In 2018, the vast majority of Gartner’s Supply Chain Top 25-ranked companies1 have used control towers to enhance their operational performance, and they are not the only ones to do so. We see that the number of companies adopting a supply chain control tower is increasing globally. These projects go beyond the implementation of visibility software and are truly looking at the full spectrum of process redesign, organizational change, and internal and external collaboration.
Over the years, we have helped many clients across different industries design and implement a control tower. Typically, these clients implemented control towers as part of a digital transformation project or were trying to eliminate silos across processes, product groups, and regions. Recently, we also helped companies implement control towers as part of post-merger or acquisition activities. Based upon our experiences successfully designing and implementing supply chain control towers, we would like to share some key learnings.
Implementing a control tower at a global manufacturer
For a global manufacturer, we supported the implementation of a logistics control tower as part of a global digital transformation program. This company had highly differentiated products and business models. Moreover, logistics activities were organized per business unit and supported with a wide variety of tools and systems. Due to this traditional supply chain set up, the company was working with many logistic service providers (LSP) and different processes were implemented across regions, business units, and even within plants.
During the preparation for the implementation, we defined a new organizational structure and new processes in line with the corporate strategy. We centralized typical transport management activities such as sourcing, planning, and execution. After defining the new operating model and “to-be” processes, we implemented the new organizational structure, including new roles and responsibilities, supported with aligned performance indicators that contributed to the newly formed function. Additionally, we consolidated and rationalized their logistics contracts, whereby local LSP contracts were discontinued and regional and global contracts were set up where possible.
Once the center of excellence went live with its core functions, we migrated the plant’s outbound transport execution activities. We tested and measured success and made small improvements during a short time period before adding additional processes and services such as custom declarations and freight audit. In parallel, we transitioned additional plants to this center of excellence and rolled out the concept in other regions using the same “industrialized approach.”
This controlled ramp up allowed us to quickly react to gaps and improvement opportunities. We captured solutions for common gaps to speed up implementation with other plants and regions. For example, one area for improvement we found related to how customers were informed in case of disruptions during transportation. Traditionally, this was done by the plant, customer service representative, and LSPs. Each party had pieces of the information required to paint the full picture. In the design phase, it was decided that the control tower should contact customers, for example, in case of delays. However, due to reliable and real-time shipment information, this responsibility was moved back to customer service representatives during the proof of value, where the main objective behind this change was to have a single point of contact for customers for all their questions. Common gap resolutions are typically found in technology, such as solutions for integration with regional and/or country back-end systems or process gaps. In the above-mentioned example we identified process gaps related to the way freight settlement and auditing process should be implemented following global and local accounting legislations. By describing and fine-tuning the gap resolution, we were able to apply it throughout the transformation globally. With limited additional work, we were able to adhere local legislation constrains and system limitations.
What’s more, shifting gears between trading partners is constantly required, as your suppliers, buyers and LSPs are probably going through digital transformation programs as well, or they could be collaborating on transformation programs with other partners. They also need to be conscious of their budgets and resources. It is therefore important to be aware that a significant portion of your success depends on your trading partners, so don’t turn a deaf ear when your trading partners asks you “how high?” when you tell them to jump.
Key takeaways from our experiences
Based on our experiences, we have identified several generic (i.e. applicable to any transformation program) and control tower-specific success factors for design and implementation:
- Make the implementation a top strategic priority. Secure executive support and set ambitious targets.
- Launch, test, measure, learn, and scale the solution quickly (proof of value).
- Prioritize the transformation based on quick returns and communicate wins widely. Additionally, execute your transformation plan and expect continuous adaptation and adjustments.
- Consider that your trading partners have their own priorities and programs to work on. Therefore, it is important to involve them early in the transformation process. As mentioned in our previous blog, collaboration is an important pillar of your control tower.2
- Making use of proven technology is essential. Collaboration platforms provide the possibility to easily integrate with pre-connected partners. However, keep in mind that technology is just an enabler and that people and processes are at least equally important
To summarize our findings, every company and industry is different and there is not just one way for designing and implementing supply chain control towers. However, we believe the key to successful implementation is making sure that it supports your strategy, that stakeholders collaborate, that processes are streamlined, and that the chosen technology enables your ambition. Although you will face challenges during the implementation, it is essential to remain flexible and to learn and adapt continuously. Flexibility to adopt changes during the proof of value and scale up increases success rates.