Self-reliant Supply Chains in the Business 4.0 environment – An Intelligent Control Tower

Executive Summary

With increasing globalization, supply chains are becoming more complex and global. Goals of low cost sourcing and establishing a presence in emerging markets propel the extensions of supply chains. In order to achieve these goals, effective collaboration with partners is becoming imperative. In the current Business 4.0 environment, the stronger the collaboration – the higher the profits, flexibility and customer satisfaction levels. The essence of collaboration lies in utilization of correct information available in real-time to make business decisions. A supply chain Control Tower is a technology similar to Air Traffic Control which captures and provides supply chain data to make decisions swiftly and aligned with the business objectives. It monitors the supply chain health and identifies exceptions, bottlenecks, disruptions, etc. to be addressed at the right time. With advances digital technologies, such as cloud and the Internet of Things (IoT), enabling digitizing supply chains and 5G communications, an independent decision making entity is needed to make decisions yielding enterprise wide value rather than individual motives driving supply chain behavior.

What is a supply chain control tower?

A Supply Chain Control Tower is a centralized hub meant to integrate and distribute key information like orders, shipments, and inventory levels based on the data stored in various systems such as ERP, TMS, WMS, etc. across an organization. It links people, operational methods, and analytics using the IoT to fuel Artificial Intelligence and cloud technologies. There are three core capabilities of a Supply Chain Control Tower – End to End Visibility, Decision Analytics, and Process Execution.

End to End supply chain visibility means access to all information bits across the chain on a real time basis. Decision analytics allow organizations to convert data into meaningful business insights and decisions. Analytics means placing questions like – “Why this”, “What to do”, and, “How can” before the real time information is received. Risk and response management also fall under decision analytics. Simulation provides the capability to test potential hypotheses and scenarios before a disruption occurs. Execution refers to the circulation of alerts and action plans through the chain with subsequent monitoring to ensure governance and positive outcomes.

Where is the compelling need for the companies to implement control towers?

Organizations have begun to realize that supply chain management must become a core competency. In order to be successful, archaic/stringent supply chains must be transformed to agile supply networks. Most supply chain operations run according to traditional methods leading to higher costs and declining service levels as we enter into the Business 4.0 market.

Control Tower technology helps to provide supply chain visibility by collecting all of the data into a central repository. Since  operators must identify and analyze problem areas like high logistics costs, inventory levels, and lower fill rates to name a few, a Control Tower helps diagnose pain points by capturing volumes of data and analyzing them in parallel to operations.

Further, the operator would have to identify which of such problems need to be tackled first in order to realize maximum business value. This can be done by the Supply Chain Control Tower that can selectively analyze each area and determine the highest benefit and priority to address the problem and even prescribe resolution to eradicate the problem. This tool has analytics engines embedded along with some pre-loaded information to support decision making. Most likely, the human resources at each department at operations’ sites may have a myopic view to identify such issues and could never raise them. Here the Supply Chain Control Tower can bring out an unbiased analysis to be used to the company’s advantage.

Finally, the corrective action plans are implemented to avoid the losses and improve the efficiency. With disjoined functions across the supply chain, it’s difficult to roll out such plans unless there is a binding force. The Supply Chain Control Tower’s end to end intelligence enforces an order across the members by making the supply chain transparent. It provides controls over the supply chain design, policies related to procurement and distribution, and any potential deviations.

Call to Action – Possible Roadmap for setting-up a Supply Chain Control Tower

While ERP systems are already prevalent and provide significant amounts of information that already gets stored, it does not have external information inherent in its database. Translating this data into a meaningful form for the Supply Chain Control Tower to digest is essential. The right selection of middleware software for integration to the external environment and partners is critical. Also, the functions of the supply chain which need such sensing and monitoring have to be carefully identified. These functions could be – Planning & Routing, Forecasting, Reporting or WMS/TMS. Internal resistance is a hurdle that frequently occurs during the roll out of such tools. Selecting the right personnel who would bear the responsibility for quickly executing the decisions “radiated” out of the Control Tower is critical. A Go-Slow strategy in the initial phases and then rapid expansion in the later phases is advisable. A Supply Chain Control Tower has a long lead time to operationalize often supervened upon short term business objectives.

 

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