Supply chain issues are not over yet, say senior supply chain managers surveyed by SAP. Although supply chains have somewhat stabilized, half of the managers surveyed agreed that improvement is still needed. As supply chains undergo transformation, experts say that digital twins may be the key to more dynamic, agile supply chain models.
To mitigate volatility and manage uncertainty, businesses are increasingly looking to digital twins — virtual models of real-world objects, systems and processes that apply real-world data for real-time simulations. Some analysts believe that 2023 will be a year for rapid adoption of digital twins.
“This is a moment of opportunity to reevaluate how businesses operate,” said Andy Hancock, SAP global vice president of the Digital Supply Chain Center of Excellence. “Supply chains are under-performing and are in a recovery phrase. Businesses are looking to build risk resilience into their supply chain operations.”
Some businesses already are preparing for the next global disruption by assessing the potential for digital twins to reduce exposure in supply chains and increase adaptability. Although the business case for digital twins in supply chains is still in exploration, Hancock predicted that interest in digital twins will gain momentum as the technology proves its value for modeling agile supply chains.
“I think we’re going to see digital twins as more of a foundation for data models,” he said, emphasizing the difference of process modeling compared with the common use of digital twins to represent a physical asset, such as a vehicle, plant or person. “We’re also going to see digital process twins, which means modeling a supply chain to get a complete understanding of the different moving parts to gain visibility.”
Hancock is optimistic about the value that digital twins can deliver to supply chain operations.
“The digital twin will provide a foundational element for visibility,” he said. “This will support the overall objective of risk mitigation that a risk resilient and sustainable supply chain requires.” However, he cautioned, “digital twins are not new, and many supply-chain organizations have started their journey with them, but they have not yet delivered on the anticipated benefit. There is plenty of potential.”
Abundance of Data
There are two trends driving the application of digital twins in supply chains. The first is the inexpensive data storage and the abundance of Internet of Things (IoT) sensors and new equipment that can connect digitally.
“People have been collecting data for eons, and they’re really going to formalize it into a more structured environment, creating these digital twins across the organization,” Hancock said.
The second trend is a matter of business survival. With the pandemic, companies became painfully aware of the lack of visibility they had into their supply chain. After 20 years of globalization, these linear, static supply chains were not able to adapt fast enough to keep up with consumer demands.
A hurdle to adoption of this technology, however, may arise if businesses are unable to reach agreements with third-party suppliers to extend visibility into their operations.
Real-Time Visibility for Better Decision-Making
The benefits from the use of digital twins in the supply chain increases exponentially with the infusion of real-time data. By combining real-time operational data and business information, supply chain managers can provide a context to the data that will result in better decision-making. It will not only provide insight into the current state of the supply chain, but also provide the ability to do forecasting and simulation of various scenarios.
“If we have real-time data as the source of all decisions, the time to respond to anomalies is greatly reduced,” Hancock said. “This creates a high degree of confidence in the recommendation at the moment of action.”