Supply Chains have always shaped the World

Stephen DeAngelis

June 11, 2018

The term “supply chain” has an industrial feel to it; but, supply chains were around before the Industrial Age and probably predate recorded history. Paul Simpson reports, “Excavations of the dry bed of the ancient Lake Olorgesailie, in southern Kenya, led by American paleoanthropologist Rick Potts, suggest that our ancestors created the first supply chain between 305,000 and 320,000 years ago, at least 80,000 years older than we previously thought.”[1] What Potts discovered was that people living near the lake used tools made from obsidian and the nearest source of that stone was over a hundred miles away. The amount of obsidian discovered near the lake makes it unlikely the local population was self-sourcing. Simpson explains, “Given the volume of obsidian used around Lake Olorgesailie, anthropologist Alison Brooks believes it is unlikely that the locals commuted to pick up their obsidian. ‘We have thousands of pieces in one site that is smaller than most people’s kitchens. There has been a really major import of raw materials,’ Brooks told The Atlantic magazine.”

Once people learned to write, trade transactions were some of the first documents recorded. Hence, we know how trade and extended supply chains shaped the modern world. Potts’ discoveries indicate supply chains have shaped the world for hundreds of thousands of years. Michael Gravier (@Michael_Gravier), an Associate Professor of Marketing and Supply Chain Management at Bryant University, observes, “Supply chain leaders carry out the trade and exchanges necessary for a prosperous world. And nothing attunes you more to the humanity in another country than writing a contract together and executing supply chain operations together over the course of many years. Sometimes it takes a trip across the world and a little time conversing with the locals to make you realize that just by doing their jobs, supply chain leaders play an important role in the world.”[2] I suspect the first supply chain professionals thought of themselves as traders and merchants. Nevertheless, they knew their transactions were changing the world in which they lived. As Gravier notes, supply chain professionals continue to shape the world in which we live.

Supply Chains Basics Remain the Same

We cannot be sure what the exact arrangements were when obsidian suppliers dealt with residents around Lake Olorgesailie; but, they probably followed principles still found in today’s supply chains. Barry Hochfelder (@barryhoch21) explains, “The industry has been changed by e-commerce, technology, the global market, emerging nations, ever-present risk, corporate social responsibility and more. But the basics … of the supply chain will always exist.”[3] He calls this the “forever supply chain” and cites Robert Allen, Principal and Operations Practice Leader at The Hackett Group, who stated, “The basic concepts and elements of supply chain are immutable. Synchronization, collaboration, the drive towards efficiency and effectiveness and improving the top and bottom line all are key. ‘Collaborization’ has always been critical with customers, co-manufacturing partners, suppliers, and everyone else in the value chain.” In a previous article, I listed seven supply chain principles I believe are timeless.[4] They are:

  • Principle 1. Supply and demand governs the marketplace. My friend, Dr. Thomas Barnett (@thomaspmbarnett), is fond of noting the Stone Age didn’t end because the world ran out of rocks. What ended was the demand for stone tools. Even during the Stone Age, the provider of teardrop-shaped handaxes lost business when the obsidian supplier demonstrated the superior qualities of obsidian spearheads as weapons.
  • Principle 2. The laws of physics still matter. Space and time remain challenges for supply chains. The obsidian supply chain supporting the residents of Lake Olorgesailie developed because 100 miles on foot was too far for individuals to travel efficiently to obtain source material.
  • Principle 3. Supply chain IS business. The obsidian supplier didn’t provide the raw material to make tools and weapons because he was a philanthropist. He was a business person. Today’s supply chain managers are first and foremost business people.
  • Principle 4. Supply chains are networks not chains. Simpson points out that obsidian was not the only commodity being supplied to the residents of Lake Olorgesailie. He reports, “One site contains 86 lumps of manganese ore, useful for producing dark brown or black pigments. Elsewhere, two lumps of iron minerals had been chiseled apart to extract a red powder which, when mixed with fat, would have produced paint. Like the obsidian, the pigment-producing rocks were imported from some distance away.”
  • Principle 5. Disruptions are always costly. It takes little imagination to understand how costly a disruption in early supply chains would have been when it came to resources like obsidian, salt, hides, etc. Every modern supply chain manager also knows how costly disruptions can be.
  • Principle 6. Supply chains must change with the times. Payson Johnston (@PaysonJ), CEO & Co-Founder of Crowdz, explains, “Supply-chain management cannot be done in isolation. Industries shift, trends change, media hype comes and goes, and customers go elsewhere. Watch the trends and modify or change or even disrupt your supply-chains strategy in new directions, so you don’t get left behind.”[5]
  • Principle 7. The supply chain owns sustainability. Although sustainability is widely considered a modern challenge, I’m pretty sure the earliest supply chain professionals were also concerned their supplies of valued resources were sustainable. There are numerous historical cases where civilizations fell because their supply chains were not sustainable.

Chris Sawchuk, Principal & Global Procurement Advisory Practice Leader at The Hackett Group concludes, “In short, the objectives of supply chain won’t change. Digital transformation and all of the other changes and enhancements are allowing us to realize the objectives and visions we have always had in terms of customer-centricity, transparency, responsiveness and more.”[6]

The Supply Chain Manager’s Role has grown over Time

Back in the Stone Age, traders were involved in fairly simple transactions. Today’s supply chain managers work in a much more complex environment. Clare Hopping explains, “Supply chain management handles the entire flow of goods and services through the chain. It not only includes the physical movement of goods from their raw materials, through to production and onto the end user, it also handles the inventory too, making sure there’s enough product to fulfill orders.”[7] She continues:

“The process of supply chain management uses inspiration from various engineering processes, including industrial engineering, systems engineering as well as operations management, logistics, procurement, information technology and marketing. It relies on both physical and information flows, ensuring everyone involved in the supply chain knows exactly what’s going on at every stage to ensure products and services arrive with the customer in the most efficient way. This means there’s a big focus on customer experience too and this can be communicated through marketing channels throughout their contacts with the business. Although there are multiple components to effective supply chain management operations and much debate about what should be included, the most recognized include planning and control, organizational structure, product and information flow, management methods, power and leadership structure and rewards.”

Doug Braun, CEO of BluJay Solutions, agrees supply chain managers must change with the times. He concludes, “In a traditional supply chain logistics model, companies can only focus on optimizing one component of the supply chain at a time. It’s a very siloed approach and manages the supply chain as if it is a cost center instead of a strategic, competitive asset. A global trade network is a living ecosystem of supply chain partners all connected through one technology platform. In this model, the focus is on interactive collaboration among carriers, shippers, forwarders, suppliers, and even customers. It drives a powerful network effect with the benefits of universal connectivity among participants. Instead of micro-optimization, which only allows for cost-savings within your own supply chain, the doors are open to macro-optimization — finding those optimization opportunities that lie between several systems that are now all connected to one network.”[8] As supply chains evolve, they will continue to help shape the world.

Footnotes
[1] Paul Simpson, “How old is the world’s oldest supply chain?Supply Management, 4 April 2018.
[2] Michael Gravier, “Supply Chain Managers Shape the World,” Supply Chain Management Review, 16 January 2018.
[3] Barry Hochfelder, “The ‘chords’ of supply chains,” Supply Chain Dive, 13 March 2018.
[4] Stephen DeAngelis, “Some Supply Chain Management Principles are Timeless,” Enterra Insights, 8 May 2018.
[5] Payson Johnston, “12 Essentials of Supply-Chain Management,” Crowdz Buzz, 6 January 2017.
[6] Hochfelder, op. cit.
[7] Clare Hopping, “What is the supply chain?IT Pro, 17 November 2017.
[8] Doug Braun, “A Modern Approach to Supply Chain: The Global Trade Network,” Logistics Viewpoints, 14 March 2017.