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What are Digital Twins and How are They Revolutionizing Supply Chains?
Digital twins are critical in evolving towards anticipatory supply chains.
Published: August 4, 2023
— Proactive anticipation, embracing digital twins, redefining KPIs, and overcoming legacy supply chain constraints are critical in evolving towards anticipatory supply chains, fostering collaboration, and capitalizing on market dynamics.
The following are the main takeaways from George Lawrie’s session at aim10x live London.
The Importance of Anticipation:
George emphasized that visibility alone is not sufficient for an effective supply chain. Instead, companies must adopt a proactive approach by actively sharing capacity information, anticipating demand fluctuations, and leveraging technology to interpret market signals. By doing so, organizations can stay ahead of the curve and ensure timely responses to market dynamics.
The Rise of Digital Twins:
The presentation shed light on the emerging trend of creating digital replicas, known as digital twins, of market behavior and supply chain processes. By modeling various aspects of the supply chain, such as warehouses and transportation processes, companies can gain a comprehensive understanding of their operations. This knowledge enables them to optimize processes, identify bottlenecks, and make data-driven decisions to improve overall efficiency and effectiveness.
Transition Towards Anticipatory Supply Chains:
George highlighted the future direction of supply chains, emphasizing the need for more comprehensive digital twins, pervasive digitization, and experimentation with on-demand logistics. By sharing plans with carriers and balancing transportation costs, organizations can evolve towards a more anticipatory approach. This transition enables businesses to proactively respond to market fluctuations, mitigate risks, and optimize their supply chain operations.
The Need for New Key Performance Indicators:
Traditional KPIs may not adequately capture the complexities of modern supply chains. The keynote speaker encouraged companies to focus on new metrics that emphasize adaptability, effectiveness, and financial performance. Key indicators such as inventory turnover and margin tracking provide insights into supply chain performance and facilitate better decision-making in a rapidly changing environment.
Overcoming Legacy Supply Chain Limitations:
The keynote addressed the challenges posed by fixed hierarchies, lead times, and safety stocks, which can hinder agility and responsiveness. To address these limitations, companies were advised to invest in integrated business planning systems that foster collaboration among suppliers, customers, and internal teams. By creating an enterprise ecosystem that promotes collaboration, organizations can break down silos and achieve better alignment across the supply chain.