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AdexinBlogDigital twin in supply chain management

Digital twin in supply chain management

May 21, 2024
5 mins

Digital twin technology in supply chain management involves creating virtual replicas of physical supply chain assets, basically on physical twins, processes, and systems. 

Digital twins accelerate this, as well as how you'll manage all the stakeholders in the supply chain network in the real world and how you can leverage data from sensors, IoT devices, and other sources. It's all to provide a comprehensive and dynamic view of supply chain operations.

Organizations gain several benefits by implementing digital twins in supply chain management. In this article, we'll discuss the advantages of using digital twins as an example in the supply chain. Let's go together and see what we prepared for you regarding digital transformation

What is digital twin technology?

A supply chain digital twin is a virtual analog (digital replica) of a physical object or process. This kind of visualization in digital worlds should be capable of gathering information from its natural counterpart. The primary goal is to accurately illustrate, validate, and predict its current and future behavior. 

This is a crucial enabler for digital twin, data-driven decision-making. Companies can use comprehensive system monitoring, product validation, and simulation to get the right evaluation results without costly demonstration production.

In fact, digital twin technology provides excellent facility lifecycle management to ensure that the investment is worthwhile. As an emerging technology, its application is growing rapidly in various fields, including industrial, automotive, healthcare, supply chains, and all cross-related industries such as transportation and logistics. 

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By explaining what digital-twin technology is and its value for top organizations that can examine the subject much closer, based on deep research, digital twin in supply chain McKinsey is telling us that a digital twin serves as a diligent equivalent of a tangible entity.

So, whether it is an object, a person, or a dynamic procedure, meticulously embedded in a digital representation of its environment.

In this case, the impact of digital transformation is enormous, because by using digital twins, organizations gain the ability to model real-world scenarios and their potential consequences in complex ways. This enables them to make insightful decisions with increased precision and foresight.

We can see the value developed by the digital twin in the organizations of the four elements: 

Reduced time to market

Digital twins enable rapid iterations and optimizations of product designs, speeding up the development process compared to physical testing.

Simply put, by knowing the vulnerability of raw materials, we predict how the final product will beave. With digital twins, we can visualize that your product made with polyethylene terephthalate, commonly known as PET, will be more or less resistant in some circumstances. 

Improved product quality with digital supply chain twins

Simulating products throughout the manufacturing process can identify defects in the design earlier, leading to significant quality improvements. Referring to the above and focusing more on the subject of digital twins with supply chain upfront, we can refer to packing material in the distribution industry.

Let's give an example of returnable packaging material, such as LTL boxes or even carton boxes with foam for the distribution of hi-tech items. So, while planning the design of these materials, we can really predict durability with digital twin technology.

Real-time monitoring and customization

Organizations can create a single source of truth for its functionality by mirroring a product in service with an embedded digital twin. This facilitates real-time customization or redesign. For example, sensors installed on equipment used by people predict actual behavior and collect data to further adjust parts of how that equipment should work.

Digital twins bring nothing complicated; just look at the sensors attached to heavy machinery controlled by humans, such as the one in the mining industry. A crane in a mine or an excavator can automatically guide operators in more efficient use based on the data collected from the sensors.

Improved customer interaction with supply chain digital twins

Lastly, organizations can develop digital twins of their customers, enabling immersive product interactions and experiences. 

For example, we can mention the virtual experience a customer receives from a car dealer during a virtual car trip. This all is possible with supply chain digital twins that bring a major shift in automotive.

Digital twin in supply chain case study

Digital twin is one of the major supply chain trends and is poised to revolutionize logistics, and supply chains, especially in warehouses and distribution centers. These digital twins offer a holistic view of logistics infrastructure by combining 3D models of facilities with IoT data collected from connected warehouse platforms, along with inventory and operational indicators.

DHL, a German logistics company, provided a great case study on digital twins in the supply chain. Except for digital-twin implementation, digital warehouse twins facilitate optimal space utilization during the design phase. The goal was to streamline the flow of products, personnel, and equipment through simulations. However, from the perspective of operation, they continuously update data from new automation technologies, such as drone-based inventory counting systems and automated guided vehicles.

In fact, it all increases efficiency and throughput while minimizing energy consumption.

These innovations, adopted by industry leaders such as DHL Supply Chain, are improving the safety and efficiency of warehouse operations within the global supply chain.

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What are digital twins in supply chain benefits?

We've already mentioned the benefits quite a bit from a general perspective. Here are the real benefits for a supply chain industry committed to implementing a digital twin into its operations.

According to Ernst & Young, a digital twin makes you twice as agile, so we can also refer to that as fully agreed. One of the biggest benefits of adopting any technology to your business is always to give room for improvement in operations.

E&Y mentions that digital twins provide 2 main benefits in the supply chain:

  • Operational: Connects with systems to monitor the supply chain in real-time, anticipate potential disruptions, and proactively respond to them.

  • Strategic: Virtual labs for scenario simulation and network optimization are typically used monthly or quarterly but are evolving to real-time capabilities.

At Adexin, we believe this topic is worth exploring much deeper. So, based on our knowledge of transportation, logistics, and supply chain software development, we can identify the prospect of benefits on a much broader scale. We split these benefits into four groups: 

Digital twin in supply chain benefits
Digital twin in supply chain benefits

1. Warehouse & distribution

  • Improved visibility: Digital twins provide real-time visibility into warehouse operations, enabling managers to monitor inventory levels, track the movement of goods, and identify bottlenecks more effectively.

  • Expanded planning capabilities: With access to detailed data and simulations, warehouse managers can make more informed decisions about resource allocation. What's more, inventory deployment and workflow optimization are much higher.

  • Process optimization: Digital twins enable continuous monitoring and analysis of warehouse processes. In the long term, it's leading to identifying inefficiencies and opportunities for improvement.

  • Optimize space utilization: Digital twins help maximize the use of available space in warehouses by simulating different storage layouts and configurations. This can reduce the need for additional storage facilities.

Digital twin in warehouse and distribution
Digital twin in warehouse and distribution

2. Transportation

  • Understanding vehicle performance: Digital twins analyze data collected from sensors and onboard systems to provide insight into vehicle performance indicators. These can include fuel consumption, engine condition, and driver behavior.

  • Predicting maintenance requirements: Digital twins use predictive analytics to forecast maintenance needs based on vehicle usage. You can look at operating conditions and historical performance data. Such solutions enable companies to proactively plan maintenance and minimize downtime.

  • Proactive sourcing of spare parts: By integrating with inventory management systems and supplier networks, digital twins can automatically identify and source spare parts when needed. This ensures that vehicles remain operational, lowering downtime and allowing for more effective transport planning.

Digital twin in transportation
Digital twin in transportation

3. Supply chain

  • Clarity in decision-making: Digital twins give stakeholders a comprehensive view of the supply chain. Technology enables informed decision-making based on real-time data and insights.

  • Predicting future events: Through predictive analytics and scenario modeling, digital twins help identify potential risks and opportunities in the supply chain. Companies can anticipate and mitigate disruptions before they occur.

  • Transparency: By providing insight into supply chain operations and performance metrics, digital twins promote transparency and accountability. This trend is fostering trust and collaboration among stakeholders.

  • Advanced analytics: Digital twins use advanced analytics and machine learning algorithms to predict future trends, demand patterns, and supply chain dynamics. It helps companies make proactive decisions and stay ahead of the competition with better planning. 

  • Total system control: Digital twins allow companies to monitor and manage the entire supply chain ecosystem from end to end. It provides full control over processes, resources, and assets. So, the benefit is about enabling rapid response to changing market conditions.

  • Simulation and automation capabilities: Digital twins enable companies to simulate different scenarios, test alternative strategies, and automate routine tasks. In the supply chain, this increases efficiency and flexibility throughout the chain.

Digital twin in supply chain
Digital twin in supply chain

4. Digital twin in supply chain sustainability

Digital twin technology is increasingly being used to improve supply chain sustainability. By creating digital replicas of supply chain processes and resources, companies can gain valuable insight into their environmental impact and identify opportunities for improvement.

One of the key aspects of using digital twins for supply chain sustainability is the ability to monitor resource consumption and emissions in real time. So, here we outlined three strong benefits of digital twin in supply chain sustainability:

  • Reduced energy consumption: Digital twins can help warehouses minimize energy consumption by using predictive analytics and optimization algorithms. This involves optimizing energy usage, such as lighting, heating, cooling, and equipment operation.

  • Reducing packaging waste: Digital twins can help warehouses optimize packaging processes by monitoring inventory levels and demand patterns. It is reducing waste and minimizing environmental impact.

  • Virtual world insights: Digital twins enable transportation companies to monitor vehicle performance, track fuel consumption and identify potential problems before they escalate. It's all leading to proactive maintenance and repairs.

Digital twin in supply chain sustainability
Digital twin in supply chain sustainability

Summary on supply chain digital twin

The bottom line is that adopting digital twin technology in supply chain management brings transformative benefits. These include better visibility, optimized processes, and improved sustainability. Using real-time data and simulations, companies in the supply chain can streamline operations, minimize waste, and proactively respond to challenges.

To realize the full potential of digital twins in your supply chain, consider integrating this innovative technology into your operations today. Contact us to learn more about how digital transformation in the supply chain and drive sustainable growth.

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What is digital twin management?

Digital twin management involves creating, monitoring, and optimizing digital replicas of physical assets, processes, or systems. It includes the development of virtual models that mirror real-world counterparts, enabling organizations to gain insights, improve decision-making, and optimize performance.

What is a digital twin in the supply chain?

A supply chain digital twin is a virtual representation of the entire supply chain network or specific elements of it, such as warehouses, distribution centers, or transportation systems. It integrates real-time data from various sources, including IoT devices and operating systems, to provide a comprehensive view of supply chain operations. Supply chain digital twins facilitate simulation, analysis, and optimization to increase efficiency, visibility, and responsiveness.

What is an example of a digital twin?

An example of a digital twin is a virtual replica of an industrial machine or equipment, such as a turbine, aircraft engine, or manufacturing plant. These digital twins are created by integrating sensor data, CAD models, and operational data in a virtual environment. They allow engineers and operators to monitor performance, anticipate maintenance needs, and optimize operations in real-time.

What software is used for digital twins?

Digital twins typically use software that includes real-time data integration, simulation, and analysis capabilities. These platforms often provide tools to create virtual models, connect to IoT devices, and use artificial intelligence to analyze and optimize performance.

What is the main concept behind digital twins?

The main concept of digital twins is to create a virtual replica of a physical object, system, or process. This digital counterpart allows for real-time monitoring, simulation, and optimization, facilitating performance improvement, predictive maintenance, and better decision-making.

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