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Historical perspective of the logistics and supply chain management discipline.

Abstract

The purpose of this article is to examine the evolution of the study of business logistics and supply chain management from the perspective of one who has participated firsthand in the discipline in industry and academic positions over the past six decades. The subject matter is organized in chronological order by decade. The 1950s were primarily a decade of transportation. During the 1960s the study of transportation evolved into the study of physical distribution. During the early 1970s more attention was given to physical supply, the inbound side of logistics systems. Later in the 1970s, universities began to offer more courses in transportation, physical distribution, and logistics. The term physical distribution was phased out in the 1980s, and the term business logistics emphasized. During the 1990s, business logistics again was the emphasis, as many cost-oriented businesses became aware of the opportunities for cost savings through negotiations with carriers and implementation of the systems approach and the total cost concept. The first decade of the 21st century has been characterized by a slow evolution from logistics to supply chain management.

Introduction

This article examines the changes over the last six decades in the study of business logistics and supply chain management. My participation in the discipline as an industry professional and an academic during those times gives me a clear vantage point from which to summarize the evolution of the field. First of all, we should define the term logistics. A Google search of logistics will yield approximately 53 million results. A more precise definition is found in the dictionary, which states that logistics derives from the Greek word logistike, "the art of calculating," and from logos, meaning "reason" (Merriam-Webster Online Dictionary 2010).

The most useful definition, for our purposes, is provided by the Council of Supply Chain Management Professionals (CSEMP), the largest professional logistics organization:

Logistics management is that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flows and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements. Logistics management activities typically include inbound and outbound transportation management, fleet management, warehousing, materials handling, order fulfillment, logistics network design, inventory management, supply/demand planning, and management of third-party logistics services providers. To varying degrees, the logistics function also includes sourcing and procurement, production planning and scheduling, packaging and assembly, and customer service. It is involved in all levels of planning and execution--strategic, operational and tactical. Logistics management is an integrating function, which coordinates and optimizes all logistics activities, as well as integrates logistics activities with other functions including marketing, sales manufacturing, finance, and information technology. (CSCMP 2010)

This article provides insights with respect to how the concept has evolved over the past half century or so. It is intended for logistics professionals, as well as students planning their careers. In an attempt to be logistically correct, the subject matter is organized in chronological order by decade. But, first, an important disclaimer: this perspective is just that. It does not include all logistical historical facts or even necessarily the most important ones. It includes, however, the ones that were important to me from the 1950s to the present day.

The 1950s: The Transportation Era

During the 195os, transportation was the emphasis. Several university programs offered transportation majors. However, the topics of logistics, physical distribution, physical supply, and supply chain management were not included in these programs. There were no computers, or even calculators, to make quantifying data easier during this era. Nor was there much discussion (if any) about a systems approach or a total cost concept.

And the idea of collaboration with one's vendors or customers was not a priority with most managers in those days.

The term logistics was used primarily in the domain of the military. The importance of getting the right supplies to the right place at the right time is imperative during wartime conditions. James A. Houston surveyed the significance of logistics in the military, and stated: "This work is a general historical survey of US Army logistics. It contributes a better understanding of the significance of logistics in the American military experience ... Logistics covers a vast range of subjects ... If international politics is the 'art of the possible,' and war is its instrument, logistics is the art of defining and extending the possible" (1966).

The primary player in the 1950s was the federal government. For example, the most significant event involving logistics (or transportation) was the Federal-Aid Highway Act of 1956 authorizing the National System of Interstate and Defense Highways. It is difficult to imagine what our country would be like today without the Interstate System.

The Interstate Commerce Commission (ICC) (which dates back to 1887) was the economic regulator for the trucking and rail modes of transportation. All truck and rail freight rates, as well as regulations relating to entry by motor carriers, were under the jurisdiction of the ICC. The ICC also regulated the abandonment of railroad lines. This was such an important subject in the 1950s that I believed it justified a master's thesis on the topic, namely, "The Policy of the Interstate Commerce Commission toward the Abandonment of Railroad Lines from 1941-1957" (Southern 1957).

Several organizations were available for transportation students and practitioners in the 1950s. Many businesses encouraged their transportation professionals to pass the ICC Practitioner's Exam, which was conducted by the Association of ICC Practitioners (changed to Association of Transportation Practitioners in 1984, and later to the Association of Transportation Law, Logistics and Policy in 1994). Delta Nu Alpha Transportation Fraternity was one of the major educational organizations, and the American Society of Traffic and Transportation (AST&T), later renamed the American Society of Transportation and Logistics (AST&L), was considered one of the premier transportation professional organizations.

The first textbook in the transportation program at many universities, including the University of Tennessee, was Economics of Transportation by D. Philip Locklin (1954). The main topics were federal legislation, the modes of transportation, and rate making. There was no mention of physical distribution or logistics. Other transportation textbooks published in the 1950s and used at universities included Industrial Traffic Management (Morton and Mossman 1954) and Traffic Management Principles and Practices (Tall 1955).

The primary trade journals were Traffic World, Transport Topics, and Distribution Age. Few articles used the terms physical distribution and logistics.

The 1960s: Physical Distribution

The study of transportation in the 1960s evolved into the study of physical distribution, and to a lesser degree, logistics. The National Council of Physical Distribution Management (NCPDM) was formed in 1963 to represent professional physical distribution managers. This organization changed its name in 1985 to the Council of Logistics Management (CLM), and again in 2004 to the Council of Supply Chain Management Professionals (CSCMP). Today, the CSCMP has more than 14,000 members.

Physical distribution (outbound logistics) and physical supply (inbound logistics), for the most part, were treated as two distinct functions. This is illustrated by the two major organizations at the time. The NCPDM, established in 1963, represented the outbound side of logistics, and the National Association of Purchasing Management (NAPM) represented the inbound side. The NAPM published a new journal, the Journal of Purchasing, in 1965. This journal has continued over the years under different names: Journal of Purchasing 1965-74, Journal of Purchasing and Materials Management 1974-90, International Journal of Purchasing and Materials Management 1991-98, and Journal of Supply Chain Management 1999 to the present.

The American Marketing Association published an annotated bibliography, Physical Distribution & Marketing Logistics: An Annotated Bibliography (Marks and Taylor 1966). The president of the association, Robert J. Lavidge, stated that "the subject of physical distribution and marketing logistics has received increased attention among marketing people during recent years. We have been involved in what often has been termed a 'revolution' in physical distribution" (ibid., 1).

There were some excellent authors of textbooks and writers in academic journals and trade journals in the 1960s. One of the first textbooks that focused on physical distribution and logistics during this decade was Physical Distribution Management: Logistics Problems of the Firm (Smykay, Bowersox, and Mossman 1961).

One of the most prolific writers of the time was James L. Heskett, who was from Ohio State University and who, along with Robert Ivie and Nicholas Glaskowsky, published the first edition of their textbook, Business Logistics: Management of Physical Supply and Distribution (Heskett, Ivie, and Glaskowsky 1964). They explained that "this book deals with the two branches of business logistics, physical supply and physical distribution." Charles A. Taft added the term physical distribution in the third edition of his book Traffic Management, that is, Management of Traffic and Physical Distribution (Taft 1964).

Several academic articles discussing the concepts of distribution and logistics were published in the 1960s, for example: "The Logistics of Distribution" (Magee 1960), "Organizing for Effective Physical Distribution Management" (Cannon 1960), "The Role of Computers in Distribution Analysis" (Smykay 1961), and "Marketing Time Lags: Their Impact on Logistics" (Heskett 1961).

While physical distribution received a great deal of attention in the literature in the 1960s, transportation--as the most important function of physical distribution--was not neglected. The first issue of Transportation Journal was published in the fall of 1961 by the American Society of Traffic and Transportation. In 1966 President Lyndon B. Johnson signed Public Law 89-670 establishing the Department of Transportation, and Alan S. Boyd was selected as the nation's first secretary of transportation.

The 1970s: Physical Supply, Deregulation, and Logistics

During the early 1970s physical supply (or materials management, as it was sometimes called), the inbound side of the logistics system, received a great deal of attention. Later in the decade there was a move to combine physical distribution with physical supply and to emphasize the broader concept of logistics. The 1970s were a pivotal decade in the advancement of the logistics concept. Universities, academic journals and textbooks, and professional organizations all contributed to make this a productive decade for the logistics discipline.

Transportation, the most important function of logistics management, continued to be emphasized as well. Railroads in the United States were experiencing serious financial difficulties, especially with respect to the operation of passenger trains. This resulted in congressional passage of the Rail Passenger Service Act of 1970, which established Amtrak as a federal government entity to run all passenger trains. About the same time, the railroads in the Northeast declared bankruptcy. Congress stepped in again and passed the Regional Rail Reorganization Act of 1973, which eventually led to the establishment of the Consolidated Rail Corporation (Conrail) to run the railroads in the Northeast. For the first time in history, the government owned and operated a substantial part of the nation's railroad system.

Ironically, during this same time frame the United States entered a transportation deregulation era. Congress passed the Railroad Revitalization and Regulatory Reform Act in 1976, reducing economic regulation in the railroad industry. It also passed the Airline Deregulation Act, which deregulated air transportation and eliminated the Civil Aeronautics Board (CAB), the agency that had regulated the airlines since 1938.

During the 1970s the Transportation Journal established itself as one of the major academic journals in the discipline of transportation and logistics. It published articles in the fields of economics, industrial and carrier management, physical distribution, logistics, regulation, public policy, education, and other relevant subjects. Another logistics-related academic journal was introduced in 1978: the Journal of Business Logistics (JBL), which was published by NCPDM and is now one of the premier academic journals. Production of JBL took place at Ohio State University. Professor Bernard "Bud" LaLonde served as the first editor of JBL (Miyazaki, Phillips, and Phillips 1999).

Of major interest in the nation's universities during the 1970s were transportation, physical distribution, and logistics curricula. Several articles on these subjects were published in the Transportation Journal, including "The Educational Challenge Facing Logistics and Physical Distribution Management" (Beier 1972), "Transportation Education: An Evaluation" (Farris et al. 1972), "A Survey of Current Status and Trends in Transportation and Logistics Education" (Ballou and Piercy 1972), "Transportation]Logistics Curriculum Development: Bridging the Gap Between Industry and Academia" (Piercy, Kramphe, and Banville 1977), "Industry Evaluation of a Transportation/Logistics Curriculum" (Langley, Gibson, and Mundy 1977), and "The Current Status of Business Logistics Education" (Gilmour 1978).

In addition to journal articles, several excellent textbooks on the subjects of transportation, physical distribution, and logistics were published during the 1970s, including Business Logistics (Heskett, Glaskowsky, and Ivie 1973), Case Problems in Business Logistics (Heskett et al. 1973), Business Logistics Management (Ballou 1973), Logistics Management (Davis and Brown 1974), Economics of Transportation and Logistics (Fair and Williams 1975), The Management of Business Logistics (Coyle and Bardi 1976), and Contemporary Physical Distribution (Johnson and Wood 1977).

The 1980s: Transportation Deregulation, Physical Distribution, and Business Logistics

In the transportation world during the 1980s, deregulation continued with the Motor Carrier Act of 1980, which reduced regulation of motor freight rates and entry requirements. The Staggers Rail Act of 1980 allowed the railroads to negotiate contracts and operate with less oversight by the ICC. The CAB ceased operations in 1984, and in 1987 the federal government sold its Conrail common stock. Federal deregulation of transportation in the United States resulted in a more competitive and flexible system.

The term physical distribution began to be phased out during the 1980s, and the term logistics emphasized. As an example, James C. Johnson and Donald F. Wood changed the name of their textbook Contemporary Physical Distribution to Contemporary Physical Distribution and Logistics (Johnson and Wood 1982). The NCPDM changed its name to the Council of Logistics Management (CLM) in 1985.

The 1990s: Business Logistics

During the 1990s, business logistics continued to be a very important subject. Most cost-oriented businesses became aware of the opportunities for cost savings through negotiations with carriers and implementation of the systems approach and the total cost concept. Johnson and Wood, in their fourth edition of their textbook, dropped Physical Distribution from the title, which became simply Contemporary Logistics (Johnson and Wood 1990). Many transportation firms picked up on the logistics concept, at least nominally, promoting the idea that they were not just transportation carriers; they were logistics carriers, or they provided logistics solutions.

During the 1990s the major factors affecting logistics were developments in electronics and communications technology, such as the Internet and electronic data interchange. Also important was the growth of third-party logistics organizations, strategic alliances, and partnerships. Businesses began to view logistics as an integral component of the firm's overall Strategy.

Some of the textbooks used during the 1990s included Business Logistics Management (Ballou 1998), The Management of Business Logistics (Coyle and Bardi 1999), Business Logistics (Glaskowsky and Hudson 1992), and Fundamentals of Logistics Management (Lambert et al. 1997).

An analysis of the research in the Journal of Business Logistics appeared in a 1999 article titled "Twenty Years of JBL: An Analysis of Published Research" (Miyazaki, Phillips, and Phillips 1999). The authors attempted to categorize the content of all JBL articles published during 1978-97 into three categories. Unfortunately, 67 percent of the articles could not be classified. However, they did provide a list of the most popular subjects. There were 34 articles relating to inventory, 32 to computer applications, 22 to customer service, 21 to international logistics, 20 to traffic management, and 20 to productivity/quality.

Joseph R. Carter and Lisa M. Ellram coauthored an article in the Journal of Supply Chain Management titled "Thirty-Five Years of the Journal of Supply Chain Management: Where Have We Been and Where Are We Going?" (Carter and Ellram 2003). The article offers a greater understanding of the evolution of purchasing and supply research during the journal's existence, from 1965 to 1999. The authors conclude that legal and regulatory issues were the major focus during the early years--the mid-1960s through late 1970s. Purchasing performance and the status of the purchasing function were important in the late 1970s. Areas of emphasis in the 1990s included purchasing strategy, the strategic impact of purchasing, the role of purchasing in new product development, purchasing involvement in supplier development, and strategic supplier alliances. After 1994 the emphasis turned to the broader area of supply chain issues.

The 2000s: Logistics and Supply Chain Management

The early years of the 21st century were characterized by a slow evolution from logistics to supply chain management in both academic and business circles. In the business community small- and medium-sized companies have been slower in accepting the supply chain concept.

The same professional organizations previously discussed continue to be active in assisting academicians and practitioners in the logistics and supply chain discipline. The logistics side is well represented by the CSCMP. The CSCMP defines supply chain management as follows: "Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities" (CSCMP 2010). The handbook Transportation and Logistics Basics states: "The supply chain includes all partners in the logistics process. The idea is to have integrated information sharing among all trading partners (vendors, manufacturers, and customers)" (Southern 1997, 248).

A recent textbook is appropriately titled Supply Chain Logistics Management. It illustrates how much change there has been over the years. The authors observe that "over the last seven decades, the discipline of business logistics has advanced from the warehouse floor and transportation dock to the boardroom of leading global enterprises" (Bowersox, Closs, and Cooper 2010). Interestingly, Coyle and others' latest supply chain text is titled Supply Chain Management: A Logistics Perspective (Coyle et al. 2011a), and Coyle and others' latest transportation text is titled Transportation: A Supply Chain Perspective (Coyle et al. 2011b).

This review of logistics and supply chain management over the past six decades would not be complete without a mention of professional development through online and distance learning education in logistics and supply chain management. It would be rare to find a college or university not having some sort of online presence. Distance learning is a major part of logistics education. The Institute of Logistical Management claims to be the oldest logistics distance learning school in the world. It has an arrangement with the University of Phoenix to provide a Certified Logistics Practitioner's certification (ILM 2010). The American Society of Transportation & Logistics continues to offer its respected Certification in Transportation & Logistics (CTL), a certification program developed in conjunction with colleges and universities with established logistics programs (AST&L 2010). The first examinations for AST&L certification were held in December of 1948 at fifteen examination centers (Yeley and Waters 1972, 26).

Summary

It is a humbling experience to reflect on a six-decade career in logistics and supply chain management. From Lockin's Economics of Transportation in 1954, through the eyes of a young man with no experience, to Bowersox and colleagues' Supply Chain Logistics Management in 2010, we have witnessed enormous change. The 1950s were primarily a decade of transportation. University programs emphasized transportation and traffic management. There was no mention of physical distribution, physical supply, logistics, or supply chain management.

The 1960s were a decade in which the study of transportation evolved into the study of physical distribution. In 1963 the NCPDM was formed to represent professional physical distribution managers. Physical distribution (outbound logistics) and physical supply (inbound logistics) were treated as two totally distinct functions in those days. This is illustrated by the two major professional organizations: NCPDM representing the outbound side of logistics, and NAPM focusing on the inbound side. American Society of Transportation and Logistics continued to represent the transportation and logistics focus.

During the early 1970s more attention was given to physical supply (materials management), the inbound side of the logistics system. Later in the 1970s, universities offered more and more courses in transportation, physical distribution, and logistics. The logistics concept was catching on at universities, and in academic journals and textbooks.

The term physical distribution began to be phased out in the 1980s, and the term business logistics emphasized. Whereas the 1970s introduced logistics into the business world, the 1980s accepted business logistics as an important and full-fledged function of business.

During the 1990s, business logistics continued to be a very important subject. Most cost-oriented businesses became aware of the opportunities for cost savings through negotiations with carriers and implementation of the systems approach and the total cost concept. The major factors affecting logistics were developments in electronics and communications technology, such as the Internet and electronic data interchange.

The early years of the 21st century have been characterized by a slow evolution from logistics to supply chain management, at least as far as academia is concerned. The business community has been much slower to accept the concept, especially small- to medium-sized companies. Nevertheless, the technology is available, and some larger corporations are taking advantage of the opportunity to electronically collaborate with their channel partners. Online and distance learning in logistics and supply chain management have also grown tremendously in recent years.

It has been an exciting six decades for me. And, it definitely gives one pause to consider what might be in store in the coming years. Will management of business logistics and the supply chain continue to change to the degree that it has in the past? We believe it is safe to say that the future will include much more technology (including online education, webcasts, webinars, and virtual conferences) and emphasis on collaboration to achieve greater efficiencies. There is no doubt that business and academia will continue to recognize the many opportunities that logistics and supply chain management will offer with respect to cost effectiveness, product quality, and customer service. At any rate, we envy the students, academics, researchers, teachers, and practitioners who will be around to observe the future of business logistics and supply chain management.

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R. Neil Southern

Clinical Professor of Marketing

DeSoto Center-Southaven, 5outhaven, MS

southern@olerniss.edu
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Author:Southern, R. Neil
Publication:Transportation Journal
Geographic Code:1U2NY
Date:Jan 1, 2011
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