All companies plan, but not all companies plan well. This is particularly true for supply chain, where fluctuations can lead to significant impacts—such as a 20% increase in costs or a 30% drop in customer satisfaction. Despite the availability of advanced technologies, over 80% of supply chain data remains unutilized causing many leaders to feel they do not have the visibility required to enhance performance and adapt to changes efficiently. Despite the availability of advanced technologies, over 80% of supply chain data remains unutilized causing many leaders to feel they do not have the visibility required to enhance performance and adapt to changes efficiently. In such cases its natural to question if supply chain control tower Implementation truly is the solution to supply chain challenges?
Well, to get to the bottom of this, let’s start by understanding what supply chain control tower is and why do we need it?
Key Components of Supply chain control towers
If you have been in the industry long enough, you must have observed this trend-The companies have begun experimenting with the creation of ‘supply-chain centers’ or supply chain control towers. All supply chain control towers aim to enhance visibility and responsiveness with
each type of sub-control tower designed to address specific needs and measure a focus area within the supply chain. A usual SCCT consists of the following:
1. Planning command centre
The Planning Command Center, also known as the Demand-Supply Control Tower, integrates data from sales forecasts, market trends,and historical performance to optimize the balance between demand and supply. This helps in ensuring continuous monitoring of following KPIs for accuracy and bias:
- Forecast Accuracy: Measures the accuracy of demand forecasts compared to actual sales.
- Lead Time Variability: Measures the variability in lead times from suppliers or production processes.
- Inventory Days of Supply: Calculates the number of days that current inventory levels can meet forecasted demand. Additionally, the Planning Command Center incorporates demand sensing capabilities that monitor real-time sales data, enabling dynamic adjustments
to forecasts.
2. Logistics Control Tower - This tower focuses on managing the transportation and distribution of goods
- throughout the supply chain. Offering real-time insights into costs, truck
- utilization, and advanced shipping options for improved visibility in both
- inbound and outbound logistics helps in measuring:
- Transporter SOB: Indicates share of business for a different transporter
- Perfect Order Rate: Determines the percentage of orders delivered on or before the promised date
- Freight Cost per Unit: Calculates the total freight cost divided by the number of units shipped
This proactive strategy enables logistics teams to handle issues before they escalate, guaranteeing more efficient operations.
- Warehouse Control Tower
The Warehouse Control Tower improves warehouse operations by ensuring effective management of goods from arrival to shipment. By monitoring inventory levels in real-time, it provides insight into stock availability and location through key performance indicators (KPIs) like:
- FG Space Utilization: Measures Space utilized by FG Stock in hand inventory
- Dispatch Throughput: Measures utilization of dispatch throughput capacity on a daily basis
- Warehousing Cost: Determines warehousing cost per unit actual vs budget
These KPIs help in getting insights into stock availability and location further helps in implementing automated systems for picking, packing, and shipping to reduce errors and increase speed.
- Inventory Control Tower
The focus of the Inventory Control Tower is to oversee inventory levels throughout the entire supply chain to guarantee adequate stock availability. It gives a centralized view of inventory, showing stock from various places like warehouses and distribution centers. KPIs wise, keep an eye on:
- Ageing Stock / Inventory Movement Report: Measures ageing of the stock in hand inventory
- Days of Supply (DOS): Measures the number of days of demand that can be met by current inventory levels
Further by integrating automated replenishment alerts trigger notifications for reordering based on predefined thresholds or demand changes, streamlines the restocking process.
- Fulfilment control tower
The Fulfilment Control Tower manages the entire order fulfilment process from placement to delivery. It provides end-to-end order tracking, allowing both customers and teams to monitor orders in real-time, enhancing transparency. Performance analytics track key metrics like:
- Order Fulfilment Cycle Time: Measures the total time taken from order placement to delivery to the customer.
- Order Accuracy Rate: Tracks the percentage of orders fulfilled correctly, including item, quantity, and packaging.
- Shipped Complete per Customer Order: Measures the percentage of orders shipped with all items as specified by the customer.
Additionally, tracking such KPIs helps the tower to swiftly adapt to fulfillment strategies based on changing customer preferences or operational challenges.
- Material Management Tower
The Material Management Tower oversees the flow of raw materials essential for production processes. It monitors supplier performance by evaluatingreliability based on:
- Carry Cost of inventory: Measures the total cost associated with holding inventory, including storage, insurance, and depreciation.
- Cycle Time: Dock-to-stock: Tracks the time taken from receiving materials at the dock to placing them into inventory.
- Inventory Shrinkage Rate: Measures the percentage of inventory loss due to theft, damage, or errors.
By analysing material usage trends, it optimizes procurement strategies to negotiate better terms with suppliers and reduce costs. The time for supply chain control tower implementation is now! At the end of the day, the main purpose of each supply chain control tower is to fine-tune specific parts of the supply chain, which ultimately leads to a more efficient and cost-effective overall system.
By keeping an eye on KPIs and making improvements, organizations see benefits like Proactive risk management, enhanced network optimization, reduced costs, customer satisfaction, and enhanced overall operational efficiency. For the ever-changing changing business landscapes and environments having such atransparency into their operations can help bring the change that is needed.A smart strategy is to achieve this is to collaborate with experts who understand the nuances of the industry, have sound analytical domain expertise, and have the tools to provide quick and accurate results. And Polestar Solutions is here to help! So, let’s roll up our sleeves and embark on this exciting journey together!