Supply Chain Control Towers

Stephen DeAngelis

May 21, 2020

Anyone who has traveled by air is familiar with control towers. Personnel manning airport control towers ensure aircraft on the ground and/or approaching from the air operate safely. To ensure safe operations, control tower personnel need to know the location and intention of each aircraft. When the move toward supply chain digitization began, the control tower analogy seemed like a natural step in the process. Here’s the rub: Beyond the name, airport and supply chain control towers have little in common. Airport control towers all operate using the same standards, they have nearly perfect information to work with, and control a limited amount of airspace. Supply chain control towers have few standards, often lack needed information, and often have to deal with global operations. Lora Cecere (@lcecere), founder and CEO of Supply Chain Insights, explains, “There is no class of technologies, or common definition, for ‘supply chain control towers.’ Instead, a project needs to be based on user-defined set of capabilities.”[1]

She isn’t the only supply chain professional struggling to define what constitutes a supply chain control tower. Steve Banker (@steve_scm), Vice President of Supply Chain Services at Arc Advisory Group, asks, “What is a supply chain control tower?”[2] His answer, “From my perspective it must be a holistic supply chain solution.” Although Banker’s response sounds amorphous, he goes on to list eleven characteristics that might be found in a control tower. He adds, “[A holistic supply chain control tower] covers an end to end supply chain process. For a manufacturer, that might span from source to make to deliver. If you just have visibility to transportation processes, like what you can get in a transportation management system for example, then ‘control tower’ is not the right term. ‘View’ or ‘cockpit’ becomes a better term.”[2] Christian Titze, a vice president analyst at Gartner, notes, “Gartner defines ‘control towers’ as a concept combining five elements — people, process, data and organization supported by a set of technology-enabled capabilities for transparency and coordination.”[3]

Visibility is the sine qua non of a supply chain control tower

Cecere writes, “The most common use case for control towers is visibility. While there are many types of visibility, the most frequent use case is either sourcing or transportation visibility.” Banker agrees with Cecere, but believes it should be able to do more than just see what is going on. He writes, “The control tower should have visibility to [see] how exception events affect the existing supply chain plans as well. For example, knowing that an inbound shipment for a factory is not going to arrive on time, has all sorts of implications for what can be made and what should be made. To answer those questions, one needs to be able to view the impacts on planning.”

As Cecere noted above, each company’s control tower is likely to be unique. As a result, she writes, “Focus on Outcomes.” She adds, “The reference for supply chain leaders is an airport control tower. In their mind, they visualize the status of planes landing. As they speak, they confuse the concepts of visibility and control. How so? The goal of an airport control tower is to land planes safely. The moment of truth for the control tower is when the wheels touch the tarmac and the plane safely lands. The visibility of the planes on the screen is a means to an end. If the project focuses on control, be clear on what you are trying to control and measure the outcome using control charts. … Supply chains are complex, non-linear systems. Carefully design control systems to compare reference data to desired outcomes using control theory.”

Andy Prinz (@andrewprinz) Associate Partner of Supply Chain Management, and Drew Andrews, a Senior Consultant of Supply Chain Management, with Infosys Consulting, sum up the situation this way: “Success with control tower solutions rests with having a clear purpose for the solution, selecting the proper technology as the basis of the tool, and properly integrating with existing systems and data to ensure smooth execution.”[4] Regarding clarity of purpose, they write, “Too often organizations aren’t clear on the scope of the control tower solution, the key functions that are included, and the span of control for the particular solution. That’s why control towers often fall short of expectations and benefits realization.” They note the focus of many control towers “include procurement, logistics, production, demand planning, and inventory management.” With the proper focus and corporate alignment, they assert a control tower can encompass “a number of key functions, including supply-chain visibility, alerting, scenario planning and supply-chain execution. By defining the functions that the control tower will manage, companies can clarify critical areas and prevent adverse impacts on performance.”

With regards to control tower technology, they write, “Identifying the correct control tower technology to form the basis of the solution is a complex endeavor. The process is unique to each organization, because it depends both on the purpose of the solution and existing technology platforms and data. The solution often is an overlay on top of existing systems, and becomes the aggregator or ‘platform of platforms’ that orchestrates key processes.” Because a control tower is a “platform of platforms,” it must integrate with existing systems and data. They explain, “The success of every control tower solution depends on how well it can integrate with existing source systems and data. It needs to function as a complement to those systems. This requires a clear definition of data integration and management, seamless data processing, and strong governance. Each organization is unique, based on the history of its system and data decisions. And that makes every control tower unique as well.”

Control towers and cognitive technology

Cecere notes, “[A control tower] is an ideal use case for prescriptive or cognitive analytics to sense, learn and act.” As she noted above, “Supply chains are complex, non-linear systems.” Whenever you hear terms like “complex” and “non-linear” you should start thinking about cognitive technologies. Banker agrees. He writes, “Analytics need to evolve to include more predictive capabilities based on machine learning and artificial intelligence.” Cognitive technologies like the Enterra Supply Chain Intelligence System™ can provide both actionable insights and help understand perturbative repercussions of exception events. Titze bluntly states, “Control towers are the artificial intelligence (AI) of supply chain.”[4]

In addition to helping with visibility, cognitive technologies leverage the full spectrum of analytics. The spectrum includes:

1. Descriptive analytics. Descriptive analytics can help discover what happened in the past.

2. Diagnostic analytics. Diagnostic analytics can help explain why something happened.

3. Predictive Analytics. Predictive analytics provides insights into what might happen in the future.

4. Prescriptive analytics. Prescriptive analytics informs you what you should do to achieve a particular outcome. It’s a type of analytics made possible by the emergence of cognitive computing technology.

Concluding thoughts

Like Cecere, Titze recognizes there remains confusion about the control tower concept. “Everyone wants to have it,” he writes, “but nobody quite knows how it works.” Nevertheless, he writes, “Control towers are popular because they are marketed as the solution for stitching together complex and siloed supply chains, thus providing more visibility and insights into the overall performance.” He goes on to explain, “A good control tower allows its users to: Sense: Get real-time, end-to-end supply chain visibility; Analyze: Understand and leverage incoming signals; Predict: Utilize advanced analytics for predictions and prescriptions; Solve: Do exception management and scenario modeling; Execute: Leverage a collaborative intelligent response framework; [and] Learn: Continuously learn, sense and respond.” Clearly, control towers can’t function properly without cognitive technologies playing a significant role. Titze concludes, “In the end, the same rules apply to control towers as to every technology. Supply chain leaders must have a clear understanding of what it is they need and carefully review what the vendor is providing now and is planning to provide in the future in order to make the best choice for their business.” Cecere agrees companies need to use common sense when it comes to control towers. “The concept of control towers is over-hyped by technologists driving buzz,” she writes. “Buzz without clarity and specific use cases drives hype, but not value.”

Footnotes
[1] Lora Cecere, “Control Towers: If Only There Was A Clear Definition,” Supply Chain Shaman, 5 March 2019.
[2] Steve Banker, “What is a Supply Chain Control Tower?Forbes, 5 June 2019.
[3] Christian Titze, “Gartner: What supply chain managers should know about control towers,” Supply Chain Dive, 13 March 2020.
[4] Andy Prinz and Drew Andrews, “Effective Supply-Chain Control Towers,” SupplyChainBrain, 9 February 2020.