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What is a Supply Chain Control Tower?

The concept of a Supply Chain Control Tower has been bouncing around since before the start of the new millennium – and the idea seems obvious at first. An airport control tower visually monitors and manages the use of the resources under its control (runways, gates, and airspace) through observation of, and control, over the aircraft that are either due to arrive, waiting/ in process, or due to depart.

 

Aircraft, together with their passengers and freight, function like products and parts in a supply chain.  So if we extend the concept, a supply chain control tower would provide tools for a supply chain organization to monitor and manage its resources (receiving and shipping docks, warehouse, manufacturing) through visibility to/ control over its inventory. The closest analogue to a “flight” would be a scheduled receipt or shipment (against a purchase or a sales order). We’d expect a supply chain control tower, at least as a starting point, to be a place (perhaps an application running on a corporate intranet, perhaps a physical place with display screens) where people could view displays of expected inbound receipts, customer shipments that are due to be made, manufacturing orders, and on-hand/ in-process inventory.

 

But that isn’t exactly what has happened… the concept has been redefined in at least three different ways:

  • Some supply-chain software companies proposed their existing solutions as control towers – essentially redefining the concept to fit what they already offered. Usually these solutions at least provided useful displays of order status and supply versus demand. The value for their clients was provided by improved visibility, sometimes by providing a central location that combined data from multiple ERP systems.
  • Some companies focused more on the physical aspect of the control tower, and conceived of it as more of an organization, or at least a loose confederation of people, tools and processes. There was less focus on getting all of their data into a common system, and more on getting key information visible in a common workspace.
  • Many companies used the concept as an umbrella term to cover those capabilities and information displays that they felt were most critical. They asked the question: “Where do we most need more visibility?” Often, they followed that question with “What kind of visibility would be most helpful?” For instance, a company with thousands of inbound and outbound shipments each week probably needs more than just a list – they may want to know which shipments are past due or likely to be late, critical to future deliveries, etc. Someone who is managing one of those processes may start out with a simple graph of a key performance indicator (on-time receipts or customer service level, for instance) and then may “drill down” to the data that is causing the metric to be less than desired.

 

It isn’t surprising, therefore, that every implementation of a control tower seems to be unique. The core concept of visibility has been preserved in every control tower I’ve seen, but most companies have focused on aspects of their supply chain that needed improved control, or where they saw an opportunity to improve performance (which are sometimes the same thing).

 

I think the reason for this is that it’s hard to sell simple visibility as a standalone capability. Just being able to see inventory and order information neatly organized on a screen won’t automatically increase revenue, improve customer service, or save money – at least at most companies. The present economic climate doesn’t seem seem to support investments in new capabilities just because they’re useful and will help people in their jobs.

 

Your company will probably focus on the sort of visibility that will pay bills, either by increasing revenue or by reducing expenses – which may permit you to include basic inventory/ order/ imminent receipt-and-shipment visibility as part of a larger project. For example, IBM’s internal “Transparent Supply Chain” program[1] added advanced analytics and other tools to the same data that would be needed for visibility, to significantly reduce supply chain disruptions, improve worker efficiency, and provide ongoing monitoring capabilities.

 

What kind of visibility “pays the bills?” One company has said that the intent is to provide visibility for decision making aligned with a company’s strategies, but that isn’t exactly what I’ve seen. Most commonly, companies want to answer two questions:

  • Where’s my stuff? How much do I have, and where is it – so I can figure out what I can ship (or build) today and tomorrow. This sounds like the basic “visibility to inventory” goal mentioned above, but it usually solves a more specific problem – managing SKUs at remote distribution centers, for example; or managing critical parts stored at 3PL-managed warehouses that need to be routed to EMS providers.
  • What risks do I need to be aware of and respond to? This can be relatively mundane: you may simply want to expose where you have holes in your supply or demand that could endanger the S&OP plan two or three months from now. Or you may look for purchase orders that need to be adjusted so you’re not stuck with a million dollars of surplus material six months from now.
    More strategically, some control towers focus on “risk events” like hurricanes and earthquakes. In a 2014 article,[2] Agilent’s use of its control tower was mentioned as a key success factor in mitigating the impact of supplier shortages from floods in Thailand. IBM’s Transparent Supply Chain platform provides centralized tools to respond to such events and minimize their impact on operations. And Jabil’s InControl platform exposes supply chain risks to its customers, so they can make better component and supplier choices.[3]

 

If control towers shared a common “core” of functionality, it would be easier to explain what control towers are, and do.  But it’s understandable that they have gone in a different direction. It’s interesting that at least some companies have chosen to implement “Command Centers,” with roughly the same capabilities as the original control tower concept.[4]  No matter what you call it, if the idea comes up at your company, it’s wise to ask what people really expect in their implementation of a control tower.

 

 

 

[1] Many of the Transparent Supply Chain capabilities will be offered as part of the company’s Watson Supply Chain product. See https://www.ibm.com/blogs/watson-customer-engagement/2016/10/26/watson-supply-chain/

[2] See http://www.supplychainquarterly.com/articles/20140826-control-towers-provide-a-return-on-risk-management-investments/. (This article also provides references to earlier articles on control towers.)

 

[3] See, for instance: https://www.jabil.com/solutions/featured-solutions/supply-chain-orchestration/incontrol-saas/event-risk.html and https://www.jabil.com/solutions/featured-solutions/supply-chain-orchestration/incontrol-saas/risk-management.html

[4] Dell’s command centers are described in a 2012 article, at: http://www.supplychainquarterly.com/topics/Logistics/20121001-inside-dells-global-command-centers/.

Sr. Managing Consultant, Electronics Center of Competence at IBM

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