Autonomous Supply Chain Part 2: De-mystifying Supply Chain Control Tower for Transportation

Introduction

Supply Chain Control Tower is a concept propagated by multiple Consulting firms and IT Services companies. As a result, it has muddled the definition of this concept and left several Supply Chain leaders and practitioners confused and/or disillusioned.

The reason for this confusion is simple because the Supply Chain Control Tower concept can be stretched like the arms of "Elastigirl" from Disney-Pixar's Incredibles fame!

 

Picture credits: Elastigirl (Helen Parr), Pixar

 

This concept can be made to span the entire value chain from raw material vendors to end consumers, straddling across several processes like Purchase-to-Pay, Order-to-Cash, and involving global, regional and local end-to-end material flows.

However, this topic is best approached by adapting it to an organization's current functional structure, complexity and business needs. For example, it could be split into 3 key domains:

1. Transportation
2. Planning
3. Customer Service

Segmenting the topic into sub-parts enables agile implementations and better change management across different teams within an organization.

This article will focus on Transportation Control Tower, for further deep dive, since this component is by far the most popular and the most intuitive starting point.

 

Picture credits: supplyon.com

 

It is also important to understand that several IT services companies have positioned the SC Control Tower more as a digital initiative involving dashboards and analytics tools, while research firms look at it with additional elements like process, governance and span of control.

 So let's step back and first understand what does the term SC Control Tower really mean and how can it be demystified and understood from a common man’s perspective.

 

Is Supply Chain Control Tower just another industry jargon  

The Supply Chain Control Tower concept is commonly explained using the example of the Air Traffic Control (ATC) system. And there's merit in using this analogy.

 

Picture credits: Government Executive

 

A typical ATC is a ground-based service, that is expertly steered by air-traffic controllers who direct aircraft on the ground and through controlled airspace. They also provide advisory services to aircrafts in non-controlled airspace.¹

Similarly, Transportation  Control towers are usually either cloud based or an in-house platform. This application and monitoring mechanism is established at nodal points of a company's Supply Chain operations e.g. at the Headquarters or Service Centres or available as an on-demand multi-location access system. 

There are several features like an ATC that make this analogy stick, as we unpack this topic further.

The Transportation Control tower enables:

1.  Track & trace of:
•  Incoming material from vendors or manufacturing sites (own or outsourced), like in-coming flights of different airlines at an airport
• On-hand stocks in warehouses, ports etc., like on-ground movement/operations of planes
• Outbound movement of goods to customers or distribution channel, like orderly and safe take-off of flights
2. Monitor real time location of stocks, like flight tracking systems
3. Provide advisory and corrective actions in case of disruptions
4. Ensure end-to-end compliance of standard operating procedures 
5. Review performance and provide analysis results to decision makers or improvement teams

 

Picture credits: International Airport Review

 

This analogy of SC Control Tower with the Airport Traffic Control doesn't stop here. What it also means is that specialized systems for tracking, monitoring and course corrections are required for a safe and efficient operation. Plus, it requires specialized people skills, processes, governance structures, standardized protocols and most importantly collaboration and data sharing via trusted structures across multiple entities. 

All these elements are critical for success of a safe and efficient SC Control Tower, just like an Air Traffic Control system!

 Is a SC Control Tower really a requirement that Business Leaders need to focus on?

 A SC Control Tower makes sense when there is a high proportion of cross-functional interactions within a company, coupled with multiple external collaborations. Usually a Transport Control Tower becomes more critical when there are multiple global, regional and local material flows at play, which require close monitoring and periodic intervention for safe, reliable and agile operations.

For large complex supply chains, the “hierarchy of business needs” for a SC Control Tower consist of six levels. As Christian Titze of Gartner Research highlights², "a good control tower allows its users to:

• Sense: Get real-time, end-to-end supply chain visibility
• Analyze: Understand and leverage incoming signals
• Predict: Utilize advanced analytics for predictions and prescriptions
• Solve: Do exception management and scenario modeling
• Execute: Leverage a collaborative intelligent response framework
• Learn: Continuously learn, sense and respond"

 

Concept credits: Gartner Research²

For many companies, supply chain processes are siloed with arduous collaborations, both within an organization and outside. When it comes to seamless interfaces with a wide variety of external partners e.g. raw material vendors, contract manufacturers, transport partners (multi-modal players, last mile transporters), warehouse partners, customs clearance agencies etc, the higher the number of upstream and downstream partners, the higher the complexity and lower the visibility and operational control. On top of it is the technology aspects, where ability to obtain all the required data and harmonize it for actionable decisions and interventions is crucial for success in an evolving business environment.

Where should SC Leaders focus to get started on a SC Control Tower implementation 

The starting point of a SC Control Tower implementation is to go back to first principles and evaluate the following:

1. What is the business need for enhanced transport visibility and effective management of material flows?
2. What is the current bottleneck/s for agile and transparent SC operations?
3. What are the current resources, skill sets, tools and approaches that can be leveraged to "sweat the system" to achieve the desired goals?

  

Picture credits: researchgate.net

 

Once the blueprint of the current scenario and abilities of "exploiting" current resources is clear, the next step is to gauge the current complexity, gaps, and capabilities of one's organization:

1. What are the areas in the current SC network that needs further improvement? For example, are the pain points related to local last mile deliveries or regional & global material flows? 
2. What are the key current processes that need to be adjusted or changed e.g. Freight analytics, Carrier Contract management, multi-modal transport planning?
3. What are the key policies that need to be reviewed / improved e.g. having GPS enabled carriers, seamless integration of core ERP with other transport management (TM) systems?
4. What are the current capabilities internally and in existing external vendors that can enable a step jump in performance with the SC Control implementation?

 

Lastly the focus should be balanced in the scope and coverage of the initiative. There is often an obsession to focus on Outbound Logistics, neglecting the Inbound domain, and as a result the low hanging “gold nuggets” may be missed!

 

Why are organizations struggling to build Control Tower for Transportation?

In several organizations, SC leaders look at the SC Control Tower topic as an IT implementation which entails an out-of-the box tool deployment. And viola, they expect their entire end-to-end supply chain will flash up on large LCD screens à la a Hollywood spy thriller movie.

There is also a disconnect between business needs and a sound business case for the implementation. There is also a skill-capability mismatch in most implementations starting from the top team that conceives and drives the initiative.

To top it off, most implementations are multi-month and multi-million initiatives, straddling across the length and breadth of the organization's functional teams and beyond. So, implementation control and agile improvements are few and far part.

Lastly there is a yawning gap in measuring success of the implementation and attributing it to the considerable investments.

On the contract, the portrait of a successful implementation is one that is structured to provide bite-sized results, closely linked to enhancing customer experience and enables operational decision making for agility and responsiveness. Above all it should augment competitiveness of the business in a volatile market.

  

The pragmatic path forward 

Professor Emily Ho, of Northwestern University while explaining the psychology of humans in a Harvard Business Review article says, "The conventional wisdom is that people should be eager to get information that can benefit them. But across several scenarios we saw that from 15% to more than 50% of people declined the information we were offering. We've shown that this is a serious issue. It's not just one or two people keeping their heads in the sand".³

This is also true from a Supply Chain standpoint. And therefore, having more data, visibility and decision-making support, doesn't necessarily mean that people across the organization will lap it up.

This necessitates a cultural shift, where augments organizational alignment via enhanced decision-making support and corresponding agile response, which is then inculcated as a way of working in the DNA of the organization. Without a top down vision and a pragmatic bottom-up support structure to the SC Chain Control Tower implementation, most of such projects will fail. Or even worse, it will struggle to get off the ground.

This is more of an evolutionary process than a revolutionary process. It is a combination of technical and non-technical building blocks.⁴

To summarize, the key success factors is to understand the business needs and overall concept of SC Control Tower first. Then it needs to be evaluated from a People, Process, Governance, Technology and Data perspective³. Thereafter a careful selection of the scope of implementation, partner selection, effort estimation, resource allocation and finally a robust program management, can enable to unlock the true value of a SC Control Tower. 

 

References:

1. “Air Traffic Control - Wikipedia.” En.m.wikipedia.org, en.m.wikipedia.org/wiki/Air_traffic_control. Accessed 3 April 2021.
2. Titze, Christian. “Gartner: What Supply Chain Managers Should Know about Control Towers.” Supply Chain Dive, 13 Mar. 2020, www.supplychaindive.com/news/gartner-what-supply-chain-managers-should-know-about-control-towers/574098/. Accessed 5 June 2021.
3. Stackpole, Thomas. “We Actively Avoid Information That Can Help Us.” Harvard Business Review, 1 Sept. 2020, hbr.org/2020/09/we-actively-avoid-information-that-can-help-us. Accessed 8 May 2021.
4. Titze, Christian, and Beth Coppinger. “What You Need to Know About Control Towers but Had No Time to Ask” Www.gartner.com, 30 Dec. 2020, www.gartner.com/document/3994943. Accessed 17 April 2021.