Supply Chain Control Towers are not new. Analysts and software vendors have been talking about them for as long as I’ve been an industry analyst (20+ years). So, why are we still talking about supply chain control towers?
I asked that question at the beginning of a webcast (presented by E2open) that I participated in recently (“Control Tower Capabilities: How to Separate the Truth from the Hype”). I suggested there are two main reasons why we’re still talking about control towers today.
Fulfilling the Promise of Supply Chain Control Towers
First, we’re finally starting to fulfill the promise of control towers. Twenty years ago, there was a big gap between the promise of control towers (real-time, end-to-end supply chain visibility and control) and the reality of available solutions (dashboards showing bar graphs and pie charts based on stale data from a limited number of trading partners). A big limiting factor was the lack of trading partner connectivity. In general, since connecting with trading partners (typically via EDI) was time consuming and costly, companies often followed the 80/20 rule — that is, they only connected electronically with the 20% of trading partners that accounted for 80% of their transactions.
Simply put, control towers twenty years ago (and even 10 years ago) were not real-time and they did not include the long tail of trading partners. They were also light on the control side of the equation — that is, while they provided some visibility to what was happening in the supply chain, taking action on that visibility wasn’t easily enabled; users typically had to log into multiple other applications to take corrective actions.
Today, thanks to the rise of network-based platforms (what I call Supply Chain Operating Networks) and technologies such Application Programming Interfaces (APIs), companies have the ability to connect, communicate, and collaborate, in near real-time, with a much larger percentage of trading partners. These network-based platforms also combine visibility with applications and automated workflows that span across multiple business functions (supply chain planning, logistics, global trade management, etc.). This enables users to take a more integrated, holistic approach to supply chain planning, execution, and exception management.
COVID-19: A Wakeup Call for Laggards
The second reason why we’re still talking about control towers is that the risks of being a laggard when it comes to digital transformation are greater than ever. The COVID-19 pandemic has been a wakeup call for many companies that “the old ways of doing things” are not going to work any more. What supply chain capabilities will be most important moving forward? We asked our Indago research community that question back in August and here’s what they said:
Having real-time visibility to demand and supply in order to respond quickly and efficiently to changing conditions, and the ability to model and simulate different scenarios ahead of time in order to proactively prepare for whatever lies ahead.
That is what today’s supply chain control towers promise. Is there still a gap between that promise and reality? Sure, with poor data quality still being the Achilles’ Heel of supply chain management. But the gap is much smaller today than it was just five years ago.
Is there still a lot of hype? Sure, especially when it comes to using artificial intelligence to create fully autonomous supply chains. But when you consider how quickly technology is advancing, it probably won’t take 10 years for that hype to become a reality. The real question, as always, is whether companies will be ready and willing to implement them.
Siloed Control Towers & Four Foundational Pillars
I shared the virtual stage with Gary Barraco and Lori Harner from E2open. I particularly liked Gary’s comments about siloed control towers and why overlays no longer work, as well as Lori’s comments about the four foundational pillars of control towers. I don’t want to steal their thunder, so I encourage you to watch the webcast for their insightful comments and advice on these topics. Then post a comment and share your perspective and experience related to supply chain control towers.