Emerging digital twin and simulation technologies are transforming supply chain resilience by enabling real-time visibility, proactive risk management, and operational optimisation across industries, marking a paradigm shift in how businesses navigate global disruption.
In recent years, the vulnerability of global supply chains to sudden disruptions has become increasingly apparent. Events such as factory shutdowns, shipping delays, or unexpected surges in customer dema...
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nd can cascade through complex networks, causing significant operational setbacks. Handre Dreyer, Director of Operational Technologies at 4Sight, emphasises that traditional methods relying on static forecasts and spreadsheets are inadequate for managing the dynamic nature of modern supply chains. Instead, simulation technologies and digital twins have emerged as indispensable tools for businesses striving for resilience and agility.
Simulation and digital twin technologies enable companies to create a real-time, virtual replica of their entire supply chain. This “digital twin” provides a comprehensive, bird’s-eye view, facilitating the identification of bottlenecks, inventory tracking, and supplier performance monitoring. It empowers business leaders to conduct scenario analyses—effectively “test driving” their supply chains—before implementing changes in the real world. Dreyer likens this capability to having a data-driven crystal ball that relies on advanced modelling and analytics rather than guesswork.
The benefits of simulation extend beyond simple visibility. According to Dreyer, it significantly enhances risk planning by allowing organisations to anticipate potential disruptions and develop effective contingency plans. This proactive approach enables smarter, well-informed decisions, such as rerouting shipments, adjusting production schedules, or resizing inventory buffers. Moreover, by virtualising strategy testing, companies can optimise resource use, reduce waste, and balance lean operations with reliable service delivery.
A key synergy exists between simulation and demand-driven material requirements planning (DDMRP), which shifts the focus from traditional cost-based models to flow-based supply chain management. This combination helps organisations manage variability, respond swiftly to changes, and maintain flexibility in complex environments.
The applicability of digital twin and simulation technology spans a wide range of industries. Manufacturers can improve production scheduling and reduce downtime, while retailers and e-commerce operators can better balance inventory and meet fluctuating demand. Pharmaceutical and healthcare sectors benefit from ensuring the availability of critical medicines, and automotive firms manage intricate supplier networks more effectively. Similarly, food and beverage companies can reduce spoilage while adapting to consumer tastes, and energy providers maintain steady supply amid market volatility.
Supporting Dreyer’s insights, McKinsey highlights the integration of digital twins with existing supply chain software to enhance predictive analytics and end-to-end visibility. An example cited is a global original equipment manufacturer (OEM) that reduced freight and damage costs by eight percent through policy optimisation enabled by digital twins. This points to tangible improvements in efficiency and resilience in highly dynamic market conditions.
Boston Consulting Group further underscores the transformative impact of digital twins, reporting that some companies have achieved 20-30% gains in forecast accuracy alongside up to 80% reductions in delays and downtime. Integration with artificial intelligence is advancing the field, automating decision-making and refining resource allocation, which leads to substantial cost savings and improved supply chain performance.
Exiger stresses the role of digital twins in enabling real-time monitoring and proactive risk identification. These capabilities foster greater collaboration among stakeholders and strengthen vendor ecosystems by highlighting single points of failure and predicting operational disruptions before they occur.
Goldman WMS and Maersk echo the advantages of enhanced visibility and predictive capabilities offered by digital twins. Maersk, in particular, points to improved transportation route optimisation and warehouse management, which contribute to more accurate delivery estimates and proactive issue resolution—both critical for enhancing customer satisfaction.
RELEX Solutions adds that digital twins support detailed scenario planning and foster interdepartmental collaboration, which drives continuous improvement across supply chain functions.
Looking forward, Dreyer advocates a shift from reactive to proactive supply chain management. By combining digital twins, simulation, and methodologies like DDMRP, companies can anticipate challenges and position themselves to thrive despite disruption. This technology is not merely a tool but is positioned as the backbone of modern supply chain strategy, essential for future-proofing operations in an unpredictable world.
In sum, the integration of digital twins and simulation technologies represents a paradigm shift in supply chain management. Supported by industry research and practical business cases, this approach enables companies to build more resilient, efficient, and agile supply chains, ensuring they are prepared for the uncertainties of the future.
Source: Noah Wire Services
