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3 Reasons Why You Might Need a Supply Chain Control Tower

Posted by Martin Verwijmeren on Nov 17, 2017 1:53:42 PM

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With today’s growing supply chain complexity, we’re seeing organizations struggle to deliver customer value with their supply chains at a cost that helps to make their business profitable.

It’s a huge problem that is getting more difficult by the day as organizations and supply chain professionals look for answers in their strategies and the technologies they use as the foundation for their supply chains. Oftentimes, the solution is not replacing the legacy systems they have in place but by connecting and extending them with a supply chain control tower.

We have detailed on previous posts the 3 Common Types of Control Towers You’ll See (since they are not all created equal) but on today’s post we wanted to go into the symptoms you and your organization might be feeling to make evaluation of a supply chain control tower a priority.

1. Disjointed, Fragmented Systems by Region or Partner

One of the best use cases for a supply chain control tower is an IT infrastructure that is working well enough to execute on core supply chain processes but has huge gaps in end-to-end supply chain visibility and control when it comes to the customer order and ensuring it arrives OTIF.

This can take many shapes and some includes include as:

  • Regional ERP systems making it hard to share information and automate processes. For example, Europe may run SAP while US is still on legacy system.
  • SAP is used globally, but was implemented at different times and with different instances in each region. This would require massive and expensive upgrades in order to normalize.
  • Siloed systems focused on siloed processes (i.e. ERP, WMS, TMS) that are not tightly integrated to take advantage of common data and resources.
  • Third party vendors such as 3PLs provide software only provide insight into their operations so you end up with having to manage and log-in to multiple areas just to understand what’s happening holistically

We see the above scenarios hinder overall supply chain improvement, flexibility, and optimization. A large spare parts supplier recently improved their product availability and optimized their inventory across their network by using a supply chain control tower to connect their regionalized supply chain operations. It provided them with agility to better use these resources in concert such as leveraging inventory from DC’s in different parts of the country when stocked out at local locations.

A supply chain control tower can help to solve many limitations of your legacy systems, integrating with your core systems to break down the barriers that exist in your supply chains so that you can better orchestrate order fulfillment using all the resources and assets you have in your supply chain network.

2. Limited to No Visibility into Suppliers

One of the biggest complaints with current supply chains we hear is the inability to get near real-time visibility with suppliers. Without this type of visibility, there is dysfunction across the supply chain as supply and demand execution of inventory and product loses transparency.

However, as we begin to receive better supply chain visibility and control of our suppliers (in many cases in the hundreds and thousands) we begin to open up the possibilities to better serve our customers. And it can start with a supply chain control tower.

Creative solutions such as supplier drop-ship, automated inventory replenishment and multi-tier inventory optimization are made available in the supply chain with a supply chain control tower, enabling better collaboration with suppliers while better managing product across all internal and external parties in the supply chain.

3. Need for Orchestration with Outbound and Reverse Partners

We’ve seen recently that organizations are looking to multi-enterprise solutions for greater visibility and control with third parties. And while near real-time visibility is the first major goal that most organizations look to achieve with their partners, we’ve seen that’s really just the start. Data is still just data unless you use it to execute and optimize.

With a supply chain control tower, the visibility you have on your supply chain network is used to not only quickly address any order exceptions but is used to determine the best way to collaborate with your partners to ensure more OTIF orders and faster lead times.

This begins with a supply chain control tower that can digitize your carrier and partner SLA’s to make the data in these agreements actionable within your order flows. Through digitization, you can achieve true supply chain orchestration, with the control tower automatically determining the best supply chain for each order based on the most recent partner data. Most importantly, it also looks at each order’s supply chain in relation to other orders ensuring cost efficiency with partners and carriers in cases like determining when to do LTL or TL or what carriers to use for each leg of a multi-leg international shipment.

The key here is treating your partners as you would your own internal resources to better collaborate with them to achieve optimal outcomes in the supply chain.

Are you ready for the Multi-Enterprise Supply Chain?

As supply chains are shifting to more dynamic networks and are the future for organizations to compete with the likes of Amazon and Walmart. And the strategic use of multiple parties such as suppliers, 3PLs and freight forwarders in the supply chain helps to drive cost certainty and expand the footprint of your supply chain but it also limits your control over what is an important function to customer satisfaction.

As digitization and globalization continue to drive transformation in our supply chains, we’re going to need to learn how to elevate our current IT infrastructure to optimize the multiple parties in our multi-enterprise supply chains. Most importantly, we need to think less about just cost savings through process efficiency and more about delivery customer excellence in the most cost efficient way possible.

And that’s only achieved if we can have better supply chain orchestration across our systems and parties.

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Topics: Supply Chain Orchestration, Supply Chain Visibility, Supplier Collaboration, Control Tower, Multi-Enterprise Business Networks





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