The potential of virtual tools for supply chain management

With supply chains around the world scrambling to adapt to a new normal, organisations need to consider using cloud-based, virtual tools to keep everything running smoothly. ‘Virtual twin’ tools can provide a single source of truth and help with advanced decision making across a product build process. 

In this piece, we will explore how these cloud-based supply chain management and planning solutions, with the digital twin experience at their core, can provide a continuous digital connection that allows information to flow across the value chain.

These solutions will help manufacturers to effortlessly collaborate with other stakeholders to create more resilient, adaptive systems and tackle the supply chain challenges they’re likely to face in 2022 and beyond.

Supply chain challenges

How can I guarantee my suppliers are functioning? How can I liaise with my factories? How can I guarantee access to facilities, and procure essential materials and parts? These questions around supply chain security and resilience are at the forefront of the minds of manufacturers who are looking to deal with the disruption caused over the past 24 months.

Two years into the global pandemic, many will be wondering when supply chains will get back to ‘normal’ – but early indications suggest that 2022 won’t be that year. In fact, we’re likely to see new challenges arise beyond existing labour shortages and production stoppages.

For example, we’ll likely see the price of raw materials continue to increase and almost one in 10 manufacturers believe that the increases in the cost of energy could be a threat to their business, according to the latest quarterly Manufacturing Outlook survey from Make UK and business advisory firm BDO.

Extreme weather caused by global warming will play a significant role in causing these inflations, which will also sadly now be exacerbated by the invasion of Ukraine. The impact of this will be felt across all operations, from the shipment of microchips to agriculture goods.

But while supply chain challenges aren’t projected to disappear in 2022, I do believe this year will see significant developments in supply chain technology that will help to drive efficiencies and lower costs. By conducting a thorough assessment of core supply chain elements, manufacturers can ascertain which parts need to be addressed as a priority and invest in technology appropriately to mitigate the most pressing risks.

Data and technology for supply chain planning

To manage risk, manufacturers need to be able to avoid catastrophes, lower costs and move fast on new opportunities. To do this, they need to have insights from valuable data sources to help inform these decisions – which will help them to make choices around the inventory and delivery of goods, customer and partner notifications, or storage solutions.

This means having a supply chain planning software solution in place which provides manufacturers with the control and insight needed to transform supply chain planning from a cost centre to a revenue generator. By integrating planning decisions into a single system, with a direct link to reality through an executional feedback loop, manufacturers can bring together all facets of their supply chain – allowing them to plan for all scenarios and ensure they’re tracking well against clearly defined Key Performance Indicators (KPIs).

The system should include sales and operations planning, allowing manufacturers full visibility into factors affecting marketing, finance, and operations to bridge the gap between sales and operations – helping to improve accuracy when planning demand. This should be tightly integrated with lower, less visible planning levels such as scheduling, routing, and the Master Production Schedule (MPS) to deliver true value.

Secondly, it should allow for integration with adjacent business processes such as accurate production planning – with the ability to manage obstacles to profitability such as high inventory levels, poor delivery performance, low yield, and excessive waste. From there, it needs to be able to manage batching and sequencing of the manufacturer’s execution schedule to ensure that the plan is optimal at all times, and that service levels are met at minimum costs.

Finally, it should support accurate logistics and workforce planning, helping to increase operational efficiency, improve resource utilisation and reduce costs – whilst ensuring productivity and employee satisfaction remains high. All of this should be carried out while respecting business rules, requirements, and constraints.

This doesn’t involve extending an existing Enterprise Resource Planning (ERP) system – it instead means complementing it with a supply chain planning and optimisation (SCP&O) solution that enables a manufacturer’s planners to plan for profit.

Manufacturers should seek a solution that enables them to achieve their business goals on their terms, rather than one that requires them to sacrifice their unique business model to accommodate the software. In our experience, it’s often the seemingly trivial things that break a plan – and a manufacturing plan that doesn’t address a manufacturing constraint cannot be used.

Accurate planning, using optimal technology solutions, will provide manufacturers with the control they need to meet delivery dates and achieve their business goals.

Harness the power of the digital twin

Additionally, the supply chain virtual twin, where data is communicated via a scientifically accurate 3D model, can operate as an extension of the digital twin concept used in manufacturing environments and apply it to the supply chain specifically.

This technology allows organisations to create a virtual version of the entire supply chain, from procurement and planning to tracking and distribution, enabling a business to simulate and test the performance of products and processes before doing so in the real-world. plan, optimise and evaluate multiple scenarios before executing a decision.

It can also study the environmental impact of the manufacturing process, using AI to assess ethical sourcing of materials as well as the carbon footprint of supply chains. This will help manufacturers to deliver the transformation required from the industry to improve sustainability and achieve Net Zero targets.

In this era of extreme disruption, where demand for resources and assets across multiple industries has dramatically shifted, supply chain virtual twins can help businesses identify shortfalls or surges ahead of time and adjust their activity to better accommodate these changes.

For example, for manufacturers making vital PPE equipment, they can be used to not only optimise virtual product design but enable them to model and simulate the impact of spikes in demand on their operations, improve supply chain resilience and predict potential logistical hurdles.

We term this innovation ‘virtualisation’ – a process which combines 3D modelling and simulation to create virtual twins that not only replicate a machine, process or product in virtual space, as digital twins do, but also the environment in which those machines, processes or products must operate. This added value provides the visibility, insight, and capability to run ‘what if’ scenarios that enable agile, 21st century manufacturing.

A real-life example of how this is being put into practice is France-based tractor manufacturer CLAAS Tractor, which has shifted its business to a platform model. The approach connects the dots so that people, processes, and information, previously locked in application silos, benefit from a single platform that spans every function, from the beginning to the end of the product lifecycle. This allows the manufacturer to work from a single trusted data source and manage all design and production processes in virtual environments, enabling fast and safe virtual experimentation to reveal the best possible solutions.

When designing a new tractor in the past, for example, data silos forced the company to build a physical prototype tractor in a testing area and assemble it with instructions printed on paper documents, just to identify any design and system-integration issues. Now, design engineers can not only create a 3D virtual twin of the tractor, but also use the models for virtual assembly tests.

This confirms the feasibility of the manufacturing process and ensures every component and mechanical system will function correctly – without physically manufacturing a single part. As a result, CLAAS Tractor can quickly identify and rectify any design errors and optimise its tooling and assembly lines, all before manufacturing begins. The 3D models also serve as highly intuitive assembly guides on the factory floor – providing benefits across the entire development cycle of the product.

Building awareness of technology

Despite these benefits of virtual twins, the awareness and effective implementation of the technology continues to lag. Our recent survey found that only 14% of engineering respondents were currently using virtual twins, and 65% reported that they were unprepared to launch them.

It’s clear that there is a lack of understanding around the range of benefits that digital twins can provide, and a scepticism about their ability to provide them, leading decision-makers to disregard their implementation entirely. This varies across industries – with some sectors more willing to embrace new technologies than others.

However, it’s only with these tools that businesses can get a firmer grasp of potential supply chain risks and how they can manage them. By combining real-time operational insights with cloud-based collaboration across the value chain, virtual twins can help identify and prepare for logistical obstacles, reduce waste, and develop flexibility.

When it comes to successfully navigating a competitive and challenging post-pandemic landscape, those business who can adapt quickly and transform their supply chains and facilities to meet the new normal will thrive. Virtual twin tools, as part of a connected ecosystem of accurate supply chain management, can help suppliers and customers achieve more transparency when working together – facilitating better, more accurate and more effective work for manufacturers.

About the authors

Camilo Gaviria, VP, Technical Sales, Dassault Systèmes

Camilo Gaviria is the Vice President of Business Excellence at DELMIA. He oversees the DELMIA Center of Excellence within Dassault Systèmes. Prior to this, He was the Senior Business Director for Metals & Manufacturing, and the Director of Quintiq Latin America. With a strong focus on the usage of advanced technologies such as Machine Learning, Simulation and Mathematical optimisation to address supply chain challenges and deliver business value Camilo has been in the frontline of innovation in the area of supply chain digital transformation. Camilo holds a bachelor’s degree in economics and a master’s degree in econometrics and operations research. He is also a Lean Six Sigma Black Belt practitioner.

Jeroen Hanekamp, VP EuroNorth, Dassault Systèmes

Jeroen Hanekamp (LLM, MSc) is Vice President DELMIA at Dassault Systèmes. Previously, he was the General Manager/Brand CEO of DELMIA Quintiq, and responsible for integrating the Quintiq organization into Dassault Systèmes (completed 1 yr ahead of schedule). Earlier, he held the roles of Chief Commercial Operations Officer and General Counsel. Hanekamp earned degrees in Strategic Organization Management (BSc) and Commercial Law (LLB), a master’s degree in Business Administration (judicium cum laude), and a master’s degree in Corporate Law (LLM).
Hanekamp was founder of Ficsus.nl (2009) and has been co-responsible for the business start-up of the First Dutch Innovations company TNO Triskelion (2011). Ficsus.nl was sold in 2019 to e-Boekhouden.nl.