Case for Digital Twins Part 2: Digitisation is key to building better supply chain, profitable growth

A digital twin can become a replica of the factory floor, enriched by continuous, real-time sensor data on machinery, items produced, and environmental conditions.

A ‘digital twin’ of the supply chain lets a business model the potential effects of reconfiguring its processes, workforce, assets, and data before actually putting material and information through it.

Across the supply chain, the five high-impact areas for digital twins include the following: Smart manufacturing: Manufacturing can gain immensely from digital twins. A digital twin can become a replica of the factory floor, enriched by continuous, real-time sensor data on machinery, items produced, and environmental conditions. On a shop floor, digital twins can set in motion a continuous feedback loop between the digital and the physical. Sensors draw data and analyse it to identify issues and ultimately make modifications.

One example of a smart factory is a connected shop floor. Firms use Internet of Things (IoT) sensors to monitor the movement of critical equipment, locate assets rapidly, monitor and analyse production data, assess environmental conditions, and gauge storage volumes.

Also Read: Case for Digital Twins: India can build resilient supply chain by digitisation

Logistics: Especially, for a country with limited space and expensive fuel, digital twins can transform the value chain. A core area for transformation is logistics infrastructure, for example, warehouses and distribution centres. Logistics companies can integrate 3D models of facilities with data from IoT sensors, drone-based stock measurements, automated guided vehicles, and storage and retrieval robots. This continuous transmission of data helps in identifying waste, adjusting allocation, and digitally simulating and evaluating modifications. Further, worker productivity can be addressed with mixed reality, for example, AR vision picking systems deploying smart glasses to provide visual cues with a hands-free workflow and scanning capabilities.

Moreover, digital twins of shipments and containers can be combined with historical movement data to automate decision-making regarding asset usage, fleet sizing, and distribution. Sensors in shipments can monitor high-value and sensitive products. Similarly, the Geographic Information Systems (GIS) can optimise the distribution routes to uncover actionable insights through data on weather, traffic, customer locations, and demand patterns. Digital twins can play a role in all aspects of the logistics value chain.

Inventory management: Digital twins of shop floors, warehouses, and market stock points can integrate with sensor data on inventory levels and operational features. They can support in timely inventory management and facilitate continuous adjustments based on supply and demand.

One example involves inventory optimisation models in retail. Global retailers use in-store sensors to create digital twins and optimise store layouts, assess temperatures of meat coolers, and monitor checkout queues. Inventory is updated in real time to reflect stocks, with the aim of reducing stock-outs and improving store layouts. These measures help in maximising the footfall and revenue.

Supplier collaboration: Beyond the downstream, there are significant upstream opportunities. Traditional supply chains have linear stages, so inefficiencies in upstream supply can snowball into larger ones in subsequent phases. Additionally, there is generally a lack of visibility for stakeholders. In contrast, in a digital supply network single digital core drives all dimensions. The most important being supplier collaboration, with analytics-driven sourcing, asset sharing, block-chain-enabled transparency, cloud/control tower optimisation, and a supplier ecosystem. A connected community enhances transparency and real-time decision-making, stimulates stakeholder communication, and minimises latency, risk, and waste.

Product development: Modelling a new product digitally is cheaper and reduces the time to market and introduce the product. It can boost efficiency and quality, making it easier to pinpoint components with a long lead-time and gauge their impact on the supply chain. For example, an auto component industry, which uses digital twins and sensors as R&D tools to improve component life and performance.

Digital twins – going all in

Digital twins are a harbinger for change and transformation in supply chain. They can have the potential to transform manufacturing with sensor-based insights and adjustments and bolster logistics through digitised distribution and warehouses. Digital twins can fast track inventory management and supplier collaboration, while giving a leg-up to product development. It would be difficult to find an aspect of the supply chain where digital twins cannot accelerate growth. Its vast potential and the uncertainties of COVID-19, present an opportunity for Indian firms to consider making the exponential jump.

To get started, organisations need to look for opportunities and identify areas for using digital twins. They can pilot, mature, and scale the transformation. Finally, they may look for and evaluate the next digital twin opportunity. For the organisations looking at staying resilient and growing exponentially in these uncertain times, digital twins might be the key to profitable growth.

• P.S. Easwaran is Partner and Leader, Supply Chain, Deloitte India. Views expressed are the author’s own.