15 Critical Functions of Supply Chain Control Towers Q&A

Posted by Chris Brablc on Jan 31, 2018 9:35:07 AM

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Last week, MPO and DSV co-presented on the webinar, "15 Critical Functions of Supply Chain Control Towers". As with every webinar we do we receive a whole host of insightful questions from the audience, many of which we answer on the webinar and the rest which we want to answer via our blog.

Here are the questions from the webinar and answers from our team of experts.

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Is transportation control tower more of a operational or analytics control tower?

The answer really is "it depends". Transportation control towers typically provide both an operational and analytics function for the carrier and transportation specific processes in the supply chain for each order. That being said, transportation control towers typically are limited to the siloed data they receive on just transportation, making it so your supply chain planners are tracking down any exceptions prior to the transportation stage on a piecemeal basis.

Supply chain control towers are often end-to-end, meaning they are operational with analytics and spanning all supply chain functions (i.e. sourcing, manufacturing, warehousing, transportation, etc.) This enables your planning team to effectively catch order exceptions much earlier in the process thus easier more OTIF orders.

How do you handle the conflict of interest that arises when control tower or 4PL provider is also providing some of the 3PL or 2PL services in the same supply chain?

Transparency is a key issue that many organizations are struggling with when it comes to their 3PL and 2PL partners and is a critical function of any solution that provides supply chain orchestration such as a control tower. Let's handle your question in two parts.

First, if you’re using a control tower solution internally, I'd most likely look to disentangle your technology provider from your 3PL or 2PL.. I recommend either partnering with a best of breed technology provider, or if you leverage the technology from your logistics partner, perform the right due diligence to ensure it provides the flexibility you need. Some LSPs also leverage best of breed technology vendors and will set up contracts that give you flexibility to use the technology separately from the logistics services, and vice-versa. You also might face a situation where you decide to switch 3PL providers, which leads to a tough technology conversation. You don't want to have to switch both your 3PL and the technology at the same time if you can help it.

Second, if you've made a decision to outsource your supply chain orchestration to a 4PL this is a different situation. You've obviously made a decision to outsource this element of your supply chain and in turn, that organization is responsible for maintaining the SLAs agreed upon and doing so across your partners. In these cases, you need to be up front and transparent about the performance reporting you want from the 4PL and need to ensure this relationship is managed. I'd also look into the technology that the 4PL is using. Did they build it internally or do they have a strategic partnership with a technology provider to offer these services? The latter might offer more flexibility into supply chain visibility and transparency across the multiple parties in the supply chain.

Are Control Towers able to integrate traffic data to allow for more accurate delivery arrival times?

Typically, if your control tower is also orchestrating your transportation you will be integrating it with your carriers to help provide this line of sight. The carrier delivery times and view into these times should pass into the control tower so the control tower can make real-time decisions on how to best optimize and orchestrate the best order flow for the single customer order to arrive OTIF and in relation to all your other orders that come into the system (i.e. should you consolidate and split orders?)

Our Control Tower is an analytics control tower. The challenge often rests with data gathering from multiple 3PLs. How is this handled?

As organizations have continued to outsource significant parts of the supply chain, it's become increasingly important for them to be able to track the performance of their supply chain partners (i.e. suppliers, 3PLs, carriers, etc.) and provide true collaboration with these partners. Multi-enterprise business networks are forming with control towers connecting a pre-configured network of parties and partners to ensure deep collaboration on a unified data set for better supply chain visibility and improved order optimization.

Now, in reality, depending on the 3PL, you'll find their ability to share, integrate collaborate on data to vary. Most control tower solutions will have the ability to integrate in multiple ways with all of these 3PLs, however, the integrations themselves may differ based on the existing systems they use.

Can you give an example of non-transportation step in e-commerce?

A non-transportation step would be any step in the supply chain that occurs to give you granular end-to-end supply chain visibility into the processes not related to supplier or end customer shipments. This could include pick and pack steps in your warehouses or , kitting, inspection repair steps from your suppliers. If international this could also include custom brokers or container preparation, equipment configuration or assembly steps. The key here is that supply chain control towers can also associate an activity cost to these steps ensuring that you can effectively measure the total landing cost of any order that includes steps outside transportation.

The other key element of a control tower in terms of optimization is also inventory sourcing especially for your omni-channel strategy. As an order comes in, control towers with sophisticated order management capabilities can help to determine the best location to source inventory from while taking into account inventory, time, activity cost, transportation cost and capacity across all your inventory locations including internal and external warehouses and retail stores.

How these Control Towers help in reducing the risk in operational activities in logistics and Supply Chain?

Risk can come in multiple dimensions from operations around weather, broken down equipment, reduced capacity, etc. Reducing risk is all about measuring efficiency and events across multiple partners based on your pre-determined plan.

The first area a control tower helps is in truly digitizing and executing on this plan and providing real-time supply chain visibility into the granular events to enable you to immediately understand where your supply chain is breaking down. Control towers help you catch these exceptions sooner and enable intelligent re-planning to ensure better customer experiences. Control Towers should be able to accept expected events, such as pick-up, or order confirmation, which highlights if the order is in plan, but also unexpected events which could include weather delays, equipment failure, etc.

The second area is around analytics and being able to more effectively measure the performance of the end-to-end functions of the supply chain as well as the performance of all of your internal and external parties. More and more, external suppliers and partners are influencing the end customer experience we provide to customers with our supply chain and control towers help us gain visibility and better collaborate and optimize interactions with your network. Control tower analytics can help you to identify bottlenecks sooner and make strategic partner decisions that drive better efficiency, optimized costs and improved customer experience.

Today's need is not only visibility but the prescriptive form of analytics through control tower data to enable better, faster, and facts based decision making process. How are solutions helping with this?

Totally agree! Digital control towers are well past the pure visibility roots they had in the past and are moving into core execution platforms that optimize your supply chain based on this visibility. At MP Objects, we like to describe the value and usage of control towers in three key phases:

  • End-to-End Visibility: First, many customers still struggle with core visibility for the end-to-end supply chain from an order perspective. Control towers first benefit is giving a single source of truth for the customer order across all functions and parties in the supply chain. This needs to be set up first.
  • True Collaboration: Second, is using this visibility for better real-time collaboration. Collaboration requires that you and all of your parties and systems are working off a centralized data set. Control towers can help to make the connections between these parties and provide transparency into the data so that each party can take action on the most readily available information.
  • Continuous Optimization: Third, a control tower will begin using the visibility and networked parties to make real-time, automated decisions on the best plan for each order and in conjunction with other orders. This means that the end-to-end order flow across suppliers, manufacturing, warehousing and transportation will be optimally planned near real-time once orders are received. It also means that as new orders are recognized, the control tower consistently re-plans and intelligently orchestrates the best order flows and paths for each order in relation to current and future orders. The result is a system that quickly understands where efficiency can be gained whether that means consolidation and splitting of orders to ensure a Full Truck Load or combining a customer's order with other orders that they made where inventory is located in different locations. A control tower will take in all the order and supply chain information (i.e. partner SLAs, lead times, cost, delivery time, capacity, customer info, etc.) and orchestrate your orders in the most cost efficient and optimized way to ensure OTIF.

In today's era of supply chain complexity where supply chains are becoming longer, more specialized and with more parties than ever before, systems like control towers through supply chain orchestration are able to embrace the complexity providing agility and flexibility with ensuring better customer experiences while most effectively managing risk and cost.

Critical Functions of a Modern Control Tower On Demand Webinar

Topics: Supply Chain Orchestration, supply chain visibility, supply chain complexity, supply chain control tower, inventory optimization, digital supply chain, supply chain optimization, inventory management, supply chain networks, multi-enterprise operating networks

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