Digital twin might sound like a cutting-edge European DJ outfit. That would be fun. But a digital twin (DT) in the business world is simply an identical representation (digital) of a system or physical object. The concept emerged from NASA with mock-ups of space capsules. These were used to mirror and ultimately diagnose problems in orbit. From there, digital simulations took hold and by 2017 the technological research and consulting firm, Gartner, predicted digital twins would only continue to grow based on an estimated 21 billion connected sensors and endpoints set to emerge by 2020.

These 21 billion connected sensors arrived and continue multiplying. Nearly every industry on the planet possesses the capacity to create DTs and thus “experiment” with hypothetical scenarios to model how distinct variables would affect their business operations. For supply chains, DTs are made up of thousands of inventory, warehouses, assets, and logistics positions. Analysts can then play with the systems, products, and services to assess the impact of decisions without the tangible, real-world risk. 

E.ON is a European electric utility company based in Germany. The firm is using a digital twin of its 110kV power transformers to monitor its health and performance. Also known as “DT tech,” energy and utilities providers are collaborating with a range of actors along their supply chain (vendors and equipment providers) to supply digital continuity and attempt to insure against unexpected failures. 

Another interesting benefit of DTs for supply chains is their sheer presence bakes innovation into the chain. Many supply chains are simply disparate systems operating along the chain. Humans are tasked with bringing cohesion to the process. With DTs, a chain can be deconstructed and optimized into an intelligent, connected system. The actors along the chain may tinker at will and make modifications until the DT is fully optimized. This is a rare treat in the business world. 

One of the barriers standing in the way of a more expansive DT rollout is human bureaucracy. Believe it or not, governance and lack of managerial support are two massive obstacles. The third is a lack of human capital with the tech skills to create and manage DTs. Many firms have turned to upskilling existing employees in areas such as cybersecurity and blockchain, hybrid cloud systems, data capture, and embedded software. The demand is growing and those younger graduates with said skills are being paid handsomely for their knowledge and skills.