Supply Chain Control Towers: What They Are, Why They’re Important, and How to Create Them

There are always a variety of disruptions in the supply chain industry. The COVID-19 pandemic, weather events, or the odd ship stuck in the Suez Canal are just a few newsworthy examples. If you’re a part of the supply chain, you need to be prepared to see these disruptions in order to respond quickly and efficiently. But what’s the best way for you to do that? And what about the average day-to-day inefficiencies?

Each part of the supply chain produces data and information. This data would be useful to share in the event of disruption. But sharing that data would also be beneficial for visibility and transparency in general.

For instance, it would be useful for all parts of the supply chain to know right away when there’s a shipping delay so the invested parties can adapt accordingly. On the other hand, certain data points would also be useful for teams to see supply status in real time.

In short, it makes a lot of sense for every party involved in a supply chain to have a network support system in place where everyone can monitor all of the same data.

This is where a supply chain control tower comes in handy. A supply chain control tower is essentially a user interface that facilitates shared data and communication across a supply chain network. In other words, with a supply chain control tower, you and the companies you partner with are better positioned to resolve issues and be flexible to real-world scenarios.

How do you get there? Is a supply chain control tower necessary? What are all of the details? If you want to achieve interoperability—or when systems communicate, exchange data, and use information—and tackle the problem of unforeseen bumps in the road, using a supply chain control tower is your best bet.

In this post, we’ll fill you in on what exactly a supply chain control tower is, how important supply chain control towers are in streamlining your processes, and how you can start to use a supply chain control tower.

What Is a Supply Chain Control Tower?

If you want to understand how it can work to your advantage, you first need to understand what a supply chain control tower is.

Chris Petrocelli, president of xMS Supply Chain services and an Advisory Board member at SUNY Maritime College and Oregon State University, states, “A supply chain control tower is a network that consists of a combination of information flows to support basic commerce and transactional activities, both domestically and internationally.”

In essence, a supply chain control tower supports the movement of physical goods transported throughout the supply chain through the data that’s in sync with the business processes.

It’s worth noting that there’s different types of supply chain control towers for different needs. These include:

• Transportation control towers provide shipping notifications, track-and-trace notifications, and other data metrics that can help improve performance on shipments.

• Fulfillment control towers provide data that helps users ensure shipments are fulfilled on schedule, identify and track expedited orders, and locate potential cost reductions.

• Inventory control towers provide real-time inventory visibility. This level of detailed, shared information from a control tower can help prevent shortages, stockouts, and general inventory management.
• Supply assurance control towers provide work in progress (WIP) visibility from suppliers to ensure adequate supply flow, allow them to plan ahead for delivery schedule, and improve lead time accuracy.

After you decide what purposes you want your control tower to serve, you can then create a control tower dashboard. Your dashboard is your user interface. Control towers are backed by the raw data your supply chain produces, coupled with the analytical power of artificial intelligence (AI) and machine learning. Thus, ease of use is crucial.

Benefits and Limitations of a Supply Chain Control Tower

The biggest benefit of a supply chain control tower is that you can see the exceptions or bumps in the road as they happen, or even before they happen. Political turmoil, port delays, unforeseen weather, or even just unpredicted market demand are some examples of events a control tower could help you see and respond to effectively.

As Mike Turner, vice president of sales at dynamic freight matching company DFM Data Corp., points out, this can be useful to a company in the supply chain because you can then use that shared data “to push feedback on exceptions or concerns that could affect the production process, the last-mile delivery process, or identify proactively where the merchandise needs to be at a point in time.”

There is, however, a limitation to a supply chain tower: systems.

“There are challenges within organizations and their internal systems, as well as the interrelationship between buyers’ systems and sellers’ systems. Internally and externally, these become some of the biggest challenges that companies face today when it comes to playing any role within the network,” Petrocelli states.

The hardest part of all this may be working around the status quo. For example, you need your internal systems to cooperate with the supply chain control tower. You also need the other parties involved in the supply chain control tower to have systems that let you transfer files and integrate them into the supply chain control tower.

Indeed, convincing companies within a supply chain to share data is a necessary, if somewhat foreign, request. Beyond that, each company must utilize systems that integrate. However, those are hurdles that must be cleared in order to make a control tower a reality.

In short, you need easily accessible raw data. This is where developing a paperless supply chain becomes critical. Paperwork inside filing cabinets is not easily accessible data.

Many supply chain companies considering a control tower will be constrained by the existing processes, systems, and applications being utilized in-house or at their partners. But to summarize, the first step toward control towers is to implement document digitization.

How a Supply Chain Control Tower Can Serve You

OK, now we can get down to the exciting part about supply chain control towers, which is how they can improve visibility, communication, and efficiency in the supply chain.

A supply chain control tower can help keep your supply chain moving seamlessly. Exceptional and unforeseen events are always occurring, so with a supply chain control tower, you can see these exceptions coming and plan for them in real time. You can also plan in advance.

“As business leaders get information and are informed of the exceptions in the supply chain, the intent is to proactively get ahead of the curve so that I can do something different,” Turner explains. “Now, maybe I can expedite a move, or I can let my end-company know that this load or this particular piece of inventory is going to be a day late.”

Through communication, you can make adjustments on the back end or the front end. The most crucial advantage of a supply chain control tower is that it provides shared visibility to all the players involved. This improves the ability of a supply chain to manage the overall flow of the goods.

As noted, you can program a supply chain control tower to provide a number of notifications and alerts. For example, if there’s a production delay at a supplier site, you can alert the manufacturer right away. On the other hand, you can alert the supplier whenever there’s an inventory shortage on the manufacturing floor. When there’s a delay with a shipment, you can get a real-time notification regarding the ETA and prepare receiving staff accordingly.

A supply chain control tower can also perform what-if simulations for you. Because it’s an information hub, you can use the control tower to help you plan out scenarios based on machine learning and predictive analytics. Check out a use case of a supply chain control tower and what it can do for your company here.

Achieving Interoperability

By having companies flowing data into the control tower, you can achieve interoperability because, ultimately, you have companies aggregating the data into one ecosystem. But can this flow of data serve an even greater purpose?

If you use a supply chain control tower to its full potential, it can be a powerful tool.

For instance, there’s a lot of opportunity in the supply chain when it comes to empty trailers. As Turner states,“Right now, at any point in time, I would say 20% to 30% of loads going down the highway are empty because they don’t have a backhaul, where they may have taken a good somewhere, but they don’t have anything coming back.”

A supply chain control tower could help a company address this. Because you have this flow of data and information and you can see all aspects of the supply chain, you could digitally match routes in this scenario so that when truckers go out, they are bringing a full load back on their roundtrip.

And you could use this same tactic to consolidate loads as well.

“Hopefully, in the future, you can see truck A, truck B, and truck C are coming in from different suppliers and they might be all going to Walmart, so you can find a place where you can consolidate the merchandise. I think there are ways where you take all these empty miles and get some use out of them or eliminate them,” Turner explains.

To start, you can use supply chain control towers to address the exceptions in your supply chain and plan around them. But also, you can ultimately use supply chain control towers to address larger goals and work toward creating your optimal supply chain.

Getting Started in Creating a Supply Chain Control Tower

Now that we’ve covered all the ins and outs of supply chain control towers and their purpose in improving communication along your supply chain, you’re probably wondering how to go about setting one up.

The following are general steps required for the design and implementation of a supply chain control tower:

1. First, assess your supply chain as it works currently. Identify the key problems and  business objectives that the control tower can help address.
2. Review and analyze your business processes so you can develop a strategy for responding to these goals you’ve identified. For example, if you know that you experience inventory shortages, you can strategize ways to keep track of inventory more effectively.
3. Design your supply chain control tower.

   Most project planning for control towers will begin by asking questions and stating goals and desired outcomes. For example,  identify which people and parties need to be involved. Look at your systems and determine whether you have the correct systems in place for a control tower. If not, ask questions like these: What systems must be added? What data do you want? What definitions and access to the data are required?

4. Set up a software integration system that will feed into your information hub.
5. Next, plan and create an information hub or user interface where the data is aggregated both from within and outside your organization.
6. And finally, plan out who will be responsible for monitoring, auditing, and making decisions based on the information collected in the hub.
7. Once deployed, continuously develop and improve your control tower through testing, metrics, and delivery on objectives.

Oftentimes, logistics networks get designed by commercial influences and purchasing practices. As Petrocelli points out, “Commercial buying expectations requirements will dictate supply chain and logistics configuration needs on the sourcing and purchasing side.”

But if you’re setting up the supply chain control tower on your end, then you should understand what type of system you’re going to use and how complex that system is going to be.

Going paperless and having a streamlined digital process is your first step. That raw data will allow you to create the IT ecosystem that combines the information from all the different parties  and datasets and to synthesize it into what makes sense.

Companies will often hire consultants to help set up a supply chain control tower. If you don’t have enough IT staff internally, consulting a specialist to implement a control tower can ensure it runs seamlessly and aggregates data easily from all required parts of the supply chain.

When Designing a Supply Chain Control Tower, Think Back to What Your Goal Is

Ultimately, when it comes time to create and use a supply chain control tower, think about your goals and key performance indicators (KPIs). What are you using a control tower for? What do you need it to provide? Is it going to be across all modes? Is the control tower looking at inventory across a global network or just regional? You’ll need some strategies for how to handle your big-picture goals.

Once you answer those internal questions, then you can go out and find who the right player may be to support your goals.

And keep this in mind: if your strategy is fragmented, then your solutions will be fragmented. So, set some goals and form a plan for your supply chain control tower. Also note that as with any system, a control tower is only as good as its data.

Conclusion

To summarize, a supply chain control tower is a centralized hub that captures data from all parts of your supply chain. You can streamline data sharing, foster communication, and increase visibility and improve supply chain performance among your supply chain partners. Delays happen. Hiccups should be expected. Control towers see them coming and help you respond right away.

It may seem daunting to set up a control tower, but the visibility and the benefits one can provide you and every other company in your supply chain can improve your processes and achieve your business goals.

So, to get started, begin with digitization and a conversation with your supply chain partners.

Don’t expect perfection from day one. But strive for continuous improvement, and you might become amazed at the clarity and visibility a control tower can provide.