Supply Chain Control Tower

The Covid-19 outbreak has shown that unforeseen events can wreak havoc on the global supply chain. Supply chains are also vulnerable to natural calamities, public strikes, temporary closure of routes, amazone effect, geopolitical challenges, and the move to reshoring and nearshoring, business leaders are more aware than ever of the potential for disruptions in the supply chain. This may result in halting production, loss of business, and decreasing customer loyalty along with increasing pressure to deliver quality products and services. Therefore, supply chain managers need visibility to assess the impact of such disruptions and take immediate actions to arrange supplies from alternate sources.

Outsourcing has taken the supply chain beyond company’s manufacturing facilities. This demands the following:

• Effective collaboration and close monitoring
• Visibility to forecast and actual demand
• Monitoring and reacting to variations in demand
• Arranging supplies from alternate sources during disruptions
• Prediction of stockout and taking appropriate action to prevent it
• Rescheduling supplies during sudden drop in demand
• Avoiding overstock

This confluence of circumstances makes it hyper-important that supply chain teams know what’s happening in their supply chain right now, Why it’s happening, and how to address it quickly – before small disruptions become big expensive problems creating an issue in sustainable and resilient business continuation.

"Supply chain control towers" came into the picture for the visibility that is essential for organizations that need to navigate this complexity.

"A supply chain control tower is a cloud-based solution that leverages advanced technologies – such as artificial intelligence (AI), machine learning, and the Internet of Things (IoT) – to proactively manage supply chains." - SAP

"A supply chain control tower is traditionally defined 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." - IBM

“Control Tower capabilities as a concept, the result of people, process and organization facilitated by appropriately combined technology elements including Data-driven E2E supply chain insights and E2E decision making enabled by Visualization, Diagnostics, Predictive, Simulation, Responsive Collaboration, Learning and Automation”- Gartner

Simpler definition of Supply chain control towers:

A control tower is a real-time decision making system build using AI, ML, IOT, Cloud platforms. One that helps operational planners identify potential disruptions and help them in the decision making process to mitigate those risks for full understanding, resolving critical issues, and providing more visibility towards the overall supply chain.

In the evolutionary journey of supply chain maturity, control tower comes way down the line. Forced by the disruptions that happened because of COVID, we have seen some companies jump to a control tower without putting the fundamental tactical planning processes in place. This is akin to putting fuel in fire, with an automated fire extinguisher system in place. The cost of firefighting will simply skyrocket.

Four step process which can help in this:

Step 1 – Streamline Strategic and Tactical supply chain planning for the core operations.

Step 2 – Digitize Dealer activities (DMS), Warehousing operations (WMS) and Logistics operations (TMS). The real time feed from these solutions help control tower make better decisions.

Step 3 – Deploy a control tower with operational planning capabilities. The control tower will use feeds from all these systems to make better decisions.

Step 4 – Add IoT and predictive analytics capabilities to preempt some of the disruptions.

Supply Chain Control Tower has the following features –

Functional features

• Provides real-time, on-hand data about the items at stocking location (factory, warehouse, DC, store, port). This data is collected from WMS or inventory systems.
• Provides visibility into incoming supplies for an item-location combination. Supplies from purchase orders, stock transfer order, shipment, and deliveries are collected from supply chain execution systems.
• Provides visibility into demand for an item at a particular location. Demand can be from forecast, sales order, transfer order, outbound shipment or delivery. This data is collected from Order Management, TMS and Planning systems.
• Calculates projected inventory based on above data.
• Creates exception alerts for current and future low stock or stockout by comparing calculated future inventory with minimum inventory levels.
• Creates exception alerts for expected over stock situation by comparing calculated future inventory with maximum inventory levels.
• Captures and displays location of shipments provided by shipment tracking systems. This also includes container number, content of container, expected date of arrival, mode of shipment, and vehicle/flight/vessel number.
• Calculates early or late arrivals based on above data.
• Early or late arrival data is used for calculation of projected inventory for a particular period.
• If early/late arrival impacts inventory in terms of over, low or out-of-stock, then the user is alerted by exception.
• Provides visibility into demand-supply of other locations which aids planners in mitigating critical situations.
• Provides tools like chats and emails to collaborate with stakeholders to reach a resolution.
• Color-coded and graphical representations help planners in monitoring and quickly draws attention to critical situations.
• Some control towers provide user interfaces for external entities like suppliers, customers and logistic service providers for them to send related data and monitor their part.
• Provides action like creation of transfer order, change date of delivery to expedite or defer supply and communicate actions to relevant internal and external stakeholders.
• Calculates financial impact of delay in supply.

Technical features

• Centralized data management of entire supply chain.
• Provides APIs for integration with other systems like ERP, WMS, TMS, consignment tracking systems, and suppliers/customers/LSP systems.
• Real-time data gathering and information sharing.
• Provides analytical capability for drill down (example – purchase orders or sales orders for an item), calculate and display daily, end of month, end of week, end of quarter stock, color-coded and graphical display in dashboards.
• Real-time alerts for all supply chain disruptions and exception management.
• Predefined analytical dashboard. Capability to create new dashboards.
• Predictive data analysis and advanced analytics.
• Automated decision-making supported by machine learning to allow the supply chain to self-correct as needed.
• Role-based access control.

Types of supply chain control towers

Logistics/transportation control towers

Logistics/transportation control towers offer advance shipping notifications, delivery data and track-and-trace information — and visibility into inbound and outbound logistics.

Fulfillment control towers

Fulfillment control towers specialize in assisting package shipments, and are designed to help expedite orders while reducing the overall cost-to-serve.

Inventory control towers

Inventory control towers enable real-time insights into inventory management, with special emphasis on preventing inventory stock-outs and shortages.

Supply assurance control towers

Supply assurance control towers ensure there’s an adequate supply available, that more supply is planned for delivery, and other matters related to supply.

E2E supply chain control towers

E2E supply chain control towers are engineered to provide visibility across internal and external systems and processes, with applications for various departments or entities.

Possible challenges when establishing a supply chain control tower

Supply chain technology leaders primarily see control towers as extensively visual dashboards and, at times, fail to leverage them as analytics-driven, decision-support tools.?

Many companies lack end-to-end visibility, process orchestration and aligned decision making.?

Visibility is a necessary foundation and first step, but you will also need advanced deep analytics (predicting), providing scenario-based options for the next best action (prescriptive) and decision support to optimize the outcome.

These are both business- and technology-related challenges when starting a control tower initiative:?

• Lack of clarity on the span of control. Overcomplicating the span/scope of supply chain operations managed by a control tower can lead to unrealistic expectations about benefits.
• Resistance when breaking down functional silos for end-to-end visibility and control. Supply chain control towers are still functionally siloed in their setup and do not provide the anticipated end-to-end visibility, control and decision-making support. Data lakes are only a partial answer.
• Questions on actual data ownership. With many business partners providing data into the control tower, who owns the data? Who is allowed to see what data? Who evaluates the data? Who gets benefits out of insights? Who benchmarks the data?
• Required talent. Lack of clarity and/or required skills to work in a control tower environment.
• Ambivalence on build-versus-buy decision. Without a well-rounded understanding of what is required to design, implement, deploy and maintain a control tower, it is difficult to evaluate whether the control tower should be in-house (and there the options platform versus data lake), hybrid or outsourced.
• Inability to identify the right technology requirements. Investing a significant amount of time in reviewing and evaluating different technology platforms with multiple capabilities and functionality can result in analysis paralysis and the inability to make an investment decision.

Considerations when deploying a supply chain control tower

Data quality

An effective supply chain control tower depends on quality data, which directly influences the level of visibility that can be achieved, as well as the output of insights.

Practical and actionable outputs

For data to be useful, it must first be usable. Practical and actionable outputs ensure data is understandable and applicable to common activities and problems.

Mindset change management

Deploying a control tower typically requires much planning and significant changes in operation, and a concerted effort to get away from existing mindsets.

Conclusion:

A supply chain control tower is created by combining people, process, data, organization and technology to improve visibility, control and decision making.

Don’t look at a control tower as a stand-alone supply chain management (SCM) application, but rather as an integrated capability embedded in a broader SCM suite or tool. It can serve specific use cases along supply chain functional domains. AI/ML is being built into control towers to help make entire supply chain autonomous and self-healing.

-Credit to multiple sources help in this article

By: Sushant Kale

Supply Chain Technology Expert

(SCRM, Data and Analytics, BI, AI/ML)