The Past & Future of the Supply Chain

A dive into the history of the supply chain, and unsolved problems for its future.

James Hennessy

October 31, 2023

How We Work is an interview and essay series by Contrary dedicated to surfacing insights about important parts of the economy that have gone unnoticed or under-explored by the startup ecosystem. It profiles the people who power the modern world and the tools, systems, and processes they interact with every day.


Supply chains are the lifeblood of the global economy, connecting producers and consumers across vast distances. The T-shirts we wear, the phones we use, and the food we eat navigate complex routes from origin to destination thanks to intricate systems of manufacturing, storage, and transportation.

Today, these systems operate through the sophisticated interaction of technology, infrastructure, and human talent. Innovations in shipping containers, automation, and information systems enable the rapid flow of goods worldwide, but supply chains also rely on experienced professionals across logistics and operations to navigate the intricacies of global trade. This choreographed movement of goods across oceans and land did not happen overnight. This story will explore how supply chains came to function the way that they do – and the opportunities that still exist to make them better, faster, and more resilient.

Today’s Supply Chain

The supply chains that deliver the products we rely on today operate as highly complex, globally interconnected systems. Advanced logistics technologies and management strategies tie together numerous entities involved in moving goods from raw materials to the end consumer.

Most consumer goods are now manufactured internationally – predominantly in Asia – to reduce labor costs. Raw materials and component parts are sourced globally based on availability, quality, and price. A consumer electronics product like a smartphone may have silicon chips made in Taiwan, camera modules from Japan, batteries from South Korea, and be assembled in China.

Managing these international supply webs requires a freight forwarder to coordinate the end-to-end shipment. They arrange customs documentation, consolidate cargo from various suppliers, book ocean freight transport, manage warehousing, and handle final delivery. The rise of digitized global trade and logistics data enables real-time tracking of purchase orders, inventory, and shipments across multiple countries and entities.

Ocean container vessels transport finished goods and bulk raw materials between ports on different continents. The ships are operated by liner companies that schedule regular routes. At the port, cranes rapidly load and unload containers under tight schedules seeking to minimize ship turnaround times. Materials then flow by truck and rail to inland distribution hubs.

Warehouses and distribution centers provide critical nodes to consolidate, store, and redistribute goods. Sophisticated automated storage systems, picking robots, and inventory management software optimize their operations, and packages are sorted into pallets or individual orders for final delivery. Trucks transport orders from distribution centers to retail stores, where inventory management integrates with point-of-sale systems to replenish stock. Sophisticated analytics allow retailers to sense demand shifts and adapt their supply and pricing accordingly.

The rise of e-commerce required modifying retail supply chains to support direct-to-consumer delivery. Regional e-commerce fulfillment centers hold inventory closer to consumers to enable fast order turnaround. Robots assemble orders while delivery services pick up shipments for last-mile drop-off.

To enable seamless flow, companies and their supply chain managers leverage digitized systems to coordinate activities. Enterprise Resource Planning (ERP) software integrates procurement, manufacturing, inventory, and financial data to synchronize actions between departments, facilities, and geographies. Customer Relationship Management (CRM) systems track interactions and demands.

Technologies continue advancing supply chain capabilities. Internet of Things (IoT) sensors allow remote monitoring of inventory levels, equipment performance, and transport conditions. Artificial intelligence identifies inefficiencies and optimizes planning. Autonomous robots help automate warehousing and container transport.

While sophisticated technology powers the modern supply chain at various points, there are still many manual processes that fill gaps and coordinate processes. For example, freight forwarders still routinely email spreadsheets, PDFs, and scanned documents to share data between companies. The myriad providers in global logistics means phone calls and emails are heavily used to check shipment statuses, provide instructions, and resolve problems across time zones. New solutions are emerging to digitize end-to-end flows, but much progress is still needed to transition supply chain communication into the digital age.

A new generation of digital-first freight forwarding and logistics companies is emerging, led by startups like Flexport. These companies are attempting to combine logistics expertise with modern tech stacks to simplify global trade and improve supply chain visibility. They provide digital platforms that centralize procurement, documentation, tracking, and freight booking in one portal.

The last mile of delivery – getting a product from a transportation hub to the final destination – remains one of the biggest pain points in supply chains. New disruptive approaches are emerging to improve last-mile efficiency, speed, and sustainability. Retailers are offering buy online, pick up in-store, and curbside pickup options to give customers delivery flexibility. Micro-fulfillment centers located closer to urban areas allow faster order turnaround, while predictive analytics tools improve delivery route optimization. Such innovations provide faster, cheaper, lower emission alternatives to traditional parcel delivery. However, scaling these solutions faces ongoing hurdles around everything from costs and labor availability to public acceptance.

The History of Supply Chains

Source: Wikimedia Commons

For most of human history, supply chains transporting goods and manufactured products between distant points of the globe simply did not exist. Production was largely local, raw materials were sourced nearby, and products were made, distributed, and sold to meet the needs of the immediate community. The notion of coordinating systems and processes to deliver goods across vast distances emerged slowly over centuries of technological change.

The roots of the modern supply chain stretch back thousands of years to the ancient civilizations of Mesopotamia, Egypt, Greece, and Rome. Trade routes spanning Europe, Asia, and Africa connected distant cultures and enabled the exchange of goods. The Mediterranean region, in particular, became a nexus of trade and commerce, with civilizations like the Greeks, Romans, and Phoenicians playing pivotal roles. Olive oil, wine, and pottery were among the key exports of the Greek world, for example, and these goods found their way to markets as distant as India and Spain.

Roman road networks helped expand overland trade reach, and The Silk Road connected Rome with distant producers in China. Shipping capabilities slowly advanced to support Rome’s maritime ambitions and helped spur larger networks of trade. But supply chains still lacked any real integration, with fragmented coordination between producers, traders, and distributors occurring across vast geographies and time lags. Information flow was poor, and only somewhat improved by the rise of a powerful mediating class of merchants and traders, who could provide a degree of connectivity between distant markets.

In the medieval era, most economic activity was at the local level. Craftsmen procured resources and inputs from the surrounding area and sold their wares at market. Some luxury goods like silk and spices were traded internationally by merchants traveling along the aforementioned ancient routes. The establishment of guilds and market towns helped to standardize production and trade practices, creating the simple foundations for later industrial systems. Key trade cities emerged – like Venice, which served as an intermediary between Eastern and Western markets. But supply chains remained largely regionalized, with long-distance trade hampered by transportation and communication challenges.

The onset of colonialism opened up more regular long-distance trade. Chartered companies like the Dutch East India Company and British East India Company established trading posts and ports across Africa and Asia, importing luxury goods like spices, textiles, tea and tobacco to Europe. Complex commodity trade routes developed between distant ports, connecting various continents in a more intricate network than before. Insurance markets and financial instruments like bills of exchange emerged to mitigate the risks of long-distance trade, giving rise to an early form of globalized commerce – albeit one that was usually highly extractive and imbalanced.

Into the Modern Era

Source: Geograph

Modern supply chain management represents a coming together of these time-tested trade practices with logistics, a field that arose from the need for the planning and coordination of complex military maneuvers and transportation. Logistics, which has been practiced both formally and informally for millennia, was developed scientifically in the 19th and early 20th centuries alongside innovations in transportation, communication, and manufacturing.

The Industrial Revolution marked a pivotal shift. Mechanization increased manufacturing output exponentially, while the rise of the railroad made overland transport faster and more reliable. Factories could produce far more than what was demanded locally, and a nascent consumer class began to expect access to both commodities and manufactured goods regardless of geography. 

World War I and II necessitated major leaps in logistics, paving the way for the development of sophisticated methods to mobilize, track, and transport vast quantities of resources across continents, under tough conditions and often against tight timelines. These innovations trickled down into postwar commercial applications and changed the way goods were manufactured, stored, and transported. This helped lay the groundwork for modern supply chains. 

The development of the shipping container in the 1950s and 1960s radically transformed global trade. Rather than loading goods individually onto ships, standardized steel container units allowed for intermodal freight transport based on a global understanding of volumes. Containers could be moved seamlessly between ships, trucks, and trains, eliminating repeated handling of cargo and saving costs and time. This process of ‘containerization’ also introduced unified measurement of cargo – which not only systematized global trade but democratized it and helped it scale, providing access to smaller market players.

Other innovations were happening in parallel. Toyota’s “just-in-time” manufacturing system demonstrated the efficacy of closely coordinated, efficient supply chains and became hugely influential in future mass production. Pioneered by the Japanese carmaker in the 1950s, the system relied on close relationships with local suppliers to deliver components as they were needed on the production line rather than stockpiling inventory. This eliminated waste, lowered costs, and enabled flexible responses to demand changes. 

The development of information technology in the 1960s and 70s automated invoicing, tracking, and planning. By the 1980s, advances in personal computing allowed supply chain management to become a standalone operational function focused on integrating and optimizing the flow of products, information, and finances. Supply chain data standardization and enterprise resource planning platforms further enabled end-to-end coordination. These innovations – supercharged by the arrival of the internet – helped unlock one of the most enduring obstacles to globalized trade: rapid, efficient communication. 

Globalization accelerated in the 1990s as trade barriers fell and emerging economies like China became manufacturing powerhouses. As the United States and other developed nations continued long transitions into service economies, global corporations looked overseas to reduce production costs, enabled by trade deals like NAFTA and China’s membership in the WTO. Multinational supply chains spread across continents, creating complex, worldwide networks that required sophisticated coordination between suppliers, warehouses, transportation, retailers, and customers. In this brave new world, velocity was key – with even relatively simple manufactured goods and commodities needing to flow quickly across substantial distances.

The rise of the internet and e-commerce brought with them new distribution and delivery challenges. Traditionally, retail supply chains were designed to move pallets and cases to stores – not individual items to homes. Home delivery capabilities became critical, and regional distribution centers were supplemented with smaller local fulfillment centers to get closer to customers. As a result, inventory deployment, picking processes, packaging, and reverse logistics had to be reconfigured to support new, faster supply chains. Consumers began to demand more rapid delivery, with same-day service becoming an expectation thanks to a new generation of online retailers such as Amazon. 

The 2010s and 2020s saw a new focus on building agility, flexibility, and resilience into supply chains. Events like the COVID-19 pandemic revealed the fragilities in globalized, interconnected supply chains, with just-in-time manufacturing and lean inventories putting many companies along the supply chain in a difficult position. Lockdowns and border closures disrupted flows of raw materials and finished goods worldwide, and it became clear many companies had concentrated too much manufacturing in China without backups in place. For example, shortages of semiconductors, production of which was clustered in Asia, had widespread ripple effects including crippling auto production.

In the pandemic's wake, more are increasing regional supplier diversity, expanding safety stocks, and stress testing for widespread disruptions. COVID demonstrated that cost-focused networks must balance efficiency with flexibility, redundancy, and localization options to withstand systemic shocks.

The Workers Behind the Supply Chain

Source: Flickr

While technology drives much of the advanced coordination required for modern supply chains to function, they ultimately rely on people. Human labor and accumulated knowledge have become key to ensuring the continued function of global trade and logistics. The size of the industry is immense and includes a range of people working in numerous capacities. In the US alone, more than 3.5 million people work as truck drivers – to say nothing of the millions more working in other jobs at various points in the supply chain.

Some of the key roles include the following:

  • Supply chain managers oversee the strategy, planning, and execution of end-to-end supply chain operations. They manage relationships with vendors and logistics partners. Supply chain managers require strong analytical and communication skills to coordinate complex global networks.
  • Logistics managers are responsible for the daily warehousing and transportation activities that move goods through the supply chain. They manage route planning, freight rates, fleet maintenance, inventory control systems, and distribution center operations. Logistics managers optimize efficiencies in the physical flow of materials.
  • Procurement managers source and procure the raw materials, components, equipment, and services required for manufacturing and operations. They identify suppliers through market research, evaluate proposals, negotiate contracts, and develop supplier relationships to balance cost, quality, and reliability.
  • Customs brokers, who navigate the complexities of international trade and import/export regulations. They ensure proper documentation is filed and duties are paid to smoothly move cargo across borders.
  • Production and factory workers, who produce finished goods on assembly lines and at workstations using mechanical equipment, robots, and their hands. They follow repeatable procedures and processes under the guidance of engineers and supervisors.
  • Warehouse workers pick, pack, and ship orders in warehouses and distribution centers. They replenish inventories, follow inventory management system directions, and ensure the right products are efficiently routed to customers.
  • Cargo ship crews, who operate merchant vessels transporting containerized cargo around the world. Deck crews load and unload ships in port cooperating with longshoremen. Engine crews maintain propulsion systems keeping ships on schedule across vast oceans.
  • Truck drivers transport goods over land by driving heavy-duty tractor-trailers. They move raw materials from suppliers to factories, deliver finished products to warehouses and distribution centers, and ship orders from fulfillment centers directly to customers. 

While technologies like AI, robotics, and automation have changed and will continue to change the way we work, people still power global supply chains.

There are several key reasons for this enduring human contribution. Global supply chains involve highly complex networks with numerous stakeholders, all of whom are trying to reconcile trades, assets, and irregularities. This makes end-to-end automation a difficult problem.  Freight forwarding, for example, requires flexible arrangements of customs documentation, overseas shipping, insurance, tracking, and final delivery across changing situations. Humans excel at pattern recognition to identify anomalies and handle exceptions. 

Relationships between shippers, carriers, regulators, and suppliers also rely on nuanced communication and trust difficult to program. Activities like loading containers require spatial reasoning and manipulation dexterity hard to replicate in robots. While AI and automation are gaining ground in supply chains, many tasks still benefit from human judgment, adaptability, and skills.

The Future of the Supply Chain

Supply chains are evolving from linear models to dynamic networks able to rapidly adapt to disruptions and shifts in demand. New technologies will enable resilience, sustainability, and customization.

Innovations in IoT and digital ledger technology will provide end-to-end transparency from raw materials to the consumer. Every product, package, and transport vehicle will become intelligent through sensors and connectivity. This will allow real-time tracking and condition monitoring to quickly identify issues. Artificial intelligence and advanced analytics will move supply chains towards predictive capabilities as opposed to reactive ones. Machine learning will help identify weaknesses and inefficiencies for correction. It will also allow optimization and autonomous decision-making without the need for human input.

Robotics and automation will transform warehouses into highly automated environments needing minimal human intervention. Fleets of driverless vehicles will enhance short-haul freight delivery while drones may manage last-mile distribution in some cases. Autonomous cargo ships could move goods across oceans. 

With human roles shifting towards oversight, problem-solving, and relationship management, supply chain training will emphasize leadership, critical thinking, analytics, and communication skills. Cross-disciplinary collaboration and risk management will be increasingly vital. Meanwhile, consumer expectations and preferences will drive greater personalization. People will continue to demand product customization, same-day delivery, and new purchasing experiences.

Another trend gaining momentum is reshoring – in other words, bringing manufacturing back closer to domestic markets. Many companies are re-evaluating the risks of long overseas supply lines. Reshoring allows closer oversight for quality control and intellectual property protection. It also insulates from trade wars, tariffs, and shipping disruptions. Technologies like robotics and 3D printing may help make local automated production costs competitive.

Overall, the future points towards supply chains that behave intelligently in real time. They will self-orchestrate across a digital mesh of providers, customers, and physical infrastructure. Efficiency, sustainability, and resilience will merge through technology, innovation, and human ingenuity. Supply chains will become robust, self-sustaining networks transporting goods and services across the globe.

Unsolved Problems & Opportunities

Driving towards this future, supply chains present major unresolved problems and opportunities founders can view as opportunities to disrupt established players. 

Legacy supply chains built around forecasting often lack visibility and responsiveness when confronted with unexpected disruptions like global pandemics, resulting in shortages and stockouts. Startups could leverage AI and machine learning to create dynamic optimization and rerouting, building agility and demand-driven adaptability into systems.

The transportation of goods contributes significantly to emissions, waste, and pollution. Packaging clogs landfills while freight transport drives climate change. Freight alone contributes 8% to global greenhouse gas emissions, and as much as 11% if warehouses and ports are included. Opportunities exist to develop smart sustainable packaging and enable circular flows capturing used materials for recycling or upcycling. Startups could provide green tech solutions for container shipping, ports, and freight transportation such as renewable energy sources, electrification of fleets, and fuel efficiency tech.

Inefficient logistics remain a problem for supply chains, with empty backhauls, uneven asset utilization, bad routing, and poorly optimized mode and carrier selection leading to inflated costs. Startups might apply predictive analytics and optimization algorithms to reduce miles traveled, improve load factors, consolidate shipments, and select cheaper, faster modes.

Complex global networks involve numerous suppliers and vendors, but a lack of visibility exposes companies to risks of unethical labor, quality issues, IP theft, and counterfeiting. Founders could consider better solutions supply chain mapping, risk assessment, supplier auditing and vetting, and production monitoring to improve integrity.

As described earlier, many supply chains rely on fragmented legacy systems and manual processes that introduce errors, lags, and lack of coordination. True end-to-end visibility is hampered by siloed data and incompatible systems. Startups have an opportunity to develop platforms that integrate procurement, manufacturing, inventory, transportation, and delivery on a common architecture. Though many supply chain tech startups have pursued this north star, it remains an unsolved problem on the whole.

The evolution of supply chains has been driven by human ingenuity, advancing technology, and the demands of an interconnected global economy. As consumer expectations continue to rise and new disruptions emerge, supply chains must become even more agile, sustainable, and transparent. 

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