Supply chain control towers have come of age and are proliferating on the market. Here’s what you should be looking for as you shop around and pick the best match for your organization.
Software solutions that extend the view of a company’s operation for supply chain planning, supply chain execution, and related functions, control tower solutions help centralize data and visibility. Once in place, control towers help companies improve efficiency, save money, collaborate with business partners, and coordinate activities across their end-to-end supply chains.
With 2020 still visible in their rearview mirrors and now focused on the pending post-COVID recovery, companies are more closely examining what went wrong during the early stages of the pandemic and working to close those gaps before the next disruption emerges.
For many, the focus is now on gaining higher levels of supply chain visibility, or, the tracking of in-transit parts, components, or products from the point of manufacture to their final destination. Armed with high levels of visibility, companies can improve and strengthen their supply chains by making data readily available to all stakeholders (including the customer).
“Until recently, supply chain control towers have been all about providing visibility to your immediate trading partners,” digital supply chain consultant Jenis Sheth writes in Supply Chain Game Changer™. “But with the development of multi-party, consumer-driven networks, advanced control towers now provide real-time visibility, collaboration, and powerful artificial intelligence (AI) capabilities to move beyond decision-support to decision-making and autonomous control.”
Enabling Strategic Priorities and Solving Problems
According to Deloitte, a control tower is a dynamic end-to-end capability that enables strategic priorities, solves specific business issues, and delivers measurable benefits by implementing three interwoven components:
- A way of working in the organization and beyond; insight-driven and exception-based.
- An organization that understands business issues and has the analytical capability to generate actionable insights and improve the process.
- A data insight platform that monitors transactional-level data from internal and external sources, automatically separating issues and prompting action by the user.
Control towers also help companies accelerate speed to market, manage margins, increase cost controls, improve asset utilization (including inventory), reduce lead times, and enhance risk mitigation. By “connecting the dots” across different data types and offering a near-real-time view of all supply chain activities, control towers serve as key competitive differentiators for the companies that are using them.
“The more a solution connects this disparate information into a single view – converging both planning and execution, as well as all order and flow types – and enables in-app actionability,” Deloitte writes, “the greater a business’ ability to drive process improvement, cost reductions, and on-time and in-full (OTIF) delivery.”
Not all control towers are the same. Some offer a broader scope of functionalities while others provide higher levels of supply chain visibility. In Why Your Supply Chain Needs a Control Tower for Navigating Uncertainty, BCG’s Justin Ahmad walks companies through the key elements of an effective control tower and highlights these six foundational elements to look for:
- Service. Predictive service alerts and real-time fulfillment monitoring are enabled by algorithms that flag risk based on key data feeds. This includes data related to both demand and supply. “Examples include point-of-sale data and inventory levels for aftermarket parts, demand trends, capacity utilization, inventory levels, and key indicators of supplier health,” Ahmad writes.
- Inventory health. Near real-time heatmaps provide the overall status of regional inventory at the product and plant levels, flag shortages, and offer visibility into aging inventory.
- Materials health. A current view of the inventory status of key components and materials, supplier capacity, and projected demand helps assembly plants proactively flag risks and inform planning on production capacity.
- Logistics. “Carrier performance, freight, and current and projected warehouse utilization are monitored in real time,” Ahmad points out, “making it easier to predict constraints and reduce avoidable costs.”
- Operations. Visibility into manufacturing performance trends, the organization’s capacity utilization, and schedule adherence provides early alerts to upcoming operational issues.
- Scenario planning. “Integrated demand and supply scenario modeling and trade-off analysis enable better navigation through uncertainty by considering upside potential,” Ahmad writes, “as well as risk.”
When selecting your control tower, look for a solution that provides end-to-end visibility across all supply chain partners (e.g., suppliers, contract manufacturers, transportation carriers, third-party logistics providers); real-time tracking through collaborative information sharing; early warning alerts and exception management; and predictive and prescriptive decision support.
Calling the control tower an “exciting capability that should be part of everyone’s supply chain strategy,” Sheth points to changing business demands and advancements in technology as the two key reasons all companies should be exploring and investing in control towers. “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.”