What is a supply chain control tower?
Businesses are under constant pressure to deliver quality products, services and customer experiences at competitive prices. Under normal circumstances, this requires a supply chain that continuously delivers and optimizes operations, as well as mitigates an array of disruptions.
The global pandemic upped the ante and illustrated the heightened challenges faced when operating in a volatile and disruptive environment. It reinforced to Chief Supply Chain Officers (CSCOs) and business leaders the importance of high-performing and resilient supply chains.
However, most companies lack the visibility and intelligence needed to build more resilient and agile supply chains. Visibility is limited primarily because organizations have difficulty accessing demand, inventory and supply chain data scattered across disperse and siloed systems and external sources. With a traditional data integration approach, unifying information from different systems is a time-consuming and high-cost effort that must be repeated as systems and information needs change.
What is a supply chain control tower?
Supply chain control towers are designed to provide deeper end-to-end (E2E) visibility across the supply chain. They often include a central dashboard of data with views into key business metrics and events.
Modern control towers increasingly leverage advanced technologies, such as Artificial Intelligence (AI) and Machine Learning (ML), to help organizations break through data silos, reduce or eliminate manual processes, and get real-time visibility and intelligent insights to drive action. An advanced control tower will enable collaboration across cross-functional teams and partners – and preserve organizational knowledge (in the form of digital supply chain playbooks) to improve and accelerate decision-making and outcomes. Ultimately, supply chain control towers help organizations:
Types of supply chain control towers
Control towers are a constantly evolving concept and technology. Most solution providers and analyst firms have their individual definitions and classifications. However, there is general consensus that purpose-built control towers deliver more value, making them essential to the modern business. Examples include:
- Logistics/transportation control towers –Offer direct visibility and insight into inbound and outbound logistics, including advance shipping notifications (ASN), deliveries, and track and trace, among other details. These solutions are usually tied into and complement Transportation Management Systems (TMS).
- Fulfillment control towers – Aimed at fulfillment and order data integration to reduce cost-to-serve and help deliver the “perfect order” to customers more often.
- Inventory control towers – Provide essential real-time insights to manage inventory more effectively with visibility and insights into imbalances, shortages, stock outs, expiring inventory and other related metrics.
- Supply assurance control towers – Ensure supply availability, on time delivery of supply, product quality, supplier service quality and supplier continuity.
- E2E supply chain control towers – Deliver visibility across internal and external systems and processes. Depending on the industry and organization this may tie in suppliers, sales and orders, logistics and/or inventory.
See a single, near real-time view of inventory.
Increasingly, solution vendors and companies are expanding their definitions and visions – and bringing all these components together, ultimately into one control tower, for more complete visibility and control across the E2E supply chain.
According to IDC, at its most basic, a modern supply chain control tower must be able to understand what has happened, what is happening, and what will happen across the E2E supply chain. It should, “see what’s happening in the supply chain, and probably the broader business and outside world as well, analyze what it observes in real or near real time, determine what needs to be done, and then facilitate action.”
What data does a supply chain control tower provide?
In essence, supply chain control towers are designed to collect, cleanse and correlate large amounts data – and make sense of it. The types of data that may be ingested or accessed by the control tower vary widely by solution provider or company employing the control tower, and may come from the following sources:
- Internal Systems: ERP, Warehouse Management Systems (WMS), and TMS.
- Partner Networks: B2B networks and direct connections with key suppliers, partners and clients/customers. This is an area in which use of blockchain capabilities is beginning to rapidly accelerate.
- External Data Sources: This includes third-party information and data providers who curate data like weather, risk, and country reports, as well as “dark” or unstructured data that is “read” by AI. Access to AI-interpreted external data and events, integrated with internal supply chain systems, is one of the most effective ways to detect external disruptions and the impact on the supply chain and customer orders.
The value of modern control towers is derived largely from the visibility provided into data across silos or barriers, and the depth of visibility, which is typically more granular than what can be accessed through traditional methods. Some providers offer supply chain control tower solutions that correlated and interpret data with advanced analytics or AI to provide:
- Real-time data visibility and information to act faster and make more-informed decisions
- Predictive data analysis and advanced data analytics to avoid or mitigate disruption
- Prescriptive data analysis that can provide recommendations, augment human decision-making and automate defined decisions and actions
Benefits and advantages of a modern supply chain control tower
A best-in-class control tower will help organizations optimize supply chain management (or operations) and increase resilience and agility with the following capabilities:
- Sensing Demand and External Events: By correlating external event information with internal information, practitioners get a better understanding of the changing operating environment and the impact of external events on the organization and supply chain. Third-party data often adds value, providing a more detailed and nuanced view of what is going on and what the impacts are, for instance what is the impact of weather on a late shipment and how does that impact a customer sales order.
- Smart-alerts: AI-enabled smart-alert capabilities are a practitioner favorite, helping them understand the upstream and downstream impact of events on customers and prioritize response to better mitigate disruptions. Practitioners are often overwhelmed with information and AI-enabled smart alerts help them weed through masses of relevant internal and external data and focus on the most important issues. The control tower solution also allows them to drill down into specific aspects of the disruption or issue to get to the root causes and formulate a course of corrective action.
- Insights and Recommendations: Moving beyond visibility, sensing and alerting, control towers can also apply AI and ML to generate insights. These insights save practitioners vast amounts of time searching, correlating, and analyzing data. Control towers that leverage deep AI have the advantage of allowing practitioners to communicate with the solution via natural language conversations.
- Digital Playbooks: Building on the insights referenced above, some control towers offer digital playbooks, the modern and digital equivalent of traditional supply chain playbooks. These playbooks can aid practitioners in drilling down for information; understanding the context and history of an issue; outlining process steps and best practices; and capturing and retaining actions and institutional knowledge. AI-enabled digital playbooks arm practitioners with greater guidance, speed and confidence in responding to events – and can help ensure access to, and application of, best practices.
- Collaboration: Control towers enable various levels of collaboration among the supply chain team – across the organization and external resources vital to the business. Resolution rooms with AI can help practitioners identify the right experts to bring together and/or provide access to the digital playbooks to make decisions faster over time. The capability to enable cross-function and cross-organization collaboration significantly enhances the ability of an organization and individual practitioners to resolve and address events or disruptions.
Supply chain control tower integration
Supply chains are rarely fully integrated within a single organization and often cross organizational boundaries. With a traditional data integration approach, unifying information from different systems is a time-consuming and high-cost effort that must be repeated as systems and information needs change.
Cloud-based solutions reduce the amount of time and resources needed to address these integration issues. Some control tower solution providers build their solutions based off, or connected to, their supplier networks. Other solutions take a more agnostic approach and quickly and easily connect to any B2B or supplier network.
In terms of connecting to third-party data providers, most control towers use some type of API technology to lower the cost and maintenance of connections. When evaluating or implementing a control tower solution, inquire about the time and costs of integration. Platform agnostic, low implementation, high-speed connectivity will help drive the success of a control tower and its ROI.
Risks and obstacles of a supply chain control tower
As with any business change, there can be obstacles to supply chain transformation, digitization and the implementation of disruptive technologies. Fortunately, the complexity and risk involved in deploying control tower solutions has been reduced by the evolution of control tower technologies; the number of major organizations implementing them and sharing their knowledge and experiences; and the availability of cloud-based and Software-as-a-Service (SaaS) solutions.
Key factors to consider when deploying a supply chain control tower include:
- Data Quality: Assessing and ensuring the quality of data to be accessed by the control tower remains a top challenge for organizations. The quality of data input impacts the quality of the visibility and insights output. Organizations should assess their objectives upfront and know what data inputs are available and needed – and determine what is needed from partners and solution providers in terms of data cleansing and quality assurance. AI and ML are increasingly leveraged to help improve data integration, correlation and quality.
- External Data Sources: Determining the capability and process of ingesting external data sources, whether from suppliers or via data services, is a related challenge. Organizations should determine upfront what external sources of information are needed to address specific business and supply chain objectives – and urge that companies understand the plan and capabilities of solutions to ingest and normalize external data.
- Practical and Actionable Outputs: It is not just about connecting to data sources, correlating this data with internal systems and presenting it in a way that is understandable and useful to supply chain professionals in their day-to-day activities is critical. Too often, programs fail when they do not ensure that data/information outputs are practical and actionable enough to apply to business and supply chain problems and daily tasks.
- Mindset and Change Management: Deploying a control tower often involves elements of transformation/innovation within the supply chain organization. To be successful, end users need to break out of old mindsets and make a commitment to operating in new ways. Organizations will need to cultivate the mindsets and skill sets needed to operate and manage a modern supply chain.
It is important to remember that every industry and organization has different objectives – and not all control tower solutions are the same. Control towers represent a journey for any organization, one to deeper visibility and insights. These solutions are a key step in a supply chain transformation – and will continue to evolve. Ultimately, most organizations are on the path to establishing a digital twin to the physical supply chain, and control towers are a critical and significant step along that path to the future.