Consider Henry Ford’s assembly line in the early 20th century. Materials and capital entered the system, skilled labor transformed them into cars, and distributors delivered them to customers. Under a traditional business model, a separate organization would administer each step—but was such a siloed approach necessarily the best one? In the late 1970s, Booz Allen examined that question and came to a conclusion that changed the way organizations around the world—from small companies to governments—conduct their operations.
In the late 1970s, Keith Oliver was a Booz Allen consultant working on a logistics and production planning project for the electronics manufacturer Philips. Keith observed that various elements within the client’s product flow—manufacturing, marketing, distribution, sales, and finance—were functioning as isolated silos with conflicting goals and processes that created inventory surpluses and inefficiencies.
For example, he discovered friction between Philips’ manufacturing and marketing departments: The former prioritized efficiency, which meant long lead times and large batches, while the latter prioritized meeting customer demand, which meant flexibility, variety, and smaller batch sizes. What Philips needed was a partner with operations expertise and technical know-how that could look at the problem in a new way and rethink and retool its system. Philips needed a partner like Booz Allen.
Booz Allen Vice President Keith Oliver developed the concept of supply chain management while working with Dutch electronics giant Philips.
