A supply chain control tower is not a physical tower or object—it’s a centralised hub containing all the technology, organisational tools and processes needed to capture data from all stages of the supply chain, from the manufacturer to the consumer. Supply chain control towers allow you to operate smarter and more efficiently throughout a complicated supply chain network. In doing so, you deliver greater benefits to your consumers while reducing costly exceptions.
A control tower is a resource that provides visibility into the functioning of supply chains. While this term applies most directly to immediate trading partners such as customers and suppliers, its relevance also extends to broader levels of end-to-end supply chains. Through the availability and capture of relevant supply chain data, control towers support capabilities such as real-time updates of supply chain activity, use of predictive analytics to identify potential supply chain disruptions, synchronisation and alignment among organisations comprising supply chains and the creation of centralised decision-making that focuses on fulfilling the needs of end-user customers and consumers. At a basic level, a robust Control Tower will serve the following functions:
- Real-Time Order Planning: To improve customer service levels, your Control Tower should be able to capture and leverage key data in real-time, such as the delivery time, inventory availability and transportation costs. Doing so allows you to always select the best, most cost-effective order flow.
- Exceptions Management: Your Control tower should also focus on consistently delivering OTIF orders by tracking supply chain milestones and sending alerts when issues arise. More importantly, your solution should allow you to take action directly within the app.
- Granular Visibility: In addition to track and trace, your Control Tower would ideally provide granular visibility into the details of each order to effectively fulfill on every required element.
What is the difference between control towers and traditional freight or distribution management?
Traditional freight and distribution management are usually managed from either the point of origin or product destinations and as such have physical locations. Supply chain control towers are not tied to a location, nor are they confined to a single part of the network hierarchy. Instead, a control tower focuses on gathering and storing real-time data from the company and its third-party logistics provider. The tower offers a single point of contact for all data points, increasing supply chain visibility by using artificial intelligence systems to run real-time analytics. On the other hand, traditional freight centers on transportation and distribution. With a control tower, your decision-making processes are informed by factors as diverse as freight forwarding, tracking, tracing, exceptions alerts and delivery scheduling, among others.
How do control towers add value to supply chain management?
Control towers add value to supply chain management through easy access to big data and real-time analytics. Leveraging the power of supply chain data, a company can do the following:
- provide end-to-end supply chain visibility to all stakeholders
- minimize supply chain risk, costs, and exceptions
- encourage collaboration throughout the chain
- respond to and resolve supply chain disruptions in real time
- use predictive data for more accurate forecasting and decision-making
- track fuel consumption, vehicle speed, location, and delivery-time estimates
Using a control tower to optimise your supply chain makes your company more agile as it can respond rapidly to market changes and customer expectations. Big data gathered and analyzed by the tower can result in a reduction of transportation costs and improved supply chain performance. New technologies and service providers now make it possible for companies to turn their supply chains into the end-to-end business operating strategies needed to meet today’s challenges and demands.
How can companies benefit from the Control tower?
Without a supply chain control tower, a company with a complex supply chain to manage is left to rely on human assets to manually compile information to guide improvements and mitigate exceptions. Relying heavily on human assets to complete the tasks a control tower can do very quickly on its own is costly, time consuming, inefficient and limited in terms of what is achievable overall. To add, collected data is left to human interpretation, leaving greater room for error. The AI-driven systems of a control tower can not only instantly aggregate data but also connect it and expand it though predictive analytics and real-time data processing. These capabilities facilitate better decision-making across all parts of the supply chain, leading to cost reductions, more efficient operations and less waste.
Big data is a control tower’s stock-in-trade, covering all aspects of the transportation process from on-time delivery and inventory levels to supply chain disruptions and exception management. Assisted by powerful machine learning processes, control towers inform and advise stakeholders throughout the supply chain, providing enhanced visibility and advanced analytics when you need them the most. At a minimum, a supply chain control tower should provide the following:
- enhanced visibility of the end-to-end supply chain to all suppliers, subcontractors, transportation carriers, third-party logistics providers, and consumers
- real-time data gathering and information sharing
- real-time alerts for all supply chain disruptions and exception management
- predictive data analysis and advanced analytics
- automated decision-making supported by machine learning to allow the supply chain to self-correct as needed
Control towers offer a Software-as-a-Service (SaaS) solution to companies dealing with complicated national and global supply chains. When properly executed, the impact of a control tower is far-reaching, affecting everyone from delivery drivers to supply chain executives. Control towers can change how you operate at all levels of the supply chain. Examples of a control tower’s impact on supply chain management include the following:
- reduced time between exception identification and problem resolution
- reduced costs across all aspects of the supply chain
- a complete bird’s-eye view of the entire supply chain
- increased speed, reliability, and adaptability of the supply chain network
- increased sharing and collaboration with trade partners
- as-needed adjustments to trading terms and contracts
These factors must be considered throughout the creation of a control tower, which progresses through the following steps:
- Visibility improvement: The first step is to complete simple, reactive fixes to improve supply chain visibility. Such fixes should be completed without major disruption to the existing chain.
- Integration of information technology: Once supply-chain visibility is improved, integrating information technology into the supply chain must occur for the subsequent processes to happen.
- Performance monitoring: Next is the launch of data-based decision-making capabilities with a standardised set of key performance indicators, logistics data and basic analytics. At this point, the most important factor is data gathering for future use.
- Horizontal processes: After the control tower is set up to monitor supply chain performance, focus switches from managing vertical silos to managing horizontal processes.
- Synchronizing the network: At this stage, data flows unhindered to the tower, where machine learning can perform complex real-time and predictive analysis.
Every supply chain is vastly different and therefore requires different services from a supply chain control tower. The length of the supply chain itself typically does not have the biggest impact on control tower assembly times. Rather, assembly times are predicated on the number and nature of all moving parts—from raw material transportation to final delivery—that come together to form a supply chain. In other words, the more complex a company’s supply chain is, the longer its control tower takes to set up. Supply chain control towers can take different forms in terms of functional footprint and scope of control. They can be built to drive specific business outcomes then evolve over time to address additional issues and take the supply chain organisation to whole new levels of maturity and performance. Here are three illustrative examples of control towers being used to bring about particular business outcomes:
Establishing a control tower is a journey that must be guided by a clear understanding of where the real value-creation opportunities lie. When building a supply chain control tower for the first time, it is a good idea to begin with a limited scope in order to prove the concept and generate momentum. A leading consumer goods manufacturer, for example, decided to get started by designing a control tower to reduce end-to-end cost to serve in a single product line serving just one market region. When the company met its target of a 15% cost reduction in inbound logistics, manufacturing, distribution, and inventory, it then rolled its control tower out to the rest of its global business. Control towers of the kind we have described are a relatively new concept, but they are already demonstrating their value in helping to solve some of the most vexing challenges facing supply chain managers today.
The demands of business and the advancements in technology provide both the need for and the ability to deliver a Digital Supply Chain. To make that end-to-end Supply Chain work, real Control Tower applications are required. With a Control Tower enabled by full visibility across the entire supply chain, there is an opportunity for more efficient management and decision making than ever before. End-to end supply chain alignment, collaboration, and orchestration, and the ability to use real time information to respond with quickness and agility to unexpected events—these are indispensable capabilities for supply chain leadership today. Given these requirements, we believe that one of the most powerful tools there is for boosting overall supply chain performance and maximising the value the supply chain delivers to the business is a supply chain Control Tower.
This article has been authored by V Raju, Senior Vice President- Contract Logistics, Avvashya CCI Logistics Pvt Ltd.