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.
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:
- 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.
- 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 evaluating
reliability 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, d
customer satisfaction, and enhanced overall operational efficiency. For the ever-
changing changing business landscapes and environments having such a
transparency 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!