Managing real-time information across increasingly complex supply chains is a challenge for even the best run companies. Increasingly, the answer is a control tower. Malory Davies looks at the issues.
A complex supply chain generates huge amounts of data from maintaining visibility across multiple sites and transport operations – along with efficient planning and resource optimisation.
And that is why the concept of the control tower has become so significant. Ceva, for example, now has 15 controls towers serving customers globally. Simon Hobbs, Ceva’s vice president supply chain development, UK, Ireland and Nordics, says: “Control towers enable efficient planning, remove duplication and optimise planning resources across multiple operating locations through centralised teams of transport planners and sophisticated planning systems. Single points of communication maximise operational visibility, for example, larger amounts of consistent transport movement data is available (compared to that of localised planning) which facilitates more efficient vehicle utilisation. This allows greater agility in reacting to any changes in customer requirements, such as peaks in volume. A single source of performance metric data is readily available meaning we see more effective management and a strong base for continuous improvement and we see more effective control and management of our sub-contractor base.
“In a nutshell”, he says, “control towers provide orchestration and synchronisation of global supply chain processes, ensuring supply chain performance by implementing engineered solutions designed to meet customer and business needs; provide information about all supply chain network partner activity within a region and in one place; and manage supply chain execution with “same-time-zone / same-language” capabilities across all regions.”
Dan Mowbray, commercial manager at Jigsaw highlights the importance of the customer understanding what they want to achieve from a control tower/4PL model.
“In general terms, operations which have become complex (for example through significant growth, mergers and acquisitions or business/market changes) often present good opportunities to identify and exploit synergies and other efficiency gains through a control tower.
Mowbray points out that both parties must be willing to work together, share information, identify the benefits they want to achieve and also be willing to implement change. “Without this it will not be possible to deliver all of the potential benefits. While customers are always interested in the cost savings some are also driven by other factors such as achieving and maintaining increasingly demanding service levels.”
Setting up a control tower may seem like a daunting task. But most logistics companies already have a variety of business systems in place, says Peter Heuvel, solutions consulting director at Kewill.
He highlights three stages in the process: First, strategy planning with users and stakeholders to understand what the business objectives are.
Second is implementation to create the control tower architecture, which effectively sits on top of the other applications that will deliver the visibility different types of end users need.
The third stage is devoted to feedback and evaluation. “It’s essential that key learnings are immediately taken as part of the ongoing development process to ensure best practice for everyone involved,” he says.
Hobbs points out that for an effective control tower to operate, a shared, strategic, global solutions platform to orchestrate all of the supply chain activities, end to end is essential. This ensures directed execution, visibility of global supply chains, and integrates with the best technology and applications.
Ceva uses its “Matrix Supply Chain Management” platform serves as the backbone for coordinating activities between the disparate systems within the Ceva Solutions Matrix. These include freight management, warehouse management, transport management and supply chain management as well as Ceva Matrix Connect which integrates the systems.
There are a number of suppliers that can provide the technology to support a control tower operation – E2open for example harnesses cloud connectivity to support control tower operations monitoring network status and highlight business rule exceptions in real time.
Kewill’s Control Tower solution is designed to enable work flows to be easily configured to map the standard operating procedures of multiple customers or brands, the solution proactively identifies potential problems and issues alerts to safeguard KPI attainment, says Heuvel.
Jigsaw has invested in its own technology systems, says Mowbray. “Any effective control tower should have a solid central system which incorporates effective transport management functionality and which enables and supports the flexibility inherent to the control tower approach. It should be able to interface with systems operated by the customer, third party hauliers and, if necessary, other stakeholders. In some cases these might include the customer’s customer such as a major retailer.”
Success in implementing a control tower also requires a change in mind-set. Hobbs says: “For a successful operation, you have to move away from a local/single depot mentality and understand that you are part of a wider network and work as one team. But you also need to ensure that the people within the control tower retain sufficient levels of local expertise and knowledge too – it’s a difficult balance.
“Properly defined operating procedures, exceptional communications and transparency between the control tower and operating locations is critical for a successful operation. With this will come greater accuracy of available assets and spare capacity, ultimately leading to a highly efficient and effective operation.”
Heuvel also highlights the fact that people can be resistant to change, even when the net effect on their working life is positive. “Managing a control tower requires liaison not just internally but also with supply chain partners, which often amplifies the complexity.”
The best gains are achieved when customers embrace change so that solutions can be devised which align operations with outcomes, says Mowbray. “Often this will involve, or indeed require, significant process change. It is also important to measure before-and-after performance to demonstrate what has been achieved.”
The benefits of employing a control tower are going to vary according to the nature of the operation. This reinforces the importance of establishing a baseline from current operations so that savings and efficiency improvements can be measures.
Hobbs agrees that each situation is unique. “It’s fair to say that for those with high amounts of empty running or those with multiple planning teams at different locations that are responsible for different activities, the ROI will be significant. In terms of domestic road transport, if there are opportunities to integrate multiple types of transport movements such as radial home delivery and inter-site trunking to maximise the equipment you have, the savings are vast because you are effectively ‘milking your assets’.
CASE STUDY: Yusen Superhighway for pharma
Yusen Logistics is making increasing use of control towers globally to manage complex international flows in a number of vertical market sectors. Its control tower driven European Pharmaceutical Superhighway, carries more than one million pallets a year, providing solutions to complex supply chain requirements for both major global manufacturers and small biotech companies.
The Control Tower at Milton Keynes provides a single centre to manage global air and sea freight movements together with customs and fiscal services, linking into Yusen offices around the world. It enables centralised planning of pan-European transport movements to maximise vehicle utilisation, minimise empty running, reduce pallet costs and achieve environmental benefits, while ensuring product integrity.
James Colson, general manager, healthcare, says: “The pharmaceutical and healthcare market sectors are key strategic development areas for Yusen Logistics. Our solutions currently range from the delivery of raw materials into the manufacturing process, to the delivery of finished drugs of all classes and equipment, to in-market distributors, hospitals, pharmacies and surgeries.”
The Superhighway operation is based on a strategic network of specialist pharmaceutical hubs that consolidate and cross-dock product for onward delivery throughout Western and Eastern Europe and beyond. Yusen’s hubs in Belgium and the UK also manage global inbound/outbound shipments by air and sea.
CASE STUDY: Unipart boosts availability with control tower
Unipart Logistics has developed an award winning global control centre for a major client – a blueprint for any global supply chain operation, whether it be manufacturing, engineering, retail or aftermarket.
Supply chain director Steve Thomas says: “Prior to the Global Control Centre, there were between 6-7,000 back orders at any point in time, with typical global availability running at 96 – 96.5 per cent.
“In 2011 we determined to make a step-change in performance, raising it to industry leading levels. So we benchmarked ourselves against the whole sector and set ourselves a challenge to reduce back orders from the 6-7,000 level to 2,500, a massive step change, and raise availability from 96 per cent to over 98 per cent globally.”
With more than 1,200 suppliers, 60,000 skus and the requirement to fulfil 60,000 orders a week for 850 customers worldwide, visibility and coordination of activities across the supply chain was critical. Unipart decided that a control tower was needed to provide the required transparency.
“We started by mapping out a hierarchy of all the processes. We knew our top-level results, back orders and availability, but we needed to break them down for all areas of the business. There were many points to consider, such as items may be physically in the supply chain but not in the right place, or else there may be shortages due to a supplier not delivering on time, higher than expected demand or a failure to order early enough. We needed to look at all scenarios.”
“The next stage was to build a prototype,” says Thomas. “We pulled in data from SAP and our various logistics systems and built a system where we could click and drill down into the next level of detail.
“We had an in-house team look at all aspects of the prototype, with leaders from all parts of the business contributing. The result was a ‘tree like’ structure where we could cascade down through the process areas, through multiple levels.”
“Within one month of using the prototype we were starting to see the first business benefits,” says Thomas. “Within four months the prototype had been stabilised. Then we set about putting it onto a more robust platform, using SAP Business Objects, and using a range of visual tools to illustrate performance and status, such as dials and traffic light signals.
“Now we have two control centres where we have a bank of touch screens, which is useful for team meetings. But we also have the data available on desktops, so that team members can simply log-on to see how their area of the supply chain is performing.”
The improvement in performance has been significant. Thomas says: “We have now got down to 1,800 back orders, and our availability has topped 98.6 per cent. Also during this process we were able to reduce our inventory by a third, so not only did we improve performance but we did it on a reduced inventory. And in addition we cut freight costs by 15 per cent.”
Originally printed in Logistics Manager 08/2014
