September 2019 | Commentary | The Lean Supply Chain

The View From the Control Tower

Tags: Lean, Supply Chain

Paul A. Myerson, instructor, management and decision sciences at Monmouth University and author of books on Lean and the Supply Chain for McGraw-Hill, Pearson, and Productivity Press, 732-571-7523

As discussed in my last column, Integrated Business Planning (IBP) is a process that uses “outside-in” thinking by integrating demand forecasts, supply plans, inventory projections, and financial plans into one medium-term strategic model. That’s a great starting point.

But the leading-edge way to manage your short- to mid-term global supply chain in real time (or close to it), is through a control tower that utilizes technology, organization, and processes that capture product movement visibility from the supplier all the way to the customer.

The control tower creates an overview of total supply chain performance using KPI dashboards. It resolves problems with management functions to deliver visibility and provide capabilities such as collaboration with trading partners and functionality enabling supply chain planners to automate processes and controls.

Types of Control Towers

Currently, software vendors offer two general types of operational control tower systems:

1. Transportation control towers are mainly focused on inbound and outbound transportation. They are usually offered as a module in a transportation management system (TMS).

2. Supply chain control towers typically focus on the multi-enterprise supply chain, ensuring visibility and control across internal as well as external supply chain processes and milestones. These control towers enable end-to-end visibility and control across your entire supply chain network and includes real-time collaboration with suppliers and partners.

Moving Beyond Decision Support

Until recently, supply chain control towers have been largely about providing visibility to your immediate trading partners. But with the development of multi-party, consumer-driven networks, advanced control towers now provide real-time visibility, collaboration, analytics, and artificial intelligence capabilities to move beyond decision support to decision-making and autonomous control.

Leading technology vendors allow users to set parameters to supply chain elements such as inventory levels and replenishment plans, and then leave the tool to make adjustments when issues arise.

Additionally, vendors are providing capabilities that help enterprises work with multiple tiers of trading partners, manufacturers, transportation and logistics providers, and customers to better coordinate their operations. If designed and managed properly, a supply chain control tower can increase inventory turns, and significantly reduce safety stocks, stock outs, and expediting costs.

Supporting a Lean Supply Chain

A lean philosophy and culture is compatible with a control tower system. While a control tower helps to plan and control a more reliable supply chain, a lean philosophy helps achieve that goal. The end-to-end supply chain visibility and transparency a control tower provides, combined with a lean culture of continuous improvement, can produce coordinated, sustainable execution processes allowing companies to successfully manage the complexities of today’s supply chains and gain a competitive advantage.

It’s one thing to envision having a lean and agile supply chain, but another thing to see one in action. Like sales and operations planning and IBP, control towers can be a critical component in achieving that goal.