What is a Supply Chain Control Tower and How to Build One
The idea of a “supply chain control tower” sounds intriguing, doesn’t it? The pandemic is past us (hopefully) but it has disrupted supply chains in every industry. These disruptions are going to impact how businesses operate for decades to come. With business challenges becoming more complex, operations and supply chain leaders are dealing with more unknown unknowns on a daily basis than ever before.
In this scenario, the concept of supply chain control towers is fast gaining popularity. Companies from a variety of industries like D2C, e-commerce, mobility and logistics, and healthcare, are exploring how these control towers can help them:
- streamline their supply chain management
- reduce supply chain disruptions and issues down to the bare minimum
- help them understand the most common problems and bottlenecks
In this guide, we will cover the basics of Supply Chain Control Tower - what it is, why it’s important, how it helps operations and business teams, and how to go about building one. Let’s jump in!
First, a brief explanation of Supply Chain
A supply chain is an ecosystem of connected nodes that work together to deliver a finished product or service to the customer. It is the network of individuals, internal teams and external stakeholders who are involved in procurement, production, and delivery of any product or service.
Managing supply chain operations is a crucial process because an optimized supply chain results in lower costs and a more efficient production cycle. This ultimately results in a better experience for the end customer. Companies seek to improve their supply chains so that they improve their operational efficiency and generate higher profits without increasing supply and production costs.
Why Supply Chain Operations needs a makeover
Managing supply chain operations through manual and traditional methods doesn’t work anymore
Supply chains are becoming too complex to be handled manually i.e. through phone calls, spreadsheets, and emails. There are multiple factors behind this:
- The products and services we are creating have become multi-layered, requiring collaboration with multiple internal and external stakeholders.
- Teams have become globally distributed, leading to additional complexities due to timezone and cultural differences.
- With the rise in competition, GTM and distribution strategies are becoming much more co-ordinated. Customers have a high bar that companies need to reach. A single disruption in your supply chain can strip away your customer loyalty.
Business leaders need end-to-end visibility into the supply chain
Operations and product leaders are asking for complete visibility into their supply chain. This is important for two reasons:
- Companies want to make quick and agile decisions when it comes to fixing supply and demand bottlenecks, solving production issues, shifting excess stock to underserved locations, etc. They need to have a complete picture of what’s happening and what’s broken in their supply chain to make these decisions in a nimble manner.
- Supply chain management and financial planning should be very responsive to the external changes that are happening all around. Without complete visibility into what’s happening on the ground floor, companies are doomed to stay one step behind.
To get this visibility, business leaders look towards the supply chain and operations teams to answer these questions all the time:
- What is happening now?
- What’s preventing our supply chain from functioning smoothly at this moment?
- Why is this happening?
- What might happen next?
- How we can perform better?
Without the ability to answer the above questions, supply chain processes are broken. Meaning costs are rising, customers are going away, and profits are going down.
Achieving end-to-end visibility is a major challenge for most companies
As with anything in this world, the devil lies in the details. Efforts to set a systematic supply chain process face these two major roadblocks:
- Key information is siloed in different systems (data warehouses, messages, email threads, call transcripts, spreadsheets, dashboards). Data not talking to each other prevents companies from getting to a single source of truth and arriving at a full picture of what’s happening in their business.
- Imagine for a moment that you have successfully aggregated all the data in one place. Even then, there is the problem of sending data to the right person at the right time so that they can resolve supply chain issues promptly before they affect the customer. Data without a system to take proactive action on that data is useless.
This is where the Supply Chain Control Tower comes to our rescue!
What is a Supply Chain Control Tower
Contrary to what you may think, a supply chain control tower is not a physical tower (though it can be). Nor is it a software product.
A Supply Chain Control Tower is a system that connects each node of your entire supply chain and binds the whole thing together into a cohesive whole. Companies who are looking to collaborate across all their supply chain activities use the control tower as the centerpiece of their operations.
The Supply Chain Tower Tower combines multiple facets of your business, including:
- Procurement, Raw Materials, Sourcing
- Manufacturing, Production
- Warehouse, Inventory
- Distribution, logistics, mobility
- Sales and after-sales service
What are the benefits of a Supply Chain Control Tower
In a nutshell, here is what the Supply Chain Control Tower helps you achieve:
- End-to-end visibility into your supply chain
- Integration of data across multiple parties and platforms
- Real-time identification of supply chain disruptions and bottlenecks
- Alerting the right person at the right time, whenever a supply chain issue comes up
- Automate problem-solving and decision-making
- Make operations and supply chain teams take ownership of running things smoothly
- Understand the reasons behind supply chain disruptions and implement corrective measures
We’ll explore these points in further detail below.
End-to-end visibility of supply chain
The control tower, by being connected to every node of your supply chain, helps you understand the status of each aspect of production and delivery. Using dashboards and AI-enabled monitoring helps you get a bird’s eye view of everything happening in your business.
Integration of data across multiple parties and platforms
It’s said that no man is an island. Well, the same applies to every company! It’s important to note that supply chain control tower is not just about your org. Your supply chain consists of external parties as well, such as warehousing partners, raw material suppliers, delivery partners. The supply chain control tower helps you integrate data from all sources (suppliers, warehousing partners, delivery partners, logistics partners) and platforms (database, excel sheets, ticketing systems, dashboards, warehousing and inventory management system) which helps you see the full picture of your supply chain operations.
Real-time identification of disruptions and bottlenecks
As we’ve mentioned before, just visibility into supply chain operations is not enough to solve the issues that inevitably arise. You also need a system that automatically identifies disruptions and bottlenecks in your supply chain in real-time. A supply chain control tower usually has a monitoring and observability system which works on a rule-basis and identifies KPIs, metrics, SLAs and TATs that breach certain thresholds or levels.
Examples of things you should actively monitor:
- Inventory shortages
- Delayed shipments
- Missing components or raw materials
- Production status
- Transit status
- Supplier commitments vs actual delivery
Alerting the right person at the right time about operations issues
One of the key goals of a control tower is to enable quick decisions and resolve supply chain issues proactively before they affect key metrics. One of the ways the supply chain control tower does this is by setting up an alerting system.
With alerts, stakeholders get alerted whenever key steps in the supply chain process are missed or supply chain KPIs, SLAs and TATs move beyond acceptable levels. This helps the right person intervene and fix the issue ASAP.
For example, let’s say you are manufacturing computers. The deadline for delivery is Aug 30. One week before, you come to know through your supply chain control tower that the components from the supplier hasn’t been delivered yet or that one part of the components is missing. Now as soon as you got this info, you can assign this issue to some to get it fixed ASAP.
Automate Problem-solving and Decision-making
Along with proactive alerts, the supply control tower also helps in resolving the issues without being bottlenecked on an actual human making the decision every time. Since your supply chain is 24/7, you need a robust system to function in an autonomous way and make majority of the decisions in a rule-given manner. This helps your team solve problems promptly.
In addition, by integrating all data sources, the supply chain control tower can enrich the alerts the are being sent with rich and contextual info which is updated in real-time. Therefore all the stakeholders can get the same set of information and solve the problem collaboratively.
Make operations and supply chain teams take ownership for running things smoothly
A supply chain control tower is built up of 3 parts - technology, processes, and people. Unfortunately, most attempts to build a control tower are sacrificed at the altar of human error and mismanagement. To fix this, a true control tower needs to build accountability and ownership into the system.
Here are some things you can do to build a resilient Supply Chain Control Tower
- Assign ownership for each area to key stakeholders in your supply chain ecosystem
- Track every activity like a hawk with AI-enabled monitoring which watches all your data sources and identifies disruption, bottlenecks, potential issues on a rule-given basis
- Each such issue should be assigned to a particular person in the team with an ETA
- Setup automations like automatic escalations if the issue is not marked as resolved within a specific time. These are key to ensure that issues are actually being followed up on and not falling through the cracks.
- Lastly, and this is the key part, every alert should be treated like a ticket which needs to be resolved. Most supply chain control towers stop at giving alerts but there is no transparency on what’s happening on the alert, who’s working on it, what’s the ETA, etc. Solving every issue like a ticket makes sure that issues are actually being addressed and fixed (which, after all, is the main objective of doing this in the first place).
Understand the reasons behind supply chain disruptions and implement corrective measures
A supply chain control tower isn’t just about what’s happening now. To remain ahead of the competition and be ruthlessly efficient, business leaders also need to look at the why behind the what. To figure this out, they need to understand the most common issues that arise in their supply chain and what are the reasons behind those issues. Only when they invest the time to actually understand the root cause, can they implement corrective measures to make sure that they face less issues, and can optimize their cost structure while giving a better experience to the end user.
The best way to get all of the why is…drumroll..flatline the hierarchy which exists in any supply chain. Changes are, your on-ground staff already knows the reasons behind particular issues but they don’t have a way to relay this info to the higher ups. With a proper supply chain control tower setup, you can enable your team to add comments, labels and tags to each and every incident, right within the alert itself. You can even add info automatically like time spent to resolve the issue, who actually solved the issue, etc.
All of the above info is a rich goldmine of data to help you streamline your entire supply chain. With proper analysis, you can find out:
- What are the most common issues in my supply chain?
- What is the reason behind these issues?
- What’s causing delay in resolving these issues?
- Which members of my team are on top of things, and which ones are letting things fall through
- And more…
Fundamentals to set up a Supply Chain Control Tower
A supply chain control tower is made up of 3 elements
- Right people
- Right technology
- Right processes
When these 3 things run hand-in-hand, they collectively become your supply chain control tower. Here’s how you can start:
To summarise, setting up a supply chain control tower is the Holy Grail of building a resilient supply chain. It can seem extremely complex, but it’s really not. Start with some small automation which can reduce the manual work. Next, automate some of the problem-solving and decision-making steps. If you can just start off these two, you have a good base. And then it’s off to the races!
How we can help?
At Locale.ai, we help companies improve their supply chain processes and workflows through alerting, monitoring and issue management. Locale helps in
- Automating the detection of issues through alerts
- Tracking the status of each issue and helping teams solve the issue collaboratively
- Measuring the performance of your team and ops health
- Analyzing the root causes behind ops issues and implement corrective measures
We work with companies in D2C, ecommerce, healthtech, edtech, gaming, mobility and logistics, agritech, etc. across the globe. If you’re interested in finding out how a streamlined supply chain and operations system can benefit your business, let us know. We’re happy to chat!