The Digital Supply Chain Twin: An Imperative for Supply Chain Resiliency & Relevancy

Matt Tichon
Matt Tichon
VP of Industry Strategy, Coupa

Matt Tichon is the Vice President of Industry Strategy at Coupa, where he serves as a thought leader for the Digital Supply Chain Twin, advanced analytics, and applied AI. With a long history of leading supply chain transformations, he leverages his 25 years of experience in executive and senior-level supply chain roles spanning consulting, technology, manufacturing, and distribution — and is one of Supply & Demand Chain Executive's 2021's Pros to Know.

Read time: 5 mins
The Digital Supply Chain Twin: An Imperative for Supply Chain Resiliency & Relevancy

Five key takeaways from my session at the AI Supply Chain Summit in March 2021

The concept of a digital twin has been around for decades, yet it still stirs up much confusion.

The most easily understood example involves a flight simulator. In one, pilots can test out responses to changing conditions to determine which actions will lead to a safe landing. They can run it in a variety of conditions, on numerous flight paths, learning and practicing for the future within a safe environment. As a result, the rest of us get to enjoy a relaxing flight where we may have “blind faith” that our pilots will get us safely back to the ground.

What if you were able to have that same level of faith in your supply chain planning?

That’s exactly what a digital twin allows you to acquire.

But First, What Is a Digital Twin?

Simply put, a digital twin is your proverbial flight simulator. It’s a digital replica of your supply chain where you’re able to test out and implement scenario planning. Having one in place means that you can analyze “what if” possibilities or identify situations most likely to arise. It means you’re better able to flow with disruption rather than be knocked off-kilter by it.

Now that you know that, you’re prepared to dive into the five key takeaways from my session at the World Digital Supply Chain and Logistics Summit in December 2020.

Five Key Takeaways for the Digital Twin

A digital twin is imperative for survival and supply chain resiliency in the post-pandemic world. However, it’s easy to get them wrong. Here are five things you must remember when building your digital twin.

1. Decisions Need to Be Interconnected and Outside-In

Historically, applications were developed to optimize decisions within a given function of the supply chain. In other words, we assumed things wouldn’t change or cause major disruptions because – for the most part – they didn’t.

However, this antiquated approach leaves significant cost savings and service improvements unrealized. That’s because businesses have always operated in highly siloed environments, where departments functioned like their own microorganisms. However, as business has steadily gotten both more digital and more complex, the need for holistic solutions and perspectives has grown greater.

The digital supply chain twin allows you to evaluate end-to-end supply chain decisions in the context of their impact on total cost, service, efficiencies, and agility.

2. AI-Powered Technologies Allow for Significant Innovation Without Massive Rip and Replace

Some executives fear that implementing new technology solutions means throwing out everything in which they’ve already invested. In contrast, the opposite is true.

A digital twin makes your existing systems better. It can extend the shelf life of your current software investments by extracting key data from your current ERP systems and then testing out what-if scenarios in a virtual environment. That means you’ll keep your current framework (minimizing disruption) but gain the ability to experiment with the guidance of AI-powered supply chain analytics.

Once you determine your organization’s best decisions, you can push the resulting master data settings back into your transaction systems to achieve a known outcome.

3. The Supply Chain Digital Twin’s Self-Service Deployment Is Possible

There’s a term getting thrown around the data science world right now: democratization.

Democratization simply means that data is no longer locked up in silos where it’s only accessible – and understandable – by specialists.

There are a lot of business benefits to democratizing data. For instance, through it, you can democratize decisioning with AI by deploying micro applications designed for your citizen data scientists. Taking this approach allows you to increase your organization’s decision-making capacity and speed to bypass data science organizations’ human constraints.

4. Transformation Happens in Bite Sizes, Yet Businesses Need Guidance from an Overarching Vision

Most supply chain decisions are made one at a time, much like the adage of how one “eats an elephant.”

That used to work. These days, it poses the threat that the market conditions may outstrip the company and render them obsolete. In short, you don’t have time to ponder each move or oversee each process individually.

The digital supply chain twin allows your company to evaluate and order a myriad of options in the context of an overarching plan. You’ll be able to see where you’re going, where you need to be, anticipate supply chain disruption, and spot opportunities to automate or accelerate specific processes.

The end result? Those bite-sized transformations happen on their own, aggregating while you stay focused on operations.

5. Disruptions Are Here to Stay; The Power Lies in Anticipating Them

Much like sports teams develop pre-designed playbooks to respond to potential plays from the other team appropriately, you can take the same approach with your supply chain and even your company culture.

In fact, you’ll need to do that to keep pace with the new, disruptive norm. Creating a contingency plan for plausible scenarios will put your company in the strongest position to react when the disruption occurs.

And your digital twin will be your invaluable guide to building this playbook.

Are You Ready for Disruption? With a Digital Twin, You Are

In the 2020s, the supply chain digital twin is imperative. It’s the only tool out there that will empower your company to remain agile and resilient in the face of disruption.