Visibility. Of course that’s what you want. We all want it. After all, how can you run a supply chain without it? Changes in demand, late shipments, quality issues, point of sale, weather patterns, production schedules and projected inventory positions are just some of the myriad of things you want to be able to see so you can make better and more informed decisions as a supply chain executive.
Wanting—or should I say needing—visibility is nothing new, but why does it seem to remain so difficult to obtain? Every year good supply chain visibility eludes almost half of the supply chain leaders in our annual KPMG Global Manufacturing Outlook survey. Why is this? Let’s explore the concept of visibility and take a look at some techniques and solutions you might employ to help drive better planning, decision-making and execution across the enterprise.
For starters, I think we have more visibility today than we’ve ever had. We’ve spent the last two decades deploying a host of web-based collaborative applications, B2B/EDI integrations and business intelligence solutions. The information we want is undoubtedly available and there for the taking. That said, with increased globalization, smart devices, new channels or routes to market, and the Internet of Things, the number of items we want visibility to and the number of partners in our supply chain ecosystem we need information from, has simply exploded.
So is the visibility problem that we don’t have access to the information we need to inform our decision-making, or is it that we have access to the data but it’s either too much data or it’s not organized in a way that you can do something intelligent with it to drive decision-making? It’s likely both but I’d be willing to bet the problem is more the latter than the former. The data is there and we have access to it, but it’s not organized in a way to make effective decision-making.
A couple of years back the term control tower showed up in the supply chain lexicon and it’s been an unavoidable topic at conferences since its introduction. Most people would say that a supply chain control tower involves assembling a suite of purpose-built applications to manage the flow of information, core processes and decision-making across the supply chain. This is technically true but not a complete definition in my opinion. A control tower, if properly built, is really a scalable architecture and underlying supply chain operating system that can evolve to execute ever-changing business models while providing supply chain visibility and analytics for effective decision-making. Whether you choose to adopt the term “control tower” or not, the concept and supporting architecture is something every supply chain executive should embrace to better manage performance across the supply chain.
Core Layers of the Architecture
There are four core layers in the control tower architecture:
Integration Layer. The integration layer manages the flow of information between your back-end systems and the other layers in the control tower. The integration layer also manages connectivity to your external partners and remote data sources.
Visibility Layer. The visibility layer includes the aggregation and normalization of your global operational data from both internal and external sources for the purposes of business intelligence, metrics and reporting.
Execution Layer. The execution layer includes a suite of purpose-built applications that are designed to manage different aspects of the supply chain. These can be applications for supply chain risk management, demand planning, supply planning, order execution and fulfillment, transportation management, etc. The applications draw upon the normalized information organized in the visibility layer.
Analytics Layer. The analytics layer supports root cause analysis, simulations and “what if” scenarios. The analytics layer also includes tools to drive executive level decision-making that can inform the processes managed in the execution layer.
If properly architected, a supply chain control tower will provide you with the information you need to make effective decisions and the applications to carry out those decisions across your organization and your extended partner community. As an example, we recently worked with a global consumer goods manufacturer that adopted a supply chain control tower architecture to improve planning effectiveness, fill rates and overall responsiveness as their business has experienced significant growth in e-commerce. The company was able to reduce their planning cycle time by 75%, improve on-time delivery in full by 11%, and reduce finished good inventory by 11%.
So how to do you get a supply chain control tower? Unfortunately you can’t buy one or rather you can only buy pieces of a more holistic solution. Nobody offers a “control tower in a box” but then again that’s to be expected if you accept the assertion that a control tower is a supply chain operating system and architecture and not an off-the-shelf solution.
Adopting and deploying a supply chain control tower architecture is a journey. It’s like building a house. We all know that a house has a foundation, plumbing, walls and a roof. Where every house varies is in the number of rooms, the number of stories, the type of materials used to construct the house, etc. A control tower is no different. The effective ones all have the same four layers in the architecture but vary in terms of core capabilities, scope and technologies involved. So like building a house, it helps to have a plan before you begin and then recognize that it will take time to build and see your vision come to life.
- Develop a plan for your supply chain control tower and operating system. What are all of the core capabilities it will need to support? What is the functional scope? What is the geographic scope? What is the involvement or dependencies on my trading partners?
- Develop a technology blueprint and draft architecture. Not all technology works well together so think through different options and combinations of technologies to support the different layers and functional capabilities.
- Focus on getting visibility and control across your own organization before extending the architecture and solution to your customer or trading partners. You may be surprised just how many questions can be answered with the data you already have within your own organization.
- Be patient and have a purposeful plan for how the capabilities will be unlocked over time.
- Involve your customers and suppliers to work with you on your control tower solution. Treat them as one virtual team. Odds are they’ve been building out their own supply chain architecture and may have advice to share.
If you’re struggling with supply chain visibility and lack the information you need to inform your decision-making and process execution, step back and see if you have the right supply chain architecture in place. Having the right control tower architecture will provide you with measurable benefits today but more importantly is future-proof as your business model evolves and needs change.
Rob Barrett is a supply chain advisory principal at global consulting firm KPMG and leads the firm’s thought leadership on demand-driven and digital supply chains. Over the last 20 years, he’s worked with 30+ global manufacturing companies on supply chain collaboration, planning, visibility and control tower programs.