Scramble is on for short supplies--an opening for purchasing
By Jim Morgan -- Purchasing, 11/18/1999
The outbreak of war in 1914 had been expected for more than 20 years and in many ways the war was not all that unpopular in the U.S.--at first. U.S. business had been going through a great deal of uncertainty in the years leading up to the actual shooting. Labor troubles had gotten worse, taxes had risen, and the Democratic president, Woodrow Wilson, was scaring the tar out of normally conservative businessmen with his "advanced economic ideas.'At first the uncertainty over war rumors leading up to August 1914 were characterized by an economic slump. But quite quickly the slump disappeared behind stacks of orders for munitions, ordnance, and raw and semi-finished products. And as the war orders built up, the new upward movement of the economy was given a nudge from two turn-of-the-century inventions--the airplane and the motor car.
Very quickly demand began to shoot up as the shooting in Europe became more intense. Annual steel output, just under 30 million tons in 1910, began to climb steadily. By the time the U.S. entered the shooting war steel production was above 50 million tons. Production of aluminum was also going through the roof, partly because of war demand, but also because the price had dropped from five dollars a pound in 1885 to twenty-two cents a pound in 1910. New developments in communications and transportation made U.S. products more accessible on the world market. Meanwhile the chemical industry and the oil industry were riding twin booms.
World War I also was a period for purchasing departments to put their stamps on company business. As the fighting in Europe grew more intense, there was a furious scramble for supplies at any cost. In the early years of the war buyers faced shortages of bearings, tungsten, and many other raw materials that the warring nations in Europe began to embargo. Substitute sources and substitute materials had to be sought out.
As the war progressed and American involvement in it became more likely, executive managers began to seek out supply/purchasing specialists on ways to nail down critical supplies and avoid stockouts. This was also a time when many alert purchasing specialists began to seek out receptive executive managers with ideas about gathering supply availability information. Some even began to develop primitive world supply models.
The war days also raised purchasing's visibility in corporate organizational structures. As more and more purchasing specialists won recognition for their sourcing suggestions, they also were being sought out for ideas on subjects further afield. For a relatively small number of purchasing managers fast war-generated corporate expansion was involving them in projects dealing with questions considering the merits of centralization versus decentralization.
Transportation, which seldom was a responsibility for the purchasing department, was becoming an acute problem for many buyers. More and more often the search for alternative supplies and suppliers involved buyers in very critical routing decisions and negotiations (especially with the railroad industry) for prioritization of rolling stock usage.
By war's end in 1918 purchasing had become involved in wide skein of corporate participation involving such areas as inventory management, transportation, source selection, even make/buy decisions. In a few short years the newcomer on the industrial block had begun to win recognition on a corporatewide front.
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