Supply chains around the globe are being tested like never before. Since the onset of the pandemic, I've had the opportunity to gain insights as to what some manufacturers in the process industries are doing to keep complex supply-chain operations running as nimbly and efficiently as possible faced with this unprecedented level of uncertainty. Here are some key insights.

Identifying Risk

Being prepared for multiple outcomes is essential to manage uncertainty. Many supply-chain and operations professionals I spoke to worked rapidly to identify, document and ensure that there was a common understanding amongst key internal stakeholders of:

• Priorities: In case of supply constraints, which customer or material demands should be prioritized over others? What are the customer retention priorities? What allocation approaches should be used for which segments?
• Options: What options exist to ensure raw material security? What options exist to manufacture products at alternate facilities? What options exist in terms of product or material substitutions? What are the marginal costs associated with different options?
• Risks: What modifications are needed to inventory buffers in order to account for higher risk factors in the supply chain?

Leading organizations updated their planning master data repositories to ensure that their supply-chain and operational digital twins were properly calibrated with these priorities, options and risk mitigation approaches. These organizations also set up business processes to revisit and update priorities, options and risks as needed.

Maintaining Safety

Keeping employees safe continues to be the most immediate and urgent need. One company is using their digital twin to help maintain social distancing to keep operations personnel safe. In order to do this, they added to their digital twin some constraints related to using alternating lines/equipment on various days of the week. Their digital twin scheduling optimization model now respects all these constraints and ensures that personnel scheduled to work in a section of the manufacturing facility have safe distances from staff working on other lines/equipment.

Running Optimization Scenarios

What’s amazed me most since the onset of the pandemic is how supply-chain optimization scenario analysis has rocketed in importance and is being used by many manufacturers to help manage uncertainty and complexity. Digital twins allow companies to easily run and evaluate “what if” scenarios with any combination of supply/demand assumptions to economically optimize their end-to-end supply chain.

One customer proudly shared that they evaluated close to 150 supply/demand scenarios using supply-chain optimization technology to understand projected financials and operational implications (key issues and constraints). 

Aligning Demand, Supply and Capacity

As every organization knows, plans don’t always execute as expected. Plans become outdated quickly — even more so in times of uncertainty. Companies that employ scheduling optimization digital twins can continuously and easily align demand, supply, capacity and operations execution.

Maintaining visibility and situational awareness of what is happening across the supply chain and within manufacturing facilities is much more challenging in the current work-from-home context. Some manufacturers are using collaborative web platforms specifically designed to keep supply-chain and manufacturing operations team members constantly aligned in relation to what is changing and how to best achieve near and mid-term execution goals.

Preparing for Recovery

I have the following suggestions for manufacturers on how to best use their digital twins in preparation for and during the recovery phase of the pandemic.

1. Monitor demand and market signals for signs of recovery. Get team members to engage at the periphery of the organization (rather than being inwardly focused) closest to your markets and customers to look for clues or signals of recovery. Employ demand management digital twins in support of sales and operations execution (S&OE) weekly meetings to quickly spot changes in demand trends, and hopefully, demand rebounds.
2. Continue doing scenario analysis using supply-chain optimization digital twins as the uncertain future unfolds. Recovery will likely not happen on a uniform basis within a country or around the world. It will most likely occur locally in certain countries or specific regions within a country. Digital twins will continue to play a central role in support of monthly sales and operations planning (S&OP) by charting the best course of actions to evolving supply/demand recovery scenarios. Such digital twins will help inform when to build and/or reposition inventories in the supply chain. They will also help in deciding on where and when to adjust production.
3. Continue using planning and scheduling digital twins to maintain forward visibility in the short term to understand logistics requirements and book capacity ahead of time. This may be particularly important for manufacturers who want to ensure they get the overseas ship and route they want.

Digital twins are proving to be critical tools for many manufacturers in the process industries during these uncertain times. Digital twins provide insight so organizations can adapt to this new operating environment and keep supply-chain and manufacturing operations running as nimbly and efficiently as possible. Building digital capabilities now will help organizations prepare for the ongoing uncertainty that is likely to continue into 2021 and beyond.

Roch Gauthier is senior director of product management at Aspen Technology.