Control towers are a critical way that companies can maintain visibility of logistics operations across a number of sites. Alex Whiteman looks at the pros and cons.
Data drives business, and, as more and more comes online, firms can become tangled up in it. This data is vital for maintaining a firm’s visibility across numerous sites and controlling transport operations, particularly route planning and effective use of resources. Sifting through the sheer weight of this can be a crippling experience.
Fortunately for firms, control towers can take the strain. Just as more data enters the supply chain, so too has the use of control towers increased.
A Logistics Manager survey conducted in 2013 among supply chain and logistics leaders found that the most likely piece of equipment or system a firm would invest in would be a control tower. Of those polled, more than 54 per cent responded this way, ahead of investing in consultants and route planning software, each with a 38 per cent share, and warehouse management systems with 35 per cent share. One hundred per cent of those questioned had at least considered investing in control towers.
Mike Meades, general manager of Flextronics, says that since 2012 his firm has seen a marked increase in the number of businesses making enquiries about control towers. And this interest is translating into a rise in control tower use.
Rod Turner, group warehouse director at Carlsberg Supply Chain and former Unilever group warehouse excellence programme manager, provides his personal opinion on the growth of control tower usage, noting that people are turning to them for the visibility they offer.
“When allocating business to different transport providers, control towers are critical,” says Turner. “It allows you to see shortfalls quicker and reduces administration costs.”
Meades points out that control the towers become almost unavoidable as supply chains become ever more complex and virtual.
“They provide and integrate the necessary analytical tools,” he says. “We work with a tech firm that has outsourced its supply chain but still want total visibility and control towers provide this.”
Earlier this year JDA launched its Agile Control Tower (ACT) on its Enterprise Supply Planning, system. According to JDA, instead of simply providing a rapid what-if capability, the tower diagnoses the cause and suggests solutions from a pre-determined library of actions.
Aseem Kohli, senior director of product management at JDA Software, says: “In talking with our customers worldwide, one of their biggest day-to-day challenges is managing supply chain disruptions in a seamless manner that combines speed with strategy versus historically having to choose one or the other.”
He says that the system shows any exceptions in a graphical manner, identifies the root cause, presents pre-determined courses of action, and enables the end-to-end supply chain plan to be updated with a single mouse click.
“Historically, supply chain disruptions have been followed by a lengthy analysis cycle and what-if exercises that delayed the response and created a competitive disadvantage,” says Kohli.
He argues that companies can use the control tower to turn disruptions into a strategic advantage, by continuing to operate in a seamless manner that maintains both service levels and profitability. “In a world characterised by volatility, this feature represents a real game-changer.”
Yusen Logistics deploys control towers across Europe, monitoring the flow of products right across the continent as well as into the Near East and Russia. In particular it specialises in monitoring the flow of pharmaceutical products, of which it is responsible for the delivery of 1.6m pallets per annum.
It offers access to a fleet of 50 hauliers, primarily offering road haulage but to some extent also offers short sea and air. The control towers it operates manage this haulage. Recently it expanded its collaborative network servicing final mile distribution requirements across the whole of Europe and beyond within the healthcare sector. The firm’s control tower handles 20,000 deliveries per week across more than 50,000 delivery points in 36 countries.
The expanded service manages in-market supply to end users, namely hospitals, pharmacies, doctors, dentists, wholesalers and vaccination centres. Initially this expansion will cover users in Austria, Denmark, France, Italy, Spain, UK, Germany, Belgium, with Poland expected to follow later in the year.
Dr Richard Gibson, Yusen’s strategic development director, says you will never find an identical definition of a control tower. They are, he says, aligned to client needs.
“Each logistics service provider will have a control tower but each of these will different.”
In June, New Zealand dairy cooperative Fonterra selected Damco to operate the control tower for European export logistics, with responsibility as a placement agent for bookings with Fonterra’s direct carrier contracts.
Damco also was made responsible for handling origin services, container haulage, documents and certificates for export orders for Fonterra, which is owned by more than 10,500 New Zealand farmers.
Kevin Fogg, sales operations manager, said: “Fonterra chose Damco because we wanted one trusted company, with the necessary local footprint and expertise, to manage all of our export logistics across Europe. The long-standing relationship between our two companies in New Zealand was a significant factor in selecting Damco as our European control tower.”
There is a quote Gibson uses when describing control towers and the supply chain – he hastens to add that this is not his quote: “Whoever owns the IT, owns the supply chain.”
“The volumes of data we are getting are increasing year by year,” says Gibson. “Data requirements are increasing at an equally large scale as further legislation is rolled out.”
Meades says that this exponential growth in data is partly to connect the various nodes within the supply chain: “And this will only increase as cloud technology rolls ever outward, on a global scale.”
Gibson believes the quantity of data is getting to the point where it will begin to test IT providers’ systems.
“As such, we are having to upgrade to suit this,” he says. “One problem we are having with this though is that we do not have a steady flow, but rather peaks and troughs.”
But this is not creating a pressure to upgrade, says Gibson: “On the IT front, I’m happy that I’ve got sufficient capacity in the product for the short to medium term.
“We are, however, looking to develop a bespoke IT solution that can manage billing scheduling and visibility.”
The customers’ needs for visibility are where we are seeing some real pressure to develop systems, says Gibson.
“Visibility allows them to cut their cost base,” says Gibson. “Moving to a control tower solution from a pallet network is seen as a good way of generating cash – especially with so many firms having long ago outsourced.”
As such it has invested in upgrading its real-time tracking technology, specifically designed to track and measure the temperature, humidity and location of dry and refrigerated freight containers. The system also monitors risks such as irregular door activity and shock impact and has inbuilt geo-fencing functionality.
It can be fitted to the door of any standard ISO container, the ISO9002 accredited system. With full end-to-end reporting, including interval and event-based SMS and email alerts, in addition to location and status tracking via an online web portal, the solution gives customers full visibility of their products at every stage from the point of loading.
Meades says that while he feels no pressure to upgrade, as clients want more data and quicker analysis, speed of reaction will be tested.
“End to end visibility, backed up by analytics,” says Meades. “This is where we get the most interest: why are things happening? Fortunately, control towers make it easy to standardise this process.”
Turner concludes by stating that control towers are a good option for manufacturers with sufficient scale which they can leverage to reduce costs.
“3PLs too can benefit from towers,” he says. “Whether this is for actively selling transport; administration; or just simplifying processes in low-tech situations.
“Unilever found them to be particularly beneficial, and is looking to expand its reach with more movements – air, sea, and road, both domestically and internationally.”
Technology: Up in the clouds
Cloud computing is just one of the developments in technology being used to improve control towers offerings.
Carlsberg’s Rod Turner, providing his personal opinion, says: “The transactional technology behind control towers is not that fantastic or developed,” says Turner. “But what it does is provide the ability to link to the ERP.”
By doing this, for firms approaching multiple hauliers, it allows a larger number of firms to bid for the tender, which Turner believes is vital for firms looking for efficient, effective resource management.
Flextronics general manager Mike Meades reckons that the increased use of cloud computing has been the biggest single technological development for control towers, but he says that Flextronics’ most recent improvement has been the launch of Flex Pulse. “This allows us to marry mobile technology with our control tower systems,” he says.
Flex Pulse aggregates and interprets live streaming data from multiple sources, highlighting global variables that may impact or disrupt supply chains, facilitating contingency planning and crisis preparedness and response.
Yusen Logistics handles 17,000 EDIs per day, says strategic development director Dr Richard Gibson.
“The challenge we have is to gather this data and drop it into their system,” says Gibson. “We have a product that coordinates these demands and combines them into a haulier planning tool in a mix of full truck load and less than truck load.”
This system, which operates out of Yusen’s centre at Milton Keynes, allows Yusen customers to take advantage of less than truckload rates.
“It gives the client visibility of where their load is, this is through a process we developed that piggy backs onto the haulier’s GPS service. We can share this data with pharmaceutical firms moving just six pallets.”
According to Gibson, the Yusen system allows for monitoring of temperatures, door status – sending an alert when the rear door is opened – and a panic button. As to the hauliers used by Yusen, they are audited giving visibility of movement.
And what about offline? Gibson says that anything run offline runs risks: “You may say, well what if there’s a glitch? In such a scenario we would bring in more staff to get things back up to date.”
Meades says that it is just the case that more and more things are going online “this is the way business is moving”. As for Turner, the only benefit he sees in caching data offline is for disaster recovery, but he adds that there wouldn’t be too much you could do with that data.
Case study: Suttons creates control tower in Singapore
Suttons, the St Helens-based chemicals logistics specialist, has implemented a centralised control tower model for polystyrene resin producer TPSC Asia after winning a supply chain management contract.
Singapore-based TPSC is one of the largest producers of general purpose polystyrene and high impact polystyrene in South East Asia.
Its product is distributed to more than 30 countries and Suttons has been given the responsibility to oversee all aspects of the supply chain from TPSC’s manufacturing site for all inbound and outbound logistics.
It will take control of the management of all logistics activities including on-site logistics, movements in and out of TPSC facilities, together with tactical and strategic optimisation of their logistics network.
Supply chain visibility is the key enabler, and to achieve this Suttons has implemented a centralised control tower model. The control tower is a central hub with the required technology, organisation and processes to capture and use supply chain data to support decision making and provide more control of the supply chain and optimise all operations.
Suttons will manage all of TPSC’s suppliers and work to a strategic set of KPIs designed to maximise value, improve service and strengthen TPSC’s service to its customers.
Mr Ng Chye Ming, TSPC’s head of supply chain said: “Through Suttons’ innovations, we can confidently achieve a cost saving of more than 10 per cent in our current financial year, this certainly has a significant impact on our bottom line! We now have one point of contact for all transport and logistics activities, a clear target driven strategy that ultimately improves the service we provide to our customers and frees up our team to focus on our core business.”