What control towers can do for your supply chain
More than an ‘old-fashioned’ freight management desk, a control tower offers functionalities which, if used well in appropriate situations, can add great value to logistics and supply chain operations.
What are control towers?
- It is not actually a tower.
- It is not in direct communication with truck drivers, sea captains or air pilots.
- It does not control the production, storage, replenishment and order process.
- It is not a synonym for a 4PL.
Control towers essentially provide supply chain visibility across divisions, countries and modalities.
What is the difference between control towers and traditional freight or distribution management?
Control towers are not physically or hierarchically linked to one specific location, whereas traditional freight and distribution flows are managed from either origin or destination.
Who needs control towers?
- The scope is global or inter/intra-continental
- The dependency is high
- Many supply chain activities are outsourced
- Your customers’ service requirements are increasingly challenging
Control towers can improve visibility in complex and highly fragmented supply chains by providing centralized data solutions and fast, fact-based information.
Can I set up a control tower internally or should I outsource it?
- Planning: staff with a background in supply chains
- Event management: staff with a background in transport operations
- Business intelligence: staff with a background in operational improvement
- Management of supply chain partners: staff with a background in 3PLs
- IT management: handling IT tools to exchange data with supply chain partners (suppliers, manufacturers, 3PLs and carriers) as well as internal system management to store the data in a structured way and provide information to support the control tower functions
Your decision on whether or not to outsource a control tower depends on these factors:
- If it is feasible to develop the above-mentioned operational and IT capabilities in-house
- The business case behind the investment required for an in-house solution vs. the indirect costs associated with outsourcing
- The volatility of the workload and the reaching of a certain critical mass
Insourcing, at least in the early stages, tends to favour process quality, whereas outsourcing provides a solution with greater long-term flexibility in relation to resources and systems.
Typical benefits of control towers
- Align expectations and take a reality check, not only internally but also externally towards providers.
- The benefits should form the basis of the setup in terms of processes, systems and resources.
- Save on logistics costs
- Reduce inventory
- Improve service levels such as total cycle time and on-time delivery
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