Executive Briefings

Should You Invest in a Supply Chain Control Tower?

We live in a time of incredible technological progress. Self-driving cars and self-flying drones have already arrived, and more intelligent machines are surely just over the horizon. For many in the supply chain management community, the next big technology is the "control tower". Millions of dollars have been spent marketing the idea that a control tower is the "intelligent" system of the future and the solution to your problems. What is a control tower and should you invest in one?

Should You Invest in a Supply Chain Control Tower?

Given the stakes, it pays to be skeptical and investigate what lies beneath that flashy demo. A closer inspection at the underlying architecture of control tower systems reveals several critical flaws.

First, what exactly is a supply chain control tower? Every outlet has its own definition, but all share a common theme"”visibility. A supply chain control tower system is an attempt to make the outside supply chain environment visible to the enterprise, with "end-to-end" visibility being the Holy Grail. Other supposed benefits include removing system latency, recording every transaction and event, and rapidly alerting planners of disruptions and deviations from demand and operations plans. But these can all really be thought of as various forms of visibility.

The visibility that control towers provide supposedly reduces the amount of complexity that human planners face, allowing them to make better decisions. No doubt supply chains have become too complicated: a recent Gartner survey found that 85 percent of respondents felt that supply chain complexity is a significant and growing challenge for their operations. Where is this complexity coming from? The answer lies in today's globalized, outsourced supply chains.

Globalization and outsourcing mean that unlike the vertical integrated supply chains of a few decades ago, no single company today owns more than a small slice of the fulfillment process. This type of specialization has largely been a good thing in that it has reduced the overall cost of goods for consumers. The hidden downside however, is that because traditional enterprise systems were conceived when supply chains were much more virtually integrated, they were not designed to see and manage anything beyond the four walls of a single enterprise. Thus, as supply chains become more fragmented and complicated, they also become more hidden, making the problem even worse! It will probably come as no surprise then that a recent Deloitte survey of manufacturing and retail executives found that one of their top two concerns was the amount of risk within their extended supply chain comprising vendors and customers.

Given today's environment of complexity and risk, it is no wonder that the control tower has been so appealing to the supply chain community. Yet when you begin to inspect the underlying technology these systems rely on, it's clear that they could never live up to the hype. For example, take "end-to-end" visibility, the primary benefit they are supposed to provide. The truth is that control towers offer a very limited form of visibility, emphasizing visibility into one part of the chain at the expense of another. At best, this means visibility across the internal departments of an enterprise combined with national sales and purchasing visibility into its immediate trading partners.

This is because control towers create visibility by crudely stitching together multiple applications together with one-off connections that aren't reusable, a time- and resource-intensive process. Given that today's supply chains are made up of thousands of trading partners, each with their own incompatible systems, you can see why control tower projects stall long before providing the end-to-end visibility they promise. End-to-end visibility means just that"”seeing everything in real time from the end customer all the way back to raw material suppliers. Anything less means you're making decisions without valuable information that affects your profitability.

Suppose a control tower could somehow grant you end-to-end visibility in real time, how valuable would that really be? This leads us to the second major limitation of a control tower"”it does nothing to change the fact that your enterprise is using separate systems for planning, execution and business intelligence. Thus, even when a control tower provides a timely alert about an issue somewhere else in the chain, a human planner must still evaluate the alert, translate its effect on the strategic, operating and execution plans, and determine the optimal response. This takes a lot of time and effort"”meaning that at best the latency between detecting a discrepancy and taking corrective action will be a full week, and more likely several weeks or a month.

Thus, the limited visibility that control towers offer actually matters less than the fact that they lack decision-making technology, instead offering mere decision support. Today's global supply chains are simply generating too much data for human planners to keep pace. The real solution is an intelligent multi-enterprise transaction backbone that actually responds to issues by executing the necessary transactions on its own, whether creating new transactions or modifying old transactions. For example, when a supply shortage occurs, the system should not only give trading partners instant visibility into impact, but also make intelligent allocation decisions across the supply network all the way to the store.

This capability is possible today, but it requires a fundamentally different architecture from that of passive systems like control towers. The future of supply chain technology lies in systems that collapse the historical divide between planning and execution systems, and that make intelligent decisions and modify plans automatically without human intervention. It should be designed from the outset to accommodate every member of a supply chain, whether a supplier, logistics provider, or retailer, with reusable intra-company connections to ensure continuous progress and projects that actually gain momentum over time.

In the end, the name "control tower" alone reveals the limited aspirations and backward vision of these systems. Aviation control towers have been around for decades, and emerged by necessity during a time when the only way to manage airspace was to passively track and guide planes with radar and radio. In an age of pilotless drones, why name a technology of the "future" after something that came about before the internet or even computers?

Source: One Network Enterprises


Keywords: supply chain management, supply chain management IT, demand-driven, supplier network, supply chain visibility, supply chain solutions, supply chain risk management

Given the stakes, it pays to be skeptical and investigate what lies beneath that flashy demo. A closer inspection at the underlying architecture of control tower systems reveals several critical flaws.

First, what exactly is a supply chain control tower? Every outlet has its own definition, but all share a common theme"”visibility. A supply chain control tower system is an attempt to make the outside supply chain environment visible to the enterprise, with "end-to-end" visibility being the Holy Grail. Other supposed benefits include removing system latency, recording every transaction and event, and rapidly alerting planners of disruptions and deviations from demand and operations plans. But these can all really be thought of as various forms of visibility.

The visibility that control towers provide supposedly reduces the amount of complexity that human planners face, allowing them to make better decisions. No doubt supply chains have become too complicated: a recent Gartner survey found that 85 percent of respondents felt that supply chain complexity is a significant and growing challenge for their operations. Where is this complexity coming from? The answer lies in today's globalized, outsourced supply chains.

Globalization and outsourcing mean that unlike the vertical integrated supply chains of a few decades ago, no single company today owns more than a small slice of the fulfillment process. This type of specialization has largely been a good thing in that it has reduced the overall cost of goods for consumers. The hidden downside however, is that because traditional enterprise systems were conceived when supply chains were much more virtually integrated, they were not designed to see and manage anything beyond the four walls of a single enterprise. Thus, as supply chains become more fragmented and complicated, they also become more hidden, making the problem even worse! It will probably come as no surprise then that a recent Deloitte survey of manufacturing and retail executives found that one of their top two concerns was the amount of risk within their extended supply chain comprising vendors and customers.

Given today's environment of complexity and risk, it is no wonder that the control tower has been so appealing to the supply chain community. Yet when you begin to inspect the underlying technology these systems rely on, it's clear that they could never live up to the hype. For example, take "end-to-end" visibility, the primary benefit they are supposed to provide. The truth is that control towers offer a very limited form of visibility, emphasizing visibility into one part of the chain at the expense of another. At best, this means visibility across the internal departments of an enterprise combined with national sales and purchasing visibility into its immediate trading partners.

This is because control towers create visibility by crudely stitching together multiple applications together with one-off connections that aren't reusable, a time- and resource-intensive process. Given that today's supply chains are made up of thousands of trading partners, each with their own incompatible systems, you can see why control tower projects stall long before providing the end-to-end visibility they promise. End-to-end visibility means just that"”seeing everything in real time from the end customer all the way back to raw material suppliers. Anything less means you're making decisions without valuable information that affects your profitability.

Suppose a control tower could somehow grant you end-to-end visibility in real time, how valuable would that really be? This leads us to the second major limitation of a control tower"”it does nothing to change the fact that your enterprise is using separate systems for planning, execution and business intelligence. Thus, even when a control tower provides a timely alert about an issue somewhere else in the chain, a human planner must still evaluate the alert, translate its effect on the strategic, operating and execution plans, and determine the optimal response. This takes a lot of time and effort"”meaning that at best the latency between detecting a discrepancy and taking corrective action will be a full week, and more likely several weeks or a month.

Thus, the limited visibility that control towers offer actually matters less than the fact that they lack decision-making technology, instead offering mere decision support. Today's global supply chains are simply generating too much data for human planners to keep pace. The real solution is an intelligent multi-enterprise transaction backbone that actually responds to issues by executing the necessary transactions on its own, whether creating new transactions or modifying old transactions. For example, when a supply shortage occurs, the system should not only give trading partners instant visibility into impact, but also make intelligent allocation decisions across the supply network all the way to the store.

This capability is possible today, but it requires a fundamentally different architecture from that of passive systems like control towers. The future of supply chain technology lies in systems that collapse the historical divide between planning and execution systems, and that make intelligent decisions and modify plans automatically without human intervention. It should be designed from the outset to accommodate every member of a supply chain, whether a supplier, logistics provider, or retailer, with reusable intra-company connections to ensure continuous progress and projects that actually gain momentum over time.

In the end, the name "control tower" alone reveals the limited aspirations and backward vision of these systems. Aviation control towers have been around for decades, and emerged by necessity during a time when the only way to manage airspace was to passively track and guide planes with radar and radio. In an age of pilotless drones, why name a technology of the "future" after something that came about before the internet or even computers?

Source: One Network Enterprises


Keywords: supply chain management, supply chain management IT, demand-driven, supplier network, supply chain visibility, supply chain solutions, supply chain risk management

Should You Invest in a Supply Chain Control Tower?