Supply chain control towers: Providing end-to-end visibility
During the pandemic, everyone experienced supply chain disruptions in some way: the lack of toilet paper on grocery store shelves, a shortage of N95 masks and medical equipment, a scarcity of lumber, or even the scramble to find an adoptable puppy. COVID-19 brought into sharp focus the vulnerabilities in today’s global supply chains. When you combine those vulnerabilities with the Amazon Effect, geopolitical challenges, and the move to reshoring and nearshoring, business leaders are more aware than ever of the potential for disruptions in the supply chain.
On top of all of that, companies are now also experiencing decreasing customer loyalty along with increasing pressure to deliver quality products, services, and customer experiences at competitive prices. This confluence of circumstances makes it hyper-important that supply chain teams know what’s happening in their supply chain right now, why it’s happening, and how to address it quickly – before small disruptions become big expensive problems.
Supply chain control towers provide the visibility that is essential for organisations that need to navigate this complexity.
A 2018 survey found that the “biggest challenge for global supply chain executives was visibility.” And that was pre-pandemic.
As we emerge from the chaos of COVID-19, the need for end-to-end supply chain visibility to manage complex, modern networks is more critical than ever.
What is a supply chain control tower?
A supply chain control tower is a cloud-based solution that leverages advanced technologies – such as artificial intelligence (AI), machine learning, and the Internet of Things (IoT) – to proactively manage supply chains.
Supply chain control towers offer end-to-end, real-time visibility across an organisation’s entire network, including suppliers, manufacturers, and business partners. They allow organisations to manage what they cannot see, plan for unlimited unknown variations, and mitigate disruptions and risk before they become issues. In a world where historical data can no longer accurately predict current and future demand, and disruptions range from extreme weather to trade wars to tankers blocking the Suez Canal, that visibility and instant access to up-to-date information is essential for supply chain agility and resilience.
Data is the lifeblood of control towers. These systems collect large amounts of up-to-the-minute data from across the supply chain to provide an accessible, usable 360-degree view of what’s happening anywhere in your supply chain in real time. That data is used to:
- Drive what-if analysis and compare scenarios
- Run simulations of demand and supply changes
- Identify issues with customer alerts and address them quickly
- Collaborate with partners across the supply chain
- Automate exception flagging and handling
As supply chain control towers have evolved, they’ve broken down functional silos to allow organisations to connect to their entire supply network – enabling greater supply chain visibility, collaboration, and optimisation.
Control towers – yesterday and today
Supply chain control towers are not new, but in initial iterations they were siloed and linear, only offering insights into a specific area of operations such as transportation, logistics, or warehousing. They were usually on-premise software solutions with limited capabilities.
Types of control towers included:
- Logistics control towers
- Operational control towers
- Transportation control towers
- Analytical control towers
- Inventory control towers
Analytical control towers offered analysis but no prescriptive guidance for how to address problems, for example. And transportation control towers tracked transportation-related data but nothing beyond that. Most of these control towers only offered visibility to immediate trading partners. But as the speed and complexity of supply chains accelerated, it became harder to organise and solve problems across siloed, legacy systems and control towers.
The rise of the cloud with its computational power and ability to ingest and analyse large amounts of data – combined with artificial intelligence, machine learning, IoT, and predictive and prescriptive supply chain analytics – changed all of that. Today’s supply chain control towers provide end-to-end visibility and deep context into all supply chain operations.
As they evolve to encompass the entire supply chain, control towers are in high demand. According to Grandview Research, the global control tower market size was valued at USD$2.58B in 2018 and is expected to grow to $17.24B by 2027.
Benefits of a supply chain control tower
By providing end-to-end visibility, decision support, and the ability to course correct quickly, a supply chain control tower makes an organisation’s supply chain more resilient. And a resilient supply chain can avoid the impact of disruptions or rapidly bounce back from disruptions when they do occur. The core benefits of a supply chain control tower include:
- End-to-end supply chain visibility: By having visibility across the entire supply chain – including suppliers, manufacturers, transporters, warehouses, and third-party logistics (3PLs) – companies can proactively manage their supply chains, which reduces risks and costs.
- More accurate forecasting and decision-making: Being able to aggregate data, connect it, and expand it through predictive analytics leads to better, more automated decision-making and self-correction – resulting in more efficient operations and less waste.
- Greater supply chain agility: Agile supply chains can pivot when the unexpected happens. That agility creates better customer experiences, faster response times, and a more efficient supply chain overall.
- Better supply chain collaboration: A supply chain system that connects partners, suppliers, and logistics service providers facilitates cross-organisational collaboration. This ability to address issues directly with partners leads to faster issue resolution, lower costs, higher customer satisfaction, and increased partner and talent retention.
- Optimum inventory levels: Supply chain control towers provide visibility into inventory across the entire network – so companies have what they need, where they need it, when they need it. They increase inventory turnover and profits, and reduce inventory holdings stock outs, and material shortages.
See, decide, act: Preventing supply chain disruptions
Supply chain control towers allow supply chain executives to see, decide, and act in real time.
Supply chain control tower process
- See: Identify causes of exceptions, trace problems to their origin, and see across silos, including ERP systems, warehouse management, and order management.
- Decide: Use scenario-based modelling and supply chain analytics to create reactive and predictive alerts, assess the impact of exception conditions, and understand and prioritize issues as they arise.
- Act: Drive better and faster decision-making based on an all-encompassing view of the data combined with granular visibility, which optimises the supply chain.
How do supply chain control towers work?
Everything that happens within a supply chain control tower relies on data – inputting usable data, analysing it accurately and efficiently, presenting it in an actionable way, and leveraging it to drive informed, optimised decision-making. The better and more comprehensive the data your supply chain control tower uses, the better your results will be.
A supply chain control tower:
- Automatically collects and integrates structured and unstructured data from across the supply chain – from barcodes, remote sensors, and the Internet of Things (IoT) to weather and traffic data – to provide real-time information and insights.
- Combines that data with logic to provide up-to-date information via user-friendly dashboards that give insights into core operational functions such as product development, order management, inventory planning, manufacturing, and more.
- Leverages granular visibility to improve agility when responding to tactical and operational disruptions. It can also predict events that may occur in the near future. And it does so quickly, so supply chain teams can anticipate and prioritize issues.
- Supports automated decision-making and self-correction, in part because of the ability to identify the causes of issues and trace problems to their source. And continuously learns, senses, responds, and improves thanks to AI and machine learning.
- Makes it easy for stakeholders to create procedure playbooks that define how to solve specific supply chain planning issues. These playbooks can be shared with supply chain teams when an issue is detected to help streamline and standardise their response.
Real-world supply chain control tower examples
Discover how Schnellecke Logistics SE, which keeps automotive supply chains running around the world with logistics services and supplies, achieved real-time transparency with a digital control tower.
Learn how Orkla Food Ingredients – a distributor of bakery and ice cream ingredients and plant-based products to 22 European countries – makes proactive supply chain planning decisions with in-depth, accurate insights.
Explore control tower capabilities
Drive supply chain visibility and agility with SAP Integrated Business Planning.
SAP Insights Newsletter
Subscribe today
Gain key insights by subscribing to our newsletter.