Control Tower and Center of Excellence (CoE) are two terms mentioned repeatedly as companies try to gain better visibility, control, and performance from supply chains that are becoming more dynamic and complex every day. But what do these terms mean and how do they relate to each other? What defines a successful Center of Excellence? Does it go beyond technology? And how are companies achieving business value by taking a Center of Excellence approach?
Control Tower vs. Center of Excellence
I began our discussion by asking Sergio to explain the difference between control tower and center of excellence. Sergio says that while both provide end-to-end supply chain visibility, dashboards, and reports, a CoE pulls together other aspects of supply chain management into a single location — such as procurement experts, financial experts who manage the order-to-cash process, engineers who leverage supply chain analytics, and IT staff who create and maintain supply chain applications. “Having all of these functional capabilities in one place makes it easy for clients to do business with you,” says Sergio.
Technology vs. People
We hear a lot about all of the technology and tools that are critical parts of control towers and CoEs, but are they the driving force for success? Sergio notes that while these tools are important to both functions, it is the people, the subject matter experts at the CoE, who ultimately deliver value to customers. “It is the people who are in meetings with customers to analyze the data and help customers derive value from the analytics,” comments Sergio. “This is what is driving the evolution of control towers to centers of excellence.”
Sergio points out that another key value of a CoE is the ability to develop supply chain talent. He notes that students come out of school with logistics knowledge, but not the experience necessary to interpret broader business issues, or the experience of using technology and supply chain analytics to properly advise clients and help them create value. A CoE provides them with this opportunity and experience. “So once again, the CoE is all about people.”
Defining Success in a CoE
If a CoE is about people, what defines success? “The success of a CoE is the success of the client because you are part of their supply chain,” says Sergio. “That is done by having the right balance of technology, process, and people within your center. And it is the people who lead that effort. They must understand the customer’s needs and direct the supply chain to deliver the goods as required. This includes understanding the constraints in the supply chain and determining what are the critical issues that must be addressed to succeed. Also, they analyze what has happened over the past year in the customer’s supply chain and offer recommendations for improving performance.”
Driving Business Value
I asked Sergio for examples of how a CoE can drive business value. He relates how a company in Mexico was struggling to deliver orders on time to 30 locations in the US after recently implementing a major ERP system. “We spent a week on their manufacturing floor to understand their processes and followed the orders to the border to see where the hold-ups occurred. Within three weeks we were able to advise the client on where the process issues were, provide dashboards giving them visibility to orders all the way to their final destinations and enabled them to bring back the proof of delivery (POD) so they could collect the cash. The client was very happy as this was their biggest win of the year.”
As a way to wrap up, I asked Sergio what questions companies should ask themselves to determine if they are a good candidate for a CoE strategy and how they might get started on a transition to this approach. For his insights and advice on that question and more, I encourage you to watch the full episode. Then post a comment and share your own thoughts and experiences on this topic!