Using Digital Supply Chain Twins to Anticipate and Plan for Disruptions
The unprecedented disruptions caused by COVID-19 and other significant events have underscored the importance of digital technologies to optimize business processes.
As Meredith Whalen, IDC’s Chief Research Officer wrote in a September 2020 post, “The pandemic was a wake-up call for the digital resisters.”
Describing the negative effects across various types of “digital resister” scenarios, Whalen described one that may sound familiar to supply chain professionals: “…for organizations without sophisticated data intelligence technologies, they were unable to plan in a world where scenarios changed rapidly.”
Citing IDC’s global biweekly survey of tech decision makers, Whalen noted that 65% of organizations surveyed “reported the pandemic exposed gaps in their analytic, artificial intelligence, and/or machine learning models. Their models were not flexible enough to incorporate contextual business understanding of the situation as it evolved.”
For supply chain professionals, such findings are fueling the growing urgency to adopt digital supply chain networks (DSNs) to address current and future disruptions.
One important component of the DSN?
The digital supply chain twin (DSCT).
What is a digital twin?
Digital twins are growing in popularity across many industries—including manufacturing, energy and power, aerospace, oil and gas, automobile, and others.
Defining a digital twin as “an integration of all modern intelligence technologies including Big Data, artificial intelligence, machine learning, and IoT used for predictive analysis of any system or equipment,” Mordor Intelligence reflects the growing popularity of digital twins in its prediction that the digital twin market will experience a whopping 35.1% compound annual growth rate (CAGR) from 2021 to 2026.
In a supply chain context, Gartner defines the DCST as “a digital representation of the physical supply chain.”
Gartner’s recently published resource, The CSCO’s Guide to Supply Chain Technology Innovations, describes the purpose of the DSCT, how it is created, and the role it plays in supporting effective decision making: “It’s the basis for local and end-to-end (E2E) decision making, as it ensures that every decision is aligned horizontally and vertically throughout the network.
The DSCT is made up from all the relevant data across the supply chain and its operating environment. Then the data needs to be associated in a meaningful way so predictive and prescriptive analytics can be applied to create and judge/approve the different plans, scenarios and orders.”
Gartner’s resource outlines eight supply chain technology “themes,” rather than individual technologies, since various technologies are often used together to address supply chain challenges to achieve desired results.
This premise is supported by the fact that the DSCT requires the use of multiple technologies to be effective, as described by EY Global in Digital Twin for Seamless Visibility Across Supply Chain.
In the video, the firm describes what it refers to as the “four key dimensions of [an] end-to-end digital twin solution”:
Sense: “Predict issues early using data feeds from sensors, partner and supplier data, and weather events.”
View: “Gain an integrated view of extended supply chain operations using advanced analytics to predict potential disruptions.”
Analyze and simulate: “Using machine learning and AI engines digital twin can help simulate potential issues and risks across the supply chain ecosystem.”
Act: “The digital twin can enable better decision making using near real-time information to facilitate execution in operational systems.”
How Digital Twins Support Supply Chain Resiliency
In an article for Industry Week, Stress Testing for the Next Supply Chain Disruption, Eric Green describes the role of digital twins—aka “virtual twins”—to improve resiliency by helping companies pivot when problems arise.
“By using virtual environments to create a collaborative system where all stakeholders can see what’s happened in the past and what’s happening right now, businesses can create simulations to analyze and optimize their paths forward—and find the resiliency to weather a coming storm,” he writes.
An important part of doing so is enabled by Internet of Things (IoT) sensors and other applications that provide critical supply chain data within manufacturing and warehousing settings and to track inventory as it travels throughout the supply chain.
Underscoring the importance of establishing goals for the DSCT, Green recommends focusing on highest priority goals first to address the most critical needs. Running simulations can then help decision makers with stress-testing, process optimization, and dealing with “what if” scenarios.
“Testing granular constraints of resources, materials and bottlenecks are essential for contingency planning. Remember to not only troubleshoot potential disruptions to your supply, but also to your demand, as we’ve seen business and consumer buying habits can shift radically in a crisis,” he writes.
The Predictive Abilities of Digital Twins
In a post for the Association for Supply Chain Management (ASCM), Digital Twins: A Business’s Better Half, Joe Bellini describes how digital twins can provide a safe environment in which supply chain professionals can “monitor and analyze” business challenges and test solutions before deploying them in the real world.
When created within the right framework, he says they can also possess valuable predictive powers: “Digital twins that are integrated into supply chain networks can give organizations an almost psychic ability to prepare for future risks and challenges.”
Noting that digital twins can be used for “strategic and tactical planning” and to resolve “hot-spot” issues that occur, Bellini says the ability of “AI agents” within the network to identify trends that may impact future supply and demand makes it possible for companies to act immediately, instead of waiting for disruptions to occur.
The Digital Twin Consortium
There are many resources for learning more about digital twins and the value of using them in supply chain processes—such as the Digital Twin Consortium®, which was launched in 2020.
Touting itself as “The Authority in Digital Twin,” the Digital Twin Consortium® says it “coalesces industry, government and academia to drive consistency in vocabulary, architecture, security and interoperability of digital twin technology. It advances the use of digital twin technology from aerospace to natural resources. Digital Twin Consortium is open to any business, organization or entity with an interest in digital twins. Our global membership is committed to using digital twins throughout their operations and supply chains and capturing best practices and standards requirements for themselves and their clients.”
The following video provides an additional overview.
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