There is a lot of talk about digital supply chain twin.
A digital twin is meant to be a digital representation of a real-world supply chain environment. it showcases the relationships between all the relevant nodes of the supply chain — such as products, customers, markets, warehouses, manufacturing plants. It is meant to model and simulate a supply chain in action.
But is this mere talk?
Or, is the digital supply chain twin really capable of feeling the pain of real supply chain in advance? If not, then what exactly is the purpose of this twin?
At GLOBAL SUPPLY CHAIN GROUP, we work with companies that are obsessed about customer delight and creating minutest amount of additional customer value. None of these companies have shown much interest in creating a high cost digital twin with indeterminate customer value unless they are first considering making a major transformation in their manufacturing or distribution footprint.
These are the companies which are actively investigating the possibilities of using robotics for customer deliveries and predictive shipping methodologies to further enhance their competitive edge. The last mile problem of supply chain networks may eventually be solved by using AI.
Yet, they are wary of shiny ivory tower concepts such as control tower, digital twin or whatever latest pet object is marketed as the silver bullet by the vendors
Companies already have a three decades of history with SAP, other ERP tools, DSS tools, and a multitude of SCM planning and control applications. Almost every time a desktop pilot is installed and run in advance of a roll-out for the simple reason that companies have learned at a huge cost that failure of these systems is not an option in real life. They have also learned that software vendors frequently promise and show much more than the real capability of their software.
In fact, by now we have nearly 25 years of accumulated wisdom in corporate circles about the SCM software, vendors, implementation partners and their missteps from the past. The following infographic (click on the infographic so see a full screen version, the infographic is sourced from our book OUSOURCING 3.0) summarises this accumulated corporate wisdom:
Supply Chain Simulations Can be Extremely Useful
Yet, almost all our clients commission selective supply chain simulation projects, especially when supply chains are operating on tight margins. There are a number of supply chain simulation tools, and we have also built many customised tools for particular situations where simulation is required.
However, in each case the simulation is selective and for a part of the supply chain. The problem with simulations is that as you add more working parts - such as demand planning, inventory planning, DRP, transportation planning, load optimisation and many other SCM parts - the simulations gets more and more complex. All the inter-relations between these facets of supply chain need human intervention and judgement despite significant simplification.
Digital Twins Can Be Useful On A Selective Basis
One of clients calls us for SCM assessment every time they plan to change their manufacturing footprint. Over the past two decades we have done dozens of projects for them across the world. The reason is because, the first time they called us for such a project, we created a working simulation model of the proposed new plant and showed them an hour by hour working model of supply chain in action. We showed them how it would cope with the peaks and troughs of demands and supply - never running out of product or raw materials.
So What Is The Bottom-Line?
Here is the summary of my thinking:
- Vendors and their implementation partners will always come up with newer sounding concepts to engage their target markets. That is their job.
- Shiny new packages look attractive - though in many cases they are just old wine in new bottle.
- Digital Twin is very close to supply chain simulations that have been around for a long time.
- End-to-end supply chain is complex. Even a simplified digital twin of such a complex entity will be too complex to model realistically.
- If they succeed in modeling an end-to-end supply chain in all its completeness, it is unlikely that the model will isolate the pain points that you are trying to uncover in advance by creating the digital twin.
- If you are not making a big enough change in the supply chain structure or system, a digital twin may not reveal the pain points either.
- If you are making a big change in the supply chain structure or system, a digital twin of the limited part of the supply chain can be an extremely useful tool that will help to uncover pain points in advance.