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Cutting Edge Control Towers

Feb 15 2016

My main current research focus is supply chain control towers. ARC’s 20th Annual Industry Forum took place last week in Orlando and a panel I moderated was focused on this topic. But the topic was discussed in other tracks, and in informal off the record discussions as well.

Here are some takeaways:

One supplier of visibility solutions argues that control tower visibility can be built bit by bit, pay for a bit of order tracking here, ocean container tracking there, and this software supplier’s experience is that companies tend only to pay for a slice of visibility when they can justify the ROI. Over time this can develop into a broad visibility solution. But the companies with the most advanced control towers in the world made an upfront commitment to advanced control towers often without fully knowing what the payback would be or even believing a business case could really be quantified.

A supply chain control tower implies some degree of centralization. But one very large manufacturer with advanced visibility capabilities has 40 control towers. Different brands have their own control towers. And not all control towers that contribute to supply chain capabilities are strictly speaking supply chain control towers. For example, a control tower focused on social media can provide key demand insights. At this company, there is a centralized control tower that the CEO visits on Monday mornings, looks at key issues, and directs key personnel to follow up.

Control rooms have long been in existence at utilities, chemical plants, and refineries. One core focus is safety, but these rooms also focus on process efficiency and asset utilization. Over time, the industry has moved from a control room at a plant to a control tower managing several plants. The industry has focused heavily on ergonomics, a simple look and feel that makes instant decision making possible, and security. When it comes to usability, despite the investment top supply chain software companies have made in user interfaces, professionals in our field can learn a lot from the process industry.

Leading manufacturers do not believe that any one software supplier will be able to provide most of what they need to build an advanced supply chain control tower. Some leading enterprise software suppliers are being described as being years away from having the kind of capabilities that are needed.

An advanced supply chain control tower will always contain information that goes beyond what is in internal enterprise applications. The Internet of Things buzz is leading to more focus on how GPS, social media, and internet data (like online newspaper articles) can be used, mashed up, layered over a company’s supply chain network map, combined with existing data (like EDI event notifications), and result in far more timely and meaningful warnings about a wide variety of supply chain risks that have historically been poorly monitored.

An advanced supply chain control tower is a hub for analytics. Depending on the problem the analytics can range from simple to very advanced. For example, if the problem is stock keeping unit (SKU) rationalization you might look for data that says a SKU has not been purchased in 90 days. A simple rule can be put in place that says if that occurs, remove that SKU from the list of items our company sells. On the other end of the complexity spectrum, detailed supply chain design models can be rerun just before a product is introduced to make sure the initial assumptions are still largely valid about where products should be manufactured and how they should be distributed.

Analytics get better when data scientists (statisticians, mathematicians, operational researchers, and industrial engineers) work with subject matter experts (SMEs). There is a component of continuous improvement at work where the SMEs continue to come up with ideas of how processes could be improved, and the data scientists then access the necessary data and provide analytic tools to help solve the new problems.

In conclusion, I would like to sincerely thank the executives that participated in the supply chain control tower panel – Jan Theissen of AGCO, Jeff Tazelaar of Dow Chemical, and Tom Moroney of Shell. Their content and insights were excellent. This was the best panel I have ever have the privilege of participating in. This track was taped, and the session will be viewable online in about a month.

By Logistics View Points | February 15, 2016 | Steve Banker
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