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Why Planning Control Towers are Key to a Successful Supply Chain
1 July 2019
By Birgit Breitschuh and Liam Harrington
Automated, well-connected systems. Check. Impeccably organised behaviours and processes within a well-structured organisation. Check. An optimised go-to-market strategy. Check. That’s what successful 21st century supply chains look like, but they’re surprisingly difficult to find in a modern marketplace which requires more visibility, flexibility and agility than ever before. With ‘volatility’, and ‘instability’ now commonplace in business vocabulary, supply chains must be able to meet unexpected and unplanned demand to satisfy their customers.
How can this be done? With an optimised end-to-end supply chain, enabled by today’s technology. In the age of digital disruption, technology is dictating the pace of change; organisations need to embrace the latest advances and get fit for the future to survive, let alone thrive. Enter, planning control towers.
Why, 'Planning Control Towers'?
End-to-end supply chain is about managing the supply chain in an organised way, and this is where the concept of planning ‘control towers’ emerges. Predictably, its origins are in the world of aviation, where control towers manage and monitor the multiple autonomous events at airports – take-offs, landings, on-the-ground transport and logistics etc. By tracking independent but parallel events, the control tower can improve performance, respond in real-time to projected or unexpected events and ensure operations run as expected. And avoid potential disasters.
How they work in business
When applied in the context of large multi-national organisations, planning control tower decisions are made centrally, synchronising what is being made in multiple factories and what is distributed to multiple markets. Decision-making isn’t devolved to a local level, rather, it all stems from one centralised source with access to insights for the whole organisation, rather than just a single sub-division. This way, businesses can ensure that the decisions being made benefit the organisation as whole, enabling them to optimise the allocation of products and services.
Cottoning onto this concept, a number of software solution providers now offer IT packages which include a ‘Control Tower’ module. Most often, these are cloud-based data-storage systems that enable companies to leverage their end-to-end supply chain visibility performance by using real-time data analytics for optimised performance. The most sophisticated systems not only provide visibility, but also respond to disruptions and provide collaboration capabilities and functionality to automate processes, and controls everything from optimum products distribution to temperature of perishable products monitoring. By relying on a system to highlight and solve issues, such as optimum product distribution – the planner can focus on other tasks to improve efficiency and performance.
Challenges from the inside
But competitors aren’t the only threat to an organisation – one of the biggest obstacles to a business is itself. Internal customers blight the path to success, vying for the affections and attentions of supply chain and disrupting the flow of products and services to external consumers. Some organisations even have customer service divisions just for satisfying their own people, because the front-end of supply chain have become accustomed to behaving as if they are the customer.
For example; if an organisation has global sub-divisions with local markets and local inventory for those markets, and the sub-division is demanding stock from a central distribution point, the company is setting itself up for sub-optimisation. If decisions are made on a local level rather than from a centralised perspective, it could result in product not being sold and/or product not being distributed to the market where it would have achieved greater margin.
Crucially, if organisations continue to operate on internal customer methodology or just by optimising the front-end of the supply chain, they are never going to be able to improve to the extent that they can realistically afford to compete with the big boys. For many smaller businesses, the perpetual struggle against global giant, Amazon, can illustrate this.
Renowned for its next-day and same-day delivery – and now, incredibly, one-hour delivery slots – Amazon has dominated the online consumer goods market and has left smaller organisations scrabbling to match its quick and convenient delivery slots. Despite a $7.2 billion loss on shipping in 2017 due to deliberately putting the squeeze on would-be competitors, Amazon is continuing to invest heavily in creating its own shipping infrastructure, from ocean freight, air transport, demi trucks, local delivery, and even trialling drone deliveries to customer’s front doors. Many organisations are trying to compete with Amazon in terms of delivery but are inevitably over-promising and under- delivering because their supply chains have never been structured in a way to allow them to do this. They are running extremely unbalanced supply chains and yet, expecting to deliver excellent, competitive service on the front-end without proper investment in both time and technology.
And ultimately, in today’s fast-paced world, businesses can’t afford to not invest in optimising their supply chains, as they battle to win the short-lived affections of an increasingly fickle customer base, with an insatiable appetite for newer, better and cheaper offerings. Predicting the future might be impossible, but planning for it is essential and planning control towers are an excellent place to start.
Interested in supply chains? Read our blog on why supply chain needs to be offered a seat at the decision-making table here.
if you have something to say, get in touch with us on Twitter, or connect with Birgit and Liam on LinkedIn.