Shifting From Supply Chain to Value Chain With a Virtual Twin
By Ronald Thorburn
The pandemic made “supply chains,” or more specifically, “broken supply chains,” part of everyday conversation. Fortunately, this topic may mercifully go away. We see supply chain struggles easing as consumer manufacturers and their ecosystems (materials, suppliers, and logistics companies) begin using new software tools to anticipate and proactively avoid the pain. Companies embracing a more efficient value chain approach will benefit and so will their customers.
Even in normal times, companies must counteract forces that stymie the supply chain. Forces like complex regulations and ingredient changes — and shifting constraints such as labor shortages, rising material costs, and logistical disruptions — contribute, sometimes hitting simultaneously. Embracing a value chain approach, where each link in the supply chain is visible via a single business platform, helps companies minimize these disruptions by solving issues or lessening their impact.
Leading manufacturers must work to implement a value chain for their companies. Experiencing a complete view of their product on one platform — from R&D through delivery to retailers or consumers — becomes an “Aha! moment” for companies. Consider Amy’s Kitchen, a leading producer of natural, organic convenience and frozen foods. Their goals are to maximize resource utilization, improve decision making, and enhance productivity.
Amy’s Kitchen CEO Andy Berliner noted that his company “required a supply chain planning and optimization platform” that accommodated their intricate scheduling requirements, stemming from their approach to assemble and cook products simultaneously.
Vast efficiencies are possible with a value chain that uses virtual twins on a single platform. First, a quick definition: virtual twins are virtual models of a product, process, or even a logistics puzzle. Using a platform approach allows companies to connect and collaborate within their organization and with their partners and suppliers. Companies use a virtual twin to apply simulations and use current and historical data to predict future outcomes.
This means companies can anticipate and even avoid challenges before they become a problem. The platform approach allows companies to begin with a specific area or process that needs improvement and then extend the value to incorporate other areas or partners and suppliers.
There are many areas ripe for improvement across a value chain. Here are five:
Demand forecasting: Virtual twins enable what-if scenarios to stay two steps ahead of potential problems.
Materials supply: Track supply and delivery in real time; create transparency across formulation issues, batching and sequencing.
Production and labor planning: Use modeling (demand, staffing standards, and optimization) and analysis to support employees and optimize the value chain.
Inventory management: Track inventory with an open view of supply and scalability and with scenario planning and collaborative exploration of options.
Transportation logistics: Model delivery options and manage for cost, sustainability, and efficiency.
There are many value chain applications. For example, planners that receive feedback from a supplier about higher material costs can work with engineers to propose alternative designs for the next generation. Therefore, manufacturers can take advantage of capacity at other plants to avoid missing manufacturing targets because of real-time information.
Simply implementing digital technologies to update manual processes leaves so much potential value untapped. Taking it to the next level, a virtual twin can leverage both historical and real-time data as intelligence to drive business value. Using virtual twins to analyze the full product and manufacturing lifecycle (concept to delivery) on one unified platform removes silos and delays. A platform approach offers superior insight to make faster and better decisions than any disparate patchwork of systems.
Using virtual twins also improves control and synchronization across manufacturing planning and operations. Supply chain and manufacturing professionals use technology to get ahead of shortages, changing commodities prices, workforce fluctuations, transportation disruptions, and more.
Connecting internal functions and the links of the supply chain, an advanced platform supports virtual twin modeling, simulation, and analysis. Manufacturers with full visibility can respond dynamically to changes in the supply chain or customer demand and avoid bottlenecks to deliver on time.
Paperboard producer Metsä Board leveraged a platform approach to offer its clients 3D simulation services in its advanced packaging designs. This concurrent engineering approach means Metsä Board can reduce decision times and provide faster recommendations and solutions to its customers.
Will your company be next to implement a value chain approach?
With benefits extending from increased collaboration to enhanced safety, more consumer goods companies are investing in digital twins, including Unilever, Mars, Coca-Cola, Kraft Heinz, and Johnson & Johnson.