A Control Tower Organization
Blog: Capgemini CTO Blog
Visibility is a key enabler managing your supply chain both within the walls as well as outside the physical boundaries of your locations. In 2013, Gartner defined that visibility “provides controlled access and transparency to accurate, timely and complete plans, event and data transactions, content and relevant supply chain information”. Simply put, visibility provides speed, reliability and flexibility in the form of well-controlled and proactively managed supply chain functions. However, visibility implemented in traditional supply chain organizations will only gain siloed benefits. After all, traditional supply chain organizations are often organized per process, product group or geography. However, supply chains processes do not stop at those traditional organizational boundaries, but typically run across processes, regions, and product groups and specifically beyond the four walls of your organization.
Event Management is the backbone of a visibility solution. It enables monitoring of activities throughout the supply chain. Events provide insights for tracking of process progress and track performance against pre-defined milestones and KPIs. Managers in every department (procurement, transport, supply chain management, warehousing, and more) can therefore successfully manage by exception. And thus, alerts and notifications ensure proactive management of events.
They are used to inform you about new opportunities, risks and potential disruptions across your supply chain. Examples include late shipments, production delays or missing transport documents. Alerts and notifications are like the warning lights in the dashboard of your car. When your low fuel light fires up, you know that you have to stop and refill before you run out of gas. But when your oil light turns on, you should stop immediately. Supply chain alerts and notifications are no different. They are based upon your (sophisticated) business rules and/ or contract conditions. For example, I have not yet received my ordered materials, or the steamship carrying my containers has not left the port of departure yet, where it should have sailed four days ago. Once informed you can predict potential process deviations and propose mitigation measures. Alerts collect order status information from all sources across the supply chain.
Analytics is another key feature you will benefit from implementing supply chain visibility. Analytics enables you to analyze your (operational) processes and business performance, discover and explain inefficiencies and even predict future events. For example, analytics can help you identify the best suppliers and provide early warning of budget overruns in certain expense categories, and transportation analytics software can predict the impact of weather on shipments. This is what we at Capgemini are often asked about: how to utilize visibility to its full potential?
We believe that, to fully take advantage of supply chain visibility, you also should look at your organization, people and processes as we stated back in 2011. Capgemini defined a supply chain control tower as a central hub merging (real-time) data and physical material flows with the organization, processes and culture to improve supply chain visibility, enabled by technology. In 2016, we added collaboration to this definition based upon our experience designing and implementing supply chain control towers globally. During several implementations, we learned that both internal and external collaboration are equally important, particularly when your control tower matures.
Enforce collaboration with aligned performance indicators
External collaboration is when two or more organizations are working together to plan and execute supply chain operations to create mutual benefits. When considering external collaboration, we have identified three distinct collaboration types:
- Vertical collaboration focuses on collaboration with customers and suppliers. In supply chain visibility, a good example of vertical collaboration is the use of customer/supplier portals to share order and product information.
- Horizontal collaboration focuses on collaboration with supply chain partners and/or competitors. Practical examples include transport consolidation, inventory sharing, and demand sensing.
- Network collaboration is the most advanced form of collaboration and tries to achieve a degree of higher flexibility for organizations by combining and sharing capabilities with both vertical and horizontal partners. Typical examples are providing track and trace functionality to customers and multi-echelon planning.
Internal collaboration is equally important. A control tower organization with a combination of the right experience, process knowledge and competencies supported by the right mix of centralization enables this. At our implementations we found that the following three business models were effective at enabling internal collaboration:
- A Centralized Orchestration has the authority to make decisions regarding events impacting multiple parts of your supply chain
- Centralized Coordination supports alerting, predictions and decision-making regarding events impacting multiple parts of your supply chain
- Information sharing with internal and external supply chain partners
Each of these structures should have clearly defined roles and responsibilities and together with the authority to make, support or share information you will increase control.
In addition, it is important to assess the contribution of the control tower to the end-to-end supply chain. This requires key performance indicators that operate at different levels and link or integrate these efforts to meet your supply chain objectives . When control towers mature, we not only see control tower roles and responsibilities change. We specifically see shifting decision authority whereby the control tower typically moves from information sharing towards supply chain orchestration. Naturally, this shift not only impacts the control tower organization, but also the rest of your business.
For these reasons, control towers are catalysts for digital supply chain transformations. If implemented correctly, control towers turn visibility into truly digital supply chains. This will deliver significant value to not only your internal organization, but also to your supply chain partners.
If you would like to know more about this topic, please contact our experts below: