What is a control tower in supply chain management?
The world has not been the same since the COVID 19 pandemic, upsetting countless lives and businesses. Businesses that were already working hard to deliver goods and services had to find new ways to counter the impact of COVID 19. Businesses that could not either cope with the pressure or lost their momentum, were shut down.
99.9% of all businesses in the U.S. qualify as small businesses, collectively employing 47.3% of the nation’s private workforce. They've been one of the hardest-hit sectors amid the pandemic. Compared to January 2020, 34% of small businesses are closed.
World Economic Forum
While many supply chain companies were affected by COVID 19, the industry continues to survive and deliver services and, in many cases, has helped in mitigating disruptions. COVID 19 highlighted the vulnerabilities and heightened challenges facing the industry, underscoring the need for future-proofed and resilient supply chains.
In a recent survey, only 21% of respondents stated that they have a highly resilient network today, meaning good visibility and the agility to shift sourcing, manufacturing and distribution activities around fairly rapidly.
Access to supply chain visibility and intelligence is key to having a resilient and agile supply chain, but most companies lack supply chain visibility as their data is dispersed in various systems. What’s worse, each of these systems acts in silos and depends on external sources that are not integrated. This causes issues with consolidating the data and information in time and is an often repeated process.
What is a supply chain control tower?
IBM defines a supply chain control tower as a connected, personalized dashboard of data, key business metrics, and events across the supply chain. A supply chain control tower enables organizations to more fully understand, prioritize and resolve critical issues in real-time.
A control tower provides end-to-end visibility across the supply chain with particular focus on predictive disruptions. This is done by leveraging a mix of advanced technologies such as Artificial Intelligence and Machine Learning, in turn reducing or eliminating repetitive manual processes and converting data into actionable insights in real-time.
Functions of a supply chain control tower
Supply chain control towers help cross-functional teams within companies collaborate internally and externally with other business partners. Furthermore, control towers also allow for the improvement of data-driven decision-making and business outcomes. Supply chain control towers do not control any of the operations or communicate directly with service providers; they simply provide the required supply chain visibility across regions, countries and modes of transport.
Supply chain control towers work as a central hub for curating, analysing and integrating data from both the internal and external network of the company and through the use of supply chain analytics dispenses it in an integrated, consistent and standard format allowing companies to detect risks in advance so the risks can be mitigated before the risk manifests itself.
Unlike traditional supply chain management tools, supply chain control towers are centrally controlled and not linked to locations. Whether at origin or destination its role is to centrally collate and disseminate information covering order status, inventory and shipment status. Due to its complex nature, supply chain problems require quick action, whether it be increased demand for goods, order status, status of a purchase order, changes in logistics costs, or supplier performance. To address these challenges, supply chain leaders need data-driven facts and information. This is what supply chain control towers are designed to handle.
The types and benefits of supply chain control towers
The implementation of a supply chain control tower begins with the identification of the problems that a company is looking to solve. There are distinct benefits of setting up and running a supply chain control tower.
Fixed costs include warehouse/ equipment rental, utilities, loan repayments, while variable costs include items like labour, packaging, and fuel. These elements can vary based on cargo volume handled. Creating a matrix of cost vs. volume that incorporates both fixed and variable costs allows for a clear view of the costs and any unnatural deviations so that they can be tracked and stopped.
- End to end visibility and orchestration
- Scalable and adaptable
- Standardising operations and processes within the company
- Process improvements
- Mitigating risks
- Simplifying data landscape and complex systems
- Eliminating or reducing errors and manual processes
- Generate actionable insights using curated data
- Reducing dependence on 3rd party providers
- Increased revenue
- Ensuring customer satisfaction through specific solutions
Different companies configure their supply chain control towers in diverse ways depending on the scope of their supply chain. Some variations of supply chain control towers include:
- End to end – used to provide customers with real-time visibility across all their systems and processes including suppliers and on the operational side
- Logistics – provides specific visibility into inbound and outbound cargo operations, order processing, warehousing and distribution and also tracking and tracking goods
- Inventory management and fulfillment control towers enable supply chain managers to have real-time and comprehensive insights into the full spectrum of inventory including expiring/expired stock, shortages, excess, stock-outs and everything related to inventory and enable deliveries to customers on demand
- Supply chain assurance – created to ensure continuity in orders, quality, and timeliness of delivery
Many of the current solutions for supply chain challenges are being redesigned based on the lessons learned from the COVID supply chain disruptions. Supply chain control towers have been around for a decade but have resulted in slow gestation in many supply chain companies.
IDC's 2020 Supply Chain Survey showed that 85% of respondents were of the view that the supply chain control tower is either important or very important to the future of the supply chain. Next-generation control towers are expected to leverage the power of digital supply chain platforms and integrated technologies to make supply chains more dynamic, responsive, intelligent, resilient and predictive.
Supply chain managers can use control towers to enable automation, re-engineer supply chain processes, address inefficiencies, execute intelligent workflows and make their supply chains predictable and ready to handle any expected disruptions.
Control towers also provide companies with the option to improve their logistics insights through future-proofing and create the ability to respond to events in advance or in real-time; gaining a competitive advantage.