Welcome Readers !
I am Sheerapthi Ramiya, 2nd Year MBA from Amrita School of Business, coming back with this week's read ! Hope my readers are doing well and I hope you enjoy :)
The Silk Road - Mankind's first ever Global Supply Chain. The journey is insightful with how it came about into existence with a demand for luxury goods all across Eurasia. The journey of the Silk Road does not end here as there is a lot more to explore ! So hang on tight as things start to spice up. To those who have not gone through Part 1 of this marvelous journey of the Silk Road, I urge you to click the link below which directs you to Part 1 of the story and then come back here.
During the 13th century, Caravanserais (Rest houses) were strategically built along the trade routes. Caravans with their animals were able to stay in these caravanserais free up to 3 days with food, accommodation and health care services. Caravanserais appeared every 25-40km along the trade route (relatable to modern day Highway Rest areas). These Caravanserais also served as military stations, royal guest houses, prisons, refuge areas and religious meeting points. During the same period, the Mongol Empire emerged as the dominant military power. The empire covered the Chinese land in the East to the Persian Land in the west. This helped the Empire focus on intercontinental trade which gave it stability and security along the Silk Road.
During the 16th century, the rise of the Mughal Empire in India gained power and controlled a portion of the trade along the Silk Road. During the same period, the Iberian empire controlled the sea trade from Asia. During 16th -18th century, 3 alternative routes were established that linked the Ottoman Empire to India - 2 sea routes (Persian Gulf route and Red Sea Route) and 1 land route through Anatolia. During the 18th century, the northern trade route became an alternative to the route linking China, Uyghur Region, Persia, and the Middle East.
The Silk Road
During the 15th century, traveling from Herat in Afghanistan to Peking in China took about a year. The journey from Peking to Samarkand also took about a year. 9-10 months was the lead time from Istanbul to Central Asia. The travel time of the full length of the Silk Road was approximately 270 days (depending upon weather conditions). Considering today's scenario, we can reach those locations within hours !
While the trade route has expanded all over Eurasia at this point, how did Empires maintain this big Global Supply Chain network ? In my LSCM course taken by Hema Maam, I was introduced to the Risks involved when designing a global supply chain network and how to manage and mitigate them. I was surprised to know that the same concept of risk management and risk mitigation was applied back in during the existence of the Silk Road. We are talking about a centuries' old Global supply chain network.
Here are some of the risks that were involved along the Silk Road Supply Chain:
1) The Silk Road supply chain had to manage various financial risks such as interests, tariffs and tax rate risks. During the 17th century, Parthians and Sasanians who served as middlemen tried to monopolize the Silk trade. The states of Turkey demanded high tariffs just to pass through them !
2) The Silk Road had a great deal of supply chain security risks along the Silk Road. Various mitigation tools and methods were designed and operated at firm and across firm levels. Defenses were setup at private and international levels to protect them from banditry which also included guarding the caravans. The Seljuk Empire provided insurance policies to the traders to manage security risk across land and sea. Contracts were made between caravanners and merchants that guaranteed the delivery of the goods and reduction in transportation fees if delayed. Similar transportation contracts are carried by third party logistics in today's world.
Bandits forcing travelers to unload their animals
3) The players along the Silk Road were exposed to supply and procurement risks in different regions for various products. For example, European merchants had more risks of procuring goods from India than from China. India did not have well supplied trade centers. Merchants had to search for goods demanded if they wanted to procure from India. Merchants also had to make sure that the goods were manufactured and shipped to Europe according to the specifications of the customers.
4) Demand and price risks were widespread along the Silk Road. European regions saw a hike in demand levels for refined and raw sugar including silk. This resulted in the conversion of farmland to land dedicated to sugarcane and mulberry trees. Steam reeling of silk was widely operated in China and in the Mediterranean region, especially in the city of Bursa in Anatolia. Firms purchased cocoons at low prices and sold high in the market to be profitable.
Even though some risks along the Silk Road were mitigated, integration among various empires could not hold for long. The fragmentation of the Mongol Empire loosened the political, cultural and economic unity of the Silk Road. After the fall, other great political powers along the Silk Road became economically and culturally separated. The consolidation of the Ottoman and Safavid (Refer Map below) led to the revival of overland trade but was stopped immediately as war broke between the two empires. The Silk Road trade continued to flourish but was shattered by the end of the Safavid Empire in the 1720s.
Ottoman and Safavid Empires
Not all is lost as initiatives are being made by the countries that are along the Silk Road. A Railway line has been established in the year 1990 which connects China, Kazakhstan, Mongolia and Russia. The Eurasian Land Bridge, which connects these countries, is referred to as the "New Silk Road". The line connected the cities of Urumqi in China to Nur-Sultan in Kazakhstan during 2008. The line has been developed to provide freight services that connected Chongqing in China to Duisburg in Germany in the year 2011. This resulted in reducing the lead time from 36 days to 13 days. By the year 2017, the line expanded to London, Milan and Madrid.
The Silk Road Train Routes
A recent development to the Silk Road initiative is the "Belt and Road Initiative (BRI)" in the year 2013. It is a 1 Trillion dollar project carried out by the Chinese President Xi Jinping to connect China to Europe. The BRI includes the overland Silk Road Economic Belt and 21st century Maritime Silk Road with primary points in Urumqi, Dostyk, Nur-Sultan, Gomel, Belarussian city of Brest, and the Polish cities of Malaszewicze and Lodz. These cities will be the hubs for logistics, transportation and shipment to other countries to the rest of Europe. The BRI is considered to enhance regional connectivity between Europe and Asia and embrace economic development for participating countries. Some articles do mention that this initiative would dissolve trade relationships between Europe and USA as trade strengthens between China and Europe.
The Belt and Road Initiative
The journey of my blog on the Silk Road stops here as we have come across many interesting details and facts, sighting that the ancient trade route was complex with Supply chain risks but also a Resilient one. Moving goods in a successful way from East to West and vice versa along the Silk Road was a challenging task considering no aid from today's technology. Creating a strategy to manage performance and risks was similar to Global Supply Chain in today's world. To my readers, we can conclude that today's Global Supply Chain Network concepts and ideas were planted many centuries ago. Time has contributed to the growth and expansion of the capabilities of the 21st century Supply Chain.
I thank all my readers who took the time to come across the First Global Supply Chain in the History of Mankind. If you liked this blog and would like more blogs on the supply chains during the medieval times, check out my other blogs mentioned below!
If you like to know more on Logistics was taken care of during the age of Alexander and his great Conquest, click the link below!
If you would like to know more about the Logistics of the Kurukshetra War, click the link below !
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