Eight essential elements of Supply Chain Control Tower (SCCT) enabling advanced visibility and standardized, real-time analytics from a single source. By Alexander Bender & Jeff Keene, January 05, 2014, Supplychain247.com
A Supply Chain Control Tower (SCCT) is a centralized function that helps companies orchestrate their operations.
The goal is to enable advanced visibility and standardized, real-time analytics from a single source of truth to provide an unobstructed view of where to take action and apply resources.
While many organizations tackle a SCCT implementation as an Information Technology project, implementing a SCCT is much more than that.
In order to gain the expected benefits, it is necessary that the organization transform itself and the ecosystem in which it operates.
We have identified eight essential elements of a SC-CT:
- High quality external information feeds
- High quality internal data
- Real-time Key Performance Indicators (KPIs)
- Defined roles and responsibilities
- Real-time and predictive alerts
- Processes and automated workflows
- Real-time analytics
- Decision support capability
Related: 8 Elements of Successful Supplier Control Towers
Obviously achieving this is a tall order and it is not expected that an organization acquires all these capabilities immediately. We see this as a process and have identified four stages that define the SCCT journey.
Stage 1 – Reacting
We call this stage “Reacting” since the organization is able to respond to events. It has visibility into its supply chain and operational systems exchange data, for example Advance Shipping Notice (ASN) and other Electronic Data Interchange (EDI) transactions.
However, visibility is often restricted to the tier 1 level or the wholesale level on the distribution side. Automated data exchange capability is often only with a few key customers or suppliers and overall trust of this data is low. However, there is no centralized, integrated, or even coordinated approach; only a few building blocks for a future Control Tower are in place.
Reporting is focused on the past (last month/ week, yesterday) and the static. Information is on the local or functional level with at best partial integration. Some KPIs exist and are tracked, often monthly and sometimes weekly. Actions are taken when these KPIs are missed; hence this stage is called “Reacting”.
Many organizations are in this stage, even organizations that use advanced Business Intelligence (BI) tools typically still operate in a reactive mode. The accessibility and quality of available data is another reason why companies get stuck in this level. Without the ability to bring together data from different sources, both internal and external, reports and analyses are often not accepted across the organization.
Stage 2 – Anticipating
We call this stage “Anticipating” because the organization has processes and procedures in place to react quicker and more effectively. This is mainly achieved by identifying what can go wrong with suppliers, transportation, distribution, etc. and preparing for each of these situations.
Applying the Failure Mode and Effects Analysis (FMEA) technique is usually a great starting point as it structures the process to identify what can go wrong, what the possible impacts are (including the possible criticality), and how to respond. The result is a set of processes that align functions both globally and locally.
In addition to a conceptual approach, organizations also dive deeper into all their data to analyze past behavior and quantify impacts. This analysis usually leads to better data consolidation across functions and locations. Deeper analysis also helps to identify Key Performance Predictors (KPP).
These are KPIs that can function as early warning signs. For example, the turn-around time for suppliers to acknowledge your requested delivery dates can be an indicator of your suppliers’ capacity load and possible future delivery or quality performance.
The alignment of functions as well as the consolidation and more detailed analysis of available data establish the basis for a future SCCT. For example, one company we worked with created a center of competency with the ultimate goal to make sure that the supply side was working flawlessly.
This competency center did not yet have many of the typical SCCT capabilities, but it was centralizing and integrating data from many different sources, improving data quality, and establishing generally accepted KPIs.
Stage 3 – Collaborating
In this phase, the SCCT starts to become a reality as a central coordination point. We call stage 3 “Collaborating” because at this stage organizations share data and information bi-directionally with partners such as third party logistics providers (3PLs), customers, and suppliers, enabling end-to-end visibility. Management focus is shifted from just anticipating issues to preventing them.
Identification of negative trends, which are the build-up to a possible problem – are shared near real time using alerts and workflows that route information automatically and directly to decision makers, including external decision makers. Any corrective actions are now taken collaboratively to ensure an optimal outcome across the multi-echelon supply chain.
In this stage, all participants can see the same data. This is usually enabled by advanced BI, Business Process Management (BPM) and similar workflow management tools. A few software vendors offer a combination of capabilities to support Control Tower execution. These include (in no particular order) Vecco, Tibco, Kinaxis, and E2open.
A typical example for this stage Control Tower is a centralized function, usually directly reporting to the VP of Supply Chain or Chief Operating Officer that will own all supply chain-related data and be the acknowledged single source of truth for all supply chain reporting. It will monitor all supply chain-related activities and provide information, insights, and support to functional manager.
Stage 4 – Orchestrating
We call the final level “Orchestration” because at this stage, organizations are orchestrating supply chain execution with the help of a centralized SCCT. Supply chain execution is monitored in the Control Tower and corrective actions are triggered by predictive techniques. Results of all actions and decisions are fed back into the system (first manually, later automatically) and allow for continuous improvements.
Through the integration of analytics capabilities, most issues are detected early and resolved before they ever become issues.
In addition companies rely on various end-to-end optimization decision support capabilities such as network design, inventory optimization and supply chain risk management. In this phase, supply chain analytics capabilities are a key part of a regular (typically monthly) Sales, Inventory and Operations (SIOP) process to orchestrate operations. In retail, this process is sometimes called Collaborative Planning and Forecasting and Replenishment (CPFR).
How do you start on this journey?
It is important to note that an organization cannot simply start their SCCT journey at Stage 4; but should progress through the stages. It is no small task to develop best practices, link up the many disparate data sources, and bring the many levels of the organization on-board with the cross-functional solution.
We find that the main barriers to implementation are often related to:
- Organizational issues: stove pipes and unclear roles and responsibilities
- Missing data integration and perceived low data quality
- Differences in measures and lack of standardized KPIs and reports
Addressing these issues is an important part of the journey and they need to be integrated into the planning process.