Customers constantly ask me, “What do I need to better assure my supply?” I reply “How about implementing a Control Tower?”
Control towers can be used within many industries for different purposes: airports and train depots use them for traffic control; power plants, especially nuclear plants have elaborate control rooms to monitor operations and third party logistics providers deploy them to track distribution and transportation activities. These are places where operations run extremely smoothly and if there are near misses or averted incidents, we hear of them.
What do all these control towers have in common? If you wanted to set up a control tower to monitor and assure your supply, what would you need?
- High quality external information feeds: These provide the ability to see what is going on around the world. With a globally orchestrated supply chain, manufacturing operations are vulnerable in China, Europe, and in the US. Your supplies are also vulnerable in the air, on the ocean, and on the roads. This is triggered by political events, weather, and health issues. The possibilities are almost endless and you need to monitor news channels, weather forecasts, police radios, and even YouTube.
- High quality internal data:
In order to evaluate the many different events that take place in the world every day, you need to know where the suppliers are located, what their capacity is, how they are doing and what they produce. You also need to know where your facilities are and what are their demand and inventory positions. You need to know what your facilities have ordered and will order in the next 6-18 months. You need to know where all the parts are that your facilities need. - Standardized communication:
When you see something happen and understand that this has a possible impact to your operation, you need to know what to say to your employees. What information will decision makers need from the control tower? The right amount is essential. Too much information will overload the decision makers while too little might prompt more questions than answers. To streamline this approach, standard templates need to be available for various scenarios. - Roles & Responsibilities:
Not just what we communicate is important, but also to whom and in what sequence. The company culture and regulations will impact this answer greatly. The list of recipients needs to be in place and current. It also needs to be closely aligned to the type of event and the initial assessment. The challenge here is to keep this information current, especially in larger enterprises. Once an incident occurs there will be no time to figure out who the right people are to handle it. - Initial Assessment, Escalations & Downgrading:
The initial assessment of an incident is crucial. It drives notifications (what and to whom) and determines the course of actions. The criteria should be fact based and the procedure should be easy. A simple calculator that combines information about the number of impacted suppliers, parts, manufacturing facilities, past spend, and current order volume is a good starting point. The calculator delivers a value that can be linked to a standardized incident evaluation table. Creating this table is the hard part as it reflects how the enterprise sees a given incident. Leading procurement organizations follow the principle of worrying about supply rather than believing that “everything will be fine.”
Any updates to the incident follow the same process of fact gathering and an initial assessment. However, in order to escalate or downgrade an incident, additional requirements can provide more stability in the organization’s response. - Processes, Policies, & Checklists:
Repeatable processes are the key to executing your plan flawlessly and efficiently with predictable outcomes. Additionally, as these processes mature, opportunities for automation exist. The goal is to reduce the time to response decision and therefore, reduce the latency in enterprises. Another tool is to incorporate checklists. Checklists are not step-by-step directions, instead, they are intended to remind knowledgeable employees of important steps and empower them to find solutions. - Metrics & Measures:
As always, metrics provide feedback and drive behavior. They can help identify improvement opportunities and ensure that the Command & Control Center delivers value. When reducing the latency between an incident and the organization’s response, time measures such as Time to Awareness and Time to Resolution are key. However, quality measures are also important to ensure credibility. - People:
Having the right people will make all the difference. Members of a Control Tower need to be aware of current events that might affect your suppliers and supply lines. Members need to understand that it is often not enough to know who your direct suppliers are, but it is also important to know where all your parts and materials originate. They need to err on the side of caution to make sure that an event half way around the world does not impact your operations.
Some of these elements seem easy to achieve and indeed, developing one area is often not a hard task in itself. In this process, the challenges usually arise from orchestrating all elements in parallel. The organization’s expectation is that the Control Tower is in operation when in reality you are really still designing it. Additionally, most of the final designs have to be aligned closely with the organization that they are designed for. A one-size fit all solution does not exist. The next blog in this series will address and identify successful approaches to the implementation side of this approach.
Written by Alexander Bender, a Principal at OPS Rules