The continued disruptions experienced today by even the most advanced manufacturers demonstrate the critical role supply chain resiliency plays in profitability. As supply chain leaders look for ways to minimize the impact of future disruptions and global crises on customer satisfaction and sales, the ever-growing process complexity has caused the supply chain to be a leadership priority.
According to a recent study by Capgemini, 80 percent of the organizations surveyed reported being “negatively impacted” by the continual COVID-19 crisis.1 Furthermore, two-thirds foresaw the need for a significant change to their supply chain strategy to compete in the new normal, with resiliency being the top priority.
The key to building in resiliency and, thus, the supply chain flexibility and agility needed to withstand future disruptions is investment in digital twins that support contingency planning.
Gartner predicts that by 2023, up to 95 percent of companies will have failed to implement resilient planning for their supply chains.2
Even though supply chain resiliency isn’t a new concept, the technology capabilities and how those capabilities need to interact aren’t fully understood. As the scope and scale of today’s supply chains heighten, there is a growing demand among business leaders to transform their processes to foresee better and correct quicker.
In a complex supply chain process, the digital twin is what makes resiliency possible. Gartner’s recent report, Supply Chain Brief: For Resilience, Think Like a Formula 1 Team, believes three specific layers are needed to attain the resiliency level required for current and future supply chains. According to Gartner, a future-proofed supply chain is where a digital twin connects design and strategy and execution layers. And embedded in each layer is the necessary technology to enable resilience.
Today’s supply chains are complex and often composed of many variables. How can a supply chain be resilient in the face of uncertainty with so many variables and unknowns?
According to Gartner, often, it is at the design (or configure) layer that resiliency is considered. Manufacturers will implement multisourcing, for example, in the supply chain design thinking this will create resiliency. Unfortunately, this mindset creates a stochastic physical supply chain—ridge and fragile, and unable to absorb and rebound when faced with unforeseen disruptions.
The agile design of a supply chain network can be a key means for improving supply chain resilience if you integrate in the digital twin model external and internal uncertainties. Agile supply chains can be configured and reconfigured rapidly in response to disruptions, uncertainties, and other changes in the supply chain environment. More than local or operational flexibility, agile design is a strategic-level attribute that improves resilience significantly in the longer term.
Cosmo Tech’s Simulation Digital Twin technology is itself a product of agile design. As a result, it offers a number of levers by which a supply chain manager can improve resilience. The supply chain models, for example, within the digital twin are entirely flexible. Add to this the capacity for configuring unlimited what-if scenarios and automatically identifying bottlenecks in supply chain networks and the supply chain designer has the tools that they need to build networks that are resilient. Finally, the sensitivity analysis and robustness optimizations that help network designers to identify the points in their networks that are most at risk of disruption, and to reinforce those points with strategically deployed resource
By using a digital twin, the supply chain’s design is continually refined to absorb uncertainty and give leadership the ability to optimize decisions to unforeseen events rapidly. Building in resilience in the design layer also means investing in both resistance to risk and recovery from uncertainty.
In an optimized supply chain management system, manufacturers gain a competitive advantage by running tests to simulate scenarios to maximize performance while being resilient to variable and unknown conditions.
The simulations and testing of predictable internal and external events using the digital twin provide leaders with the information needed to optimize their strategy for bringing the right balance among resilience, cost, and probability.
“With a Simulation Digital Twin, manufacturing managers can simulate and optimize the effects of different operational strategies, identifying robust, resilient strategic plans and the actions required to implement them effectively,” said Hughes de Bantel, co-founder and CEO of Cosmo Tech.
The supply chain strategy is further optimized by identifying the likely effects of potential uncertainties and their cascading impacts. With this information, what-if simulations of different reaction scenarios guide leaders to chart a course of action in line with organizational risk profiles.
The competitive advantage is by investing in the ability to absorb and recover from uncertainties. To do so requires a Simulation Digital Twin solution that provides risk-impact assessment, sensitivity analysis, and robustness optimization.
By bringing real-time data into the simulation, supply chain teams can understand the probable impact the event has on production and profitability. The continual flow of data and simulations to the pre-set thresholds (resiliency) predict to what level the supply chain can absorb the problem and the cost to performance.
A manufacturer’s competitive edge comes from testing its strategy in real-time against an unforeseeable event and adapting the design to minimize and cope with its impact.
The impact of unforeseen disruptions in complex supply chains is improved by addressing both resistance to risk and recovery from uncertainty. By proactively monitoring the supply chain, managers can see where possible disruptions may occur and compare these events to the designed-in and optimized strategy.
The modern-day supply chain requires a predetermined resiliency level to absorb and lessen the impact of foreseeable events and the growing uncertainties faced today by the vast majority of organizations.
If resiliency is only built at the design level (i.e., multisourcing), manufacturers will face a deterministic supply chain that cannot absorb and rebound from uncertainties. Only when all three layers—design, strategy, and execution—are working together can organizations confront and adapt to internal and external events. The secret is to use the supply chain digital twin to connect these three layers so that the entire process can be truly resilient in execution.
1. Capgemini: Fast forward – Rethinking supply chain resilience for a post-COVID-19 world
2. Gartner Report, Supply Chain Brief: For Resilience, Think Like a Formula 1 Team