The concept of Supply Chain appeared around thirty years ago. This term made it possible to define the outline of an essential function for industrial and distribution companies. Although there are many definitions of the Supply Chain, that of the Supply Chain Council defines it as “the set of links whose succession describes the flow of products from the supply of basic materials to the distribution of the finished product to the end customer.
Little by little, Supply Chain came to replace the historical term Logistics, the origin of which is military, which was only partially adapted to the industrial and distribution sectors. NATO defines logistics as the science of planning and executing movements of armed forces and their maintenance. Logistics provides the link between deployed forces and the industrial base which produces the weapons and equipment these forces need to accomplish their mission. In practice, logistics includes the identification of needs as well as the creation of stocks and capacities, and the maintenance of forces and their armament. Logistics covers a very wide range of activities. Supply, maintenance, movement and transport, oil support, infrastructure and medical support are the main logistics activities that NATO takes care of.
The term Supply Chain has allowed logistics to gain recognition within the management committees of large global companies. Numerous higher education courses were created in the 90s and 2000s to support this movement. Many young people have been trained in the principles of Supply Chain.
Remember that when the term Supply Chain was coined, the Internet and e-commerce had not yet taken off. The first theorists and practitioners of the Supply Chain were therefore unable to integrate the changes that would soon shake up the economic world. These first disciples were also specialists in industrial logistics. They naturally favored a push flow approach from factories downstream in a B2B world.
This approach was characterized by a depreciation of the transport link. As proof, it is enough to study the programs of the main training courses in Supply Chain since the 90s. The results are clear: the total hours of training on the transport links represents barely 5% of the teaching hours provided.
The concept of Supply Chain is undoubtedly the right approach but it has not evolved while companies have transformed. This gap has increased as B2C and the digitalization of B2B have developed.
Within a Supply Chain, there are different links which constitute boxes through which physical flows circulate: factories, warehouses, crossdocking platforms, etc. And there is an element, omnipresent between each link in the chain: transport which is available in several modes (air, sea, rail and road) and several segments (messenger, batches, complete). It is therefore not acceptable to consider transport as a simple link in the chain. It must be understood differently to properly exploit its contribution to an efficient Supply Chain.
Like the human body, there are the organs and the cardiovascular system. Made up of the heart and the vessels (the arteries and veins), the cardiovascular system has the function of distributing to the organs, through the blood, the oxygen and nutrients essential to their life, while eliminating their waste. The parallel with the Supply Chain is obvious. For 30 years, Supply Chain specialists have neglected the importance of transport and often relegated it to the background.
This error went unnoticed for a long time because new practitioners were trained by their elders without questioning their precepts. The vast majority of them were operating in an old economy B2B world.
However, at the beginning of the 2000s, a company chose to approach the concept of the Supply Chain from another angle. This company has expanded into the e-commerce sector. It has put the Customer at the heart of its strategy. It is therefore natural that it imagined its Supply Chain by positioning transport, not as a link in the chain but as a common thread between the end Customer and all the other links upstream. Everyone knows this company, it’s Amazon.
It is therefore time to evolve the principles of Supply Chain to adapt it to the reality of today's companies and the expectations of their Customers. After 30 years of existence, Supply Chain specialists must now implement a V2 starting from the blank sheet or rather from the end Customer. From then on, Transport will become the essential element of an efficient Supply Chain.
The Supply Chain is dead, long live the Supply Chain!
