{"id":15571,"date":"2017-10-11T08:25:54","date_gmt":"2017-10-11T15:25:54","guid":{"rendered":"https:\/\/www.esri.com\/about\/newsroom\/?post_type=wherenext&p=15571"},"modified":"2024-05-10T06:03:21","modified_gmt":"2024-05-10T13:03:21","slug":"digital-twin-for-supply-chain-management","status":"publish","type":"wherenext","link":"https:\/\/www.esri.com\/about\/newsroom\/publications\/wherenext\/digital-twin-for-supply-chain-management","title":{"rendered":"A Digital Twin for the Supply Chain"},"author":861,"featured_media":15521,"parent":0,"menu_order":0,"template":"","format":"standard","meta":{"_acf_changed":false,"sync_status":"","episode_type":"","audio_file":"","podmotor_file_id":"","podmotor_episode_id":"","castos_file_data":"","cover_image":"","cover_image_id":"","duration":"","filesize":"","filesize_raw":"","date_recorded":"","explicit":"","block":"","itunes_episode_number":"","itunes_title":"","itunes_season_number":"","itunes_episode_type":"","_links_to":"","_links_to_target":""},"categories":[1001,801,1051],"tags":[],"department":[488812],"wherenext-category":[],"industry":[],"class_list":["post-15571","wherenext","type-wherenext","status-publish","format-standard","has-post-thumbnail","hentry","category-commercial","category-operational-intelligence","category-real-time-gis","department-emerging-technologies"],"acf":{"short_description":"The digital twin may help supply chain operators serve an increasingly empowered consumer\u2014and gain a seat in the boardroom.","pdf":{"host_remotely":false,"file":"","file_url":""},"flexible_content":[{"acf_fc_layout":"content","content":"Businesses that have mastered the new supply chain have embraced one key learning: real-time digital awareness informs the best physical response.\r\n\r\nIn the months and years to come, more supply chain operators will capitalize on this knowledge, and most will discover that a digital twin<\/a> of the supply chain leads them directly to the right physical, real-world response."},{"acf_fc_layout":"form","form_type":"aside","form_position":"Right","form_title":"THE ESRI BRIEF","form_desc":"A biweekly email connecting senior executives and business leaders with thought-provoking articles on location intelligence and critical technology trends.","form_button_label":"Sign up now","form_content":"https:\/\/go.pardot.com\/l\/82202\/2017-10-12\/jw1bmb","form_tag":"low-commitment-form\/sign-up-form"},{"acf_fc_layout":"content","content":"See It They Must <\/strong>\r\n\r\nIn the last decade, the world of the supply chain operator has changed dramatically, creating both high risk and huge opportunity.\r\n\r\nConsider the advent of the Internet of Things (IoT). Now that connectivity is becoming ubiquitous, almost anything in the supply chain can be tracked in real time\u2014not just finished goods but also the tires on the truck, the wings on the plane, and the pallets that transport the goods. In addition, new forms of digital information are now available from third parties\u2014pinpoint weather warnings, social media sentiment, and traffic alerts and hazards. This expanding set of digital intelligence has yielded an overwhelming amount of data that companies are struggling to leverage so they can make sense of the most urgent situations.\r\n\r\nOn the demand side, today's global consumer\u2014empowered by information and high on expectations\u2014has fueled a right-now economy that forces businesses and supply chains to accelerate both their decision-making and their quality delivery of products and services. Combine that pressure with an ever more complex network of supply partners (and partners of partners), and a supply chain leader's ability to see it all clearly\u2014let alone manage it effectively\u2014is challenged significantly.\r\n\r\nBut see it they must."},{"acf_fc_layout":"quote","image":15501,"text":"The idea that manufacturing is dead, or retail is dead, is an absolute fallacy. In the history of the planet, we've never built, bought, or sold more goods than we do now. And it will only increase.","author_name":"","author_profession_organization":""},{"acf_fc_layout":"content","content":"Rising Expectations<\/strong>\r\n\r\nThese days, Amazon is as good a barometer of supply chain demands as almost any single company, and analysts estimate<\/a> that the e-commerce giant's Prime two-day delivery service is now serving more than 50 percent of American households. That uptake has rippled across the supply chain, as companies look to deliver not just the speed that consumers crave but also the transparency and accuracy they expect.\r\n\r\nAccording to Supply Chain Quarterly<\/em><\/a>, a 2016 Dotcom Distribution survey found that \"almost half (47 percent) of shoppers said they had chosen not to order from a retailer again because of poor order transparency about their package status during the fulfillment and delivery process.\"\r\n\r\nLogistics providers\u2014UPS among them\u2014have a close-up view of this empowered consumer.\r\n\r\n\"When I started over 40 years ago, getting a package cross-country in five or six days was a miracle,\" UPS executive Jack Levis said in a recent podcast interview<\/a>. \"Nowadays, people want their delivery experience where they want it, how they want it, when they want it.\""},{"acf_fc_layout":"sidebar","layout":"standard","image_reference":null,"image_reference_figure":"","spotlight_image":null,"section_title":"","spotlight_name":"","position":"Left","content":"

Where to Begin?<\/h2>\r\nNo company can instantly digitize its entire supply chain or even the parts it directly controls. So how do executives begin creating a digital twin of their supply chain?\r\n\r\n\"Start with processes,\" says Morgan Swink, professor and executive director of the Supply and Value Chain Center, Neeley School of Business, Texas Christian University (TCU). Those might include order to cash or procure to pay\u2014the kind of processes that companies and their partners accomplish collaboratively.\r\n\r\n\"Think about one process and how you can improve the quality and efficiency of that process through more timely, better-formatted, higher-quality, more accurate information,\" Swink advises. \"That's what digitization gives you at the core.\"","snippet":""},{"acf_fc_layout":"content","content":"These expectations have changed business, in part by compressing decision cycles for supply chains worldwide. Executives no longer have a two- or three-day time frame to determine what's best. Smart decisions must be made in minutes, if not seconds, by empowered employees on the front lines of the business.\r\n\r\nThe best response, according to Deloitte, is not an iteration on traditional thinking but rather a revolution.\r\n\r\n\"For business leaders accustomed to traditional linear data and communications, the shift to real-time access to data and intelligence fundamentally transforms the way they conduct business,\" Deloitte analysts wrote in the 2016 report The Rise of the Digital Supply Network<\/em><\/a>. \u00a0<\/em>\r\n\r\nMeet Your Twin <\/strong>\r\n\r\nIn the modern world of commerce, the supply chain is always <\/em>on, always <\/em>connected, always <\/em>producing data. <\/em>To excel in this environment, and to leverage that information for maximum value, some forward-thinking companies are beginning to apply the digital twin concept to their supply chains."},{"acf_fc_layout":"image","image":15531,"image_position":"right","orientation":"horizontal","hyperlink":""},{"acf_fc_layout":"content","content":"A digital twin is a virtual replica of physical assets, processes, or systems. As physical conditions change, the digital twin logs those changes in real time\u2014whether it's a shipment of subassemblies delayed by a parts shortage, a delivery truck waylaid by a traffic hazard, a distribution center's operations threatened by extreme weather, or a service provider completing a maintenance job.\r\n\r\nThe digital twin creates a physical-to-digital-to-physical loop that allows a company to quickly and continually fine-tune its live network.\r\n\r\n\"What we're talking about is making a connection between those two realities, the virtual and the physical . . . so that what happens in the physical world is immediately reflected in the virtual reality,\" says Morgan Swink, professor of supply chain management at Texas Christian University's Neeley School of Business. The upshot, he continues, is that companies can make more intelligent decisions and adapt to changing conditions faster than ever.\r\n\r\nCapturing physical changes as digital information gives companies a global operating picture of how their supply network is performing. It also quickens their reaction time, moving companies closer to satisfying the demands of the empowered consumer.\r\n\r\nIn short, digital awareness informs the physical response, then refreshes the digital record."},{"acf_fc_layout":"quote","image":15501,"text":"I think the supply chain is in a position now that [supply chain executives] can really make a difference for business growth and be the real change agents as we move into the digitization of the supply chain.","author_name":"Morgan Swink, TCU","author_profession_organization":""},{"acf_fc_layout":"content","content":"Manufacturers, retailers, and other supply chain operators have some of the components of the digital twin in place\u2014MES, SCM, ERP, and CRM software to manage production; logistics and suppliers; procurement; and customer commitments. Some already use a geographic information system (GIS) to track assets and processes wherever they are in the world.\r\n\r\nBut only a pioneering few are starting to fuse these systems to construct the always-on connectivity that creates the real-time track-and-trace capability that a supply chain digital twin demands.\r\n\r\nNext Generation Benefits<\/strong>\r\n\r\nIn the tradition-bound world of supply chain management, some executives might wonder why they would invest in such an integration.\r\n\r\nIn its report, Deloitte notes several business benefits of what it calls the digital supply network<\/em>:\r\n