Jaakko Elovaara 11.11.2016 6 min read

Digital Twins Optimize Global Trade and Supply Chain

Last month, Gartner issued a report about the "Top 10 Strategic Technology Trends" on the frame in 2017. One that was particularly interesting was "digital twins."

What is a “digital twin”?

The digital twin is a virtual replica of a process or an effort that includes: the results of that process or effort, what was actually processed, and how it performed.

Sounds a bit tricky, but let’s think about it through some examples. 

1. General Electric (GE)

On February 26, 2016, Chairman of the Board & Chief Executive Officer of GE wrote the following in a letter to shareholders:

“The Digital Twin is a software model of a physical asset or process that will make it possible to manage more precisely than we ever thought possible and deliver better outcomes. The Twin will create new business models and services for GE’s customers and our businesses.

On the GE90 engine, we have used Digital Twins to increase fleet availability while saving tens of millions of dollars in unnecessary service overhauls. In rail, we are using Digital Twin models of the Evolution Locomotive to enable our customers to minimize fuel consumption and emissions.”

General Electric is investing heavily in this digital twins as part of their massive digital transformation program. 

2. Global trade

We work with a global retailer that ships to thousands of points of sale, globally, based on forecasting and demand. Most of the shipping is carried out through air cargo by a global network of carriers.

The actual performance and execution of the shipping is one process that takes place as each event occurs.

The planned performance is another process and an entirely different story. Planned performance does not always align with the actual performance. This can result in immense challenges to the retailers in many forms including:, disturbing the customer satisfaction, missing important seasonal sales hours ( e.g Xmas sales), decreasing the margins, not using the primary method of delivery and source to mention a few.

The digital twin can act as a defined optimal, virtual process for any existing physical process. The physical process feeds real-time data to the digital twin and instantly compares the performance per-sequence and as aggregate, however it is configured.

This data is available through an app or integrated to back-end solutions to all stakeholders in the process (logistics, warehousing, transportation, plants, carriers, etc..). Everyone has the data at hand, and any anomaly is reported and brought to the attention of the stakeholder immediately while there is still time to react, fix it and learn.

3. Supplier of an element to the consolidator / manufacturing company

The manufacturer has a vendor that provides an element to the product. The vendor has 10 plants in the region and manages the transportation logistics under contract with the manufacturer.

The manufacturer sends purchase orders (PO) for products to be delivered to their own plant where the consolidation happens. Currently they have no visibility into the process after the PO is sent.

The digital twin can virtually highlight the entire process. From the PO to the delivery to the consolidation plant, it gathers data on what actually occurs, but also the ideal flow of the product with all relevant sequences and stakeholders and values as needed (such as transportation cost).

Let’s assume the vendor cannot deliver from the primary plant, but instead needs to go to plan B. This will potentially lengthen the delivery time, and increase the transportation cost.. Such results consequently lead to lower margins for one or many parties in the flow. The digital twin is the repository of the truth to all stakeholders again, helping them further optimize their operation and increase customer value and experience.

A digital twin is not only an abstraction in bits. The digital twin is a very powerful tool that provides not only real-time data on specific processes, but also monitors and reports on deviations to help all stakeholders perform better, manage costs and increase profitability.

It is highly recommended to have digital twins on supply chain and global trade visibility agendas for shippers, forwarders, carriers, and so on

It is essential to ensure you’re using an agile and efficient data technology to carry out such tasks without massive upfront costs, keeping in mind that the configuration and maintaining the competitive advantage is an ongoing process. 

The new world meeting the old. Simple, quick and convenient.


Jaakko Elovaara

Chief Executive Officer (CEO), Youredi

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