The supply chain is one of the most important aspects of running a business. In fact, some of the largest companies in the world today are built solely to make logistics faster, more effective, and less expensive. There are many big changes that have happened over the last fifty years that have changed the landscape of the supply chain in business. One of the biggest areas of change is simply how many businesses view supply chain as a whole. Many large companies have departments filled with people whose sole job is to make the supply chain more efficient. Here are some of the biggest changes in supply chain over the past 50 years.
Transportation has undergone many changes in the past few years that have affected supply chains. First of all, trucking companies now have to comply with more environmental regulations than ever before. Trucks have to purchase special fluids that reduce the total carbon emissions that they let out. In addition, drivers are now using electronic logs rather than the traditional paper versions. This is a huge game changer because drivers are only allowed to drive a certain number of hours per week and electronic logs ensure that they are not cheating the system.
Ten years ago, it
was easy for a driver to report driving under the legal limit but spend many
more hours driving. Having drivers that are well rested is a good thing, but it
presents a complication in the supply chain due to the current driver shortage. Finally, rising fuel costs have continued to pressure the
profit margins of many trucking companies who are having to makes difficult decisions in order to stay afloat.
One of the more positive developments in supply chain is the software that is now available for businesses to make things more efficient. Whether it is an inventory management program or one that tells a truck which fuel stop is the most efficient, these programs help to drive the bottom line of every business that invests in them. Product shipping has become much more advanced with the many software programs that are available, as they can optimize the DIM weight on different shipments based on input variables in to the system. Although businesses still need to hire people to run the software programs, overall it is a huge boost to the bottom line as it makes their supply chains run more efficiently.
Another huge change over the past fifty years is the growth in overseas products that are sold within the United States. In search of higher margins, many companies look to foreign countries for lower costs on their products. Often, this creates a higher profit margin on the products but is more expensive from a supply chain perspective.
Not only can more
problems happen along the way, but the transportation costs are much higher.
Companies must learn to balance product costs with their supply chain costs and
understand that there are many costs outside of how much they are paying a
supplier for a product. Once predominantly targeting factories in Asia, many companies
in the United State are looking for sourcing options in Mexico because their
lead times are much shorter and the transportation costs are lower. At the end
of the day, all of this must be balanced by the company in order to make the
most profitable decision possible.
Overall, a supply chain is one of the biggest areas of focus for many companies. There have been many improvements over the past 50 years in supply chains along with many new opportunities and challenges. The most successful companies will understand these changes and adapt to them along the way with the more improved technology coming out.