De top 10 supply chain innovaties
Ik ben dol op lijstjes. Supply Chain Digest presenteerde de top 10 supply chain innovaties aller tijden. Een leerzaam, en leuk overzicht van Taylor tot Toyota.
It was of course not a Toyota car that had such an impact, but rather the Toyota Production System (TPS) that was the foundation of the company’s dramatic success across the globe. Toyota’s supply chain concept truly did change the world.
2. Continuous Replenishment
Until 1987 or so, order patterns in the consumer goods supply chain were almost totally dependent on whatever the manufacturer sale person and retail buyer decided between them. That’s until Procter & Gamble bought a mainframe application from IBM for ‘continuous replenishment’, re-wrote it for consumer goods to retail, and as a result dramatically changed that entire value chain by driving orders based on DC withdrawals and sales data. P&G first implemented the approach with dramatic results in both lowering inventories while increasing in-stock at retail. A legendary 1988 meeting between P&G’s CEO and Sam Walton led to a CR program there and changed supply chain history, helping propel Wal-Mart to retail dominance and providing the foundation for Efficient Consumer Response (ECR), Category Management, Continuous Planning, Forecasting and Replenishment (CPFR), and more.
3. Ocean Shipping Container
Until the mid-1950s, there was no standard way to ship products on ocean carriers, and most were shipped on whatever container or platform the producing company deemed best. The result was terribly inefficient handling on both sides of the equation, poor space utilization on the cargo ships, and high logistics costs. Enter Malcom McLean who invented the standard steel shipping container first implemented in 1956 at the port of New Jersey. This invention started the explosion in global trade.
4. Economic Order Quantity (EOQ)
Economic Order Quantity is a mathematical approach for determining the financially optimal amount of product to order from suppliers based on inventory holding costs and ordering costs. The original concept is generally credited to Ford Whitman Harris, a Westinghouse engineer, from an article in 1913, but it was a much later article in the Harvard Business Review in 1934 by RH Wilson that made EOQ mainstream. The formulas are still taught today, and the basis for much supply chain decision-making even in this era.
5. Ford Assembly Line
Henry Ford actually got the idea for the assembly line approach from the flow systems of meat packing operations in the Midwest, but it was Ford’s adoption of the production approach with a continuously moving line for Model T’s in 1913 that revolutionized not only automobile assembly but took the practice of manufacturing to new levels in other sectors as well. Total time of assembly for a single car using the production line fell from 12.5 labor hours to 93 labor minutes, ultimately making cars affordable for the masses, changing not only supply chain but society.
6. Universal Product Code
Though the idea to use some form of printed and even wireless automatic product identification had been around for decades, lack of standards had precluded individual ideas from gaining any sort of critical mass. In 1970, a company called Logicon wrote a standard for something close to the what became known as the Universal Product Code (UPC) to identify via a bar code a specific SKU, an effort that was finalized a few years later by George Laurer. The invention triggered the auto ID movement, forever changing supply chain practice and information flow.
7. Track and trace
After re-inventing the category of express parcel shipments, FedEx went a step further in the mid-1980s with its development of a new computerized tracking system that provided near real-time information about package delivery. Outfitting drivers with small handheld computers for scanning pick-ups and deliveries, a shipment’s status was available end to end. The Fedex system really drove the idea that ‘information was as important as the package itself’, and was foundation of our current supply chain visibility systems and concepts.
8. Distribution Requirements Planning (DRP)
In the late 1970s, Andre Martin ran operations for Abbott Labs Canada, and found himself caught between manufacturing and distribution managers, who could never seem to get inventory questions right and always blamed each other. Realizing that what was needed was a sort of MRP for inventory distribution, Martin led a successful effort to build the first computerized DRP system, which in turn led to a book that created the software category of DRP, as several technology firms built products based on these ideas. Was in many way the start of today’s sales and operations planning.
In 1982, 3M, like every other company, had to leave transportation decisions to each plant and distribution center. Roy Mayeske, at that time the Executive Director of 3M Transportation, had the idea to centralize transportation planning to look for network synergies. 3M took mainframe software being used by Schneider National, one of its major carriers, and modified it to be workable from a shipper perspective. Ship sites called in planned shipments. Carriers and routings were phoned back. The LCC is now of course a standard practice today in most international companies.
In the late 1800s, the Frederick Taylor takes the first scientific approach to manufacturing. In the early 1880s, he invents the concepts of using time studies on the factory floor, and based on that work, the notion of ‘standard times’ for getting specific tasks done. Later develops the concept of incentive systems and piece-rate pay plans. Taylor’s ideas were simply seminal, and often controversial, and dramatically influenced the practice of manufacturing over the next few decades and even to this very day.