Digital twins have become increasingly invaluable for enterprises to improve their supply chain planning. Whereas many official website digital twins simulate products or buildings, supply chain twins model the diffuse connections between raw materials, finished products and customers. Supply chain twins are growing in importance as enterprises try to keep pace with disruptions caused by COVID-19, shipping bottlenecks and sanctions.
“The major disruptions over the past couple of years have made supply chain predictability and resiliency top priorities for businesses,” Brian Bronson, president of Americas and APAC at Capgemini Engineering, told VentureBeat. “A company’s supply chain has many steps and moving parts along the entire work stream and with each one comes another variable where more potential challenges could arise.”
Digital twins can help anticipate these scenarios and develop alternate strategies to meet customer expectations at minimal cost. Enterprises can recreate everything from shipping to trucking and other means of transport, inventory within warehouses and distribution centers and the last-mile delivery of products to their destinations.
Harpreet Gulati, senior VP for planning, simulation and optimization business at Aveva, said, “Digital twin technology is the future of supply chain management and one of the biggest advantages is that no matter where people are, they see the same picture,” said Harpreet Gulati, senior VP for planning, simulation and optimization business at Aveva. Supply chain twins can also enable collaboration across planning, scheduling, operations and distribution and ensure everyone has the same understanding of a plant and business.
Strategic planning
Enterprises used to develop a strategic plan once per year using tons of spreadsheets. Digital twins bring all the data together, allowing teams to revise these short to medium-term plans multiple times per year. “A supply chain digital twin can be used for strategic planning as it can assimilate historical enterprise, environmental, geospatial, structured and unstructured data,” NTT supply chain transformation lead Yogesh Amraotkar told VentureBeat. A supply chain twin can predict potential hazards and simulate various options to overcome them.
Operational planning
Operational planning helps calibrate procurement and shipping activities a few weeks to a few months out. This considers factors like the ocean liners carrying goods for the next season and parts and raw materials for cars, trucks or industrial equipment scheduled to be manufactured over the next quarter. Operational planning can help teams map the tradeoffs between faster routes via planes and more cost-effective routes via ships. Digital twins can also help enterprises keep abreast of new bottlenecks at ports and other routes to plan cost-effective alternatives, Amraotkar said.
Tactical coordination
“Supply chain digital twins can equally shine by mitigating risks almost in real-time,” Amraotkar said. Tactical planning helps mitigate the impact of unplanned events leading to disruptions in one link that affect multiple components across the entire value chain. However, this use of digital twins requires more buy-in among front-line workers that might be involved in implementing the changes. He cautions that without coordinated efforts to orchestrate the outcomes of a digital twin, different stakeholders may take decisions they think would mitigate an impending situation. In isolation, each would be right but counterproductive if those decisions do not align in the same direction. Digital twins could help bring decision-makers together to evaluate the results of the simulations to reach a collective decision.
“A digital twin, which includes various supply and demand inputs and other components of the supply chain network, including warehouses, logistics and inventory levels, is an essential tool for the sales and operations teams,” Owen Keates, industry executive at Hitachi Vantara, told VentureBeat.
A typical supply chain team presents a monthly recommended sales and operations plan to the executive team for consideration and sign-off. This plan connects sales orders and forecasts with the capacity of the business to manufacture and procure the required goods to meet demand. Consideration is also given to risk value, the confidence levels of the demand plans and other potential disruptions such as factory maintenance shutdowns or delays in procurement. Digital twins could help teams run “what-if” scenarios” to assess the various risk profiles and the optimum balancing of demand with the ability to supply.
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