The 3 Vs: The Value of a Supply Chain Control Tower

| July 23, 2020 | 

Whether or not you’ve heard the term “supply chain control tower,” it’s been around for a while. And given all of the market volatility lately, it’s well worth understanding and considering.

What is it?

A supply chain control tower is essentially a dashboard that compiles and displays timely order and shipment-related updates and data intelligence (often combined with analytics of sales and other plant data) from across your supply chain. It’s analogous to an aviation control tower because it gives you the ability to anticipate potential trouble or changes and quickly adjust “flight plans” or orders and shipments accordingly.

Consider the example of a food manufacturer which makes snack packages that are popular for customers on the go and school lunches. In normal times, the manufacturer would typically see some of its highest demand in airports, gas stations and convenience stores. When the COVID-19 crisis hit, however, buying patterns quickly shifted. All of a sudden, with people following stay at home orders would have been more likely to buy larger bags of the snacks from the grocery store. Then buying patterns across states would quickly start to vary again based on when and how the states reopened. At the same time, the situation would be fluid, with the potential for hot spots impacting supplier operations or demand or both.

A supply chain control tower that brings together the right combination of data intelligence and technologies makes it much easier to manage through shifts in supply and demand, whether or not they are sudden and dramatic. For example, sales analytics could provide right-time insights into when demand began to shift, so orders from packaging suppliers could be adjusted accordingly. And by tying in shipping alerts and other data from your suppliers and shippers, you could more dynamically respond to potential supply shortages or delays.

Answering Important Questions (The 3 V’s)

From a business management perspective, the control tower focus is centered around addressing three key challenges (the 3 V’s) related to the movement of information, materials and products:

  • Visibility: the ability to see what is going on in your business.
  • Variability: the ability to cope with change in supply, demand, and other variables in the market and your own operations.
  • Velocity: speed in all its forms, from the ability to respond quickly to the speed of production to meet demand

For every business, the information that is required and the preciseness that is needed will vary. In the near term, even a simple supply chain control tower can add value. For example, a good starting point might be establishing a consolidated view that keeps your team updated about when suppliers have shipped, when the order is loaded on transport and the expected arrival day.

Over time, you can consider what other data would be helpful and continue to build out the supply chain control tower. In most cases, in addition to knowing where things are, you can benefit from early awareness of abnormalities or variations in shipping and being able to answer demand-related questions. For example:

  • Will a shipment arrive on time?
  • Has customer demand shifted outside of a historical norm (if so, why)?
  • When are individual products or SKUs selling faster or slower?
  • Is there a benefit to providing your customers visibility into their orders?

Ultimately, a good control tower should not only provide you visibility into the supply chain, but also alerts about changes you need to be aware of. That way you can change plans or actions quickly to get on top of a situation and avoid impacting something further downstream.

Phasing in Your Control Tower Build

To start off with, the essential elements for a supply chain control tower include a database, some type of analytics tool and visualization capabilities. Today, many suppliers and shipping companies already provide some sort of alerts, so the first challenge is figuring out how to bring together all of the information in phase one. In phase two, you can create rules to identify where and when abnormalities are occurring and add alerts and more advanced visualizations. And in phase three you could set up defined procedures for responses to abnormalities (eventually, AI capabilities could direct responses to some types of issues or abnormalities).

Now, going back to the flight plan analogy. Without a control tower to see the air space and make quick judgement calls, the possibility of big disasters is certainly higher. The operations and supply chain experts at Dploy Solutions and TBM Consulting Group can help you build or optimize your supply chain control tower.  We can guide you in establishing the right approach, technologies and data analytics that will give you that clear and wide visibility you need to gain control of your supply chain even through market volatility.  Contact us to get started.