How to implement a Supply Chain Control Tower into your business? (Part 1)
There are three general phases of implementing a Supply Chain Control Tower (SCCT) that could be applicable to any kind of business. The first phase is called Initiation or Orientation. A few things should be done in this phase. Firstly, a company should ensure that it meets the key requirements of developing and implementing a SCCT (feasibility analysis), which are processes, technology, people, and data. These key requirements are repeatedly mentioned in multiple articles which are to be found at the end of this post.
- Processes: standardization should be applied in different processes and procedures across business units. An example is a standard template of certain documents among different departments.
- Technology: it is important that a SCCT integrates well with other systems, and it must accommodate changes when the architecture changes. A well-established ERP system across all areas of the supply chain (SC) would be a helpful backbone for developing a SCCT.
- People: ideally, every stakeholder involving in the SC should be willing to share data with each other. Within a company, a cross-functional team should be responsible for executing the SCCT implementation project, while they are willing to do, adapt and understand the importance of the project. Executive sponsorship is also crucial that top management should commit guiding and supporting financially along the development and implementation.
- Data: data and information should be at high quality and accessible in order to be converted into useful insights.
As a result, a cross-functional team should be formed, in which SC, Procurement, IT specialist/ Data Science, Finance, Production, and Quality are the recommended members. Simultaneously, a company should inform every employee about the changes, clearly communicating with them and collecting their opinions, needs and wishes of the projects via a questionnaire or face-to-face meetings for example. Announcing a major change to employees is of high importance to a successful implementation, not only for the SCCT, or also for similar cases.
Next, the cross-functional team can finalize the required functionalities of a SCCT, and any customized ones for a specific site. For more information related to SCCT functionalities, you can find it here. After that, it comes to the question of the company’s development and implementation approaches. According to literature review, there are three methods: in-house built, outsourcing and co-creation, in which the first two options are commonly used in practices. What the cross-functional team can do is to analyse different scenarios of each approach, to see which one suits best the company meeting a set of criteria (e.g. ease of implementation, costs, etc.). Depending on the chosen approach, some extra steps can be taken. For example, in case of outsourcing, the team has to do some market analysis and then select the most suitable supplier, contracting and so on.
Before moving to the next phase, it is also essential to conduct risk-and-cost analysis. Regarding potential risks, one way to analyse them is by referencing to a similar project that the company did before, analysing the likelihood of occurrence and its impact on business performance on different levels (minor, average, serve). Among the risks, change management is a major concern when implementing a SCCT, meaning to what extent the SCCT users (employees) are flexible and adaptable to changes. Talking about potential costs, the first impression is that the total development & implementation costs vary by companies, and industries. No specific numbers can be found. Thus, the focus would be on the cost drivers. After identifying the relevant cost drivers, the team can analyse them based on ABC analysis, to pay more attention to the biggest potential costs. An article written about this topic can be found here. Throughout the risk-and-cost analysis, contingency plans should be developed in preparation for any disruptions, at least specifying what to do and who is responsible for what.
The last remark of this phase is to also think forward the future. This means that a company should consider the impact on its daily operations after the implementation of a SCCT. It could be argued that it is not necessary to be that worried in advance, and it doesn’t affect anything negatively, does it? The duration of the Initiation phase varies by companies, industries and countries/cultures. All of these activities should be outlined clearly in terms of timeline and people in charge, while the team should actively involve top management in this phase.
Thank you for reading and please share if you find it insightful! See you in the next blog!
Somapa, Cools & Dullaert, (2017) Characterizing supply chain visibility – a literature review
Trzuskawska-Grzesinska, (2017) Control towers in supply chain management – past and future
Bhosle et al., (2017) Global Supply Chain Control Towers – Achieving end-to-end Supply Chain Visibility
Liotine, (2019) Shaping the Next Generation Pharmaceutical SupplyChain Control Tower with Autonomous Intelligence
Series Supply Chain Control Tower
Continuous improvement – phase 3 of implementing a Supply Chain Control Tower (Part 3).
Implementing of Supply Chain Control Tower (Part 2): go-Live phase
General phases of implementing a Supply Chain Control Tower (SCCT).
Short description of the main challenges of implementing a Supply Chain Control Tower.
Risk management of the process of development and implementation of a SCCT with examples of the risk response strategy.
Supply chain control tower: functionalities, SCCT IT architecture, SCCT’s performance.