Why Supply Chain Control Towers Are Essential During the Pandemic—and BeyondAug 25, 2020
Covid-19’s Effect on Global Supply Chains
The impact of coronavirus on everyday life is nothing short of profound. The way we work, shop, entertain ourselves, and communicate has been drastically affected. As part of this we’ve seen shifting demand for many common items, which has caused a massive ripple effect in the global supply chains for countless products.
In particular, the demand for personal protective equipment (PPE) and other medical supplies, cleaning products, and home improvement items has soared, as has the need for things like at-home workout equipment, bread-making implements, and famously, toilet paper. In addition, there has been a change in how consumers purchase goods and services, with heavier reliance on online orders and touchless curbside pickups.
It’s Time to Get Creative
Businesses across every industry are now looking for creative ways to fulfill customer demand as efficiently and profitably as they can. For example, some have identified opportunities for e-commerce orders that can be shipped from a local store, or they offer pick-up from a store instead of shipping from a distribution center. Others look to introduce flexibility on sourcing from vendors by introducing item substitution and shipment splitting.
Throughout all of these activities, the need for overall stock level optimization in the warehouse is front and center. When demand for certain products suddenly goes up or down, you need to adjust purchasing as quickly as possible to protect your bottom line.
Likewise, there’s a pressing need for better utilization of your workforce throughout stores, DCs, and hubs to generate the productivity and efficiency gains that will protect your business during this (or any) time of great uncertainty.
All of these requirements speak to the need for a central solution—a supply chain control tower— that can help you keep tabs on important aspects of your business across your network.
A Supply Chain Control Tower Approach
During these turbulent times, many retailers and manufacturers have recognized a growing need for a task force-style team. With a cross-functional skillset, this team is able to monitor and analyze specific KPIs and take quick action to make improvements across the enterprise supply chain as situations rapidly shift.
This supply chain control tower approach, which isn’t a single software product but your uniquely designed combination of people, technology, and targeted information, can help you navigate the choppy Covid-19 waters while putting in place a strategy that will guide your business for years to come.
But how do you get started?
Technology Alone Isn’t Enough
Just having the latest and greatest MRP or ERP system, or even complementing that with a Warehouse Management System (WMS) and Transportation Management System (TMS), is not enough. You need precise, up-to-the-minute visibility into stock levels, inbound and outbound shipments, and routing and transportation options.
An effective supply chain control tower solution enables you to collaborate across ALL such applications in the enterprise landscape to generate a holistic understanding of:
- What’s happening right now?
- What could go wrong in the foreseeable future?
- What can or should be corrected?
- What can be improved?
This can be achieved via a strong analytics platform that spans your enterprise. This tool should be built with special focus on essential supply chain functions.
The System Components and Capabilities of a Supply Chain Control Tower
An effective supply chain control tower has three important layers: visibility, analytics, and actions.
1. Visibility: The Foundation
This layer is all about bringing your enterprise data together. Here, information (i.e., transaction data) from across your various software applications, systems, and processes is shared at the right time. This establishes up-to-the-minute visibility into your inventory and operations across your supply chain enterprise. Implementing this in a successful manner involves designing meaningful data feeds into a common, organization-wide format of transactions. If you already have a Big Data initiative going on in your organization, you probably have taken a step in the right direction to enable the foundation!
2. Analytics: The Processing Power
Data visibility is key to analytics, which can use advanced technologies like statistical models, AI, and ML to monitor and analyze the information to provide insights into corrective actions. This is not just a “reporting layer” in terms of technology; it’s much more intelligent and complex.
- Automatically compare customer returns data against specific vendors who deliver those products. This can help identify the insights needed for additional quality checks at the time of inbound receiving.
- Trigger suggestions to update or cancel purchase orders based on rising stock levels for items if you are seeing a lot of orders being cancelled or a reduction in demand.
- Trigger suggestions to increase labor on the floor in certain warehouses if a shortage is on the horizon.
- Trigger suggestions of bonus/rewards/appreciation messages to specific workers to increase morale and strengthen productivity (the theory of gamification).
3. Actions: The Informed Decisions
This is the dashboard and user interface layer that is combined with workflow management to bring a new idea smoothly from concept to execution. When your team is presented with continuous monitoring and tracking information, insights, and possible actions, they have a much more effective way to make informed business decisions. Their ability to trigger downstream updates to the MRP/ERP/WMS/TMS helps control transactions in a rational way.
Ultimately, the workflow management component enables them to alert people about the change via mobile device, email, etc. to align understanding and resources. For example, lower demand may require moving from an eight-hour shift to a four-hour shift, but alerting warehouse supervisors would be key before triggering the alert in the system.
The Benefits of Supply Chain Control Towers
A supply chain control tower is the solution needed to bridge the gap between your Supply Chain Execution (SCE) solutions and Supply Chain Planning (SCP) solutions. This approach can help you:
- Reduce your business’ reaction time to changes, enabling fast, agile decisions
- Optimize stock levels, reducing inventory carrying costs and total cost to serve
- Manage transportation effectively, resulting in savings by altering routes and/or carriers at the right time or changing service levels, thereby increasing delivery accuracy and customer satisfaction
- Optimize labor, generating productivity and efficiency improvements
- Maximize existing software functionality in enterprise apps such as MRP/ERP/WMS/TMS to increase ROI and utilization
- Address the short-term pandemic situation as well as transition to the new environment that will be defined post Covid-19
As you can see, a supply chain control tower approach can pay dividends both during today’s coronavirus chaos and down the road as the ‘new normal’ becomes established. 4SIGHT can help you evaluate your environment, business goals, technology underpinnings, and internal resources to craft your strategy. Get in touch to learn more. You can also delve more deeply into the topic of a demand-driven value network and control towers in this related blog post.
Contact us to learn more.