4 Global Supply Chain Challenges and How Control Towers Can Help

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The global market in 2021 is faster, more digital, and more competitive than ever. Customers carry the baton, and demand signals keep flowing into the enterprise from more and more different channels.

The modern supply chain dynamics require innovative capabilities and strategies to deal with uncertainties, improve resilience and implement holistic solutions to balance costs, services, deliveries, and customer expectations.

Four Challenges Facing the Modern Supply Chain Industry

What is Modern Supply Chain Management? - Unicsoft

Supply chain leaders need to manage a highly complex supply chain for the global business environment and deal with disruptions to keep the bottom line and top line intact. However, for decades, poor supply chain visibility has suffocated the industry.

Here are the four challenges gripping the modern supply chain.

1. Data and Application Silos

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Vertical organizations often fly blind.

Yes, that is true. Most companies are vertically integrated and use systems such as ERP, TMS, WMS, MRP to manage their functional departments. The functions primarily rely on plans developed within such systems to drive execution, monitoring & control. As a result, critical information such as customer demand, logistics, function-specific supply challenges & backlogs is siloed and invisible to other departments.

While function-specific analysis is time-consuming, cross-functional insights are even more challenging and require sifting through large volumes of data. Thus, business unit heads lose sight of the strategic ambitions of the overall supply chain

According to a survey by Supply Chain Dive, only 6% of companies believe that they have achieved complete supply chain visibility.

The lack of supply chain visibility is overwhelming and keeps on staggering.

2. Lack of Know-Hows, Tools, Technologies to Generate Insights

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With the advent of digital data, volume, accessibility, and insights generation through analytics are critical to creating a sustainable supply chain.

However, because analytics is not widely adopted, the data is poorly used.

The data engineering and analytics capabilities in most supply chains are insufficient. As a result, supply chain leaders often cannot effectively use relevant data at the required speed. They also lack diagnostic and advanced analytics tools/technologies and often fail to understand the nature of use cases or problems in the supply chain.

3. Lack of Predictive and Prescriptive Capabilities

Descriptive, Predictive, Prescriptive Analytics | UNSW Online

Digitalization is not enough.

As per the Chartered Institute of Procurement & Supply Risk Index’s report, the average annual economic loss caused by major natural disasters around the world is approximately US$211 billion.

Supply chain leaders also need to leverage new capabilities to predict market moods, deviation, and unanticipated geopolitical landscape.

However, most existing advanced analytics applications cater to solving point problems. There is an acute shortage of capabilities to use prescriptive or simulative simulations or what-if analysis to investigate broader issues in the supply chain and make recommendations. In addition, there are only a few good AI/ML-driven analytics solutions out there that prevent executives from using machine learning and limit the automation of the supply chain.

4. Lack of Off-the-shelf Solutions

Off-the-Shelf Software is Limiting Your Company's Productivity

Every use case or nature of the problem varies from customer to customer. So off-the-shelf products cannot meet customization and personalization requirements. Regarding the KPIs that businesses want to measure, use cases vary from company to company, making it impossible for off-the-shelf applications to handle. Such rigid solutions put the burden on supply chain leaders to get data in the desired format.

Indulgent customizations, choice complexities often lead to value destruction.

Need for an End-to-end Supply Chain Visibility Capabilities through Digital Control Tower

“Gartner reports, 79% of supply chain leaders believe that the internet/platform-based approach is the most critical new business model.”

The above four challenges require building a digital control tower with data engineering functions and pipelines on top of a solid data layer. Establishing a simplified data architecture with an automated framework can integrate master data and transactional data sources in a streamlined manner, ensuring the availability of necessary data across multiple silos to obtain accurate real-time visualization of the overall supply chain health.

AI/ML-driven analytics and rapid scenario planning can provide speed, consistency, and flexibility to achieve controllable and manageable supply chain functions, thereby helping executives gain a competitive advantage.

Two Critical Elements for an Ideal Supply Chain Control Tower

An ideal Supply Chain Control Tower (SCCT) is a cross-departmental, system-integrated “information hub” that provides end-to-end visibility.

There are two key elements to build/implement an ideal SCCT.

1. Real-time Visualization Catering to Different Personas.

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Executive Insights: An ideal supply chain control tower will provide a bird’s eye view of the overall supply chain health. It will enable the leaders to collect and distribute information, identify risks, and respond strategically.

Execution Insights: SCCT’s state-of-the-art setup caters to the nuanced aspects of the supply chain health for multiple execution persona – analysts or managers at the DC level or fulfillment center to view the various KPIs. It provides them with information to monitor, measure, and manage different aspects of the supply chain, including transportation, inventory movement, and operational activities.

2. Use Case Approach for Autonomous Supply Chain

Global Supply Chain Control Tower Market 2020 Analysis and Market Expert Research Report – Blue Yonder Group, Inc., Viewlocity Technologies Pty Ltd., E2open, LLC, – KSU | The Sentinel Newspaper

The ideal supply chain control tower can guide leaders/managers to explore potential use cases. It will allow them to find the most critical challenges that profoundly impact the overall performance of the supply chain and use advanced analytics, such as machine learning, advanced forecasting, or advanced scenario planning. In this way, they can combine use cases with visualization and diagnostic capabilities and automate the supply chain as they mature.

Conclusion: Control Towers are Stepping Stones Towards Autonomous Supply Chain

The supply chain control tower provides complete visibility from high-level monitoring layers to execution details, so the executives can optimize, manage, plan and execute supply chain processes and operations faster and more accurately. The addition of anomaly detection, automated root cause analysis, and response capabilities will further simplify the transition towards a cognitive supply chain control tower.

The Supply Chain AI Hype and the Importance of a Digitized Supply Chain Control Tower

The View From Digital Supply Chain Control Towers

The hype around Artificial Intelligence is far from fizzling out anytime soon. Digitalization and big data have completely penetrated the supply chain industry and are ubiquitous in nature. This article discusses one of the more interesting trends in the current supply chain analytics space – The Control Tower.

The concept of Air Control Towers and the Evolution of Digital Control Towers in Supply Chain

Engineering an Air Traffic Control Tower - Arup

One may wonder if supply chain control towers have any correlation with air traffic controllers? To be honest, yes, there is!

An air traffic control tower (ATC), is a service provided by on-ground staff (controllers), who direct aircraft on the ground and through controlled airspace; they can provide advisory services to aircraft in non-controlled airspace. The primary purpose of ATC worldwide is to prevent collisions, organize and expedite the flow of air traffic, and provide information and other support for pilots (wiki). In short, the tower helps Improve flow, reduce emergency like situations through tactical interventions and provide inputs for right decision making. In fact, the ATC’s can now be enabled for an ‘auto-pilot’ mode wherein complex decisions are taken without human interventions. Only in cases where there is an absence of reliable data to make a trade-off, is where the humans intervene.

The digital control towers aim at keeping a bird’s eye view on the events occurring within the supply chain ecosystem (controlled and uncontrolled space), with the modus operandi being very similar to a generic air traffic controller. With the help of this consolidated view generated by the digital control towers in supply chain one can gain powerful insights about the current happenings within the organization. These insights help in improving flow across the organization, reducing urgencies and providing insights and tactical support to supply chain managers to make effective decisions. In fact, in the longer run, very similar to the ATC’s of today, the Supply chain control towers should have the capability to make complex decisions when there is adequate reliable data.

Significance of Digital Control Towers in Supply Chain

Why Enterprises Are Using a Digital Supply Chain Control Tower for Optimized Orchestration - Turvo

Corporations today want to leverage the useful applications of the supply chain control tower. Organizations have copious amounts of data across their supply chain and related functions. Over the past few years, they have managed to build business intelligence and analytics solutions to drive decision-making but at a node level. Extracting valuable insights using the right sets of data, lying across various nodes in an organization while also utilizing market intelligence, to deliver real-time visibility and provide meaningful insights that can drive decisions that are optimal cross organization, is the need of the hour. E.g., with the expected slow-down in sales on specific SKUs, a client may wonder if their manufacturing plant need to continue producing to plan OR does it make sense to course correct and lose capacity?

While an ATC is designed to minimize errors by incorporating huge factors of safety and commonly understood rules of engagement between various players (airlines, pilots, other ATCs), supply chain digital control towers have the luxury to experiment under statistical variability. E.g., Try different stock norms and check the impact on service levels, see whether a reduced Order-to-delivery promise induces better productivity and hence improved customer service levels and so on. This ability of a supply chain to experiment, try and fail or succeed quickly, at nominal cost can help build a virtuous loop of innovation with in a supply chain and drive a cultural change.

Most organization today recognize the impact a control tower can have on their organization. For a global organization, it is probably one of those platforms that will steer the supply chains of the future. Many organizations have tried implementing a control tower, but there have been very few examples of success. More often than not, organization fall short of implementing a “gold-standard” control tower capable of – real time visibility, predictive alerting, identifying bottle-necks to supply chains and providing insights that can drive decision; instead they end up implementing a large set of dashboards, that showcase different KPIs important to the various nodes in a supply chain.

This possibly is because of challenges that are faced when implementing an initiative as large as a control tower.

How does a Digital Supply Chain Tower work?

The SCCT should help an organization in making 3 key decisions – a) Ensure smooth flow-paths across the supply chain, b) Identify or predict bottlenecks / constraints to flow, and c) Derive efficiency/utilization improvement opportunities in the current network.

Hence, some of the key functionalities that are required would be:

  • End to end data connectivity: Ability to go beyond creating reports and tools that are not unidimensional but are able to work with data from different nodes in a supply chain is important.

End-to-end data, analytics key to application performance | Network World

  • Visibility: SCCT should provide visibility of key supply chain KPIs (simple and complex KPIs). They should showcase the right metrics, while also be able to project the impact of a decision on the metric real-time.

5 Steps to Achieving E2E Visibility – Redwood Logistics : Redwood Logistics

  • Analytics: Supply chain control towers are equipped with and boast of analytical tools and applications. With the help of these tools, supply chain managers can easily run what-ifs, and take calculated decisions. They can, easily harness the power of predictive analysis to detect ‘tripping points’, identify triggering alerts, as well as conduct root cause analysis of the data to arrive at solutions and address challenges.

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  • Execution: The real benefit of the SCCT lies in the way the control tower communicates with the executive and the operational teams across the supply chain and allied functions. Hence this an important aspect of SCCT adoption within an organization

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Key Challenges to Implementing a Supply Chain Control Tower

The supply chain control tower, unlike a typical analytics project, entails involvement from multiple functions and geographies across the supply chain (like the involvement of multiple VPs/SVPs in large enterprises).

Implementing SCCT would mean working with a team having – a) Different priorities, b) Very different data maturity and data quality, and c) Different products and software (some archaic and some new-age).

Some of the key challenges that appear during the construction and execution of SCCTs include –

  • When the SCCT implementation is picked up as a priority exercise by a single function within a supply chain without getting the other key function buy-in early into the transformation, there is a high chance the implementation will hit multiple road blocks.
  • Many a times, people tend to implement the most complex piece OR the piece of SCCT that seems most interesting. This may lead to no tangible results for an extended period, thus leading to lack of enthusiasm from fringe teams.
  • Data maturity: Different functions may have different levels of data maturity (availability, quality etc.). Inability to assess and map this aspect will tend to escalate timelines and cost.
  • Sometimes the implementing partner makes the mistake of selling the SCCT, not as a strategic tool that can transform business functions but rather as another software that will improve business efficiencies. This will lead to wasted effort that implementation will get driven in completely wrong direction.
  • There are number of proven analytics tools and products that exist with the client. Integrating these existing tools/products in the SCCT roadmap, may cause issues during implementation but will help adoption.

A typical issue of not successfully overcoming these challenges is that companies go down the path of SCCT implementation (visibility, predictive analytics, decision tools etc.) but end up implementing an end-to-end KPI dashboard. Though the dashboard may still bring in benefits, it causes disillusionment amongst the client project team in terms of SCCT capabilities.

Some of the ways to mitigate these challenges and move towards a successful implementation include –

  • Treat SCCT implementation as a strategic initiative and not as an IT implementation. Hence, it is critical to have someone high in the business team (CSO level) bless the initiative.
  • When prioritizing sprints, give equal weights to simple but quick wins – this motivates the client’s project team.
  • Always assess the current tools and products in client environment, i.e., prioritize integration over innovation.
  • Continuous engagement with all functions (even if there is nothing happening in a specific function) is important and should be made into a practice.
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