Digital Twin (DT) technology is a key component of supply chain digital transformation. And there are plenty of reasons for this, including that DT increases productivity, boosts revenue, and enhances the customer experience.
How this technology can reshape the industry, reduce supply chain costs, and how businesses can apply DT are discussed further in this article.
What Is A Digital Twin In Supply Chain?
Before we tell you how to apply digital twins, let’s make it clear in terms of the supply chain. So, a DT is a virtual replica of a real supply chain that consists of hundreds of assets, warehouses, logistics, inventory positions, etc.
Using advanced analytics and solutions like AI (artificial intelligence) and benefiting from real-time data, the digital twin simulates the supply chain’s performance to:
- Analyze its dynamics;
- Predict process success;
- Enable scenario planning;
- Identify where volatility and uncertainty exists;
- Reveal where optimization is possible.
The data for DT is collected from sources like:
- IoT devices;
- Logistics and transportation databases;
- Operations databases;
- Vendor information;
- User experiences.
Top 6 Applications Of A Digital Twin To Improve Supply Chain Efficiency
DTs enable companies to understand supply chain performance, forecast non-standard scenarios, and build an action plan to reduce costs and maximize process efficiency.
Below we outlined the top 6 applications of the technology and the ways it can improve supply chain efficiency.
Network Optimization To Balance Cost And Service Level
Adopting digital twin technology helps in the detection of certain modifications required in the supply and demand network.
A digital twin assists in evaluating whether or not to add nodes to the network with the ability to reduce the cost of the network.
Furthermore, the technology helps in positive transformation by mitigating potential risks and detecting existing problems. This feature allows the supply chain management department to save budgets, get a higher ROI, and so on by reducing all sorts of negative factors in the process.
Streamlining Processes For Greater Efficiency And Productivity
By leveraging real-time data, DTs enable streamlining processes like planning transportation and facilities, enhancing the problem identification process, generating faster problem solutions without much human intervention, and so on.
So, DT can help enterprises understand patterns and predict outcomes of changes in various processes:
- Supply chain process design test improvements.
DT models calculate benefits, savings, and potential ROI before process transformation. For example, a company creates DT models to revise global operations by simulating various scenarios with data related to production, inventory, and distribution involved.
- Risk monitoring and probability testing.
Thanks to the technology businesses can test and identify the best course of action in extreme situations as well as try different scenarios in a virtual environment, greatly increasing the stability of the entire company.
Inventory Management To Prevent Shortages And Minimize Overall Costs
Another strong feature of the DT technology is the ability to optimize inventory management. It’s because the technology can leverage data from demand forecasting processes to avoid inventory shortages and minimize overall expenses on production and warehousing.
As a result, it allows you to optimize both stock in one warehouse and stock across the entire network.
Risk Monitoring And Identifying Bottlenecks To Avoid Unforeseen Scenarios
Improvement in risk monitoring and identifying bottlenecks is another strong feature of the digital twin technology implemented. The DT assists to discover the best course of action through multiple digitally isolated testing techniques.
By gathering data, digital twins help pinpoint potential risks and weaknesses in all aspects of delivery. For instance, a shipment digital twin will rely on data collected from sensors that communicate updated details during transportation, which can then be analyzed to monitor performance and detect bottlenecks during shipping and delivery.
In this way, DT provides a continuous, comprehensive overview of processes and bottlenecks in the supply chain, facilitating faster problem resolution with minimal human intervention.
Comprehensive Long-Term Planning To Be Ready For The Future
The supply chain requires long-term accurate planning to be well-positioned for the future and meet tough competition.
Implementing a digital twin technology helps in streamlining supply chain processes and identifying additional future capacities to build an in-depth long-term plan.
Data Management To Keep Things Under Control
Digital twins enable the creation of replicas of all the processes, including data management, making it more effective.
This application of the digital twin is one of the most important features of the technology in supply chain management.
It facilitates effective data management by providing the ability to compare historical and real-time data. Thanks to that the technology helps to identify weaknesses and strengths to focus on.
Challenges Of Implementing Digital Twins Within The Supply Chain
Digital twins have enormous potential benefits, but creating and maintaining them can be risky and complicated. There are several factors that make it difficult to implement this technology.
First of all, the supply chain is complex in nature. It is also significantly related to the proposed digital twin architecture as it applies to the physical environments of sophisticated systems.
Thus, the success of digital twin implementation consists of:
- Enhancing existing hardware and software infrastructures;
- Enterprise data management methods and strategies;
- Improving data quality;
- Implemented digital twin solutions, features and services.
The success of the development and deployment of the DT projects is closely tied to solving the various challenges that may arise when attempting to adopt the technology.
It’s a result of the multiscale nature of the digital twin, the complexity of the implementation process, and the multidisciplinary nature of digital twin projects.
A digital twin is thriving in the supply chain with its smart capabilities to boost productivity, eliminate any potential errors, enhance efficiency, and reduce all kinds of supply chain costs.
Implementing a digital twin technology across a supply chain can deliver a number of benefits, including:
- Enhanced bottleneck identification;
- Faster problem resolution with minimal human intervention;
- Improved process design testing;
- Improved outcome prediction;
- Enhanced risk monitoring and emergency simulation;
- Greater organizational stability and many more.
In short, implementing a digital twin enables businesses to make the right investments as well as make the right decisions for guaranteed returns.
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