SCOMC

THE OPERATIONS CLUB

Presents

Op-ERA
• Volume 39 •
October 29, 2021

Network-Based Planning Will lead Supply

Chain Out Of Crisis

Digital Twins: A business’s Better half

Global Supply Chain’s Crisis Is Much Bigger

Than The Pandemic; The Transformation
They’re Undergoing Is The Cure
 Network-Based Planning Will lead Supply
Chain Out Of Crisis
Before COVID-19 become a household name,
the idea that a virus could cause such severe
harm to the global economy was the storyline
of Hollywood films. The public, including
business executives from across the globe,
never imagined the level of supply chain
disruption that we see today.
Now, as the world tries to pull itself out from
under Covid’s dark cloud, assess the damage
and move forward, it’s hard not to notice the
damage that the pandemic caused to the
supply chain. And to compound the crisis,
we’re beginning to experience rising inflation.
The broader implications of this state of affairs
are becoming increasingly apparent, and
possibly worse than expected. Today, supply
chain disruptions remain a significant problem.
A lack of visibility is at the core of the
dilemma. Bottlenecks are occurring in sectors
that aren’t equipped for the ebb and flow of
production created by the pandemic. Factories
are running on skeleton crews as orders and
deliveries for nearly every industry slow to a
crawl. With an end to supplemental
unemployment checks and other government
assistance, families are struggling to make ends
meet. No one considered just how far-
reaching the effects of a diminished supply
chain could be. Now we know.
Many companies are still betting on traditional
enterprise resource planning (ERP) software,
which provides the ability to interact only with
trading partners one level up and one level
down. That approach is incapable of providing
the rapid connectivity, end-to-end visibility
and responsiveness required across global
supply chains today. Standalone systems with
point-to-point connections and high latency
offer a limited view of problems, convey vital
information far too late, and make rapid
remedial action virtually impossible.
Source: Network Based Planning Will
Lead Supply chain out of crisis
2
 Digital Twins: A business’s Better half
Digital twins enable supply chain
professionals to monitor and analyze
business problems in a safe environment,
virtually testing solutions before applying
them in real life. Although digital twins
traditionally are discussed in relation to
physical manufacturing operations, they
also can be particularly effective when
applied to the more abstract concepts of
supply chain network planning, operations
and execution. Examples of these
opportunities include improving node-to-
node movements across a network, driving
policies that improve the customer
experience, and solving many problems
that present themselves during planning
and execution.
Digital twins and imposters
A digital twin is not a simulation; it’s more
of a sandbox extension of an
organization’s supply chain network. In
information technology (IT), a sandbox is
a secure environment in which IT
professionals can test out new features or
codes without affecting other programs.
This means the digital twin is part of the
whole playground of business toys, so to
speak.
Planning software vendors often try to
provide digital twin capabilities by using
simulation techniques or importing
operating data from the enterprise
resources planning (ERP) system using
some kind of rapid response. However,
this method falls far short in its ability to
generate high-value results. If a vendor
starts talking about the right level of
resolution based on differing forecast
horizons, that’s a red flag that the
foundation or platform cannot scale
properly to solve the problem. Some
vendors even talk about using
approximations for longer-term time
horizons, which are nothing but an average
— and thus will return average results.
A supply chain network platform as a
digital twin environment
 An end-to-end, real-time supply chain
network platform provides the ability to
test out new supply chain policies, network
resilience, and the feasibility of strategic or
tactical plans
 Activate alternate parts or suppliers
 Modify modes of transportation
 Add additional shifts at a plant.
In this sense, it is the platform itself that
enables the digital twin.
As mentioned, in general, the point of a
digital twin is to analyze business questions
— such as improving node-to-node
movement across the network or driving
policies that improve the customer
experience — in order to implement
strategies and tactics that deliver the
highest-quality product at the lowest
possible cost. A digital twin should solve
all the problems that present themselves
across the network, given all the variables
in play. This is a key consideration.
Source: Digital Twins: A business better half
3
Global Supply Chain’s Crisis Is Much Bigger
Than The Pandemic; The Transformation
They’re Undergoing Is The Cure
Headlines about the depth and staying power
of the current crisis in global supply chains
and logistics are hard to miss. The
overwhelming majority of their accompanying
stories are predicated on the notion that the
tumult has been driven largely by Covid-19.
Indeed, it has become received wisdom that
the pandemic was the progenitor of the
observed distortions in accessibility to, and
cost of, cargo containers; the astronomical rise
in shipping rates; the clogging of containers in
port yards; the shortage of wooden pallets; the
dearth of truck drivers; and the constraints on
warehousing capacity.
In fact, Covid-19, itself, has played a much
smaller role in giving rise to these
developments than most observers suggest or
even assert. These strains largely reflect pre-
existing fundamental adjustments in the
functioning of supply chains and logistics
infrastructure systems. Indeed, the cross-
country differentials in the speed and the
nature of these adjustments—for example, the
utilization of artificial intelligence (AI) and
digitalization in logistics operations in China
versus the U.S.—is a key source of the current
problems observed.
Such adjustments will need to be embraced, in
fact heavily invested in, if the world
economy—consumers, workers and firms—
wish to continue to move more toward a
system of “just-in-time” market transactions
and just-in-time “factory-to-end-user”
deliveries and away from the legacy “just-in-
case” regime. That would be the conventional
model that relies less on globalization and
more on producing locally as well as increasing
warehousing and in-company stock
management as ways to mitigate risks.
If we stay on the current course, at the
minimum, consumers should be willing pay far
higher prices for more rapidly produced and
delivered products and far lower prices for
those they receive at a slower pace.
Source: Global Supply Chain’s Crisis Is Much
Bigger Than The Pandemic; The
Transformation They’re Undergoing Is The Cure