History of Logistics and Supply Chain

13/07/2026 •0•0

In the first class we will present what is expected from a logistics course, the recommended books and a little of the history behind this subject

撰写者Leon

翻译者Editorial

修订者Editorial

The Course

Develop concepts and skills that will help the student understand and use tools related to supply chain, logistics, purchasing management (public and private), inventory management, assets management, warehouse management, distribution, and transportation.

For the student:

- GONÇALVES, Paulo. Materials Management. Elsevier Brasil, 2017;

- Attendance will be required;

- There will be a test and an exam.

For the professor:

- CONTADOR, J. C. Operations Management. Ed. Edgar Blücher. São Paulo. 1990.

- GIANESI, IRINEU GN; CORRÊA, IGN; CAON, M. Production planning, programming and control: MRPII/ERP concepts, use and implementation. São Paulo, Atlas, 1997.

Introduction

“Managing materials is an activity that has been carried out in companies since the beginnings of management. It gained great momentum when logistics extended far beyond the boundaries of companies, with the main objective of meeting customers' needs and expectations”

- GONÇALVES, Paulo

Supply Chain

Competition on a global scale, where products have increasingly shorter shelf lives and consumers have higher and higher expectations, has made companies focus their attention on the supply chain. In a typical supply chain, raw materials as well as finished products are produced in different locations, transported to distributors, and then sent to consumers or retailers. Consequently, to reduce costs and improve services, effective supply chain strategies study interactions at various levels. [2]

Let us define supply chain management:

> Supply chain management is a set of approaches used to efficiently integrate suppliers, manufacturers, warehouses, and stores, so that merchandise is produced and distributed in the correct quantity, to the right locations and at the right time, in order to minimize system costs while satisfying service-level requirements.[2]

Several definitions of a supply chain have been offered in recent years, as the concept has gained popularity. The APICS Dictionary describes the supply chain as:

- the processes from the initial raw materials to the final consumption of the finished product, linking supplier companies; and

- the functions inside and outside a company that enable the value chain to make products and provide services to the customer

Its importance is due to the cost of materials in an industrial company. In a survey published by Gazeta Mercantil in 1991, more than 50% of the costs of an industrial company were found in materials and services.

But we must also make clear what supply chain is NOT. It is not the following items:

- inventory management;

- logistics management;

- supplier partnerships;

- a shipping strategy;

- distribution management;

- the logistics channel;

- contract management;

- an information system.

And there are also the following items as problems that prevent supply chain management from occurring:

- Lack of guidelines for creating alliances with supply chain partners.

- Failure to develop measures to monitor alliances.

- Inability to broaden the supply chain view beyond procurement or product distribution to encompass larger business processes.

- Inability to integrate the company's internal procedures.

- Lack of trust within and outside a company.

- Organizational resistance to the concept.

- Lack of buy-in from senior executives.

- Lack of integrated information systems and electronic commerce that connect companies.

History of the Supply Chain

In the 1980s, companies discovered new technologies and manufacturing strategies that allowed them to reduce costs and compete better in different markets. Strategies such as just-in-time manufacturing, kanban, lean manufacturing, total quality management, and others became very popular, and large amounts of resources were invested in implementing these strategies. In recent years, however, it has become clear that many companies have reduced manufacturing costs to near the maximum possible. Many of these companies are discovering that supply chain management is the next step they need to take to increase profit and market share. [3]

Case in the Textile Industry

Due to intense competition in the textile and apparel industry worldwide, leaders in U.S. apparel formed the Crafted With Pride in the USA Council in 1984 [4]. In 1985, Kurt Salmon Associates was tasked with carrying out a supply chain analysis. The results of the study showed that the lead time for the apparel supply chain, from raw materials to consumer, was 66 weeks, with 40 weeks spent in warehouses or in transit. The long supply chain resulted in major losses for the industry due to inventory financing and the lack of the right product in the right place at the right time.

The result of this study was the development of the quick response (QR) strategy. QR is a partnership in which retailers and suppliers work together to respond more quickly to consumer needs by sharing information. Significant changes occurred, such as the adoption of the UPC code by the purchasing industry and a set of standards for electronic data interchange (EDI) between companies. Retailers began installing point-of-sale (POS) verification systems to transfer sales information quickly to distributors and manufacturers.

Hewlett-Packard

It implemented changes in product physical distribution and a new distribution requirements planning (DRP) system. The DRP system records customer orders with forecasts and serves as the starting point for pulling the supply chain. [5]

Wal-Mart

The company launched its own supply chain initiative by working directly with key manufacturers. The manufacturers are responsible for managing Wal-Mart's warehouse inventory, known as vendor managed inventory (VMI). In return, Wal-Mart expects around 100% order fulfillment rates for these products. KMart and other major retailers implemented similar VMI. [6] A similar movement is noticeable at Lojas Americanas, by clicking on a product on its website it is possible to choose the supplier!

Conclusion

To begin managing the entire supply chain, companies must consider the following guidelines in their plans and implementation: [3]

- Establish a link between the supply chain strategy and the overall business strategy to align supply chain initiatives with the company’s objectives.

- Identify the objectives of the supply chain and develop plans to ensure that each process is individually capable of meeting the supply chain objectives.

- Develop systems to listen to market demand signals and plan accordingly, including changes in order patterns and changes in demand due to customer promotions.

- Manage sources of supply by developing partnerships with suppliers to reduce material costs and receive materials as needed.

- Develop customized logistics networks tailored to each customer segment.

- Develop a supply chain information systems strategy that can support decision-making at all levels of the supply chain and provide a clear view of the product flow.

References

[1] GONÇALVES, Paulo. Administração de materiais. Elsevier Brasil, 2017

[2] SELL, Supply Produce Distribute. Introduction to supply chain management. 1999.

[3] LUMMUS, Rhonda R.; VOKURKA, Robert J. Defining supply chain management: a historical perspective and practical guidelines. Industrial Management & Data Systems, v. 99, n. 1, p. 11-17, 1999.

[4] Kurt Salmon Associates Inc., 1993, Efficient Consumer Response: Enhancing Consumer Value in the Grocery Industry, Food Marketing Institute, Washington, DC.

[5] Hammel, T.R., Kopczak, L.R., 1993, "Tightening the supply chain", Production and Inventory Management Journal, 34, 2, 63-70.

[6] Johnson, M.E., Davis, T., 1995, "Gaining an edge with supply chain management", APICS - The Performance Advantage, 5, 12, 26-31

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