Insights
The Financial Case for a Supply Chain Control Tower
5of 10
top supply chain risks addressed by a centralized control tower
Moody’s, 2023
⅔
of supply chain leaders are investing in or upgrading control towers
Gartner, 2024
| How a control tower shows up in the financials | Effect |
|---|---|
| Cash tied up in inventory | Lower |
| Expired & obsolete write-offs | Lower |
| Premium off-contract buys | Lower |
| Ordering errors | Lower |
| Contract savings realized | Sooner |
Supply chain risks directly impact business performance by threatening operations, finances, and strategy. Inventory shortages and logistical delays create supply assurance gaps, which can jeopardize patient care. Disruptions increase the likelihood of needing costly, resource-intensive recovery actions to source alternative goods that are more expensive than the already contracted formulary items. Establishing a centralized control tower addresses at least five of the top ten supply chain risks (Moody’s, 2023) by improving visibility and centralizing responses for enterprise prioritization.
Centralized and Simplified Operations of a Control Tower
Non-healthcare industries, like consumer goods and logistics, have adopted supply chain control towers to improve coordination, forecast disruptions, and maximize efficiency. For example, PepsiCo uses end-to-end supply chain visibility (control towers) to boost forecast accuracy and respond quickly to disruptions (SAP, 2025), while DHL relies on global control towers for scenario planning and real-time inventory tracking (Supply Chain World, 2022). Nearly two-thirds of supply chain leaders are investing in or upgrading these systems (Gartner, 2024).
Enterprise prioritization, coordination, and communication are critical for clarifying team accountabilities, having bi-directional supply chain visibility, and enabling simplified operations. Traditional friction points between field logistics, procedural area teams, transportation services, category management, and distribution teams are lessened with clarified and concise accountabilities. Centralization of fragmented work crossing multiple teams simplifies complex processes. This team structure expedites response times, provides clear and consistent messaging, and reduces individual team/facility sub-optimization.
Leveraging leading practice from outside of healthcare, supply chain teams can adapt control tower models to address their unique challenges. For example, during a national fluids shortage, a multi-state hospital system with more than 30 hospitals leveraged a control tower approach to coordinate distribution (both self-distribution and multiple distribution partners) across all facilities. To ensure no location hoarded, the control tower centrally provided direction for all locations to maximize allocations while redirecting the forward deployment of inventory to rebalance and maintain safe inventory levels. This control tower team leveraged proactive critical item identification with clinical and procurement teams. The IV fluids had already been identified as items with high supply chain disruption potential. Given this centralized approach, proactive decisions were made to adjust inventory level targets for these items in advance of the disruption. This proactive mitigation of a significant portion of business risk came from the centralized coordination with category management and the suppliers. This example demonstrates how centralized oversight can streamline crisis response as well as protect clinical care and the business.
Key Functions of Healthcare Supply Chain Control Towers
Centralizing and simplifying business decision-making helps teams make faster, better, enterprise-wide decisions. Linking operational decision-making across functions makes it possible to optimize inventory, improve forecasting, and coordinate supplier logistics across the entire enterprise. Outlined in Figure 1 is a comparison of how individual sites at many large health systems perform the same redundant work and unintentionally compete for the same finite supplier resources, especially during disruption. The illustration also demonstrates the simplicity and efficiency of a centralized enterprise control tower, a model borrowed from consumer goods and logistics.
Each facility calls suppliers on its own. Sites compete for the same stock, hoard, and get different answers.
One team sees inventory across every site, speaks to suppliers once, and moves stock to where it is needed.
Figure 2 demonstrates the three primary functions of a centralized control tower: what they do, the primary needs they address, and the organizational value they drive.
Centralized inventory control
How much do we hold, and where should it sit?
What it does
- Sees inventory levels and trends across every facility
- Sets reorder points and where stock lives, from bedside to warehouse
- Owns inventory risk for the whole enterprise
What you get
- Faster, data-driven decisions
- Fewer shortages and less overstock
Implementation management
What is changing, and how do we roll it out?
What it does
- Plans how, when, and where each change reaches facilities
- Runs disruptions and product conversions through one process
- Sends one clear, actionable message
What you get
- Faster, more consistent response
- Clear accountability; simpler supplier coordination
Channel optimization and demand forecasting
Which supplier and route, and how much will we need?
What it does
- Constantly re-evaluates suppliers and channels
- Forecasts demand with predictive analytics
- Acts as the single point of coordination for logistics
What you get
- Less waste, stronger supplier partnerships
- A foundation for scenario planning
Inventory and Crisis Response Benefits of a Control Tower Management Model
Inventory management responsibilities are often spread across teams with varying expertise and sophistication. By centralizing resources, organizations can reiterate clear roles, optimize reorder points, set end-to-end inventory strategies, streamline dynamic sourcing selection, and reduce transactional order volume. This empowers frontline teams to focus on maintaining accurate on-hand quantities and removes emotion-driven reordering. This approach enables thoughtful and deliberate decisions as to where inventory makes the most sense to be kept (bedside, nursing storage area, floor storeroom, stat stores distribution area, distribution warehouse). Many organizations optimize a single given location, leaving an opportunity to look holistically at the where, what, and how many of inventory methodology.
Moving to a position where supply chain teams can identify early indicators of disruption and anticipate disruptions, versus reacting, is crucial. Crisis response success is often measured by response timeliness and the resiliency with which recovery is achieved. Centralized control towers allow teams to spot early warning signs, coordinate responses, and model scenarios to minimize impact. Mature control towers can mitigate disruption altogether by addressing issues with no business impact to either frontline operations or clinical care. Facility-level approaches lead to competition for resources during crises, complicating supplier coordination. Before centralization, all 30+ facilities independently reached out to a given supplier asking about substitution item availability, on-hand quantities, and anticipated product receipt timing. A holistic, centralized model supports proactive planning and more effective disruption management.
Figure 3 illustrates the financial value of managing inventory as one system.
The hospitals, shelves and suppliers stay the same. What changes is that one team plans, coordinates and updates inventory for the whole system instead of every hospital doing it alone.
One supply disruption, two responses
A 30+ hospital system during a national IV fluid shortage
Hospital by hospital
30+ separate calls to the same supplier, competing for the same stock
With a control tower
1 coordinated plan: allocations maximized, stock redirected to the sites that need it
No warehouse required. The savings come from managing many hospitals’ inventory as one system.
| Each hospital on its own | Control tower team | Financial value | |
|---|---|---|---|
| Inventory planning | Each site sets its own reorder points and stock levels, often padded “just in case” | One team sets reorder points and stocking locations using system-wide data | Less cash tied up; less expired product |
| Disruption management | Sites react separately, compete for allocations and hoard | Spots early warning signs, secures allocations, rebalances stock across sites | Fewer premium, off-contract substitute buys |
| Conversions and system updates | Each site updates items, par levels and substitutes on its own timeline | Each change is planned once, updated once and rolled out on one schedule | Contract savings realized sooner; fewer ordering errors |
| Supplier coordination | Many contacts and mixed messages to each supplier | A single point of coordination for suppliers and logistics | Better allocation and stronger supplier partnerships |
| Visibility | Each site sees only its own shelves | An enterprise view of inventory, demand and risk | Faster, data-driven decisions |
Centralizing inventory asset management transforms inventory from a localized, transactional necessity into a strategic financial asset. With holistic oversight, organizations can proactively identify aging, slow-moving, or near-expiry inventory across all facilities, significantly reducing waste, spoilage, and obsolescence costs through timely redistribution. Rather than incurring unnecessary write-offs or duplicate spending, centralized teams leverage existing inventory to fulfill regional demand, unlocking working capital and ensuring high-value assets actively serve the organization’s core operational and clinical needs.
Preparing for the Future
Supply chain disruptions aren’t a function of if, but rather when. Disruptions are becoming more frequent and severe, while many health systems still operate with limited visibility. Implement proven control tower models near-term to address challenges for improved recovery time in crisis and optimized inventory assets. Implement control towers longer-term to amplify benefit, anticipate, and scenario model to mitigate and minimize risk of disruption. This enables efficient decision-making, better coordination, and improved resilience against supply chain challenges. Ultimately, transitioning from fragmented, facility-level practices to a unified supply chain model shifts the organization from reactive crisis management to an agile, resilient operation.
References
Gartner. (2024, April 10). How to implement a logistics control tower to increase operational value. Gartner. Retrieved from Gartner: https://www.gartner.com/en/documents/5344863
Moody’s. (2023, October 9). Top 10 supply chain risks that companies face. Retrieved from Moody’s: https://www.moodys.com/web/en/us/insights/compliance-tprm/the-top-10-supply-chain-risks-that-companies-face.html
SAP. (2025, August 6). Inside PepsiCo’s supply chain transformation. Retrieved from Forbes: https://www.forbes.com/sites/sap/2025/08/06/inside-pepsicos-supply-chain-transformation/
Supply Chain World. (2022, November 23). DHL’s global network of control towers puts the business firmly at the fore: Towering above the competition. Retrieved from Supply Chain World: https://scw-mag.com/news/dhls-global-network-of-control-towers-puts-the-business-firmly-at-the-fore/