February 20, 2023
Everyone in logistics talks about Control Tower. Here is a primer on Control Tower covering:
What is A Control Tower
A Control Tower is combination of technology, people and processes to monitor various operational processes against key benchmarks and take proactive action to prevent any untoward incident. Control Tower also acts as first responder to identify and address any incidents and aligns relevant teams and resources to mitigate effect of such incidents. In a nutshell- a Control Tower is
Why logistics industry needs control tower
In March 2021, Ever Given- a 220,000-ton cargo ship got stuck in Suez Canal for 6 days. The estimated loss in trade was over USD 54 billion. Given the highly synchronized nature of logistics industry, the backlog of shipments lasted months with effect across globe from China to USA.
This incident highlighted very fragile nature of supply chains and extremely thin margins of logistics industry. While an incident like Ever Given got global media attention- logistics industry grapples with thousands of small incidents every day across their network.
The very idea of Logistics Control Tower is to monitor all such possible events and ideally prevent them or take quick action to mitigate its effects.
Control Tower helps bottom line
Logistics is a very competitive business with wafer thin margins. With a very large number of players competing for essentially same business- it is natural for logistics companies to offer lowest possible prices. Thus, even a few events can directly impact the bottom line of logistics.
For example, a 32 ft multi-axle vehicle from Mumbai to Delhi may cost Rs. 55,000 say with a gross profit margin of Rs. 4000. Suppose a vehicle had a breakdown and gets delayed by 4 hours and customer levies a penalty of 5% of freight- that is Rs. 3000. That is 75% of profit margin gone!!
A control tower could have detected the delay of vehicle and alerted driver, supervisor and customer. Possibly, vehicle was quickly repaired, and delay was limited to 1 hour. In such case, penalty would be less or may be waived off by customer.
Logistics companies face hundred of such events such as vehicle breakdown, diversions, natural calamity, delay in loading and unloading, wrong route selection, even theft and hijack of vehicle.
A Control Tower team will monitor all such events centrally and take appropriate action to mitigate all such events.
Components of control tower
Control tower has following essential components:
Sensors to capture data
Today, a range of technology is available to capture real time data of an assets in a supply chain. Some common examples are GPS devices, vehicle Onboard Devices, temperature sensors, fuel sensor. Increasingly, tools such as Dashboard camera, driver behaviour sensors, alcohol sensors provide next level of data.
Control Tower Application
All the data captured needs to be processed to generate intelligence. Map technology, geo-fences, GIS are some of the tools that help put data in a geographical perspective. For example, a map and GIS combined with GPS data can tell if an ATM van is parked actually near an ATM or Bank vault. If not, then Control Tower application can raise a flag
When you have thousands of assets on road, the amount of data generated is immense. This requires massive computing capacity to store and process data in real time. Also, the data may come in waves at times and computing infrastructure should be scalable and elastic in nature.
Cloud technology helps to deploy such infrastructure quickly and in a cost-effective way. Also, many Cloud providers offer ready components to set up a Control Tower.
Control Tower is as much about “processes” as technology. Processes decide how to convert data into actionable events. For example, when a vehicle is over speeding say above limit of 70 kmph even momentarily- sensors will throw an alert. But a process will define “over speeding” as continuous speed higher than 70 kmph for 2 minutes- and create an event to action.
Similarly, a customer has demanded “no night driving”. In such a case, process has to define night driving as time between say 9 pm to 5 am and then monitor sensor data and raise an alert if there is movement detected between such time.
The processes will have parameters that can be changed to suit different customers and context. For example, on a flat road over speeding may be 70 kmph but in a mountainous region- any speed more than 30 Kmph may be considered over speeding.
Processes are typically set with help of business users, customers and industry experts and will vary from region to region, customer to customer and even based on asset such a vehicle size, type of load etc.
Any Control Tower will ultimately depend on people to take action. While control tower can automate creation of alerts based on processes set- you need a team of experts to act on such alerts and take appropriate action. Thus, a team of trained experts is required to operate control tower and take action based on defined standard operating procedures.
People operating control tower should be experienced in logistics, must have sound knowledge of company policies and processes and ability to communicate with relevant stakeholders. Control Tower team also should be able to process multiple events and combine their knowledge to identify potential damage and thus take mitigation steps.
Examples of cost savings using control tower
Here are some interesting use cases where control tower has helped to save costs and improve service levels.
Control Tower monitors every shipment and vehicle against defined route and expected time of delivery. GPS data from vehicle is processed to check in real time location of vehicle. Control Tower application calculated pending time of arrival and calculates any delay.
If delay is beyond tolerance, an alert is raised, and Control Tower team will contact the driver to check reason for delay. Control Tower team arranges any help needed to reduce delay, if possible.
A heat map shows Control Tower team all vehicles that are delayed, and by how much. This visually helps to keep check on all delayed vehicles and focus on most delayed vehicles first.
Reduce excess waiting time
Control Tower can monitor waiting time of a vehicle at various locations. In case, a vehicle is waiting for too long- an alert is generated. In case, a customer has held up vehicle for too long- logistics company can additionally charge for waiting time.
This can reduce the overall turn around time of vehicle and ensure revenue for logistics company.
Pre-placement of vehicles
Control Tower can predict arrival time of vehicle at destination. Thus, logistics company can know in advance when a vehicle will be free and where. They can place vehicle against this demand much before vehicle reaching destination. This will ensure immediate load for vehicle with minimum waiting time. This results in more trips for a vehicle in a months and higher revenues.
Ensure optimum vehicle performance
Vehicle sensors can relay data about various parameters such as engine temperature, driving behaviour, tyre pressure etc. Control Tower can measure the same against benchmarks. In case of any issues, Control Tower can guide vehicle to nearest maintenance facility and ensure any potential issue is fixed. This can reduce vehicle breakdowns and thus timely delivery of shipments.
Route Deviation Alerts
Control Tower can set a geo-fence of entire route for a vehicle. In case a vehicle deviates too much from its path, control tower can intervene and check the reason for the same. This can check any unnecessary additional kilo meters and avoid extra costs.
Last Mile Delivery control
For last mile delivery, control tower can check if a given delivery run is completed and all shipments delivered as per a route plan. In case of any hold up, control tower can inform customer and thus reduce any dissatisfaction or rejection of delivery.
As we can see from above, Control Tower can be very beneficial to logistics company and contribute directly to their bottom line.