Did Supply Chain Make The World Better?
Optimized supply chain made the world smaller, but did it make it better?
Ever since early human hunters took down that first mastodon, hauled it back to their clan and distributed its meat, bones and hide – supply chain has been with us. Over the eons, supply chain tools have evolved – those hunters eventually killed and transported their prey more efficiently; and then stored the meat for longer periods of time; and then distributed the meat to a broader customer base.
Of course, they also started to kill way more of their prey than they needed. Then they stripped the meat from the bones and scrapped out the bones, hides, and organs. Then they moved on to the next supply source – once their current prey was no longer cost effective or available.
And therein lies the crux of the question – optimized supply chain made the world smaller, but did optimized supply chain make the world better? To most people who lived 100 years ago, the other side of the world was an unthinkable distance away. Today, it’s where our toothpaste tube is pressed shut.
From the time of those early hunters until World War II, supply chains were primarily localized. Sure, Marco Polo would bring spices from one side of the world to the next and the American South would ship its cotton to Europe – but those global enterprises were the exception (not to mention costly and lengthy). Ferdinand Magellan and transcontinental railroads helped open up new logistics routes.
And when Japan needed to rebuild its economy, Toyota stepped up and started optimizing manufacturing. With Toyota’s innovation in lean practices – combined with the rapid expansion of air travel and ocean cargo fleets – low-cost sourcing went from being a curiosity to a reality to a necessity.
Once upon a time, those factories in Detroit and Pittsburgh needed most of their raw materials and component suppliers to be local.
Or at least regional. If their supplies couldn’t get to their factories on the back of a mule or the back of a covered wagon, the factory had no use for it.
Optimized global supply chain changed all of that.
Once the factories realized that they could get their supplies from cheaper locations, it followed that the factories’ owners realized that they could put their factories in cheaper locations. Industrial sectors bounced to Mexico and then to Japan then Taiwan then Korea then China – always in search of lower labor costs, utility costs, and real estate costs. China’s massive labor force and expansive geography made it an ideal low-cost manufacturing source. My first sourcing trip to China was in 1996 and my first sourcing trip to Vietnam was 10 years later. I went to Vietnam to see if we could move production there because China was becoming too expensive. And so it goes.
Optimized supply chain is why most of what we buy at Target is affordable. Optimized supply chain puts those presents under our Christmas trees. Optimized supply chain wraps Apple watches over our wrists faster than you can thumb-type “just in time.” Does that make the world a better place? For a lot of us, yes.
But until we figure out sustainable supply chain and understand the impact of turning low cost manufacturing locations into consumer economies (which happens when all those low-cost laborers start to earn more and more money), optimized supply chain is why countrysides get razed to make room for manufacturing facilities and distribution centers.
And when optimized supply chain decides that costs have risen too high – and shut down those manufacturing facilities and distribution centers for (sometimes literal) greener pastures… does that make the world a better place?
There are no easy answers, of course. There is no going back to the days when all you needed to do to grab a quick bite was to spear a mastodon. We are where we are. And optimized supply chain helped get us here. Can an optimized, sustainable supply chain make sure we make it to tomorrow?