The Role of Digital Transformation in the Supply Chain
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The Role of Digital Transformation in the Supply Chain

By CIOReview | Monday, January 2, 2023

Manufacturing companies leverage digital twin technology to increase productivity, expand revenue streams and improve customer experience by managing risks, supply chain planning, and optimizing inventory.

FREMONT, CA: As more businesses embrace digitalization, the global industry 4.0 market will grow to USD 210 billion by 2026. As part of the digital transformation, manufacturing companies use digital twin technology to improve productivity and revenue and improve customer experience. Analysts in the supply chain industry can also leverage digital twin technology to automate their businesses and achieve digital transformations.

An analyst can use digital twins to understand a supply chain's behavior, predict unusual situations, and find ways to reduce costs and improve efficiency.

Improving design tests of supply chain process: A DT model for supply chain helps moderate business continuity and transformation risks before they occur by predicting their outcomes. With these models, you can calculate potential savings, benefits, and returns on investment before the process is transformed. A business generates DT models by simulating a wide range of manufacturing, inventories, and product distribution scenarios and updating the global operations accordingly.

Monitoring risk and testing probabilities: In a virtual environment, DT enables supply chain companies to discover the best course of action in an emergency and to test various scenarios, thus improving organizational stability.

Identify bottlenecks: DT enables seamless, end-to-end visibility of processes along the supply chain, making problem-solving more agile and efficient. Through data collection, digital twins provide insight into potential weaknesses throughout the delivery process. Data from sensors can be gathered during shipment and analyzed to spot performance bottlenecks and locations during transport and delivery, creating a shipment digital twin.

Plan transportation and facilities: Despite changes in demand and supply, a digital twin visually represents how product and service delivery is affected by changes in demand and supply. Supply chain management can plan transportation resources more effectively by leveraging real-time data.

Optimize inventory: It is possible to input data from demand forecasting processes into a supply chain digital twin, thereby avoiding stock-outs and reducing overall production costs. The solution addresses the "single-echelon" challenge (optimizing inventory in one warehouse) as well as the "multi-echelon" challenge (optimizing inventory across multiple warehouses).

Predict the performance of packaging materials: By incorporating digital twins into packaging, companies can simulate package shapes and packaging materials to test for defects before deploying them, resulting in lower financial and environmental costs.