A Unified Supply Chain Software Platform as the Foundation to Enable Digital Supply Chain Twins
Supply chains have been tackling uncertainties such as trade wars, natural disasters, cyberattacks, wars, and environmental regulations long before COVID-19. That’s why modern supply chains, increasingly powered by supply chain software, are more resilient, decentralized, and globally distributed with several trading partners and suppliers. They also produce massive amounts of stock-keeping units, product lines, and cater to more markets.
Yet, few supply chain were prepared for the domino effect of widespread lockdowns due to COVID-19. Everything — from demand signals and sales forecasts to the unavailability of production and transportation resources — was impacted.
In such volatile times, having complete visibility of supply chain operations, inventory and raw materials, and product flows can go a long way. That, in turn, requires adopting a digital-first mindset and laying the groundwork for a digital supply chain.
A key lesson from the COVID-19 pandemic
One of the biggest lessons from COVID-19 was to prioritize digitization for agility and resistance against future disruptions.
Enterprises already use many systems that generate huge volumes of data for actionable insights.
However, most decision-making using conventional supply chain management software is based on past data. Whereas, events like COVID-19 require enterprises to understand real-time data, predict potential risks using "what-if" analysis, develop appropriate risk mitigation plans, and spot opportunistic trends faster than the competition.
That’s a tall order, and precisely where digital supply chain twins — a market valued at 3.1 billion USD in 2020 and projected to reach 48.2 billion USD in 2026 — can be of assistance.
What are the digital supply chain twins?
According to Gartner, the digital supply chain twin is a digital representation of the physical supply chain. The digital replica is like a parallel universe that mirrors everything from the physical supply chain — its assets, inventories and warehouses, logistics flows, transactions, and third-party relationships, to name a few.
With advanced analytics, artificial intelligence (AI), and machine learning (ML), they simulate a supply chain’s real-time performance, complexities, and risks. Equipped with such accurate, real-time data, enterprises can achieve full control and visibility of all assets and interconnections in their supply chains, spot risks, and derive forward-looking insights as per business needs.
The concept of a digital twin isn't new and has been used in product engineering and flight simulations. The novelty lies in integrating real-time data, which is now more effective thanks to IoT, digitization, and robust data-driven simulation and modeling.
Why do digital supply chain twins matter in a post-pandemic world?
According to BCG, early implementers of digital twins have noticed several benefits, such as:
- Sustainable inventory reductions up to 5%
- CAPEX reductions up to 10% thanks to better resource planning and investments
- EBITDA improvements of 1-3%
Two excellent examples of companies reaping the benefits of digital supply chains are DHL, a global logistics company, and Unilever, the consumer goods giant.
DHL built a digital twin warehouse for Tetra Pak (a food packaging company) in Singapore to receive real-time updates from the physical warehouse. As a result, DHL continuously tracks its performance and identifies better storage solutions.
Similarly, Unilever built a virtual factory in Valinhos, Brazil, and has already saved USD 2.8 million. It used IoT sensors to feed real-time information on temperature, motor speed, and other production variables on the cloud. Unilever simulated "what-if" scenarios with advanced analytics and machine learning to map the best operational conditions, allowing it to perform predictive maintenance and reduce wastage.
What do enterprises need to make digital supply chain twins a reality?
The first step is to support agile decision-making and adapt to changes in the market, consumer behavior, demands, or global disruptions.
The next step is moving to the cloud and choosing an IT infrastructure that supports digitization on the cloud. Several enterprises have already invested in digital transformation and cloud architectures, but they struggle to generate meaningful insights.
To take full advantage of the data captured and build a true end-to-end digital twin, enterprises must have the means to bring all data together in one place and analyze it to offer insights that support decision-making across the organization. It also means stitching together complicated and siloed supply chains.
How can a unified, cloud-native, AI-powered supply chain software platform help build digital twins?
A unified, cloud-based, AI-enabled supply chain management platform brings everything from warehouse and logistics management to data processing under one roof. This facilitates end-to-end supply chain planning, management, visibility, and monitoring.
Such platforms offer complete visibility with control towers that let enterprises manage the entire supply chain from one place. By combining people, process, data, and technologies, control towers enable greater transparency and collaboration.
As AI powers digital supply chain twins, they can automatically process oceans of data with fewer errors and greater efficiency, drastically increasing productivity and reducing operational costs. Thanks to ML algorithms, such systems can identify potential roadblocks in the supply chain by simulating scenarios and prompting preemptive measures.
Since digital twins integrate with legacy operational and planning systems (ERP, TMS, and WMS), external data, and IoT devices, they make real-time data acquisition and supply chain monitoring a breeze.
Finally, they enable businesses to set up predictive altering and action status trackers that detect patterns, understand the business impact of an organization’s strategies. That, in turn, helps businesses stay on top of upcoming complications/fluctuations in markets.
What’s the way forward?
The pandemic has underlined the importance of transforming supply chains and empowering them with next-gen technologies to quickly adapt to disruptions like pandemics (where changes occur at breakneck speeds) while mitigating risks.
An AI-powered digital supply chain management platform like GEP NEXXE™ can help enterprises set up a virtual replica of their supply chains for complete visibility, intelligence, agility, and resilience — crucial to keep up with rapidly changing market dynamics.
Powered by GEP MINERVA™, GEP’s proprietary AI technology, GEP NEXXETM supports demand forecasting and big data analytics — critical components of an effective digital supply chain twin.
Schedule a demo today and find out how GEP can help future-proof your supply chain in an increasingly uncertain world.