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A supply chain control tower, powered by technology and analytics, can help organizations monitor and direct all activities across the supply chain to make it collaborative, aligned, agile and demand-driven.
Supply chain executives are facing unprecedented challenges of managing highly complex supply chains and addressing the volatility of a global business environment. The difficulties of managing supply chain in these circumstances continue to impact companies’ financials significantly.
In addition, executives face new demands to make supply chain more profitable, nimble and flexible; manage security and risks; meet increasing customer needs; and support growth opportunities.
We believe that a control tower can act as a centralized hub that uses real-time data from a company’s existing, integrated data management and transactional systems to integrate processes and tools across the end-to-end supply chain and drive business outcomes.
In this point of view, we will discuss how a supply chain control tower enables execution of advanced strategies and explore specific actions companies can take to leverage a control tower for competitive advantage.
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In the past, lack of the right technology has been an impediment to executing advanced supply chain strategies. Fortunately, new technologies and service providers now make it possible for companies to use end-to-end business operating strategies for supply chain management as required by today’s challenges and demands.
Three technological advances, in particular, are enabling this development:
Critical mass of supply chain technology: The majority of any company’s major supply chain partners are enabled with supply chain technology such as ERP, planning and optimization, transportation and warehouse management. This makes available a wealth of operational data along the extended supply chain.
Connecting through the cloud: New technologies have emerged that allow all nodes of the supply chain to be connected, regardless of the underlying execution platform. Cloud-based technologies help reduce the cost, complexity and time-to-value of interenterprise integration.
Insights through analytics: Advances in analytics are enabling organizations to make use of the vast data being collected and connected across the supply chain.
A supply chain control tower has three essential capabilities for managing complex supply chains end-to-end:
Visibility: Real-time access to information across the entire supply chain is enabling supply chain managers to answer the question “What is happening now?”
Analytics: Powerful analytics tools, including predictive analytics, is enabling supply chain managers to answer questions such as “Why is this happening?,” “What can happen next?” and “How can we improve?” Supply chain control towers are equipped with analytics to help answer these questions and target value opportunities by making sense of the visibility data, performing “what if” analysis of scenarios, and engaging in risk analysis and response management.
Execution: Streamlined processes—for tasks such as planning, materials management, fulfillment, distribution and service—enable supply chain managers to orchestrate the dissemination of information and action plans across the supply chain and then monitor activity to ensure compliance.
We recommend organizations to consider the following four questions to determine if a control tower would drive value for their organization:
Where are you underperforming in your supply chain and where are the opportunities to improve that performance with the capabilities of a control tower? For example, you could identify high costs of transportation and logistics or declining service levels and fill rates.
Which of those opportunities give you the greatest value—in the short, medium, and long terms? Prioritize the opportunities that will make the biggest impact in the shortest time. For example, cost reduction or improvement in service and performance.
How does your organization need to change to enable a control tower? Assess your organization, and identify functions which need to be moved under the control tower to achieve those outcomes. A control tower will require lines of responsibility to enable decisions to be made and implemented quickly.
Where can you begin, and where do you need to end up? Identify the road map and build the control tower capabilities. Implementing a control tower doesn’t need to be a single “big bang” proposition. A “land and expand” approach helps get to benefits early and mitigates the risk of many changes at a given point of time.
July 4, 2014
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