Supply Chain Control Tower – Evolving dimensions
The consumer industry is known to widely use control towers for increased visibility. Traditional control towers have primarily been used to provide greater visibility across supply chain functions such as inventory situation across nodes, distribution and logistics, and managing peaks. Visibility is vital because you cannot improve what you cannot measure. It also makes the supply chain more agile and customer-centric.
However, providing visibility alone isn’t sufficient to solve current supply chain challenges. Providing a platform for taking actions based on insights and recommendations is the need of supply chain leaders within consumer industries. For example, CPG companies often grapple with OTIF penalties that retailers charge if they fall short on fill rates or delivery time. The main reasons for defaults can be many, including delayed order release, tender processing, dock scheduling, carrier breakages in transit, and unavailability of shelf space. A traditional control tower will display red flags across these parameters. However, the corrective actions needed to resolve these issues are beyond its purview. Hence, there is a need for a smart control tower (SCT).
Making control towers smart
A smart control tower provides the following four key features that transcend the functionalities of a traditional control tower. They are:
- End-to-end visibility across silos: By removing data silos and providing a standardized data platform, SCT provides a 360-degree view of prominent supply chain metrics and customized alerts. SCT can ingest and process both structured and unstructured data, encompassing company internal and external data points. Quantitative and qualitative data can also be processed within SCT.
- Smarter integration, flexible technology: Easy deployment and integration features alongside scalability characterize SCT. The control tower is built using decoupled system architecture, agnostic of the company’s ERP modules and other systems with which it may need integration.
- Predict and prescribe: SCT differentiates itself from a traditional control tower in its ability to predict outcomes from any supply chain module. It takes a step ahead with prescriptive features made possible using advanced data analytics models, AI, and ML.
- Real-time cognitive features: Using a stream of continuously scanned data around supply chain KPIs, SCT can recommend actions in real-time. A constantly evolving root cause analysis that makes smart recommendations using AI and ML is the hallmark of SCT.
The above features can be depicted using a visually appealing front-end, with a set of insightful dashboards suitable for executive understanding. The primary areas an SCT dashboard can display are:
- Overall supply chain health: This will be across functions such as inventory, warehousing, and transportation
- Deep dive into each function: The key KPIs relevant for each function will be displayed. For example, for inventory, we may want to showcase a dashboard that includes in-stock rate, mirrored item percentage (across DC and FC), days on hand, cube capacity utilization, and others.
- Alerts: Red flags and potential warnings will be highlighted
- Assignment to users: Alerts can be assigned to a user or group of users for corrective actions
- Prediction chart: A set of predictions for the function across any chosen period can be developed based on existing KPIs. This can be across multiple entities depending on the function, such as suppliers, categories sourced, inventory, inbound and outbound KPIs (for warehousing), and so on.
- Prescription chart: This will recommend alternate courses of action for the given function as needed.
Some classic use cases where an SCT can be of help are:
- Shipment visibility: Detecting late inbound shipments and taking actions to resolve the impact on lead times and inventory levels.
- Supply disruptions: Analyzing inbound disruptions across the supplier base for categories in all geographies. This will include risk elements such as geopolitical tensions, commodity price fluctuations, shipment delays, and evolving alternate raw materials.
- Pre-emptive out-of-stock predictions: SCT can monitor inventory levels across multiple locations and prevent out-of-stock situations.
The extent to which insight generation and prescriptive modules can be built for an SCT will determine its success in the consumer industry. While many firms are engaged in building the next-generation control tower, it will take the best mix of business, data, technology, and people to create a champion in this space.