Since the early 1990s, companies have been scrambling to optimize their supply chains, using technology to wring out inefficiencies. Today this relatively mature trend forms the foundation for a dramatically richer economy, and it has transformed the strategies and priorities of global business. Over the next few years, we'll all reap the rewards for the enormous investment that's already been made, as well as the investments yet to come.

Let's examine the facts and implications related to this trend.

As companies have grown more intertwined through joint marketing ventures and outsourcing, the need for supply chain management has become a top priority in many businesses. Faced with shorter product life cycles, demands for greater product variety, and globalization, executives have shifted from thinking in terms of managing the organization to managing the entire supply chain — from the design of the product to its disposal by the end user.

Companies have spent tens of billions of dollars on supply chain management over the past decade. In the process, major trends in management thinking and priorities have been driven by the supply chain management imperative. Perhaps no one has done a better job of studying and clarifying these trends than Laura R. Kopczak and M. Eric Johnson of Dartmouth. Kopczak and Johnson have boiled down the enormous changes that have taken place into six major trends, as follows:

1. Management has shifted its focus beyond trying to get the different functions of the company to work together smoothly to bring products to the market. Now, the emphasis is on coordinating activities across companies to bring products to the market.

2. Instead of worrying only about how to reduce the costs of producing and distributing their products, business leaders now have another concern: minimizing the costs of matching supply and demand. This is where Trend #3, Reintermediation, plays out in the business-to-business world. With the value chain needing optimization at every stage, middlemen have used their expertise to reestablish and redefine their roles.

3. The driver has shifted from supply to demand. Executives used to respond to yesterday's market demands and try to satisfy them by supplying enough products today. Now they are focusing on collecting information about what the market will demand tomorrow...