A recent study that we conducted with Forbes Insights found that most companies are in the early stages of digitizing their supply chains. In fact, our study revealed that only a small group of companies (9%) are applying high levels of digitization to their supply chain planning and execution.
Given the industry’s measured embrace of supply chain digitization, we believe decision-makers need to get serious about modernizing core capabilities that span the industry’s value chain — from manufacturing and distribution through retailing. When applied properly, supply chain digitization can address several issues including revenue growth, our respondents believe (see Figure 1).
There is, however, a growing realization that despite widespread dissatisfaction with early digital supply chain efforts as revealed by our study, decision-makers believe more informed, data-driven decision-making via enhanced analytics capabilities will eventually pay off. For example, nearly half of senior executives we surveyed in the retail and CPG industries (49%) believe their organizations can achieve digital supply chain maturity over the next few years.
We believe that organizations can overcome their digitization challenges by leveraging the supply chain control tower to create more innovative business process and analytics capabilities.
Defining the Supply Chain Control Tower
We define the supply chain control tower as a cross-functional team empowered to monitor, analyze and take suitable actions to improve specific KPIs across the extended value chain. The control tower team utilizes the following three key components (Figure 2):
Early 360-degree visibility: Information from across systems and processes is shared at the right time.
Cognitive computing engine: Information is monitored and analyzed; analytical tools assist decision-making.
Collaborative responsive mechanism: Disparate functions across the supply chain network work in harmony via workflow management capabilities.
It is equally important to dispel myths about the supply chain control tower. A supply chain control tower is not:
A product that one vendor provides.
A replacement of existing ERP or MRP systems.
A one-size-fits-all solution for end-to-end visibility. It is typically tailored to an organization’s specific needs in terms of industry, organizational structure, geographic reach and the scope of functions and processes.
How the Layers Work
The business architecture of the supply chain control tower comprises three essential layers that power its primary capabilities.
Early 360-degree visibility: Being digital requires insights. The business objective of this layer is to provide real-time or near-real-time visibility to events pertinent to the KPIs monitored by the control tower. This is enabled by:
Data and event integration: The KPIs are distilled into data elements to reveal which events should be tracked to provide actionable information. These data elements and events must then be mapped to enterprise systems that house such information.
Data processing: The data received by these systems of record is then consolidated and processed to arrive at meaningful and readily useful insights.
Presentation: A dashboard presents the collated information to users in an easy-to understand and meaningful way. It provides a shared synchronized view across the organization and supply chain partners, with the ability to easily identify which events the control tower team must respond to.
Alert/exception management: A supply chain control tower issues alerts when an event that impacts relevant KPIs occurs or is impending. These alerts are typically customized by organizational roles. Users can view the alerts and manage exceptions through the control tower dashboard.
Cognitive computing engine: Being digital requires intelligent action. The business objective of this layer is to use data from external and internal sources to apply intelligence to business processes, anticipate and prioritize issues, predict disruptions, mitigate effectively and ensure smart, autonomous decision-making. This is achieved by:
Quantifying impact: When an event has occurred, or is imminent, the team should be able to anticipate and quantify the likely impact of the event so appropriate response measures can be devised and delivered.
Scenario analysis: This pivots around the analytic capability to develop and analyze various scenarios to solve an exception.
Predictive analytics: A supply chain control tower not only provides visibility to what has happened and what is happening, but it also helps predict what can happen next through its predictive analytics capabilities.
Collaborative responsive mechanism: Being digital requires automation and collaboration. The business objective of this layer is to provide the means to collaborate across multiple functional areas both within and outside the organization to effectively respond to an event. This is achieved by:
Workflow process management: This allows various teams to leverage workflow capabilities to orchestrate an effective response to an event.
Workflow tool integration to enterprise systems: The workflow tool can be integrated with enterprise systems to automate certain types of response mechanisms when initiated by the control tower team.
Creating a Control Tower
We believe the focus of control towers should be on specific metrics/KPIs rather than on trying to solve all issues in the supply chain. While visibility to events relevant for the KPIs is a must-have for control towers, we believe analytics and process orchestration are two key components required to inform and deliver sustained and meaningful business impact. Figure 3 lays out a sequential, evolutionary approach for setting up a control tower.