Why the Conventional Thinking about Supply Chain Digital Twins Is All Wrong

Every supply chain technology vendor is clamoring to tell you about their digital twin capability, but the term “digital twin” is a marketing creation that can’t live up to its ambitious name. Here’s the real story on one of the industry’s most over-hyped and overused buzzwords, and a better way to use this technology for your supply chain design and planning needs.

A Brief History of Digital Twins  

The digital twin: ubiquitous in supply chain technology marketing today yet still unsubstantial and mysterious. 

Digital twin is a marketing spin for a supply chain application where you unify and consolidate in one place all the digital signatures and data in your company relating to a supply chain. That single stream and view of data was dubbed the “control tower” and over time rebranded as “digital twin”. 

The problem? Companies don’t always have all the data (or quality data) related to supplier orders and timelines, inventory levels, factory production lines, etc. in separate operational systems, much less a single location. 

We’ve yet to see any vendor that can offer a complete, end-to-end 360-degree view of all the data in a supply chain. If these claims from numerous planning vendors were true, wouldn’t you use this to run your supply chain? But nobody can leverage this today because they don’t have all the data they need in a single location.  

A New Definition of “Digital Twin” 

More realistically, a digital twin is a picture of some portion of your supply chain in a database you can query. Supply chain digital twins are missing an arm, a finger, and maybe a few toes. Or think of it as Dr. Evil and Mini Me. Definitely not an exact match! 

It’s best to think of a digital twin as a method of taking data from different systems and putting it together to create different pictures of the supply chain. You may also call it a control tower, a virtual monitoring system, transparency apps, or something else entirely. 

A Better Way to Use Digital Twins—Design Your Future-State Supply Chain 

It’s time to set the record straight on what a digital twin can be used for.  

If your IT team has a usable single instance of relevant supply chain data, you can use it to monitor and make some forward-looking decisions on what your current supply chain is doing or should be doing. We call this planning and execution. Some form of a digital twin is necessary to do supply chain planning.  

Supply chain design is distinct from supply chain planning but equally critical to success. Design allows companies to envision a very different supply chain than they have today. Sometimes that means big changes like expanding to new markets, introducing new products, or changing the facility footprint. Sometimes it’s smaller changes like changing where inventory is stocked or modifying production strategies and transportation policies. 

The conventional digital twin has nothing to offer when it comes to designing a future-state supply chain. The digital twin limits you to the current supply chain state—or the closest representation you have of it—when you should be opening all the possibilities. Picture our substandard digital twin Mini Me standing above you with a pillow snuffing out your future possibilities.   

In the design world, we need to create different supply chains for the future. To do this, we create “digital twins” for each of these future-state supply chain alternatives and analyze them to select the best one to implement.  

With supply chain design, we aren’t focused on the supply chain you’re stuck with, but all the supply chains you may be considering. The way we do this is with a combination of optimization and simulation: 

• Optimization uses smart math to come up with proposed supply chain design changes. 

• Simulation plays out those potential designs in detail under real-life conditions and time–orders, shipments, inventory logs, stockouts, and more. Simulation synthesizes all the data related to those supply chains that don’t exist yet so you can measure and test how they’ll work—before you invest a dime.  

RELATED: Beginner’s Guide to Supply Chain Simulation

Digital twins are great technology offered by planning systems to improve planning and execution in your current supply chain. Supply chain design offers myriad future supply chain options to compare and test under real-world uncertainty. Design frees you to envision and map out many twins of a to-be, better supply chain. 

Planning helps you reach the “efficiency curve” of your current supply chain. Supply chain design shifts the entire curve. 

Don’t be constrained by a “Mini Me” twin. If you design your system right, your new digital twin will be an even better, stronger version of your current state supply chain.