Supply chain control tower: definition, benefits, and assessment methods
Supply Chain Control Tower (SCCT) is a relatively new concept in supply chain industry, with a key functionality of providing supply chain visibility. There is an increasing demand of this system among businesses; however, not many companies thoroughly understand the concept, its functionalities, and how to assess a SCCT performance. This post therefore gives you some concrete answers about these topics.
#1: What is a SCCT and its functionalities?
There are multiple articles written over this topic, some of which are included at the end of this post for your reference. Among the SCCT definitions reviewed, this post defines a SCCT as a centralized information sharing platform. Data and information from internal and external systems should be fed to the SCCT. It is used for collecting real-time data, then storing, analyzing, and visualizing the results of certain inputs. Besides that, it monitors multiple supply chain activities within and beyond the company based on a certain set of KPIs, thus being able to send alert of any disruptions, supporting business decision making and finally, providing End-to-End (E2E) visibility. A visualization of a SCCT IT architecture is shown below in Figure 2.
Figure 2. SCCT in an organizational system (Liotine, 2019)
#2: Is it really true that SCCT’s benefits outweigh the risk and costs of investment?
Throughout literature sources and interviews, it is believed that an investment in developing and implementing a SCCT can be paid off. One of the most significant benefits of a SCCT is time saving. Since the SCCT provides a centralized information hub, the users can simply check the needed information by themselves rather than asking someone. This also counts for a reduction in conflicts among different parties thanks to the fact that everyone has same “truth” with the SCCT. Another advantage is that a company can respond to disruptions more proactively by knowing it in advance (by predictive analysis of a SCCT) or receiving early alerts from the SCCT about a potential issue. The final major benefit is to support business decision making in short-, mid-, and long-term. For example, a SCCT may be able to give a suggestion on whether a company should build another manufacturing facility or enter a new market. However, these functionalities require more advanced technologies incorporated in the SCCT.
#3: How to assess the performance of a SCCT?
Not much research or business cases have came across this question; however, it is just as important as you measure your business performance. Good news is there are few ways to do it. One of the assessment methods is the Balanced Scorecard by Kaplan and Norton (1996). Although its goal is to measure the whole organizational performance, it could be adaptable to monitor the SCCT performance. For example, in criteria “Customer”, the company can qualify the percentage of internal and external users’ satisfaction with the existence of the SCCT. Another method is the Requirement score by Patsavellas, Kaur and Salonitis (2021), which evaluates a company’s supply chain performance on five criteria: visibility, resilience, agility, automation and velocity. Again, it is not meant for assessing a SCCT, but it is potentially adaptable. An example can be found below in Table 1.
Table 1. The requirement scores (adapted from Patsavellas Kaur and Salonitis, 2021)
The next technique measures the performance of a SCCT by the four different capabilities of the SCCT, such as data collection, data integration, intelligence creation*, and interrupt decisions**. In each capability, a list of statements describes different performance statuses aligning with the corresponding score for assessment. For more information of this method, you can read the report “Development of a Tactical Strategy for a Supply Chain Control Tower” (Bratendal & Gustafsson, 2020). Whatever approach is chosen, it is essential that the assessment framework should include both qualitative and quantitative variables.
In short, a SCCT is a centralized information hub gathering and analyzing data from other systems within and beyond the company, then visualizing via dashboards the results or differences between planned and actual SC performance. Other functionalities are as follows: sending alerts of any irregularities, automating processes that are often done manually, track-and-trace real-time data of shipments, driving preventive actions, etc. If the development and implementation of the SCCT is conducted properly, the benefits possibly outweigh the costs and risks. There are certain ways to evaluate the performance of a SCCT, but ensure to measure both qualitative and quantitative variables.
So, now we know what a SCCT is and its effects on an organizational performance. Next step would be to decide whether a company should have a SCCT and how to develop and implement it into the systems. Would that be our next discussions?
Thank you for reading and I hope you’ve learnt something useful from this post! Anything else that I’ve not mentioned yet, feel free to add it in the comment.
* Intelligence creation refers to how effectively a SCCT generates information from the previous steps (data collection and integration). In other words, whether the SCCT effectively converts data into useful insights, or if it recognizes that something (e.g. a disruption) requires involvement of a relevant stakeholder.
** Interrupt decisions indicate a SCCT’s ability to transfer data and information and create relevant business decisions. For example, a SCCT identifies a vendor not being able to deliver what is promised, which requires the system to select a new vendor from a list of vendors to offload capacity. The SCCT then can suggest an action to a stakeholder, wait for approval and execute the recommended action after being approved.
Recommended reading and the sources of information:
Bratendal & Gustafsson, (2020) Development of a Tactical Strategy for a Supply Chain Control Tower
Kaplan & Norton, (1996) The Balanced Scorecard.
Patsavellas, Kaur & Salonitis, (2021) Supply chain control towers: Technology push or market pull – An assessment tool.
Trzuskawska-Grzesinska, (2017) Control towers in supply chain management – past and future
Liotine, (2019) Shaping the Next Generation Pharmaceutical Supply Chain Control Tower with Autonomous Intelligence
Image source: https://www.trinamix.com/events/resiliency-under-control-with-trinamix-control-tower/
Series 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.