By James Cooke
Has your supply chain for your electrical distributorship been impacted by unforseen weather events? Were you suppliers forced to cancel deliveries last year because of either the Japanese earthquake and tsunami or the floods in Thailand? A survey of 559 companies conducted by the Zurich Financial Services Group and the UK Business Continuity Institute found that 51% of respondents suffered a weather-related supply chain disruption in 2011.
And weather is just one cause for a supply chain break. As more companies source parts or products from countries outside the United States, they’ve painfully discovered that their supply chains are vulnerable to a multitude of disruptions from labor strikes to political turmoil. How to deal with the headaches from unforeseen supply chain upheavals has become a topic in the executive suite, and that’s why many leading companies are embracing the control tower strategy as a best practice.
The control tower is what the name suggests—a special place set up to monitor supply chain activities throughout the globe. The control tower takes advantage of the latest in software and technology to keep track of events taking place in “real-time” throughout the supply chain—the release of a shipment to a port or the departure of an ocean carrier carrying a load, for example. The software also Along with shipping activities, control towers often keep tabs on the weather. All events are displayed on a special screen and monitored just as air traffic controllers do in a control tower.
Because the control tower staff is constantly watching for disruptive events, they are in a position to respond to any alert about an impending crisis. Say a tornado knocks out a production plant. Then the staff can increase an order with a second supplier and divert the parts or products to customers who would be affected by the tornado outage.
To devise emergency response to a situation, the software applications behind the control tower should connect planning with execution activities. Advances in business intelligence software are also enabling control towers to weigh multiple scenarios and devise the best on-the-spot solution to a crisis.
Needless to say, companies opting for a control tower strategy have to be willing to invest in the requisite software. If they don’t want to bear cost, then they can choose to outsource the control towers. A number of leading third-party logistics companies have begun operating control towers on behalf of multinational companies.
Whether a company chooses to run the control tower as in-house activity or outsource to another party, this approach is emerging as the most effective way to minimize the risk of supply chain disruption. Simply put, the control tower facilitates rapid decision making in the event of an actual or potential supply chain disruption. Although there’s obviously a cost to operating a control tower, that cost can be more than offset by the revenue lost from one supply chain disruption. If your wholesale distributorship is running a far-flung supply chain and hasn’t investigated this approach, then perhaps you should do so before the next crisis breaks apart your supply chain.
James Cooke is the editor of CSCMP’s Supply Chain Quarterly magazine, the premiere journal of global thought leadership for supply chain professionals. He has been writing and reporting on the best practices in supply chains for more than 30 years.Tagged with tED