Logistics Control Tower

MONITOR | CONTROL | RESPOND

WORKING DRAFT
Last Modified 7/12/2019 8:53 AM China Standard Time
Printed
Several issues plague logistics in India...

Last Modified 7/12/2019 8:53 AM China Standard Time

1 Poor transit times and service levels

2 Non availability of trucks

3 Lack of end to end visibility

Printed
4 Poor maintenance of assets

5 High idle time of assets

McKinsey & Company 2

…Which have significant implications on organizations

Last Modified 7/12/2019 8:53 AM China Standard Time

1 Poor transit times High inventory cost and poor planning

Missed deliveries (cut-off times/poor

2 Non availability of trucks
service level)

No performance management,
3 Lack of end to end visibility
pilferage/theft, inefficient planning

Printed
Frequent breakdown, increase in
4 Poor maintenance of assets
maintenance cost

5 High idle time of assets Low utilization leading to higher cost

McKinsey & Company 3

Across industries, organizations are facing issues in logistics management

Last Modified 7/12/2019 8:53 AM China Standard Time

Metals and mining Cement/Chemical Auto Express

Printed
▪ Pilferage of material ▪ Issues with “change in ▪ High transit times ▪ Low asset utilization
undetected by standard destination” resulting in ▪ Assembly line shutdown ▪ Poor service levels
weigh bridges revenue loss in due to unavailability of ▪ Fuel theft
▪ High TAT and transit time geographic pricing RM ▪ Higher wear and tear of
limiting plant throughput scenario e.g., bag drops ▪ Lost sales assets

McKinsey & Company 4

A digital logistics control tower provides real-time visibility and ability to respond faster to events while
driving down costs
What is a control tower?
The Control Tower is the
digital nerve center of
the logistics operations
that integrates all tech
solutions for road logistics
and provides the
organization ability to
monitor, plan and take
exception decisions
Last Modified 7/12/2019 8:53 AM China Standard Time
Distinguished capabilities
Enables real-time operational adjustments to reduce
1 costs and meet customer
service levels
Provides visibility to enable mid to
2
long-term network planning and optimization
Enables continuous feedback and optimization to
3
make supply chain more efficient and responsive
Printed
4 Drives faster customer response times
Integration of data and performance management
5 systems allows organization to operate as an
orchestrated unit
McKinsey & Company 5
6 modules of control tower can be built across 3 time horizons
Digital control
tower Advanced control tower Smart control tower

Last Modified 7/12/2019 8:53 AM China Standard Time

1 Track
Trackand
andtrace
trace 3 Asset management 5 Auto scheduler

Ability to track truck movement based
▪ GPS linked tracking on transit
▪ In-plant monitoring based on geo-fencing
Bolt on devices to optimize operation Planning and dispatch placement
costs ▪ Integrated ITMS solution for indent
▪ Fuel sensors planning
▪ Digital locks ▪ Auto-scheduling based on truck
▪ Mileage guidance systems location and indents

2 Track
Performance
and trace
management 4 Smart alerts 6 Network optimisation

Realtime dashboard of operating
performance
▪ PIGO/GIGO dashboards
▪ Transporter scorecards
▪ Transit time monitoring
Printed
Mechanisms to track deviations and alert Machine learning algorithms to
on risks ▪ Optimise truck mix and space utilisation
▪ Route/stoppage deviation to deter pilferage ▪ Optimise network run to maximise run time
▪ Alert escalation to driver, transporter and
security
▪ Advanced analytics based MIS

McKinsey & Company 6

Most of the modules are applicable across sectors
Metals & Cement/

Last Modified 7/12/2019 8:53 AM China Standard Time

mining chemicals Pharma/FMCG Auto Express/3PL

1 Track and trace

Digital Performance
2
management

Asset
3
management

Printed
Advanced 4 Deviation control

5 Auto scheduler

Smart Network
6
optimisation

McKinsey & Company 7

Control tower modules can help achieve significant impact across key logistics KPIs

Logistics elements Key KPIs/ Metrics Unit of Measure Typical improvement

Last Modified 7/12/2019 8:53 AM China Standard Time

Vehicle utilization Percentage ~30%
Track and
trace On-time delivery Percentage ~30%

Fleet utilization Percentage ~30%

Asset
management
Downtime cost Rs./ annum ~12%

Customer Satisfaction Score Number ~15%

Alerts
Issue resolution TAT Time (Minutes/ Hours/ Days) ~70%

Printed
Auto OTIF % (On-Time in Full Delivery) Percentage ~30%
scheduler

Network cost Rs. / handling unit (e.g. Rs/ kg) ~15%

Network
optimization

1 Normalized across clients McKinsey & Company 8

Technology architecture of the control tower
Central Ops Center Leadership dashboards Other stakeholders

Last Modified 7/12/2019 8:53 AM China Standard Time

VISUALIZATION LAYER

KPI Alert &

Workflow MIS
BUSINESS LAYER calculation exception Rules engine
manager reporting
Analytics
and tracking management

DATA LAYER Automated alerts to

process owner

INTEGRATION LAYER

Printed
Action taken by the
exception owner

GPS SYSTEM ERP/ Data lake

▪ Location data with timestamp ▪ Process TATs
▪ Speed, acceleration ▪ Master data – Driver, Vehicle, Route
▪ Device health ▪ Alerts and exceptions
▪ Beat Plan

GPS/IOT Sensors RFIDSensors

McKinsey & Company 9
Case example: A large metals and mining player embarked on the journey of building a logistics
control tower

Last Modified 7/12/2019 8:53 AM China Standard Time

Context Challenges

Meta. and mining player with multiple plants High logistics turn around time compared to
other players in the market

10+ different raw materials and end products Lack of transparency on logistics leading
in circulation to poor service levels

Printed
3000+ trucks supporting the logistics Pilferage not getting detected leading to
amounting to 23000+ trips per month losses due to theft

$5 bn+ worth of goods moved annually Lack of data for performance management
of vendors

McKinsey & Company 10

Control Tower modules
1 2
Modules
Proactive alerts and
Track & trace inside automated exception
plant and in-transit resolution
Enables
▪ Helps ensure service ▪ Proactive pilferage
levels detection
▪ Increases safety of ▪ Faster turn-around time
asset of trucks
Benefits
▪ ML driven automated
exception resolution
▪ Simplified workflow to
resolve exception
3
Last Modified 7/12/2019 8:53 AM China Standard Time
Real-time reports and
dashboards
▪ Real-time visibility
Printed
– Performance/ SLA
– Cost levers
▪ On-the-go performance
review trigger for senior
management through
mobile platforms
McKinsey & Company 11
Vision: Future state workflow for inter-plant movement leveraging an integrated Digital Control Tower
5▪ Detect pilferage
during transit ▪ Driver gets ETA of plant entry to the parking lot

Last Modified 7/12/2019 8:53 AM China Standard Time

6
4 Alert in case of route deviation ▪ Logistics lead made aware of vehicles with alerts
approaching parking lot to ensure quick resolution

7 ▪ Automated Call/SMS devices at entry time slot

3 Track and trace in truck ▪ Visual board of call-in list
Parking-in
movement on map via GPS

Transit 8 ▪ Auto gate-in for registered trucks (auto pass)

ETA at unloading plant so Gate-in
2
driver can plan transit time
Gate out
Control
tower 9 ▪ Real-time tracking of trucks across
station (geo-fence)
Plant 1
(Loading)
Plant 2

Printed
(Unloading)
1 Accurate indent planning: defined time ▪ Real-time status of TAT performance
10
slot when trucks are required at station boards
➢ Cost savings from trip optimization
➢ Minimize parking lot congestion Transit

11▪ All “paperwork” done digitally with integrated ITMS

Gate-out Weekly/
12
monthly AA
based MIS
Performance reports
review

McKinsey & Company 12

Common myths that prevent organizations from setting up a LCT

Last Modified 7/12/2019 8:53 AM China Standard Time

1 Establishing a control tower is a long drawn process

2 Entire technology stack needs to be revisited to implement the LCT

3 Adding more manpower is more cost effective than to automate

using technology

Printed
4 First version of the control tower must be AI/ML enabled

5 Simple track and trace is enough to get full control of the operations

McKinsey & Company 13

Key success factors from our experience in setting up the Logistics Control Tower

Last Modified 7/12/2019 8:53 AM China Standard Time

1 Think through value proposition - Invest time and effort in diagnostic
to identify holistic use case

Design the solution fit-for-purpose – Create wireframes

2 and design suited for need and not plug-and play only

3 Take a holistic and long term view – Create a wave of roll-out of

Printed
different phases across time horizon

4 Tech is just 30% of answer - Collaborate across functions and

stakeholders to design, implement and sustain

McKinsey & Company 14

Last Modified 7/12/2019 8:53 AM China Standard Time Printed
Thank You