What is a Supply Chain Control Tower?
A Supply Chain Control Tower fully integrates all transport and services modes across the supply chain and gives a company full visibility in real time to monitor performance and cost control.
Agreements are made with every party in any given supply chain, who in turn feed data back a centralised “data lake”. Advanced software can then be used to analyse the data and make timely decisions about what gets delivered where and to whom. It also generates data that can inform future business decisions.
Why invest in a Supply Chain Control Tower?
A typical multinational might outsource production to dozens of factories, and partner with dozens of companies who help them comply with regulations, forward freight and take care of duties. This combines all of those functions into a single management system.
2. A control tower is a good way to gain a strategic advantage
A recent study found that 89% of supply chain executives thought their customers believed their current supply chain models were unwieldy. If it is obvious to customers that the overwhelming majority of existing supply chains are too complex and difficult to follow, then it is obvious that not enough companies are addressing the issue. That leaves a space for early movers to reform their supply chains, and gain market share.
3. Focus on your core business
Car manufacturers are good at making cars. Pharmaceutical companies are good at making drugs. Looking after the supply chain is usually a distraction from what a company does best and frankly best left to the experts, who are focused on nothing else. Managing one successfully is a challenge, especially in an age where a multinational might have outsourced to dozens of suppliers. By working with an integrated logistics expert, you can focus on making a better product, while they can focus on getting the products delivered on time with the highest service level at the lowest rate.
4. Cost savings
Although there are upfront costs involved in setting up Supply Chain Control Tower, it saves money in the long run. Here’s how:
- Less inventory
A Supply Chain Control Tower allows for maximum efficiency, delivering components to the right place at exactly the right time. This helps to minimise inventories. Inventories cost money to procure and store. Profits also take a hit if a company has to slash prices on an item because there’s too much of it sitting at the warehouse. A Supply Chain Control Tower helps to eliminate this problem.
- Freight optimisation
In many markets the control tower is used to optimise freight. It maps out the most efficient route. A truck that would once have delivered five packages could instead deliver seven or eight. This can lead to savings of up to 20%.
- Fewer mistakes
Mistakes are costly in the logistics business. If an order is late, it often has to be delivered by premium freight, which adds to the cost significantly, and eats into the margin. A Supply Chain Control Tower is designed to reduce error, and to avoid unnecessary additional cost.
- Process management
Modern multinationals often depend on a variety of suppliers, and it’s often difficult to keep track of who’s living up to their end of the bargain. With a control tower, you will know which contractors aren’t delivering on time. And because they are aware that someone is paying attention, they will have an incentive to perform.
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