5 benefits of a smart supply chain with a digital twin

A digital twin is a digital representation of a physical object, a process or a process system, based on real-time data. In the context of logistics, the digital twin is a virtual representation of a real supply chain. It enables comprehensive data-driven optimisation of all stages of value creation. Tobias Wölk, product manager automation technology and active components at reichelt elektronik lists five advantages here.

A key benefit of a smart supply chain is being able to monitor the status of products, inventory levels and transport assets in real time."Using sensors, transponders and QR codes in combination with NFC tags, all logistics processes can be monitored and combined in one model," explains Tobias Wölk.

In small warehouses or logistics centres, it is still possible to detect and correct errors manually. But in large and complex warehouses, this quickly goes beyond the capabilities of employees. DHL, for instance, has created a digital twin of its food processing warehouse in Southeast Asia. The AI-enabled system has more than 120,000 storage units in more than 2,500 facilities. All incoming and outgoing goods are recorded by cameras and sensors and this data is fed into the digital twin in real-time.

It is easy to check at any time what kind of goods are in the warehouse and where there is room for new goods. This ensures that food that spoils easily is transported to a suitable storage location within 30 minutes. These automated processes make the work of management staff much easier and improve quality, as fewer goods spoil due to incorrect storage or long waiting times.

Real-time monitoring also helps keep an eye on inventory levels at all times. This more accurate stock management prevents overstocking or bottlenecks. Integrated systems can also automatically update stock levels as products enter or leave the warehouse. This minimises manual intervention and reduces human error that can occur during inventory management."Supply chain managers can thus operate more efficiently and respond quickly to inventory problems. For example, with automated alerts as soon as the stock of a particular product falls below a predefined threshold," Tobias Wölk advises.

Smart solutions also enable integrated supplier management. This allows companies not only to accurately locate products in their own warehouse, but also to monitor ordered goods throughout the transportation process. In this way, supply chain managers are not only able to determine their exact location, but also estimate when they will arrive.

All data collected as part of monitoring and optimisation can also be evaluated to support medium- and long-term process optimisation. The aim is to find solutions and changes for improvements by recognising patterns in daily operations. Thanks to artificial intelligence and machine learning, the huge amounts of data can be analysed automatically. They help predict problems and even proactively suggest solutions.

However, a challenge for companies is still to 'feed' automated systems with sufficient and high-quality data. Once companies implement processes to automatically transmit data from monitoring to analysis systems, not only short-term options for action can be guaranteed, but also forward-looking optimisations can take place. For example, depending on the economic situation, thresholds for certain critical components may need to be adjusted.

Constant monitoring ensures greater transparency. In the EU, suppliers are obliged to provide their customers with information on delivery dates. The more precise insight they have into the status of certain goods, the easier it is for them to comply with this requirement and give customers exact delivery dates.

When suppliers get an overview of their logistics processes, they can also better calculate the associated costs. It is usually difficult to determine the cost of a supply chain as a whole. The usual logistics costs, recorded using traditional cost centre accounting, usually do not exactly match the actual total cost of the supply chain. More accurate identification of potential savings in the supply chain is made easier if costs are determined in a more transparent and less general way. By using supply chain monitoring, companies can improve their data situation and thus report their costs more transparently.

Last but not least, optimising the supply chain also contributes to a better environment. By optimising routes and using resources more efficiently, companies not only save money, they also automatically reduce their CO2 emissions. Moreover, AI-assisted tools can make specific suggestions for reducing waste, CO2 emissions and more sustainable operations by analysing all operationally relevant data.