The Basics

Digital twin technology has been used in industries such as manufacturing to provide virtual simulation capabilities that can test planned decisions. This has provided managers with a powerful tool to successfully anticipate outcomes — both positive and negative. 

In the process — and with the development of greater computing speed and power — digital twin capabilities have advanced. Now they are able to grapple with the greater complexities of supply chain management. In this particular environment, which presents many more variables than in manufacturing, the cause and effect of supply chain events can be anticipated with a new level of precision. 

Benefits for supply chain managers include reductions in operating expenditures, more accurate pairing of logistic budgets with planned sales increases, and an overall greater business resiliency. 

The Future 

The innovations to digital twin technology will prove to be a game changer for supply chain management. The way is wide open for supply chain planning that more accurately foresees and/or reacts to service or cost impacts before they can cause significant issues. 

However, for supply chain executives who are reviewing the potential to develop a digital twin process, it’s important not to ramp up too quickly. As opposed to duplicating events inside the walls of a factory, digital twin planning encompasses a much wider range of variables including manufacturers, solutions providers, carriers, distribution centers and more. 

The first implementation of digital twin technology should be taken for a basic use case; one that can be overseen and analyzed by the involved managers. This will permit an analysis of the value and benefit of the digital twin that resonates with C-level executives, managers and operating employees. 

Once a baseline understanding is developed, and confidence is gained, digital twins can be developed on a step-by-step basis in uses of increasing complexity.  

As this process evolves, four areas of supply chain benefits can be expected: 

1. Smarter decisions focused on longer-range outcomes, rather than less valuable short-term factors such as an immediate cost reduction;
2. Faster decisions, enabled by the removal of hierarchical barriers and the empowerment of direct managers to implement digital twin results, rather than running decisions up and down multiple management layers;
3. More accurate forecasts that are shared across the enterprise to provide visibility and confidence in the process;
4. Operational improvements which — when realized — are also shared to reinforce trust in the digital twin concept. 

Success in these areas must be supported by the establishment of teams that methodically develop the digital twin. Team members should include both those with pragmatic experience — who can evaluate success from a real-world perspective — and members with strong data analytics capabilities and experience. The team should also use the most granular and accurate data available, which is essential to the achievement of precise and positive results. 

All involved should have a common understanding that the implementation of digital twins in a supply chain environment is a journey that will take some time. Initially engage in a process to answer questions and gather ideas from internal experts. Once that is done, more time will be needed to implement digital twins incrementally, starting with a simple use case and then building to more systemic applications. 

A measured and careful approach will improve your supply chain performance and build a digital twin process that can generate benefits for many years. 

Resource Link: https://resources.sw.siemens.com/en-US/white-paper-the-digital-twin