It has been two decades since the logistics industry created the control tower, addressing the challenge of accounting for inventory in motion / at rest and providing greater visibility for 3PLs, distributors, retailers, wholesalers and manufacturers.
Today, digital control towers (DCTs) have benefitted from two decades of supply chain innovation. However, when it comes to better enabling companies to predict demand with greater accuracy, progress has been slow. Many companies still resort to buffering demand uncertainty with inventory. In addition, fragmented or siloed thinking remains pervasive in the ways organizations and supply chains operate. In today’s world, where agility is key, companies need a more powerful way to gain visibility into their networks.
However, many companies still try to minimize technology costs and are averse to investing in systems and tools that will enable efficiency. As a result, these same companies often lag in supply chain visibility, performance, excellence and efficiency. Customers need tools that will help them create a seamless, end-to-end supply chain with maximum visibility. Enter the “new” control tower.
The Next Wave of DCT
When we look at how the market is responding to the challenges that DCTs help solve, the picture is far from consistent. While the most advanced companies use supply chain management software, there are few that can orchestrate their supply chains with an end-to-end view. The reality is, there are still companies today that have barely adopted the tools to position them at a level three supply chain maturity.
According to a study by DHL, the most important enablers of effective supply chain management are supply chain partner alignment (60 percent); internal business functions alignment (49 percent); upstream and downstream process integration and information-sharing (47 percent); risk governance (44 percent); flexibility and redundancy (37 percent); data, models and analytics (28 percent); and complexity management (26 percent).
The availability of data and intelligent predictive analysis capabilities are critical for your future success. Data alone has little meaning; however, with intelligent interpretation, data holds a compelling value proposition that differentiates players in their ability to maintain a balanced supply chain, while meeting the promise of agile and responsive fulfillment.
The next wave of DCT is upon us. The DCT enables and fuels the basis of supply chain orchestration: an end-to-end view of supply and demand, along with the ability to meet the requirements and challenges around each while considering outside factors that are incorporated into predictive algorithms (such as weather, news, social media chatter, local events and other market forces).
A few years ago, only a small percentage of companies managed their supply chains in a structured manner. Today, important trends in the supply chain space – including globalization, increased product personalization, shorter product life cycles and a higher demand for agile supply chains – are accelerating the adoption of tools that enable an orchestrated approach.
Strategic Collaboration: A Case for the Cloud
Regardless of industry, supply chain disruption is the nightmare of every supply chain and logistics professional. Visibility and responsiveness are key to avoiding and/or mitigating disruption, and IT is crucial to creating true, end-to-end supply chain orchestration that provides visibility at all tiers.
With that said, strategic partner collaboration with upstream and downstream data sharing is critical, bridging the trust gap and working toward a shared vision of supply chain performance excellence. Cloud computing addresses these concerns. A cloud-native DCT offers a seamless collaboration platform – an environment in which data can be shared securely, allowing both up- and downstream partners to collaborate in real time with a single source of the truth, creating opportunities to resolve exceptions.
The ability to proactively manage the unpredictable is driving companies to adopt data-driven decision-making tools as they move toward building autonomous and resilient supply chains. Companies that are digitalizing their operations will see the benefits of a cloud-based DCT with these robust capabilities, which will be foundational to providing real-time digital signals from across their networks.
Key Outputs from a DCT
- Supply chain integrity – A DCT provides visibility that allows interventions to third- and fourth-tier nodes of the supply chain. An end-to-end view of supply chain activities, with assessed risk and mitigating action at each link in the chain, secures supply chain integrity. Algorithms that enable predictive events, learning from the corrective / mitigating actions taken, provide a platform that enables prescriptive analytics.
- Risk mitigation – Early warning allows companies to seek feedback from supply chain partners and act quickly to minimize the impact of problems – for example, by sourcing components from backup suppliers. The data feedback loop ensures an up-to-date picture of the current state of the entire network and supports informed responses to major incidents, coordinated across the network. Quicker response to potential supply chain disruptions translates to cost savings and greater efficiency.
- Operational agility – The ability to make strategic decisions quickly, in close cooperation with the end customer, provides greater supply chain resilience and a competitive advantage.
The New Generation of Digital Supply Chain Orchestration
Every person, process and movement leaves a digital footprint. The data from these digital footprints is the fuel that powers the new generation of supply chain solutions. Tomorrow’s supply chains will be interconnected with digital ecosystems, using machine learning (ML) and artificial intelligence (AI) to intelligently create answers to questions or problems in real-time, while learning how to respond to future situations.
Digital control tower technology enables these capabilities and is more relevant now than ever before. It brings together three different platforms — visibility, technology and communication — to enable a more consumer-centric, demand-responsive supply chain.
Today’s technology proves that old-fashioned response management, coordinated through outmoded control towers with siloed and limited applications, cannot provide the agility and visibility that today’s DCTs use to deliver tangible, real-time results. The good news is that, twenty years on, the vision of real-time visibility and end-to-end orchestration has now become a reality that all companies can achieve.