DHL Reports New Technology That Will Significantly Change Supply Chains

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By Kim Biggar

DHL Group recently launched a report, Digital Twins in Logistics, which looks at the potential impacts on the logistics industry of “digital twins.”

The report authors, Matthias Heutger, Senior Vice President and Global Head of Innovation & Commercial Development at DHL, and Markus Kueckelhaus, Vice President, Innovation & Trend Research for the company, set out to answer three questions:

  • What is a digital twin and what does it mean for my organization?
  • What best-practice examples from other industries can be applied to logistics?
  • How will my supply chain change because of digital twins?

A digital twin is essentially an advanced mathematical model of a particular physical object, created to simulate “both the physical state and behaviour” of that object. As an object ages and is affected by wear or is modified with replacement parts, for example, sensors on the object record its changes. The changes are transmitted to the model, which then updates itself, enabling an exact digital copy to remain over time. This copy provides value by allowing visualization, analysis, prediction and optimization.

The key enabling technologies of digital twins are the internet of things, cloud computing, APIs and open standards, artificial intelligence, and digital reality technologies.

According to Heutger and Kueckelhaus, “widespread adoption [of digital twins] is likely in the near future.” They cite industry researcher expectations of annual growth of the digital twins market of 38 percent over the next few years.

As valuable as digital twins can be, however, there are obstacles to adopting them. They require “considerable investment,” good data, new skills and employee motivation, and present IP protection and cyber security challenges.

While many current applications involve “the modeling of products and their manufacturing processes,” digital twins are increasingly being used to model “complete production lines, factories, and facilities.” They are “now used throughout the full product lifecycle, with a product’s twin emerging during the development process and evolving to support different business needs as a product progresses through design, manufacturing, launch, distribution, operation, servicing, and decommissioning.”

Digital twin applications in logistics are still limited, although the key enabling technologies are in use in logistics functions. “Bringing these and other technologies together into a full digital twin implementation is a complex and challenging endeavour, however.” The authors suggest that, “The cost-sensitive nature of many logistics activities may explain why few companies have so far been willing to make the necessary investments.”

Potential uses discussed in the report for digital twins in logistics, especially as “costs fall and confidence in technology grows,” are:

  1. Packaging and container digital twins: “The application of material digital twins could aid the development of stronger, lighter, more environmentally friendly packaging materials.” It could also help in the management of container fleets, “allowing the automated identification of potential problems” in recycled containers.
  2. Digital twins of shipments: Incorporating the contents of a package or container into its digital twin “could help companies improve efficiency, for example by automating packaging selection and container packing strategies to optimize utilization and product protection.”
  3. Digital twins of warehouses and distribution centres: Digital twins could be used in facility design, and in optimizing space utilization, the performance of automation systems and the productivity of warehouse personnel.
  4. Digital twins of logistics infrastructure: At major logistics hubs, such as cargo airports and container ports, digital twins could improve efficiency by improving the exchange of information among stakeholders.
  5. Digital twins of global logistics networks: “In logistics, the ultimate digital twin would be a model of an entire network, including not just logistics assets but also oceans, railway lines, highways, streets, and customer homes and workplaces. The idea of such an all-encompassing twin … is largely an aspiration for the logistics industry for now.”

Implications of Implementing Digital Twins

Realizing the benefits of digital twins will only be possible through significant change to supply chains, say the report’s authors.

  • Inbound to manufacturing: Companies will have to deal with increased complexity and work more closely than ever with their suppliers.
  • In-plant logistics: Companies will have to work with shorter lead times and, again, more complexity, as well as precise data management requirements.
  • Aftermarket logistics: “To build and operate high-performing aftermarket logistics and support capabilities, companies will need to understand exactly where their customers are, which products they are using and how they operate those products.”
  • Orchestrating the supply chain: Using digital twins “will allow companies to take a more holistic, end-to-end approach to the management of [their] products.” Full supply chain visibility will gain importance, as will supply chain configurations that support high service levels.

At this point in time, Heutger and Kueckelhaus suggest, because of the challenges related to adopting digital twins, logistics professionals might want to be planning in the near term “not how to leverage digital twins for direct orchestration of supply chain operations, assets, and facilities but rather how to evolve the supply chain” to be ready for adoption. That translates to exploring challenges and opportunities, and readying people and processes for change.

Read Digital Twins in Logistics.