Recent years have been intensely challenging for supply chain managers. Geopolitical crises, extreme weather, and the COVID-19 pandemic all exposed fundamental weaknesses in the supply chain. Today, supply chain professionals are all searching for better, more efficient approaches to supply chain management.

Using digital twins is one of the best ways to overcome supply chain snarls, stay on schedule, and lower overall costs. If you’re not sure how digital twins in supply chain management work, don’t worry. This article will dive into what a digital twin is, and how it can optimize your operations.

What Is a Digital Twin in Supply Chain Management?

A digital twin is a digital model of a real-world supply chain. You can think of a digital twin as a computer-generated replica of the real supply chain. 

Setting up that virtual model allows users to test out scenarios, try different approaches, and experiment with different ways of solving supply chain problems – all in a risk-free, virtual environment.

Using a digital twin is a very effective form of IT risk management. In fact, it has a lot in common with advanced planning software. 

Just as architects create models of buildings and test them to see whether they can stand up to earthquake conditions, supply chain professionals create models of their supply chains and test them to see how they stand up to disruption.

Why Are Digital Twins Important in Supply Chain Management?

Most professionals agree that the legacy approach to supply chain management isn’t effective anymore.

Old-fashioned methods like spreadsheets and paper-based tracking all fail because they treat the supply chain as something static.

But today’s supply chain is dynamic, global, and highly complex. It is constantly being disrupted by weather events (like floods, tropical storms, and forest fires). Wars, political instability, and mass migrations also disrupt shipping. And we can probably expect to see more health-related crises disrupt the supply chain at some point.

Dealing successfully with these challenges isn’t easy. That’s why it’s so important to use digital tools that can adapt to every little change in the supply chain. The beauty of a digital twin is that it can adjust to every disruption, giving users the chance to figure out new, innovative solutions to every challenge.

How Does a Digital Twin Work in Supply Chain Management?

A digital twin is a computer model that represents all of the components and processes in the supply chain. It uses algorithms to analyze data about the supply chain and make predictions about cost, timetables, and other key transportation data.

An effective digital twin should include all the following information:

• Locations and capacities of factories and warehouses
• All possible routes between factories, warehouses, and stores
• Labor capabilities (speed, hours, and cost)
• Consumer demand
• Weather and its impact on transportation routes
• Relevant geo-political events and their likely impact on transportation

With this data, the machine learning algorithms will be capable of modeling conditions in your real supply chain.

Keeping the model updated

Inexperienced planners are sometimes tempted to use only optimal conditions when they create their models. This would be a mistake. In order to work, a digital model needs to have accurate, real-world information. It should also be kept up to date so that it reflects real-world challenges.

In many cases, digital twins can be automatically updated. Using data from fleet telematics, as well as sensors and RFID tags, in your real supply chain gives you a constant stream of data about how products are progressing through the supply chain. This can be used to automatically update your model.

How Do Digital Twins Help Address Supply Chain Challenges?

Using a virtual model gives you the chance to experiment with different approaches to supply chain glitches.

Suppose forest fires are leading to blocked roads, and your shipment can’t get through – but you’re not sure whether to use trains or to send your cargo by sea. You can use your virtual model to try out both options and see which one is quicker and safer.

Similarly, a virtual model can help you optimize fuel efficiency, cost-effectiveness, and labor availability. It’s an excellent way to identify potential problems of any kind – and to get ahead of them.

What Are the Benefits of Using a Digital Twin in Supply Chain Management?

The benefits of using a digital twin are virtually endless. Briefly, a virtual supply chain model can:

• Identify and quantify potential risks throughout the supply chain
• Try out potential responses to risk, and compare outcomes to find the most favorable response
• Minimize lost sales and operational expenses
• Lower costs, by finding the most budget-friendly routes possible
• Reduce carbon emissions by forecasting how production and transport will impact your carbon footprint (this is especially important for industries subject to regulations)
• Model fleet manufacturing and new vehicle design with automotive digital twins

Leveraging the power of software and machine learning algorithms will reduce overall costs, increase reliability, and lead to more effective planning for just about any business. If you’re considering trying out a virtual twin, don’t hesitate! 

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