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The Top 10 Supply Chain Innovations of All-Time

What are the most important supply chain innovations of all-time? Can they even be identified?

I have been working on this off and on for almost a year, and found it is difficult to pull together. The biggest challenge was that many innovations either have no clear origins, or maybe it was sort of a combined evolution along a number of fronts.


"EOQ formulas are still taught today, and the basis for much supply chain decision-making even in this era."


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This is especially true in terms of much technology innovation.

For example, I have looked hard to see if there was some single company that invented the concept of supply chain network optimization software, but have so far stuck out. My sense is that it developed in parallel/ collaboration among several academics.

There is also not nearly as much source material in terms of supply chain history as I would have thought, as I will support with an anecdote in just a bit.

I can't say I had a crystal clear definition of what I was looking for, but it centered around this:

  • Innovations for which we can identify pretty clearly that some single company or individual(s) was/were  responsible for the breakthrough
  • The innovation had a deep and lasting impact on supply chain practice

So before the list, here is my anecdote. Several years ago, Jim Carr of PPG told me that he led the formation of a centralized transportation load control center at the company in the mid-1980s that he thought was the second or third one in the country, after 3M had pioneered the first one ever.


I wanted to - and ultimately did - put 3M's innovation on the top 10 list. But I had no detail. At first, I tried going through 3M's communications group, thinking it might have something in its company history, or might at least point me to someone there who had been around at the time. Thought it might also be a nice thing to recognize for a company that prides itself on innovation.


I can tell you that after several emails and several voice mails, I did not hear one thing back from anyone at 3M. I guess the communications group wasn't communicating that month.


So I tried my friend Paul Husby, who had been head of supply chain services at 3M in the early 2000s. Paul wasn't around or involved at the time, but connected me with Gary Ridenhower, a top supply chain exec earlier at 3M. While Ridenhower said he was ultimately in charge of the LCC development, he didn't really know many of the details. He kindly said he would ask around. 


I was hopeful, but a few weeks went by, and nothing. I really thought the trail was cold and maybe dead. Then one day, an email from Gary shows up pointing me to Pete Andersen, who was in 3M's logistics group at the time and now does some work for White Transfer. "He knows the details," Ridenhower said. 


And he does. My reason for relating this anecdote is that I really believe that if not for our efforts, this story would simply have been lost forever. I think it is worth cataloging as SCM history. Thanks to both Gary and Pete for their efforts. 

So below is my top 10 list - some of them going way back. I had hoped to have ready a somewhat more detailed article/pdf to go with this list, but just didn't quite get it done. Will have that and a video version very soon. I also recognize there will be lots of other ideas or criticisms of my list - hey, that's the fun of this from our view.

The Top 10 Supply Chain Innovations of All-Time

No. 10: Taylorism: In the late 1800s, the great Frederick Taylor takes the first scientific approach to manufacturing. In the early 1880s, he invents the concepts of using time studies on the factory floor, and based on that work, the notion of "standard times" for getting specific tasks done. Later develops the concept of incentive systems and piece-rate pay plans. Taylor's ideas were simply seminal - and often controversial - and dramatically influenced the practice of manufacturing over the next few decades and even to this very day.

No. 9: 3M's Transportation Load Control Center: In 1982, 3M, like every other company, had to leave transportation decisions to each plant and distribution center. Roy Mayeske, at that time the Executive Director of 3M Transportation, had the idea to centralize transportation planning to look for network synergies. 3M took mainframe software being used by Schneider National - one of its major carriers - and modified it to be workable  from a shipper perspective. Ship sites called in planned shipments; carriers and routings were phoned back. The LCC is now of course a standard practice today.

No. 8: Distribution Requirements Planning (DRP): In the late 1970s, Andre Martin ran operations for Abbott Labs Canada, and found himself caught between manufacturing and distribution managers, who could never seem to get inventory questions right and always blamed each other. Realizing that what was needed was a sort of Manufacturing Resources Planning for inventory distribution, Martin led a successful effort to build the first computerized  DRP system, which in turn led to a book that created the software category of DRP, as several technology firms built products based on these ideas. Was in many way the start of today's supply chain planning software industry.

No. 7: The FedEx Tracking System: After re-inventing the category of express parcel shipments, FedEx went a step further in the mid-1980s with its development of a new computerized tracking system that provided near real-time information about package delivery. Outfitting drivers with small handheld computers for scanning pick-ups and deliveries,  a shipment's status was available end to end. The Fedex system really drove the idea that "information was as important as the package itself," and was foundation of our current supply chain visibility systems and concepts.

No. 6 - The Universal Product Code: Though the idea to use some form of printed and even wireless automatic product identification had been around for decades, lack of standards had precluded individual ideas from gaining any sort of critical mass. In 1970, a company called Logicon wrote a standard for something close to the what became known as the Universal Product Code (UPC) to identify via a bar code a specific SKU, an effort that  was finalized a few years later by George Laurer. The first implementation of the UPC was in 1974 at a Marsh's supermarket in Troy, OH north of Dayton. The invention triggered the auto ID movement, forever changing supply chain practice and information flow.

No. 5: The Ford Assembly Line: Henry Ford actually got the idea for the assembly line approach from the flow systems of meat packing operations in the Midwest, but it was Ford's adoption of the production approach with a continuously moving line for Model T's in 1913 that revolutionized not only automobile assembly but took the practice of manufacturing to new levels in other sectors as well. Total time of assembly for a single car using the production line fell from 12.5 labor hours to 93 labor minutes, ultimately making cars affordable for the masses, changing not only supply chain but society.

No. 4: Economic Order Quantity (EOQ): Economic Order Quantity is a mathematical approach for determining the financially optimal amount of product to order from suppliers based on inventory holding costs and ordering costs. The original concept is generally credited to Ford Whitman Harris, a Westinghouse engineer, from an article in 1913, but it was a much later article in the Harvard Business Review in 1934 by RH Wilson that made EOQ mainstream. The formulas are still taught today, and the basis for much supply chain decision-making even in this era.

No. 3: The Ocean Shipping Container: It is hard to imagine today, but until the mid-1950s, there was no standard way to ship products on ocean carriers, and most were shipped on whatever container or platform the producing company deemed best. The result was terribly inefficient handling on both sides of the equation, poor space utilization on the cargo ships, and high logistics costs. Enter Malcom McLean, legendary logistics entrepreneur and visionary who invented the standard steel shipping container first implemented in 1956 at the port of New Jersey. Someone would have thought of it eventually, but McLean's invention in started the explosion in global trade.

No. 2: P&G's Continuous Replenishment: Until 1987 or so, order patterns in the consumer goods supply chain were almost totally dependent on whatever the manufacturer sale person and retail buyer decided between them. That's until Procter & Gamble bought a mainframe application from IBM for "continuous replenishment" (which has been deployed a handful of times in other markets), re-wrote it for consumer goods to retail, and as a result dramatically changed that entire value chain by driving orders based on DC withdrawals and sales data. P&G first implemented the approach with Schnuck's Markets in St. Louis, with dramatic results in both lowering inventories while increasing in-stock at retail.

KMart was next, taking pipeline diaper inventories from two months to two weeks - but KMart never completely embraced the possibilities. A legendary 1988 meeting between P&G's CEO and Sam Walton led to a CR program there and changed supply chain history, helping propel Wal-Mart to retail dominance and providing the foundation for Efficient Consumer Response (ECR), Category Management, Continuous Planning, Forecasting and Replenishment (CPFR), and more.

And finally.... (drum roll...envelop please)...

No. 1: The Toyota Production System: When James Womack and several co-authors wrote "The Machine that Changed the World" in 1990, it was of course not a Toyota car that had such an impact, but rather the Toyota Production System (TPS) that was the foundation of the company's dramatic success across the globe. Pioneered by Toyota's Taiichi Ohno and a few colleagues, TPS not only is the foundation for today's Lean manufacturing and supply chain practices, but the concepts have penetrated versus every area business. TPS truly did change the world.

Totally out of space. Would love your feedback on this.

Please send us your reaction or improvements to our list of the top supply chain innovations at the Feedback button below.


Dan Gilmore


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By Ed Sands
Global Logistics Practice Leader

ICG Commerce

2011 - Dynamic Market Shifts Drive Need for

Deep Capabilities and Intelligence


A few more mostly short letters on the pieces by guest columnist David Schneider digging into WalMart's move to take over most of its inbound freight. That includes our Feedback of the Week fro Paul Soper, who offers some interesting perspective on the subject.

You wll find that an other letters on the topic, and one that says editor Dan Gilmore shouldn't worry any time soon that we are running out of things to write about in the supply chain

Feedback of the Week - On WalMart Inbound:

The 100 mile deadhead from DC back to a vendor is one point, but a similar deadhead exists at the other end or at the Store.  For an inbound carrier to go to a store sounds good, he is unloading at one side of  the DC and the load to “a store” is already loaded on a fleet trailer with roll up doors, whether its truly there own or a contracted dedicated fleet who has to operate with specified grocery trailers.

If its food DC and perishables it’s a multi temp trailer,  it may work with dry vans but here again, that inbound carrier would have to have drops or live load.   The drops on the dry side are mostly walmarts own trailers for outbound I believe with exeption of a few very large carriers.    I think they can accomplish more on the dry side than the Grocery DC side.  The stores and the DC prefer roll up doors.

Shippers on the other hand often prefer swing doors on refrigerated longer haul movements  Also many grocery trailers are flat floor and lack circulation for temp controlled loads and generally weigh more.   In that the grocery side represents 51 percent of WMT sales revenues, they will have to deal with these scenarios.

Many of the big volume vendors have drop trailer from the core carriers, but presently its not feasible to have all the extra trailers that may be needed,,,,not so much a cost standpoint of trailers, but the shear lack of room for them  at vendors premises, some vendors now only have so much room for drops.  The same goes for the Walmart DCs, they do have extra property to pave, but presently they were designed for X number of trailer spaces.  The guy coming in for a customer pick up live load at a vendor is getting loaded later, not faster in most cases.

I watch it closely, as I was instrumental in talking WMT into using outside dedicated carriage for grocery distribution in the fall of 1992, at a time when they had every intention to do it themselves..the trucks and trailers form Great Dane were already ordered for the first food DC in Clarksville, Ark.  We called it Clarksville Refrigerated Lines, or CRL, later named it Transport Industries. I left, 2 years later it was sold and the new owners renamed it Greatwide (and yes we did plenty of pickups when it made sense.) Its an old idea being aggressively ramped up. 


Paul Soper

More on WalMart Inbound:

Excellent article, provides great insight as to how large retailers like Wal-Mart integrate their transportation and sourcing functions to successfully reduce costs and drive efficiencies through multiple areas of the supply chain.

Laurie Turnbull CITT, P.MM
Supply Chain Consultant
The Cole Group

We saw the value of leveraging our in-house fleet following the implementation of our E-Tendering tools in 2009. Later that year, we launched the Direct Ship Initiative to ensure that our suppliers had visibility to our delivery routes/returning vehicles for the purposes of scheduling inbound materials. Rolled-out in January 2010, the program has begun to gain real traction as the tendering application continues to evolve in both coverage and sophistication. As we evaluate the next generation TMS, the ability to manage, expand, and optimize the utilization of the in-house assets will be a key differentiator.

Bill Ray
Director of Procurement
Ply Gem Industries, Inc.

I salute and thank Supply Chain Digest and David Schneider for the excellent article and its thoughtful display of ideas and challenges!


Thom A. Williams

AmherstAlphaAdvisors LLC

I agree with everything you’ve stated so far. However, the high percentage of empty miles the Wal-Mart fleet is traveling has got to be one of their main goals. As an experienced cost justified transportation manager with a large grocery retailer, I can attest to the benefits. It took me years to battle the merchandisers over this concept and just days with our distribution management group. We became a profit center as a result, not a cost center.

Phil Bleeker

On Gilmore's Thoughts from the Beach:

Thought provoking as usual.  I wouldn’t worry about not having enough to write about though.  Early in my career (circa 1970) I worked as an accountant.  I decided to leave the profession because I saw that there were only a few ways to classify debit and credits, and computer programs could do it more efficiently than clerks.  Who would need accountants in the future?  Turns out practices continue to change, and there is plenty of opportunity for accountants.  SCM is way more complex in practice than counting beans.

On the Cisco reference, I saw a great presentation from Cisco at the 2008 CSCMP Conference on Risk Management and how they track all of their supplier partners and plan around risks.  They pointed to the earthquake in China and how they were able to quickly shift production to other sites which were unaffected. 

I guess the Cisco risk system doesn’t look at potential upturns.

Steve Murray

Principal Consultant and Chief Researcher

Supply Chain Visions


Q: Why is the Arkansas Aviation Sales Company an important part of Supply Chain history?
A: That's the air freight company Fred Smith bought in 1971 to launch his vision for what is now FedeX.
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