Before the 20Th century, companies with international trading activities exploited their competitive advantage to increase their market share and profits through a supply chain model that was largely based on owning, managing and directly controlling all the activities and assets in the supply chain (Bowersox et al. 35). In typical supply chain models, raw materials are procured in one location and products produced in one or multiple factories. The finished goods are then shipped to warehouses where they are temporally stored before being sold to supplier and customers. Effective supply chain models are required to reduce costs, improve service levels and account for interactions within the various levels in the supply chain. This paper is an analysis of supply chain model and strategies that were adopted by Carnegie Steel Company before the 20th century to ensure that logistic network that consists of suppliers, warehouses, distribution, manufacturing centers, retailer outlets, raw materials, work in progress and finished products flow is managed well.
It must be noted that in ancient times transportation technology largely determined the cost of moving goods from the point they are produced to the point they are sold. In most cases goods were manufactured near the source of the raw materials. Then, these goods made their way to the international consumer in a linear chain either by rail or by sea travel. This means that from the manufacturers manufacturing site, goods were shipped directly to the ultimate destination. Consumers and producers would communicate directly along the supply chain.
Carnegie Steel Company adopted a vertical integration supply chain model where it controlled the steels, mines where the iron ore was extracted and the ships that transported the iron ores and the final steel products from the factories. Carnegie Steel company supply chain model meant that the company had control of the whole supply chain being the suppliers, distributors, manufacturers and retailers. The company heavily focused on its manufacturing method by training its personnel in the steel smelting business so that the supply chain had processes and skills that were in line with the company goals. This approach meant that the company did not have to be worried about delays that could be caused by other players in the supply chain.
Work Cited
Bowersox, Donald J., David J. Closs, and M. Bixby Cooper. Supply chain logistics management. Vol. 2. New York, NY: McGraw-Hill, 2002.
