Textile and Apparel Supply Chain Management Technology Adoption

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Textile and Apparel Supply Chain Management Technology Adoption

  1. 1. Volume 5, Issue 2, Summer2006 Textile and Apparel Supply Chain Management Technology Adoption The Burlington Industries Case and Beyond Dr. W. Douglas Cooper Belk College of Business Administration UNC Charlotte ABSTRACT The term supply chain management first appeared in the literature in 1982 with credit to Oliver and Webber (12). However, it can be argued that modern supply chain management began in the mid 1960s with the marriage of some basic, best-practice concepts of production-distribution processes and the 3rd generation of IBM computers; S/3 60 systems. One of the chief players in the early development of supply chain design and management philosophy was a textile and apparel company; Burlington Industries. Much of the accumulated knowledge about textile and apparel firm contribution in this area has been lost or forgotten with the fall of the US domestic giants of the 1970s and 80s. Thus, the purpose of this paper is to establish a historical document that points to the important role that was played by the firm to the supply chain body of knowledge before the formal development of the “supply chain” term in the 1980s and 90s. It is the author’s belief that an understanding the early work in developing large vertically integrated supply chain designs and strategies for textile and apparel firms can give the reader significant insight into global textile and apparel supply chain designs of the future. A case study involving Burlington Industries and the supply chain information system enabler of the time, IBM, that is not to be found in the academic literature, is chosen as the core of the paper. The paper draws on the development and adoption of a supply chain management strategy for its separate businesses that was an important part of a massive 10-year, $2 billion (1975-85 dollars) capital expenditure program that was launched by Burlington Industries in 1975; a project scope unprecedented in the history of the world’s textile industry. Keywords: Supply chain, database designs, client-server information systems, ERP, MRP global economy, IBM, information technology, employment, Wal-Mart Introduction concerning supply chains and the vast amount of technology that is now available Today, global supply chains and the to manage these supply chains. management of these chains have become an integral part of both popular and academic While the term supply chain discussions of the world’s political, management first appeared in the literature economic and social problems. Graduate in 1982 with credit to Oliver and Webber schools of business provide in-depth courses (12), it can be argued that modern supply Article Designation: Scholarly 1 JTATM Volume 5, Issue 2,Summer 2006
  2. 2. chain management began in the mid 1960s appears that the academic conventional with the marriage of some basic, best- wisdom of the 1970s did not translate well practice concepts of production-distribution into the 21st Century. At minimum the above processes and the 3rd generation of IBM conventional wisdom has taken a global computers; S/360 systems. Since that time detour. the supply chain management evolution process has continued through today. One With the coming of the global can argue that most, if not all, of today’s economy during the 1995-2005 period, accepted supply chain management concepts textile and apparel industry structure was were actively at play in the 1965-1985 greatly expanded and reconfigured into a period; acting under a technology paradigm more retail directed, global version of the and names specific to that time period. US textile and apparel structure that existed However, these same concepts were also in during the 1950s and 1960s. This backward play during the 2000-2005 period and today; regression has, once again, led academic acting under a new paradigm and new researchers to question the optimal global names specific to that time period. The ten structure for modern textile and apparel year period between the two paradigms, production and distribution supply chains 1985-1995 was a transition period; a time of (05). Thirty five years after Cooper’s initial global economic change. It was also a time paper treating the textile and apparel supply of discovery, development and first-cut chain as a network flow and a world of application of fundamental changes in accomplishments in information technology supply chain management driven by changes later, not many questions have been in information systems technology. For the answered with respect to textile and apparel practice of supply chain management it was supply chain optimization that were not a time of paradigm shift. being asked in 1975. Thus, thirty years later the focus of this paper returns to an old The focus of this paper is on textile question in search of a new answer. and apparel production-distribution supply chains. Academicians have been discussing Is the adoption of modern supply chain the place of supply chain management in management technology an important textile and apparel chains for over thirty factor in determining the structure of years. Cooper (04) first treated the textile textile and apparel production and supply chain as a network flow in 1970. distribution? If so, how does/will the Hudak and Bohnslav (10) were discussing adoption of this technology affect the the merits of textile and apparel supply convergence of the future structure of the chain consolidation into single -owner, industry? linear, supply chains in 1976. With the realized advantages of large, static supply Today, much is known and written chains such as those formed by Burlington about the 1995-2005 growth in supply chain Industries and others in the 1970s, it was the management technology and the impact the conventional wisdom of the time that textile applications of this technology have had on and apparel industry structure would follow today’s global economy. It is understood the Burlington Industries model into the 21st that a major paradigm shift in supply chain Century. It was assumed that textile and management technology evolved during the apparel markets in developed countries 1985-1995 period that decreased the cost of would be supplied by large single -owner, modern supply chain technology adoption multi-node, linear, supply chains with during the 1995-2005 period. However, less production and distribution processes highly is known, remembered, or written about the optimized in their network flows for specific place of the important 1965-1985 period as a target market groups. It was assumed that part of supply chain technology’s these chains would be supported by state-of- evolutionary whole. To get a better handle the-art mechanical, chemical, electronic and on the above central question of this paper, information technology. However, today it one needs to fill-in a few knowledge gaps by Article Designation: Scholarly 2 JTATM Volume 5, Issue 2,Summer 2006
  3. 3. looking at the important 1965-1985 period eventually led to the effective where textile and apparel firms were destruction of the technology base, the adopting supply chain technology within a associated knowledge base and the very different paradigm than that facing supply chains it had developed, adopting firms today. One needs some historical insight into the similarities and 6. the author was an important differences under the two paradigms as input participant in the 1975-1985 capital before attempting to determine the expenditure projects and recounts appropriate supply chain structure for textile most of the paper’s Burlington and apparel chains as one moves through the Industries outcomes either from 21st Century. personal notes or memory. A case study involving Burlington Industries Post World War II Textile and Apparel that is not to be found in the academic Supply Chains literature is chosen as the core of the paper. The reasons for choosing this particular case At the end of World War II most of are six: the world’s economies lay in ruin. As nations began to rise from the ashes and 1. few people would guess that a US reinvent their economic selves, America, set textile company (one that, in effect, no about to reconfigure itself as the world’s longer exists) was, in 1985, one of the dominate economic power. The economic leading examples, if not the leading engine and supply chains that had produced example, of effective supply chain and distributed most of the material management technology development resources that contributed to the Allies and application, victory in the World War were in place in the domestic United States, undamaged by 2. the expansive (multi-node chain the War. All that was needed was to convert length) and diverse, yet linear, work- supply chain capacity from the supply of center nodes that populated each of military goods and services to meet the the example firm’s multiple supply demands for consumer goods and services. chain networks, Under these conditions it was natural for the US Government to think in terms of 3. the special interaction that existed economic “full employment.” The between Burlington Industries and the Employment Act of 1946 passed the US supply chain information system Congress by an overwhelming majority and enabler of the time, IBM, that was officially added a new dimension to largely responsible for the measured government polic y. The Employment Act success described in the case, of 1946 explicitly placed the US Government in a policy role of maximizing 4. the development and adoption of employment in the United States. supply chain management technology Understanding the economic trade-offs by the example firm was an important between maximum national employment part of a massive 10-year, $2 billion and inflation and the economic trade-offs (1975-85 dollars) capital expenditure between the use of technology as a program that was launched by substitute for people in the production and Burlington Industries in 1975; a distribution of goods and services, the US project scope unprecedented in the Government made its top priority keeping history of the world’s textile industry, the US work force employed. Thus, for a generation after 1946, the components of US 5. almost immediately, within five supply chains were domestic and much of years of completion of the technology the technology associated with the adoption project, the firm was management of these supply chains attacked by external forces that supported government policy. Within this Article Designation: Scholarly 3 JTATM Volume 5, Issue 2,Summer 2006
  4. 4. environment the US textile and apparel opportunity. However, for the period, these industry was composed of thousands of limitations were accepted practice for doing small, under-capitalized firms using labor- business. In the Post-World War II intensive processes and sharing work-center environment world-wide and domestic components of the textile and apparel supply demand for US textile and apparel products chain. Independent mills produced yarn as was high, supply was limited and supply an input for other independent mills that chain optimization was not on the front produced fabrics for other independent mills burner of US textile, apparel and other that produced processed fabrics that were production/distribution firms. Thoughts of used by other independent mills to produce supply chain optimization for the textile and final products for apparel, home furnishings apparel industries would not become serious and/or industrial uses. While various degrees until foreign competition for the market of vertical integration existed, and the share controlled by US textile and apparel industry did by the 1970s contain a few mills became serious in the 1970s. large vertically integrated firms, by the mid 1970s about seventy percent of all US textile The 1975 US Textile and Apparel Economy and apparel production market share was controlled by thousands of independent In the mid 1970s it was well mills dealing with each other in a dynamic understood by involved US government, manner to form short-term, ad hoc, supply education and business officials that the chains. survival of the domestic US Textile/Apparel Industry in the 21st century was going to be All Post-World War II textile and more than proble matical. Some US apparel supply chains for US production and government participants that had an interest distribution were a set of linear, in determining the future course of the individualized processes that linked industry were the National Science manufacturers, warehouses, wholesalers, Foundation, the Treasury Department’s retailers and consumers together in the form Office of Industrial Economics, US of a human/paper chain. People and paper Departments of Commerce and Labor, etc. physically connected all of the tiers of the The presence of various industry chain together. Information systems were associations, such as ATMI, American composed of what people carried around in Textile Manufacturing Institute, and others, their heads and/or what they could were pervasive at meetings to discuss the physically put down on paper. The physical industry’s future. Business leaders gave limitations of the absence of data, or data widely diverse opinions about what was redundancy, or data errors resulting from the required to promote future US use of paper as a means of maintaining the Textile/Apparel Industry survival. Textile data required to manage a supply chain, was schools such as the one at NC State profound. The practical limitations of University, serving an international student uncoordinated, decision making among clientele, were poised to do scholarly things individual supply chain managers, acting not to aid the survival process. It was the on data, but on individual agendas, was beginning of very interesting times for the equally profound. The ability to coordinate domestic US Textile/Apparel Industry! the total supply chain activities of procurement, demand planning and While US textiles and apparel, taken forecasting, inventory management, as a whole, were improperly structured to shipping and tracking was far from a survive a coming global economy in the mid definitive science. These conditions were 1970s, a relatively small number of well particularly true across the short-term, ad capitalized textile firms were about to hoc textile and apparel supply chains that attempt to beat the survival odds through the were month-to-month or week-to-week efficient and timely adoption of technology. dynamically formed by independent mills to There was a belief among these companies take advantage of a given market that in the face of significant price Article Designation: Scholarly 4 JTATM Volume 5, Issue 2,Summer 2006
  5. 5. disadvantages with foreign competition, the nearly 40 years, it was guided by its founder proper utilization of chemical, mechanical J. Spencer Love who died in 1962. During and information technology, in concert with his tenure Love and his company were an optimized supply chain, would allow known for bold, innovative ideas (06). long-term survival for a small number of Under Love’s leadership the company was a well structured, capital intensive, textile and pioneer in the development and practice of apparel firms such as Burlington Industries. the latest organizational management These few firms were willing to concepts and employee relations practices. It aggressively implement this strategy during patented many unique production processes the decades of the 1970s and 1980s. By the and related products and zealously pursued mid-to-late 1970s two large textile firms, new market opportunities as the market Burlington Industries and Milliken and populations grew, lifestyles changed and Company had already obtained a dominant living standards improved. This aggressive position in the industry with this strategy. pursuit of bold, innovative ideas, continued Writing in 1976 for the US Treasury with post-Love management well into the Department’s Office of Industrial 1980s, including the belief in the Economics, Hudak and Bohnslav (10) competitive advantage of vertically reported that these two firms, were able to integrated supply chains. Surrounded by capitalize on the emerging new technologies thousands of small independent mills, Love associated with textile machinery and man- saw optimized, vertically integrated textile made fibers, using state of the art computer- and apparel supply chains as the path to based systems, and were able to gain a economic success for Burlington Industries. significant competitive advantage over other Under Love’s direction the firm contained US and international textile firms. They multiple product divisions, organized around pointed out that these more-profitable specific product groupings that could be companies had developed complex vertical treated as separate companies. These and/or horizontal supply structures that separate companie s produced products for allowed for significant gains in flexibility, multiple apparel uses, multiple home- diversification and financial strength. They product uses and for multiple industrial uses. reported that after a period of acquiring All of the firm’s various textile/apparel control of smaller firms and absorbing these supply chains were made up of deep product firms into their supply chain structure, these structure files containing yarn and fiber firms were applying mass production and procurement, yarn-forming processes, information-based techniques in fabric -forming process, fabric -treatment consolidating diverse textile supply chain process, and final product-forming activities into well integrated operations. processes. However, it was noted that these few firms, Burlington Industries included, held a minor In support of Love’s vision, the share of the domestic US market in the mid management of Burlington Industries 1970s. Cooper (06) reported in 1975 that the understood that its future success greatly total operations of these few firms only depended on its retail partners; where total- represented about 30% of the domestic US supply-chain flow exited the chain to the textile, apparel market share with small ultimate customer. To better define its under-capitalized firms sharing the products relative to its retail customers and remaining 70%. develop consumer brand awareness, as early as 1952, Burlington was the first textile Burlington Industries company to advertise on network television. In 1975 a good number of Burlington’s Through the aggressive pursuit of retail partners were ill-managed and not acquisitions, product diversification and equipped to be the driving force of a given supply chain integration after the Second supply chain. A typical retail company of World War, Burlington Industries became the time was daily, dealing with multiple the largest textile firm in the world. For purchases from multiple supply chains while Article Designation: Scholarly 5 JTATM Volume 5, Issue 2,Summer 2006
  6. 6. being equipped with only a minimal materials intensive business. At that time it information technology needed to control its was logical to believe that by replacing destiny and the destiny of the up-stream expensive US labor with relatively chain. Under these conditions Burlington inexpensive materials and capital the firm Industries saw the logic of taking its destiny was insulated against the global “cheap in its own hands and out of the hands of its labor” competition of the coming global retail partners by positioning itself to play a economy. Thus, in the mid-1970s major role in the vendor management of its Burlington launched a 10-year, $2 billion product inventories at the retail point of the capital expenditure program, a scope supply chain. New, emerging supply chain unprecedented in the history of the world’s management theory and supporting textile industry. The objective was to computer-based systems were deemed by achieve a world-class manufacturing and Burlington Industries to be enablers of this distribution base that would positioned the corporate strategy. company for world-wide competition well into the 21st Century. During the 1970s and 1980s Burlington Industries could be described as Modern Supply Chain Management a closely-held, firm. The decision makers of the time were textile people with long-term In order to demonstrate any family involvements in successful, well differences in the Burlington Industries’ capitalized, production and distribution of 1975-1985 equivalent to today’s “modern” textile and apparel products. These were supply chain management, consider today’s textile people who wanted to remain textile current definition. The text by Chopra and people in the coming global economy. It was Meindl (02), currently adopted for use in a the strong belief of the Burlington decision number of graduate business courses, makers in the mid 1970s that through the defines a supply chain as: design and application of effective production and distribution structures “A supply chain consists of all parties (supply chains) and the optimal use of involved, directly or indirectly, in fulfilling a technology within these structures, the customer request. The supply chain not only firm’s business divisions would increase includes the manufacturer and suppliers, but their US market share as other firms no also transporters, warehouses, retailers, and longer could compete. The decision makers customers themselves. Within each of Burlington Industries believed that they organization, such as a manufacturer, the would not only survive but prosper in the supply chain inclu des all functions involved 21st Century. in receiving and filling a customer request. These functions include, but are not limited Burlington’s 1975 faith in the future to new product development, marketing, was based on a number of assumptions operations, distribution, finance, and about geo-political economy, the growth of customer service.” technology, and future relative opportunities for the investment of their capital during the Given the general definition of a last quarter of the 20th Century. In 1975 supply chain, it is useful to think of the Burlington Industries was betting that its management of a specific supply chain as large, optimized, vertically integrated, single encompassing a general body of technology ownership supply chain architectures that enables supply chain management. The coupled with the most productive production technology of modern supply chain and distribution technology available would management can be reduced to four basic be superior to any alternative competitive components. The first component is a supply chains, domestic or foreign, that conceptual paradigm that allows for the could be cobbled together in the 21st development of a theoretical structure for a Century. The strategy of Burlington class of supply chains. A second component Industries was to make the firm a capital and is a knowledge base of best practices for Article Designation: Scholarly 6 JTATM Volume 5, Issue 2,Summer 2006
  7. 7. given classes of supply chains. A third take more than a quarter century of supply component is a set of optimization tools that chain evolution to marry these three can be effectively utilized in the design and components with the slowly developing control areas of supply chain management. computer-based information components The fourth and most important of the that would result in the modern supply chain components is an effective computer-based theory and practice that is taught in today’s management information system that graduate programs of business. provides input to enable the optimization of the supply chain process. The Genesis of Modern Supply Chain Management 1965-1975 In today’s global economy Supply Chain Management is involved with the activities Throughout history the standard of: approach for controlling supply chain flow in a non computer-based environment is a 1. treating interconnected global work manual, paper-based system that serves as center nodes as networks that an i ventory control system and generates n produce flows of goods and services orders for materials up the supply chain. at minimal cost and maximum This manual system is always some variant customer satisfaction for customer of an order-point system that establishes consumption (paradigm), “when to order” based on average usage for the planned replenishment lead time plus 2. designing these networks for some safety stock to protect against greater optimal flow and economic return than average demand. Almost always, this on supply chain capital by manual system doesn’t work correctly and balancing, at the margin, the costs another informal system is the one that associated with inventory, capacity, really determines supply chain flow. This transportation and customer waiting informal system is the shortage list. This (optimization tools), shortage list overrides the dates that the formal manual system places on production 3. utilizing the benefits of concepts and purchase orders and establishes the true such as the push/pull boundary, need dates for items up and down the chain. cross-docking, risk pooling, JIT, Not surprisingly this order launching and product design, transfer pricing, expediting approach often generates a great mass customization, etc. to achieve deal of supply chain chaos because the optimal supply chain flow and orders generated by the formal manual economic return on supply chain system are of the lowest priority and are capital (best practices), constantly being overridden by expediting, thus making the formal manual system of 4. integration of “state of the art” little consequence. The resulting chaos database design and client-server described here has been given a name in network computer-based technology modern supply chain management; the with decision support modeling and bullwhip effect. The principle negative time-honored principles of optimal consequences of a large bullwhip effect are operations management to meet excessive work-in-process and finished supply chain goals (management goods inventories in addition to excessive information systems). production and distribution lead times. In addition to these main effects, production One can argue that most of the costs are negatively affected by excessive theory and decision support modeling was machine change-over costs, etc. For supply available to Burlington Industries in the chains where these main and secondary 1970s to support three of the above four effects are not perceived to be significant or basic components; paradigm, best practices, where other supply chain factors are given and optimization tools. However, it would higher priority, one lives and survives in the Article Designation: Scholarly 7 JTATM Volume 5, Issue 2,Summer 2006
  8. 8. face of the bullwhip effect. For those supply manually develop material needs, these chains where these main and secondary companies can only place orders effects are significant, minimizing this infrequently; say, once every quarter. bullwhip effect is at the center of modern Considering all the unplanned things that supply chain management. can happen between orders, the MRP approach doesn’t work a lot better than the The best practices of modern supply other manual, shortage list alternatives. management is an alternative approach to the one described above. This approach took The arrival of even the most basic on the first of several names, MRP, Material computers, IBM 1440s in the 1960s, and Requirements Planning, in the early to mid early 360 models in the late 1960s and early 1970s. In the early 1970s members of the 1970s made MRP a workable technique. American Production and Inventory Control These machines were able to explode bills Society (APICS) were actively developing of materials using new software packages the theory and applications of production such as MAPICS and PICS (products from and inventory control that would lead to IBM) in the early 1970s. An early APICS today’s practice of modern supply chain concept was the separation of independent management. Two of the most prominent of and dependent demand through a product- these APICS members were George W. structure file, Bill of Materials, along the Plossl and Oliver W. Wight. The 1970s was production-distribution supply chain. With the dawn of computer-based systems and this file it was possible for the computer to early-on Plossl and Wight saw the potential calculate the lower level inputs (dependent of these systems, in concert with APICS demand) for every supply chain level that practices, to solve a good number of the was created by a unit forecast of demand for world’s industrial problems relating to more a final product (independent demand). Thus, effective production and distribution of precision in determining these lower level goods and services. During this period, the requirements at all points up the supply major contributions of Plossl and Wight chain was possible. As computer capabilities were in visualizing ways the computational increased, a number of companies began to efficiency of computer systems could be recalculate production and purchase used to make production and distribution requirements as often as weekly and broke processes more value effective. The focus of the lead time, time phasing of this ordering the original efforts was the problems caused process into weeks of lead time that would by the practice of order launching and allow for developing precision in real order expediting as a means of managing supply “need dates” within the supply chain chain flow. They understood that under the processes. This ability to precisely best of conditions this practice was determine gross requirements at every level problematical and under the worst of of the supply chain, supplemented with conditions, it led to production and accurate inventory records of units currently distribution chaos. Their first-cut solution on hand or order at each level, created the approach was MRP. possibility for the computer to calculate a precise Net Needs to Produce/Order for MRP typically determines “when to every level of the supply chain. This ability order” based on schedules for the items that was an important first step in the use the material (dependent demand) and development of supply chain scheduling as while obviously superior to ordering based an alternative to order launching and on average usage, in practice, without the expediting. benefit of a computer system, MRP is a difficult method to use. Without the benefit Early on Plossl and Wight made the of computer aid, a company might spend as point that MRP was only a small part of the much as six to thirteen weeks to calculate solution to the problems caused by the the dependent demand requirements practice of order launching and expediting. manually. Because of the time required to An important second step to the Article Designation: Scholarly 8 JTATM Volume 5, Issue 2,Summer 2006
  9. 9. development of effective supply chain did exist and MRP would not generate valid scheduling was the practical development of priorities based on real need dates. Here, the the critical concept of defining and shortage list, with all its shortcomings, was controlling lead times at every point up and still the real scheduling system with all the down the supply chain. By definition, order excessive inventory, lead time and launching and expediting generates variable production changes associated with the lead times, up and down the supply chain, system. However, as people learned how to that often preclude lower level inputs being manage the master schedule concept available when they were needed. Under properly, MRP evolved from an ordering these conditions the pieces of the finished system into a priority planning system. product seldom can come together at the While the shortage list had in the past been right place at the right time. In order for this the real supply chain scheduling system, to happen lead times needed to be defined at with MRP, CRP and Master Scheduling each level of the supply chain; stabilized by technology acting in concert, shortages order release control through-out the entire could be seen in advance in fine increments production-distribution process. of weekly or even daily time periods, and acted on. In 1973 Plossl and Wight (13) offered a solution to the problem of variable During the 1965-75 period firms lead times. They argued the main focus of learned that the critical components of an the problem should be placed on the control MRP system include a computer-based of capacity. Instead of order launching as a system for maintaining bills of materials and means for generating production, production a computer-based system for tracking work- should be generated through a process that in-process and finished goods inventories up restricts released orders to a measured- and down the supply chain. They learned amount that is exactly equal to the capacity that the critical components of a CRP available to complete those orders within the system include a computer-based system for defined lead time. To accomplish this maintaining product routings files, and a approach to lead time control, available computer-based system for maintaining the capacity at each work-center level of the standard data required to determine the supply chain must be known so that the capacity requirements for a given amount of work load defined by the dependent demand material needs. They learned that the critical capacity needs at each supply chain level components of a MPS, Master Production can be measured against available capacity Scheduling, system include a front-end at that level. Plossl and Wight argued that if (independent demand) computer-based the dependent demand load is greater than forecasting system. With accurate MPS, it capacity to complete that load within was an easy step to develop an ATP, defined lead time then the total supply chain Available to Promise, system that would is optimized by pushing out the completion indicate to a given customer the amount of of the final product on the master schedule each product item that could be delivered to to a later time that is consistent with the a given customer at a given time. With an capacity that stabilizes lead times at every accurate MPS, an additional movement to point in the chain. DRP, Distribution Requirements Planning, closed the loop of supply chain planning. It In practice these early concepts was understood that all of these basic parts advocated by Plossl and Wight began to take must be integrated into a unified system hold for early adopters of the approach before one could define a supply chain as during the mid 1970s. With the introduction being “closed lo op.” The term “closed loop” of CRP, Capacity Requirements Planning during this period really had two meanings. systems, firms began to understand that if One meaning implied that the missing the master schedule contained more elements in an MRP system like capacity production than could really be made planning, and master scheduling, etc. were (inadequate capacity) then genuine shortages filled in. An additional meaning referred to Article Designation: Scholarly 9 JTATM Volume 5, Issue 2,Summer 2006
  10. 10. the feedback from all those involved with software module s that were later designed supply chain flow, whenever and wherever with modern client/server and relational there was a problem in the execution of the database technology to integrate supply chain master schedule plan. product/service flow with cash flow, labor needs, buyer/supplier management, With the arrival of closed-loop supply customer management, etc. into modern chain planning all types of production and supply chain management; modern ERP distribution firms began to understand the technology. importance of forecasting as a crucial input to the master schedule. Marketing sectors in By 1975 a new approach to supply those companies where closed loop MRP chain management was emerging. This new really was working learned that closed loop approach forced production and distribution supply chain planning was the best firms to become decision makers relative to marketing tool that had yet been devised. By the adoption or non-adoption of the working closely with production and emerging supply chain management distribution elements of the supply chain, a technology. The n approach required an ew master schedule that best met marketing’s entirely different approach to management. requirements, within the constraints of what The approach was based on well defined the supply chain could do, could be worked policies and procedures, discipline in out. The extension of the master schedule following these policies and procedures, into independent demand forecasting and accurate and robust amounts of data, data DRP meant that the supply chain could now management and modern computer-based translate real marketing plans into real information systems. To enter into the production and distribution plans. At this practice of modern supply chain point one could begin to think of work management in 1975 was to enter into a very center notes within network supply chains different world from what was previously and the proper way to integrate the best known. Entering into this new world was practices of “closed loop” planning into expensive, potentially dangerous because of supply chain management. At this point one disruption of the status-quo, and each firm could practice modern supply chain and/or group of firms was forced to consider management. the costs and benefits of moving, or not moving, to the modern supply chain Today, modern supply chain management approach. Each potential management is about more than order supply chain was forced to balance the scheduling. Today’s computer-based negative costs of the bullwhip effect against Enterprise Resource Planning (09) systems the costs of minimizing the bullwhip effects that run complex supply chains fold the with modern supply chain management entire supply chain business into one logical tools. For many the costs of obtaining whole. However, ERP is the logical modern supply chain management status extension of the Plossl and Wight ideas of were deemed prohibitively high relative to the 1970s. In his 1981 book, MRP II; the costs of living with the bullwhip effects. Unlocking America’s Productivity Potential In 1975 this was the case for the great (10), Oliver Wight does an update on his majority of textile and apparel firms. and Plossl’s earlier ideas. In the book Wight However, for a small number of large, discusses how these earlier developed ideas vertically integrated textile and apparel lead to improving a supply chain’s firms, such as Burlington Industries, the productivity of money (cash flow), movement to adopt modern supply chain productiv ity of labor, productivity of buyer- management technology was an integral part supplier relationships, productivity of of their future survival strategy. product and process engineering, productivity of management, as well as the productivity of supply chain profits. These Optimization Tools and the Development of ideas, of course, were the precursors of the the Supply Chain Network View Article Designation: Scholarly 10 JTATM Volume 5, Issue 2,Summer 2006
  11. 11. developing optimization tools for studying a At a typical APICS meeting in the wide range of business problems. As a 1970s one could engage in a conversation partial output of doing their academic thing, about how simple and straight-forward the linear and non-linear programming, flow ideas attributed to Plossl, Wight and many and Monte Carlo simulation, and network others were. One could argue that this optimization models, were a few of a simplicity retarded the growth of an number of other optimization tools that were academic treatment of supply chains during developed and/or refined by academics the 1970s, 80s, and well into the 1990s. during the post-World War II period. A most During the 1970s graduate programs in profound contribution, with respect to the business became enamored with development of modern supply chain mathematicians building mathematical management that emanated from the models to describe business systems. The operations research area was in the study of more mathematically elegant the model, the networks. Solution procedures that allowed more prestigious was the academic for the optimization of flows in capacitated perception of the author. Many graduate networks and solution procedures for business schools, for example, the initial finding longest and shortest paths through MBA program at Duke University, were networks would create the pre-conditions for organized around a mathematical modeling treating supply chains as a network approach to business problems called paradigm that could be optimized with Operations Research. The best business computer-based mathematical and statistical practice concepts of Plossl, Wight and many tools. However, unfortunately, like the other APICS related people were anything APICS best practices for supply chains that but mathematically elegant. These ideas were emerging under the leadership of were little more than adding, subtracting, Plossl, Wight and others, the efficacy of the multiplying and dividing in a basic vast kit of optimization tools available to the conceptual way. 1975 business practitioner dealing with supply chain optimization problems was at Thus, these concepts for improving the mercy of available data and the America’s businesses through a new view of computer-based, technology available for supply chain management flew under the dealing with that data. academic radar for a number of years and resided in such business practice societies as Available Supply Chain Computing APICS. Unfortunately, during this period Technology Under the Existing Paradigm there were minimal connections between academic and practicing business The mid 1950s to mid 1960s saw communities. Programs specifically the first two generations of computers that dedicated to the practice of supply chain could be used for business purposes. By this management did not become common in time IBM had taken a dominate position in graduate schools of business until late in the the world-wide development, production 1995-2005 period. and distribution of computing hardware. During this period computer models were Operations Research involves the designed as independent machines; often use of systematic quantitative analysis to aid custom modified for a particular customer. in the making of management decisions. A typical IBM 1440 had 8k of core memory Emphasis is placed on a scientific approach with two magnetic disks for data storage. It to decision making, with considerable was an adventure learning how to program reliance on advanced mathematical the machines and use them for a given techniques and a computer-based business task. Early adopters most often technology. By the mid 1970s academic used this limited technology as an aid in the schools of operations research, industrial area of accounting and financial records. engineering and schools of business administration had made great strides in Article Designation: Scholarly 11 JTATM Volume 5, Issue 2,Summer 2006
  12. 12. It was not until the mid 1960s, with of data storage was possible, albeit the arrival of IBM’s third generation of 360 expensive, with mainframe disks, the ability computer technology that one could first to utilize applications programs that required began to visualize the possibilities of a large amount of core memory was a modern supply chain management. Soon limiting factor to supply chain management after the arrival of the 360 technology, applications. during the late 1960s, one saw the birth o f the first inventory management software During the 1970s and 80s IBM systems; which were typically customized to continued to improve on what it had learned aid a given firm’s inventory control in the with its 360 family of computers. This manufacturing and distribution sectors. learning was incorporated into the System During this period US firms involved in 370 which first became a viable business product distribution began experimenting product in the mid 1970s. While the with the inter-relationships among machines got bigger and faster and multi- warehousing and transportation functions processor systems became common during involved in physical distribution the 1970s and 1980s, the basic machine management. Capital spent on improved architecture did not change. Computer-based warehouse facilities, processes, materials- information systems were “main-frame” handling equipment and emerging based. Each main-frame generation seemed computer-based systems, coupled with to have a different operating system and/or improved transportation processes, led to its own programming language. CPU core shorter response times and improved remained limited and expensive. As one forecasts of customer needs. By combining went through the 1980s, this limitation the two functions of warehousing and critically affected the economics of database transportation around computer-based management and retarded the emergence of information and control systems, the modern supply chain management. distribution process began to be optimized for overall cost and customer service. Modern relational database technology application only began during Also, with the aid of the IBM 360 the latter part of the 1980s and didn’t reach computer technology, some basic process significant potential until the mid 1990s monitoring and calculation applications (10). Low-cost CPU processes and began to appear in the late 1960s and early Client/Server distributed processing 70s period within various supply chain technology that would support effective components. But 1965 to1975 was a database management systems over a wide learning period for IBM as well as for its variety of conditions were only to be customers. IBM’s family members of 360 dreamed of in the 1970s and 80s. The model computers were all different in many software, middleware and standards to ways. Each had a different approach to an support modern supply chain optimization operating system. Each was designed with over the internet and local area networks different CPU magnetic core levels and thus were only to be dreamed of in the 1970s and implied bounds on the size of application 80s. Within this environment, firms that programs that could be run on the machine. wished to integrate computer-based systems, CPU magnetic core was very expensive, an with their indigenous limitations, into their IBM 360/30 with 32k of core memory was supply chain optimization practices were priced at about $120,000 of 1965 dollars. required to produce these systems “in- While expensive CPU core was the house.” These in-house projects required of weakness of IBM computer technology, big firms significant expenditures for either a and fast magnetic disk drives for data staff of data processing professionals or storage were its strengths. In the early 1970s hires of consultants to produce and one could purchase IBM 3330-11 implement the systems for them. mainframe disks of 400MB storage for about $110,000. Thus, while large quantities Article Designation: Scholarly 12 JTATM Volume 5, Issue 2,Summer 2006
  13. 13. In the 1970s, Material were pretty much, “what you see is what Requirements Planning (MRP) software you get,” adopters of COPICS were assured systems first appeared. Following the of future continuing hardware and software APICS best practices advocated by Plossl, support for the system. Wight and others these first systems phased the release of production and purchase IBM’s platform for delivering orders to match the flow of materials and in- COPICS was the 360/370 hardware process inventories to production schedules technology which by 1979 had evolved into for finished products. These first software the 370 System that was COPICS systems where both hardware and data compatible. From a marketing point of view dependent. The use of a given software IBM saw COPICS as a vehicle for selling a system implied both a given hardware good number of 370 and later to be platform and a database structure. Some developed hardware systems. But, as vendors of these software systems included, mentioned earlier, the 360/370 technology American Software, Arista, MacPack by had a fatal flaw; expensive core memory Arthur Andersen Consulting and IBM. that restricted the large data-robust application programs that are needed to Because of the hardware and data support modern supply chain management. dependent conditions, it was not surprising However, from hands-on learning gathered that the dominant hardware provider was from early adopters such as Burlington actively attempting to provide a total Industries, these first MRP systems package of hardware, software and data extensions gradually evolved into today’s management system to firms early adopting software systems for the support of an entire supply chain management concepts. IBM’s business supply chain; Enterprise Resource hardware was built around the 360/370 Planning, or ERP software. technology. Its software solution to supply chain management was COPICS Improved data communication and (Communications Oriented Production analysis techniques allowed for an Information Control System). The name increasing ability to make complex COPICS first appeared in 1972, not as decisions. The 1970s saw the addition of the software, but as a set of concept manuals. manufacturing, procurement, order These manuals were a conceptual management functions, and the integration explanation of what the authors felt should of an increasing number of other production- be included in an on-line computer-based, distribution functions as a few US firms manufacturing-based supply chain system. attempted the optimization of a total flow of From a careful examination of these concept materials through a production-distribution manuals, one can easily see the foundations network. These additions were aided by the of modern Enterprise Resource Planning or emerging technologies, growing at different ERP systems existing in 1972. However, it rates; database design, computer-based was not until 1979 that the Data Processing distributed processing, data communications Division of IBM released COPICS as a and computerized decision support systems. software package. The COPICS of 1979 was Because of the differential growth rate of the the latest in a series of evolutionary software set of technologies needed to support developments that included IBM’s answer to modern supply chain management, early the problems associated with flat-file entrance into applying supply chain designs database structures. IBM’s solution was a and methodologies was at best problematic hierarchical database structure which was and risky for the early adopters. named IMS. The COPICS software emphasis was to provide modular software While most of the principles of good that could be implemented one module at a database management for supply chain time using a standard database system and optimization were the same for the 70s and providing on-line management capability. 80s as compared to today, the computer- While previous field developed programs based technology, in particular the database Article Designation: Scholarly 13 JTATM Volume 5, Issue 2,Summer 2006
  14. 14. technology, to make use of these principles Depending on the system technology, was either lacking and/or expensive. different programming languages or Because of these conditions, incentives to programming techniques often were used embark on projects to move a firm toward from application to application. modern supply chain management were, except in a very specific cases, few. This functional dependency made application programs single -application Available Supply Chain Database specific and limited application portability Management Under the Existing Paradigm and scalability. Much “re-inventing the wheel” was required from application to Well into the 1980s file - application under this paradigm. Because management database structure was little applications tended to be single -application more than a computerization of the historic specific, little progress could be made in metal file cabinet with drawers and manila standardization. Little universality of envelopes stuffed with papers (11). Database software development was possible. This structure still exhibited the same data lack of standardization tended to limit the redundancy, data anomaly, flat-file structure expansiveness of supply chain networks by of the metal file cabinet managed by a work center location and by ownership. secretary. While each secretary was Under these conditions supply chain responsible for a particular filing system components needed a closely held unity of (database design) he/she was also control to optimize the flow of the network. responsible for managing that filing system. With the computerization of the metal file A firm operating under the conditions cabinet, one lost the secretary and gained a of this existing paradigm could expect to data processing programmer. In general, a place a relatively large emphasis on computer programmer was required to put computer issues other than the development data into a database and/or to get data out of of applications. One could expect to be a database. This programmer, through a required to maintain large staffs for high special program, placed the data that levels of data maintenance, and internal historically resided in the metal file cabinet applications development. All of which in some place, unknown to the user, on a would contribute to relatively high levels of magnetic medium, tape or disk-pack. If one systems overhead costs. It was under the wanted to see the data, one first had to go supply chain database and information find a DP programmer to write a special technology conditions of this paradigm that program to access it for the user. “Hardware, Burlington Industries initiated its 1975-1985 software and data dependence” were the technology adoption project. terms used to describe database technology of the time. Burlington Industries; Supply Chain Management Improvement Goals for 1975- Under this file -based system one 1985 thought of the systems application first and the data second. It was common for a In some market areas Burlington specific application to fit the database data Industries acted as a manufacturing vendor on the magnetic medium to the specific for other manufacturing firms in the apparel application. It was common to have and industrial products areas. However, in a common data used for multiple applications number of apparel, home furnishings and in multiple places. Because of data industrial products, it acted as a vendor for dependency, the structure of the data was various retail establishments. During the likely different from application to 1975-1985 period many of the large retail application. Because of hardware firms that were the customers of Burlington dependency, different applications on Industries, and the apparel manufacturers different hardware required different that were supplied by Burlington Industries, approaches for dealing with the data. were noted for their poor management. Article Designation: Scholarly 14 JTATM Volume 5, Issue 2,Summer 2006
  15. 15. Modern supply chain management tools Fabric division, loom scheduling and an were few-and-far-between for most large MRP system for developing warp beam retail operations. The 1980s and 90s were needs was a priority. For the Burlington characterized by a number of bankruptcies Domestics division an MRP system for and mergers taking place in the US retail developing assembly requirements for industry. Within this environment it was the bedding products was a priority. Working to goal of each Burlington Industries division these priority needs during the 1965-75 to be able to offer a given retailer a fully period, a number of computer-based supply vertically integrated supply chain with state- chain systems, developed for the specific of-the-art supply chain management needs of a given division, were a valuable technology that would allow for on-time- resource for Burlington Industries. delivery; customer service levels of all promised orders that approached ninety By 1975 Burlington Industries had eight percent. In addition it was the goal of developed a time series model, exponential these divisions to protect their position at smoothing, forecasting system that was retail by expanding vendor management of being used in its women’s hosiery division. their products at retail. It was understood The model was the principle driver of the that poor supply chain management at the division’s production and inventory control retail level was a potential Achilles heel for system. The model was fed by the data from the large vertically integrated manufacturing an internally developed, computer-based, firms whose business success was greatly customer order system and, although the affected by the effectiveness of their retail model had the capability to be run weekly, customers. In the absence of supply chain the needs of the hosiery division were such management leadership coming from the that monthly forecast update runs were retail establishments, it fell to the large sufficient. The model contained most of the manufacturing firms to supply that features, such as trend correction and leadership. seasonal adjustment capabilities that one would expect to have in a system purchased By 1975 Burlington Industries was on in today’s market. Also, the model had the the forefront of the APICS vision of what a capability of forecasting either at the item modern supply chain should look like. It had level or at an aggregate group level. For the been in partnership with IBM and had been hosiery division, the system had the an advocate of the APICS vision since the capability of taking group level forecasts mid 1960s. Together with IBM it had been a from sales management reconciling these key player in developing computer-based numbers with current sales numbers solutions for textile production and obtained from the customer order system distribution problems within the limitations and, using current percentages of item level of the IBM 360/370 technology. In the sales, convert group forecasts into item absence of software providers for this level, SKU forecasts. While developed technology, Burlington Industries had by specifically for the hosiery division, the 1975 internally developed an impressive forecasting system had the capability of array of software systems to meet its own being adapted for use in other divisions of supply chain needs. However, these systems Burlington Industries. This system were spread over multiple divisions with represented a good example of the questions little standardization. The variability in it faced with many of its internally system applications across the divisions was developed systems. Should Burlington adapt the logical outcome of each business systems it currently had developed for one division choosing to allocate its system division in other divisions or should new development resources in a priority way. software solutions, either internally or These priorities were different from division externally developed and installed be to division. For the Women’s Hosiery pursued? These questions needed to be division, a computer-based forecasting answered for a number of internally system was a priority. For the Menswear developed systems. The various divisions Article Designation: Scholarly 15 JTATM Volume 5, Issue 2,Summer 2006
  16. 16. had an inventory of MRP software designed purchased. This was the Burlington for various applications. There were various Industries supply chain focus during the types of loom scheduling and loom 1975-85 period. The mission goals for the monitoring software programs. There were supply chain focus during this period were various types of capacity planning systems the following: that met the needs of specific business divisions. Customer order service systems 1. Division by division, educate all that had been internally developed to meet levels of management and related the specific needs of each division were employees as to the benefits to available. Other systems included a variety Burlington Industries of closed loop of inventory tracking systems, systems for MRP production and distribution allocating finished inventory to customer systems. orders, and warehouse systems for picking and packing orders. 2. Identify the current supply chain CAPOSS, a finite scheduler system technology application successes of developed by IBM, was in place scheduling Burlington Industries as to the the dyeing and finishing needs of Burlington capability of technology transfer to Menswear. There were dyeing and finishing other Burlington divisions. monitoring systems in the Burlington Sportswear division. Also, various types of 3. Develop specific project plans for Decision Support Systems had been selected divisions to incorporate internally developed. Systems using linear closed loop MRP systems using programming models for loom scheduling, currently developed and newly aggregate planning and a number of arriving supply chain technology. additional problem solving areas had been Present project plans to selected internally developed and were used by a division management and all involved number of the different divisions. One of employees. these systems was used on a monthly basis as the principle input for determining 4. Implement project plans for production requirements in two of the firm’s selected divisions. Mexican operations. In addition, Burlington Industries had, with the help of outside 5. Repeat the process for additional consultants, developed for two of its divisions of Burlington Industries. divisions, state-of-the-art distribution centers. Some Successes and Failures of the Burlington Technology Adoption Strategy Given the decision to spend two billion dollars on new technology during the The Burlington strategy of supply 1975 to 1985 period, an important part of chain optimization began as what could be this project was the defining and called a “rifle” rather than a “shot-gun” optimization of the new supply chains that approach. A limited number of the firm’s would be a result of new technology businesses were chosen by corporate adoption. As new mechanical and chemical management to become examples for all the processes were being adopted the supply remaining businesses. As new mechanical, chain technology for each business division chemical and information technology needed to be defined and optimized to fit the became available to the US textile industry new processes. With supply chain and met the goals of profit improvements, technology the firm was not starting from either through increasing revenues and/or scratch. But it was time to analyze what had reducing costs, these selected business been accomplished in the various divisions divisions of Burlington Industries were and determine what technology transfer was encouraged to adopt the technology. A appropriate and what new supply chain second point of the strategy was to utilize technology needed to be developed or knowledge gained from the technology Article Designation: Scholarly 16 JTATM Volume 5, Issue 2,Summer 2006
  17. 17. adoption process in the more prof itable risk pooled inventories. During the 1975- divisions in carrying out a policy of 1985 period, experimentation with point of technology transfer to enhance the business sale techniques with several retail customers competitiveness of all businesses within the (JCPenney) was common for given company. During the decades of the 1970s Burlington divisions. and 1980s, the firm dominated the US consumer and military market for worsted For Burlington Menswear, yarn menswear fabrics. It had sizeable market production was driven by a highly share of the US textile home furnishings sophisticated materials and capacity business (carpets, drapery, upholstery, bed requirements planning system (MRP/CRP) and bath products) and had been an which had been developed in-house by innovator in the development of special Burlington staff. Fabric production was purpose industrial fabrics. One of its largest driven by a specially developed loom businesses, about 30% of total sales, was in scheduling, warp beam loading algorithm, the category of general apparel fabric. again, developed in-house. In addition, the Because of the world-wide structure of the dyeing and finishing processes were run by apparel supply chain the general apparel IBM’s finite scheduler software CAPOSS. fabric business was most vulnerable to both Aggregate planning was accomplished by domestic and foreign competition. Thus, an an, in-house developed, linear programming important part of the overall technology system and an in-house developed improvement strategy for the firm was to computer-based exponential smoothing improve its competitive position in the forecasting system that allowed for item supply of general apparel products through level and group level forecasts. This the knowledge and technology base forecasting system initiated the planning developed in other parts of the company. process for Burlington Menswear with data collected from a state -of-the-art customer Techniques and tools developed for order database management system and the example supply chains were to be acted as a Distribution Requirements diffused across other Burlington businesses Planning system (DRP) for the Burlington both domestic and foreign. New technology Menswear distribution center. Most notable adoption, including information systems about the information technology of the approaches developed for its domestic Burlington Menswear division was the high divisions were to be applied to international state of system integration that existed businesses in locations that included among the individual system components. Mexico, Canada, Germany and the UK. By 1985 conditions of state-of-the-art technology similar to the Burlington By the late 1970s one of the Menswear division existed in a number of companies of Burlington Industries, the other Burlington companies. operations of Burlington Menswear, contained state-of-the-art computer-based After, about five years of information technology. preparation that included restructuring its supply chains, redefining policies and This information technology was well procedures compatible with the integrated into packages of product and requirements of modern supply chain process designs that utilized state-of-the-art optimization, the Klopman apparel fabrics chemical and mechanical technology. division choose to configure its supply chain Operations information technology was around the implementation of IBM’s supported by computer-based monitoring COPICS software. This it accomplished and process control systems across the during the 1980-1985 period. The COPICS complete supply chain. Certain of the software emphasis was to provide modular products used principles of mass software that could be implemented one customization and postponement while other module at a time using a standard database more commodity items were produced to system and providing on-line management Article Designation: Scholarly 17 JTATM Volume 5, Issue 2,Summer 2006
  18. 18. capability. This modular approach was the management issues to those of corporate one followed by the Klopman survival. implementation, the last module being implemented about 1985. During the late 1980s Burlington Industries became the object of several It is fair to say that in its aggressive hostile takeover attempts. The end result of approach to technology adoption, the firm actions taken to guard the corporate did not always make the correct decisions. sovereignty of Burlington Industries against One example is the aborted project to attain these attempts, coupled with a range of other the world’s most modern customer order economic factors, led to a continuous down- servicing system that was undertaken by the sizing of the company, a yearly demise, and Burlington Carpet division in the US. In this eventual bankruptcy of Burlington Industries project the firm made a decision to enter in 2001. early with an existing hierarchical database technology, IMS by IBM. This decision was By the mid 1980s the world-wide made against an alternative decision to wait textile and apparel recession couple d with for an available relational database the rise of China and other Asian countries technology to be improved. Well i to the n as major players in a world textile and project and several million dollars later, the apparel economy led to additional rounds of IMS project had to be abandoned because it divesture of marginally profitable operations was the wrong technology for the given by Burlington and other US textile and application. Later applications of a fully apparel companies. During this time much relational database technology were more effort was placed on shoring-up the appropriate for the given Burlington productivity gains of its more profitable application and would have allowed the operations and focus on technology project to be successful. However, the adoptions was redirected to restructuring Carpet project shows the aggressive nature operations that they might generate that Burlington approached productivity sufficient funds in the short-term to survive. improvement through technology adoption With the NAFTA agreements and growing during the 1975 to 1985 period. This zeal for openings in the former communist world, technological improvement extended to its attention of surviving US textile and apparel international operations. companies, including Burlington Industries, shifted from productivity questions within a At the beginning of the 1980s, more static structural environment towards a Burlington Industries supported a wide geographical restructuring of their variety of domestic US supply chain operations within the new reality of a more operations. It also supported international open global economy. In general the cost supply chain operations in Puerto Rico, trade-offs of cheap labor and foreign Mexico, Canada and several countries across government supported currency Europe. World political conditions were manipulations in the emerging global textile such that Asian operations were not to be and apparel industry greatly outweighed the considered at the time. typical productivity enhancements that could be gained from technology adoption under For the international operations, the previous conditions. The end result for firm’s technology improvement strategy was companies such as Burlington Industries about to be carried out in M exico, Canada, was either forming partnerships with cheap Germany and the UK when a world-wide labor operations in the new economy or textile recession appeared in the early 1980s. declaring bankruptcy. This textile recession delayed these projects into the later part of the 1980s when the Lost in the negative aspects of the attention of Burlington Industries was demise and fall of Burlington Industries in redirected away from supply chain the 1990s, is the technology improvement Article Designation: Scholarly 18 JTATM Volume 5, Issue 2,Summer 2006
  19. 19. strategy undertaken by Burlington Industries IBM gave birth to the modern during the 1970s and 1980s. relational database management system. In 1970 E.F. Codd of IBM published a paper, Supply Chain Information Systems “A Relational Model of Data for Large Technology Under a New Paradigm Shared Data Banks.” In this paper Codd (03) proposed a new database architecture that If J. Spencer Love were alive today would free application developers from he would see a textile and apparel market having to know details about the data being structure similar to what he saw in 1950. managed. This architecture would allow The difference would be in the global applications programmers to fit the dispersion of the thousands of small under- application to the data rather than the data to capitalized mills acting as independent the application. Through proper database agents in the market place. Love’s design it was possible to have database inclination after World War II was to structures where one piece of data could be consolidate a number of the many small in only one place and be accessed by independent mills into consolidated, multiple users and multiple applications. vertically integrated structures that defined With the relational database structure it was product-oriented supply chains. His vision possible to develop relational database was that these optimized supply chains were management software that would free more efficient than virtual supply chains applications development from the ills of formed by ad hoc buyer/supplier market hardware, software and data dependency. In forces. In addition these formal vertical 1974 Chamberlin and Boyce of IBM chains could exercise countervailing market published a paper, “SEQUEL; A Structured power against monopoly forces acting at English Query Language.” This paper (01) retail. If Love was true to his vision today introduced the concept of a relational the supply chain management control algebra and a programming language process of these vertically integrated standard that would allow for the potential structures would be made considerably benefits of Codd’s database architecture to easier than was the case during the 1975-85 realize its potential. period for Burlington Industries. Between 1985 and 1995 a good number of Although IBM gave birth to the information systems limitations that modern relational database management Burlington Industries faced during the 1975- system it was not the major player in the 1985 period had been rectified. These development of modern supply chain advances in information systems management technology under the new technology, in particular, database paradigm. In the 1970s and early 80s IBM’s management technology, would greatly main business focus was on its 360/370 enhance Love’s ability to successfully carry hardware systems. These systems were out his vision today. getting bigger and faster and multi-processor systems were becoming common, however, The principle bottleneck that was the basic architecture of the hardware did restricting the potential of modern global not change. This hardware with its multiple supply chain management could be traced to operating systems, expensive core memory the process of database management under and minimal application software support, the old paradigm. What was needed was a was not an optimal platform for the coming technology paradigm shift that separated the of modern relational database management 1995-2005 period from the 1965-1985 systems. However, IBM became a player in period. What was needed was an improved 1983 when its version of a relational concept of database management. Here, the database management system, DB2, was answer was the arrival of an effective introduced on its MVS 370 technology. In Relational Database Technology! 1987 it introduced the DB2 technology for distributed systems. Article Designation: Scholarly 19 JTATM Volume 5, Issue 2,Summer 2006
  20. 20. However, a number of years were optimization process is funded with data- required for all the n ecessary elements to rich environments that allow for all support modern database management components of a given supply chain to see systems to fall into their proper place. The and know their potential relative to the arrival of inexpensive RAM, hardware market place. operating systems standards and local area networks that would transition into the The Burlington Industries Legacy and Internet were needed. In addition, Beyond; Summary and Research Questions communications standards for moving data across networks, and, most importantly, Post World War II J. Spencer Love software development of user-friendly and others looked at a structure of thousands relational database management systems of small, independent textile and apparel needed to be developed before the full mills in the United States and concluded that effects of the paradigm shift could be felt in future market success for the industry would the area of supply chain management. The come to firms with consolidated, vertically enabler of modern supply chain integrated, optimized, supply chains. management is modern supply chain Burlington Industries and others carried that information technology which includes business policy as part of their investment modern LAN and internet technology, strategies through most of the second half of modern Client/Server technology and the 20th Century. Today, potential capital modern relational database technology. investment groups look out on a global These technologies could only be dreamed economy containing thousands of small, of during the supply chain era facing the independent, textile and apparel mills across 1975-1985 Burlington Industries. that global economy and wonder if J. Spencer Love had the right idea. Under the conditions of the new Are there, or will there be, market paradigm one can fit supply chain incentives that will cause future applications to the data where one database consolidation of independent textile and can be common to multiple users and apparel mills into vertically integrated multiple applications. Applications are supply chains similar to those developed by portable and scalable. One can place firms like Burlington Industries in the last emphasis on applications development half of the 20th Century? If so, what rather than on non-application computer- geographical structure are these based issues. Development and consolidations likely to produce? In the implementation of supply chain absence of Burlington Industries type management systems can be accomplished consolidations, what is the likelihood of with a relatively small amount of overhead dynamic, virtual consolidations of cost. With the arrival of Internet technology independent textile and apparel mills into supply chains become more expansive in vertically integrated supply chains, where location. With standardization of total supply chain flow may be optimized, applications and database management becoming viable market structures. For both systems and software, ownership of supply cases, what role will supply chain chain work centers becomes more management technology play in the expansive. Location of work center nodes in consolidation process? a given supply chain has the potential to be a trivial concern. Work center nodes half-way With the demise of large vertically across the world can be treated as if they integrated textile and apparel manufacturing were next-door. In addition with the arrival firms during the 1990s, supply chain of the relational database, relatively structure for textile and apparel became inexpensive transactions data can be dominated by retail firms with monopoly collected and stored in data warehouses for power. This monopoly power is based on use with decision support system economies of scale and supply chain optimization tools. Thus, the supply chain Article Designation: Scholarly 20 JTATM Volume 5, Issue 2,Summer 2006

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