Digital Twins in Supply Chain Management
Dr Rajinder Bhandal, Lecturer in Management, Leeds University Business School. Member of the DTC Academia & Research Working Group
Supply Chain Disruption
Since the COVID-19 pandemic landed in March 2020, supply chain management has become critical. The pandemic highlighted various weaknesses in the healthcare sector, especially when sourcing and acquiring emergency supplies such as PPE, face masks, ventilators, hand sanitizers, and hand gel. The pandemic also led to panic buying, with consumers buying more than they usually would, thus leading to demand for certain products outstripping supply.
Another notable impact of the pandemic led to a surge in online shopping, which meant that critical resources and capabilities were working well above capacity from an operations management perspective. Arguably, the pandemic has spurred research and innovation toward electrification and digitization of supply chains. The recent geopolitical landscape with the war in Europe has had a significant impact on a global level. The effect on trade in the markets of essential commodities has taken its toll, too, leading to higher prices on the back of the rise in the cost of living.
Supply Chain Management Issues
Consumers have seen food prices rise and remain high for long periods, with only minor occasional fluctuations. The ongoing geopolitical tension in Asia is also impacting the global supply and demand for semiconductors, with significant implications for supply chain nearshoring activities, visibility, and traceability in the manufacturing context towards safeguarding national security. The environmental impact of flooding, storms, extreme heat waves, and drought continues to pose a significant risk to supply chains and the transportation of goods.
There is an upward trend with the relentless pursuit of technology and innovation; products and services, such as electric vehicles and electric car batteries, are becoming increasingly complex. This brings a new set of challenges when it comes to sourcing key metals and minerals from the mines, which in turn shifts attention to unethical practices within supply chains regarding the treatment of workers, including safe work conditions and fair pay.
The reality is that we are very close to the edge. Where to fuel this demand? We must develop significantly more energy. Key stakeholders need to discuss how onshore and offshore energy can better support other related manufacturing activities toward sustainable supply chains and cities of the future.
Digital Twins in Supply Chain Management
As you can appreciate from what I have just mentioned, building supply chain resilience is complex as it cuts across every primary industry and sector, including healthcare, agriculture, retail, automotive, transportation, and manufacturing, to name but a few. On the back of this disruption, organizations are beginning to open up to new ways of building supply chain resilience, which adds another layer towards increasing competitive advantage in the marketplace.
Digital twins are vital for creating that all-important competitive advantage and adding value to the business. It is very much accepted that we live in a connected world thanks to data. For example, digital twins are already in use, revolutionizing traditional inventory management processes, helping make better decisions faster and at a larger scale, and increasing error reduction rates. These transformational outcomes are being realized across the entire value chain, such as in the warehouse, transport, and logistics. The use of digital twins provides a competitive advantage for supply chain management.
Digital twins are helping to increase visibility in the supply chain. As noted earlier, the pandemic highlighted the weakness of the supply chain in knowing where critical supplies were, mapped across the various tiers. This knowledge was unknown; at best, communication and access to this information were weak from a public and private sector perspective. Thus, affecting managerial decision-making and leading to slow and ineffective decisions. Data is essential when it comes to using this for making important decisions. Digital twins offer a path towards effective decision-making thanks to the actionable insight determined from the real-time data, thus making decisions more accurate with optimal outcomes more likely. Having real-time data at your fingertips is another approach to creating more resilient supply chains, giving agility towards responding to fundamental real-world changes.
Digital Twins Improve Supply Chain Optimization
Supply chains traditionally encompass operations management, which involves inventory management. Depending on the sector and industry, inventory management can harbor inefficiencies in the movement and storage of goods in line with supply and demand. For example, this movement might be freight, containers, transportation, and first—and last-mile logistics, showing supply chain complexity.
Digital twins improve these processes, thus leading to supply chain optimization thanks to real-time data and visualization of key factors relating to location, the number of goods, time framework, distance, and fluctuation in supply and demand. The customer is always right! So, improving customer experience and customer service can only be a good thing, and digital twins are a key enabler towards achieving these and other areas of continuous improvement.
Learn more about the impact of digital twins in our webinar library.