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How to calculate the business case for a supply chain control tower?

Updated: Mar 11

The purpose of a business case is to support decision making by quantification of the expected benefits and implementation and running costs of a SC Control Tower. For the opportunities that are related to setting up a Control Tower (see this info for a transportation example), the potential savings compared to the baseline costs need to be calculated. This is done for one or more scenarios and for a specific period. By subtracting implementation and additional running costs the P&L and cashflow impact of setting up a control tower is quantified.

Supply Chain Control Tower business case summary

Specific challenges when creating a business case for a control tower project/investment are:

  • The scope of the SC Control Tower probably will be extended over time (e.g. regarding SC functions, regions and governance) impacting revenues and costs

  • Since the success of a SC Control Tower is very much depending on systems and data, various IT related investment and running costs need to be taken in account

  • When the SC Control Tower is outsourced to a 4PL, the costs of outsourcing and reduction of internal management costs need to be calculated

In the example above and the 5-step approach elaborated in this post, focus is on saving of transportation costs and increase of revenues. When applicable also savings on warehousing, production, inventory and/or interest costs and impact on sustainability objectives need to be included.


1.  Baseline creation

Agreement is needed on baseline costs for the coming budget period. The baseline is based on the costs for the initial period or previous period and adjusted for factors not related to the saving opportunities. When applicable the baseline costs are split by region, mode and/or flow (inbound, intercompany and outbound). 


Supply chain control tower business case baseline

 2. Savings calculation

A plan and budget needs to be prepared for savings to be realized in coming years. Input are the opportunities identified in an earlier stage. Based on benchmark figures and outcome of the network analysis the opportunities in the different areas are quantified (for each region). For each benefit area an opportunity chart needs to be prepared with the details of the calculation and the outcome can be summarized in one or more graphs.

Supply chain control tower savings calculation

3. Implementation and additional running costs calculation

Implementation costs of changes in the network, processes, organisation and systems and additional running costs of control tower functions and/or systems are calculated. Calculation can be based on previous experiences and industry standards and will be captured in a costing chart.


4. Sensitivity analysis

The business case is calculated for different scenarios (like committed and realistic) and net cash flow, NPV/IRR and transport specific transport cost indicators are calculated for these different scenarios.


Supply chain control tower business case scenario analysis

5. Business case summary

As the last step, the business case is summarized and prepared for decision making. See example in the introduction of this blog post. 

More information

Preparation of a business case is part of our phased approach for the identification, analysis, quantification and implementation of improvement opportunities related to the set-up of a Control Tower. For more information please contact Rob van Doesburg ( 

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