Digital Twin Technology is one of the most advanced digital technologies that could revolutionize the logistics industry and transform how it functions. Most of us probably know that it enables us to create digital replicas of physical objects in various industries to increase efficiency and mitigate risks. Here, we will explore this progressive technology and its impact on logistics.
As the name suggests, Digital Twin is the technology for creating a virtual copy of a physical object and studying its real-life equivalent to mitigate risk and reduce cost. However, the interesting thing is that although the term “digital twin” became widespread in the early 2000s, technology emerged way back in 1960, pioneered by NASA in its space exploration mission. Nowadays, digital twins are developed using advanced computational power, data analytics, and IoT technology by collecting data from varied data-generating sources and IoT devices. After all, you require a precise digital representation that can be used effectively for analysis, simulation, and monitoring.
Digital twins empower AI models and machine learning algorithms to become more effective than ever. Such technological collaboration is aided by cloud computing, which provides resources on demand that reduce costs incurred for expensive infrastructure. Unsurprisingly, the digital twin market was valued at USD 16.75 billion in 2023 and is projected to grow at a CAGR of 35.7% by 2030.
Now, let’s explore this impressive technology and how it impacts the supply chain and logistics industry.
Decoding Digital Twin Technology
Digital twins are the digital replicas of physical entities used for testing in virtual environments without causing any disturbance to the existing operations. Digital Twin technology creates virtual environments combining IoT, big data, AI, and machine learning. Once real-time and historical data are fed into the digital twin, AI and machine learning technologies recreate real-world conditions, behaviors, and interactions within the virtual environment.
Digital Twins helps you create hyper-accurate predictive models to test different scenarios and anticipate problems or risks before they can happen in the real world for faster mitigation. In the supply chain and logistics industry, digital twins can be used to simulate supply chain operations and provide useful insights into warehouse operations, inventory management, and transportation.
Powered by AI and machine learning algorithms, Digital Twin technology is becoming more effective and gaining popularity, thus leading most logistics organizations to accelerate their digital transformation plans. Digital Twins provide multiple benefits to product-based companies, such as driving a revenue increase by 10%, accelerating time-to-market by 50%, and improving product quality by 25%.
Unfortunately, Digital Twin technology is not as widespread as it should be due to various technological and organizational barriers. However, logistics companies worldwide have realized Digital Twin’s potential and are keen on embracing it for its predictability.
Innovative Usage of Digital Twin in Logistics
The pioneers in the logistics industry have started leveraging the power of digital twins to improve daily operations and efficiency. Let’s look at a few real-world applications and the impact of Digital Twin technology in the supply chain and logistics industry:
- Warehouse Management – Digital Twin models give you real-time visibility of your warehouse for smart decision-making. It acts as a map of your inventory locations and thus helps you keep track of your supplies and determine the fastest routes for delivery. It helps you to evaluate the impact of any adjustments you plan to make before taking the actual step.
- Transportation Management – Digital Twins help you track the movement of your packages or cargo through the supply chain network. The availability of real-time data on location, condition, and status helps you avoid and resolve any probable roadblock. Moreover, you can also leverage Digital Twin to track the temperature and humidity of perishable goods, ensuring they are transported in the best conditions.
- Supply Chain Management – In managing your supply chain operations effectively, Digital Twins provides an all-inclusive view that depicts every aspect, such as production, inventory, supplier procurement, and customer demand. Offering real-time data and insights into your supply chain network, Digital Twins helps you improve forecasting and decision-making.
The Rewards of Digital Twin Technology in Logistics
Leveraging Digital Twins has many benefits, with the potential of revolutionizing your logistics operations and impacting how they are managed and optimized. We will now explore some of the advantages of implementing Digital Twin Technology in logistics:
- Increased Visibility in Supply Chain Operations – Digital Twins provide exceptional visibility across the whole supply chain operations that help you precisely monitor production, distribution, shipments, and inventory.
- Preemptive Problem Resolution – Predictability is one of the outstanding features of the Digital Twin technology, helping you anticipate issues before they can escalate and become critical. These virtual models continue to analyze real-time data to identify any bottleneck so you can take proactive action and stay one step ahead.
- Smart Decisions Based on Data and Insights – Leveraging real-time data analytics and predictive modeling, Digital twins provide actionable insights to empower you to make strategic business decisions.
Thus, implementing digital twins in the logistics industry goes beyond basic optimization. It introduces a new era of agility, innovation, and customer focus by providing a detailed, data-driven base to elevate logistics operations.
Digital Twin Technology Ushering Logistics 2.0
Digital Twins can set the path to an autonomous logistics system where all processes are automated, from inventory restocking to warehousing to transportation and delivery. These advanced virtual replicas can adapt to changing conditions dynamically, optimizing routes or resources in real-time. However, per DHL, extensive implementation of Digital Twin technology in the logistics sector can be expected in the next 5 to 10 years.
You can reduce operational expenses significantly by enabling precise forecasting, decreasing overproduction and waste, and minimizing environmental footprints. Also, you can enhance service levels and customer satisfaction by optimizing resource allocation and streamlining processes.
Conclusion:
Leveraging Digital Twin in the Supply Chain is definitely a futuristic step toward operational efficiency and customer satisfaction. However, beginning your journey in the Digital Twin journey might feel overwhelming as it impacts the whole operations. Start with a solid foundation by gathering data from all sources, including warehouses, manufacturing facilities, suppliers, trucks, ships, and planes. Invest in standardizing the data by leveraging API-based technology that helps synchronize data to feed your digital twin so it can make informed recommendations.
Embrace Digital Twin in your supply chain and logistics operations as a potent catalyst for data-driven transformation and see your business grow. However, if you feel overwhelmed and want to outsource your logistics operations, contact XPDEL to see how we can help.
About XPDEL:
XPDEL is not just another 3PL provider but a growth enabler. We are a leading hi-tech Fulfillment and Logistics company supporting direct-to-consumer (D2C) and business-to-business (B2B) supply chains. Our widespread network of Fulfillment centers enables us to handle nationwide delivery in the US efficiently. Data analytics is at the heart of our 3PL services, powered by advanced technology and led by industry experts.
