Four misconceptions are hampering the advancement of digital twins

From the July-August 2022 edition of Supply Chain Management Review.

July-August 2022

In late May, I attended the Institute for Supply Management’s first live conference since 2019. The message from Tom Derry, ISM’s CEO, was simple: These are challenging times, but along with the challenges come…

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Digital twins (DTs)—living digital replicas of physical entities—are used widely in manufacturing to mimic and improve real-world processes and systems. However, there are far fewer applications of the technology in supply chain management. DTs could deliver similar benefits in supply chains if it were not for certain misconceptions that prevent companies from unlocking the technology’s huge potential.

Contrary to these mistaken beliefs, DT technology is accessible and can be implemented in well-defined steps. And as is the case with any new, innovative technology, companies need to understand what they want to achieve before implementing it.

Pioneering projects

Digital twins can deliver efficiency gains in a wide variety of supply chain functional areas. Here are some illustrative examples.

• The consolidation of shipments in distribution centers.
• Optimizing the size of freight transportation fleets.
• Testing different warehouse layouts.
• Adjusting goods flows and routing, in alignment with demand.
• The tracking of assets in real-time.
• Supporting predictive maintenance programs.

An early adopter of digital twin technology in manufacturing operations, the $13 billion packaging company Tetra Pak, built a digital version of a warehouse in Southeast Asia together with logistics services provider DHL. A continuous stream of operational data harvested from the physical facility’s Internet of Things (IoT) infrastructure feeds the digital model. The warehouse digital twin is used in a variety of ways. It helps Tetra Pak to dynamically adjust stock locations, manage inventory as well as seasonality and shifts in demand, balance workflows and allocate equipment in the physical warehouse. These applications enable the company to optimize storage space utilization and improve both operational efficiency and workplace safety standards.

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