The Evolution of Supply Chain Control Towers

You’ve probably heard of a Supply Chain Control Tower.

A Supply Chain Control Tower (SCCT) is a central hub that monitors and manages operations, the ultimate goal of which is supply chain optimization.

It’s supposed to give you an end-to-end view of all supply chain operations, which should — in theory —reduce delays in information flow, and by extension, the corrective actions you need to take to reduce or eliminate disruptions.

Not all towers are created equal though.

Depending on the level of supply chain digitization, the visibility solutions you already have in play, the specific problems you need to address, and the mechanisms you have in place to address them, the supply chain control tower you're trying to set up will fall into one or more of the following types.

First Generation Supply Chain Control Towers

One of the oldest forms of control towers, these evolved from the humble telephone switchboard.

They emerged in the 1990s when logistics managers needed visibility to manage shipments, operations, and overheads better, either for their in-house operations or to oversee their third-party logistics (3PLs) companies.

Usually made up of a small in-house team of operators, these logistics control towers tried to stay on top of things using the bare minimum business intelligence tools available to them — a printout and a telephone.

If shipments didn't make it on time, if there's a change in route that's affecting on-time deliveries, if there's something amiss in the system that's flagged by a stakeholder or a pending checkbox in someone’s spreadsheet, that's when an in-house control tower stepped in.

They're usually limited to logistics operations, and are more reactive than proactive, only working on normalizing operations when there's a disruption that someone spots.

While that may be enough in some cases, they're woefully inadequate in most.

If transporters run late or miss their delivery window and need to get into another slot, it'd be up to the control tower to contact both the driver and the consignee, mediate between them, and set up a new delivery window.

The hiccup there is, other than a phone call and the driver’s or warehouse operator’s word, there's no way for the control tower to ascertain where the transporter actually is, whether they're likely to make

the new window of delivery, and whether the consignee will actually be able to accommodate the rescheduled shipment without too much dwell time before unloading.

Discrepancies would be hard to catch, and it's hard to manage a supply chain — especially a global one — by pulling thin strings to affect distant outcomes.

And all that's assuming the person at the other end of the line even picks up the phone to begin with.

It's not unheard of for transporters to take a detour when it suits them, especially if they've got some extra trailer space to lease out and make an extra buck on the side.

Despite their best efforts, supply chain managers won’t be able to manage anything more than short-term improvements to operational efficiency.

As supply chain operations grew global and a greater portion of operations were outsourced to improve both efficiency and profitability, it became apparent that such rudimentary supply chain control towers couldn't manage the entire process end to end — at least, not without better tools.

Second Generation Supply Chain Control Towers

The lack of visibility and organized systems led to the adoption of technology to aid the effort. GPS tracking and proper control tower software like a Transportation Management Software (TMS) or Supply Chain Management Software (SCMS) became popular and widespread as a new means to oversee supply chain control tower operations and manage them better.

A good second-generation end-to-end supply chain control tower system could give you near real-time data on fleet locations, inventory levels, as well as custom alerts when exceptions or anything that affects overall supply chain performance occur.

While better tracking did help alleviate some of the gaps in first generation of supply chain control towers, there was still plenty to work on.

Simply tracking a dot on a map or inventory across warehouses wasn't enough; there were issues to contend with like:

• Manual Processes — More often than not, earlier systems relied on manual information gathering and exchange processes. These were slow, prone to error, and rarely helped preempt any positive outcomes.
• Lack of Uniformity — Some vehicles had GPS installed, others didn't. Some settled for high-end telematics, others were content with GSM or cellular phone-based tracking. Warehouses weren’t uniform in their stock-keeping systems, and data wasn’t easy to gather and share over telephonic or electronic systems back then. The quality and coverage of tracking solutions varied, especially if you’re trying to track a third-party fleet
• Information Overload — the use of fleet tracking, software, and connected systems gave supply chain managers levels of visibility that they weren’t expecting — or ready for. Seeing everything in one place was a bit too much to absorb, especially when the tracking system flags every minor stop, detour, or delay as an incident to investigate. Chasing down every alert was eating up more man-hours than they bargained for.

Issues like these meant that, although useful, a supply chain control tower with better visibility wasn’t as effective as its makers envisioned.

There were also gaps in communication because some elements still needed manual intervention. Simple things like data entry, deciding whether a detour or unplanned stop warranted action, or coordinating with disparate systems, or combining information from isolated ones (like traffic or weather) all required humans manning terminals to make a call — both figurative and literal.

Supply chain control tower solutions need to provide much more than visibility for control, they need to make it easier to manage operations by understanding supply chain behaviors and helping operators weed out the noise from the actionable intelligence

These gaps and ever evolving needs led to the adoption of better technology and techniques to make a more capable supply chain control tower.

Third Generation Supply Chain Control Towers

The third — and current —generation of supply chain control towers built on the strengths of their predecessors. They adopted the latest tools and technologies available to improve their ability to gather data and deliver actionable insight as early as they could muster them — while cutting through the noise.

The integration of live data from remote sensors, Internet of Things (IoT) devices, and better data analytics delivered through the cloud now provide more visibility and context into supply chain operations.

This had a three-fold impact on how supply chain control towers worked:

• Better Integration — It’s now easier to fold in information from disparate systems like barcodes and RFID, legacy systems that still use somewhat outdated tech, and a host of external data feeds like traffic, weather, and events that could impact a supply chain’s performance.
• Better Insight — Automated data capture eliminates human error and improves the accuracy of supply chain data analytics systems. Control tower systems can now differentiate between an event (like an unplanned stop) and an exception (like a really long unplanned stop) in logistics or supply chain operations.
• Better Exception Handling — Besides automated alerts, newer control towers prescribe a corrective course of action as well as “best practices” to follow in order to run an operation without incidents.

Supply chain control towers today are more adept at helping you manage complex supply chain operations. It’s no small feat considering how much globalization has complicated procurement, logistics, and supply chain management disciplines.

Supply chain control tower systems continue to evolve as they begin to merge planning, monitoring, and execution systems into a single dashboard, all while extending the level of visibility further to levels that, quite simply, just weren’t possible before.

These systems leverage the best tools available for supply chain visibility and take advantage of the granular visibility for predictive and early warning capabilities to improve supply chain exception handling.

They’re also reducing the time it takes to gather and generate alerts on exceptions throughout the system, early warnings that give supply chain managers a heads-up early enough to effect real positive change.

Despite technological advancements however, supply chain control towers still have limitations on the level of predictive insights they can throw up to be acted on. And therein lies another shortcoming — the control tower can only educate you, it cannot execute for you.

If you can’t act on what you see, exception handling and supply chain optimization is far more difficult.

Fourth Generation Supply Chain Control Towers

Visibility tied directly into analytics can be useful, but only if it powers foresight.

The shift from reactive control towers — ones that use real-time visibility to flag exceptions and allow agile course-correction — to predictive control towers — ones that anticipate and prioritize disruptions — is a decisive change toward building better supply chain control systems.

The latest generation of control towers use a combination of better technology and connectivity solutions, a greater degree of visibility, rapid sense and response capabilities, as well as a greater degree of decision automation to manage end-to-end supply chain operations better.

The development of AI systems that can absorb years of data and information from global multimodal shipping operations with varying environmental, load, route, and operating conditions have also improved the level of predictive insights that supply chain planners and managers can take advantage of.

Newer systems can give you better and more accurate insights into factors like:

• When shipments are prone to make unscheduled stops or face unusual delays.
• Transit time based on live logistics conditions over longer periods of time.
• Turnaround times at facilities or ports based on historic as well as live data.
• System throughput, taking manufacturing, storage, distribution, and every other factor into account.
• The likelihood of risks and disruptions for suppliers, routes, carriers, or network facilities.
• The ultimate outcome of variations or disruptions — both live or likely — throughout the supply chain network.

Newer generations will be able to learn supply chain behaviors and develop the intelligence that allows control tower systems to predict, prepare for, and prevent unwanted events.

Software vendors and third-party control tower solutions providers are incorporating advanced business intelligence capabilities that can help control tower operators to sift through reams of data from multiple sources and supply chain players, provide the means to collaborate both within and outside the organization, as well as integration with enterprise systems for automated responses to events without the need for initiation or intervention by the supply chain control tower team themselves.

Considering a Supply Chain Control Tower?

Control towers will become an invaluable supply chain tool for any enterprise that needs to streamline operations using a data and demand-driven decision engine.

Control in the phrase “supply chain control tower” is about learning, understanding, predicting and improving behavior of things, nodes, lanes, routes and people in a global interdependent supply chain.

A purely analytical control tower can provide valuable insights, but without the ability to act on them, their value is limited.

Visibility and control across the supply chain is sorely lacking despite the rise in digitization; some are still struggling to manage a tangled mess of legacy, outdated systems, others are upgrading and deploying control structures piecemeal.

The results are mixed, and most current systems can’t manage the entire process.

The endeavor to achieving complete control starts with real-time end-to-end visibility, which feeds into a decision-making structure that’s overseen by a real-time control tower to optimize every process from the inflow of raw materials, through manufacturing and distribution, up until last-mile delivery.

It’s when you move beyond fragmented visibility — and control — that you really reap the benefits of a supply chain control tower.

Whether you’re setting one up, or plan to in the future, it’s probably a better idea to outsource.

While it may be true that nobody knows your business processes better than you, outsourcing your control tower operations allows you to circumvent the pitfalls, time, and cost that you’d incur trying to set up and run your own operation.

Regardless of how you go about it, you need to start by centralizing data from disparate systems across your current operations in order to get the supply chain visibility you need.

This first — but essential — step will give you what you need to start identifying issues, inefficiencies, and scope for improvements that you probably didn’t realize existed.