Digital Twins: The Next Big Thing in Inventory Management

August 22, 2024 - 11 minutes read

Taking real-time inventory management to the next plateau.

©Milkos via Canva.com

The concept of virtual replicas mirroring every characteristic and reaction of real-world objects might sound like science fiction, but digital twins have already been with us for decades. During the Apollo 13 mission in 1970, NASA engineers used simulators on the ground to replicate conditions on the spacecraft, eventually helping the astronauts return home safely. Today, digital twins have become an essential element of aerospace engineering, construction, manufacturing, and healthcare, and we have only scratched the surface.     

Digital twins can replicate individual objects like buildings and planes in cyberspace, but they can also simulate interconnected manufacturing, inventory management, and logistics processes. With a boost from real-time data and cloud-based inventory management software, digital twins have the potential to play a key role in the future of inventory management.       

“Digital twins are becoming a business imperative, covering the entire lifecycle of an asset or process, and forming the foundation for connected products and services. Companies that fail to respond will be left behind.” – Thomas Kaiser

What is a digital twin?  

A digital twin is a virtual representation of an object or system designed to reflect physical reality.  Digital twins combine 3D modeling and real-time sensing to ensure the representations are as accurate and current as possible. Digital twins can be used to conduct simulations, analyze problems, and test enhancements efficiently, without disrupting the physical entity. Over the years, digital twins have evolved to include three distinct levels.

• Digital model: A representative model of a physical object is created but no data is exchanged between the digital and physical realms.

• Digital shadow: Data continuously flows from sensors and other data collection methods from the physical object to its digital counterpart.

• Digital twin: Data flows bidirectionally between the digital and physical worlds. Changes to digital objects are automatically implemented by their physical twins.

The accuracy and usefulness of digital twins is tied to the breadth and speed of available information. Cloud-computing, the internet of things (IoT), and artificial intelligence are expanding the use of digital twins to encompass more complex applications.

Digital twins in inventory management  

Digital twins of individual supply chain elements like parts, warehouses, and transportation networks can be linked together within an integrated virtual space known as a horizontal digital twin or process twin. Each element mirrors the location and physical condition of a supply chain asset, providing a living baseline and an ideal model for testing new systems and ideas.

Inventory management digital twins capture information from sources including IoT sensors, transportation databases, customer relationship management (CRM) data, mobile point of sale (POS) platforms, and inventory transactions within the warehouse. Unlike static digital simulations, digital twins allow you to see what is happening system-wide while studying new processes in parallel.

©ktasimarr via Canva.com

6 benefits of digital twins in inventory management

As the technology and real-time information sources improve, the benefits of digital twins are becoming more evident. Digital twins have the potential to improve both awareness and efficiency in ways that could only be imagined a decade ago.

1. Better decision-making

Inventory management software and predictive analytics have already improved decision-making dramatically by removing uncertainty and bias that were once unavoidable. Digital twins take these capabilities to the next level by consolidating data sources and allowing stakeholders to get a holistic view of the supply chain.  

Digital twins also make it easier to evaluate thousands of what-if scenarios so new approaches can be tested virtually before they are implemented. For example, a horizontal digital twin might let you simulate various distributed inventory management models in virtual settings to better understand their impact on delivery times and cost.  

2. Improved risk assessments

Digital twins become important risk management tools by modeling emergency scenarios like supply chain disruptions and natural disasters ahead of time to determine which preventive measures and responses provide the best outcomes. Inventory control digital twins also mitigate risks by:

• Automating compliance checks to ensure traceability

• Monitoring part quality and expiration dates

• Predicting supply chain interruptions, shortages, or overstock conditions

The remote sensing capabilities associated with large-scale digital twins also mitigate risks by detecting equipment issues, hazardous warehouse conditions, and transportation issues like traffic jams and breakdowns in real time.

3. Supply chain sustainability

Continuously modeling the most efficient routes and methods makes inventory management processes and the overall supply chain more sustainable. A complete, interactive model brings to light inefficient processes while providing a risk-free way to pilot methods that lessen environmental impact. Digital twins also make it easier to optimize the energy consumption of transportation systems, equipment, and facilities through real-time feedback and adjustments.

“Small actions can create big ripples. Each one of us has the power to make a difference in building a sustainable future.” – Xiuhtezcatl Martinez

4. Warehouse optimization       

Just like buildings, shipping docks, and manufacturing plants, warehouse operations can be modeled using digital twins, with all contents, equipment, racks, lighting, and even personnel painstakingly replicated in digital form. The warehouse digital twin simplifies warehouse management by interpreting real-time data streams from:

• IoT devices and sensors throughout the warehouse

• Mobile warehouse management apps

• Transportation and delivery services

Digital twins are especially useful tools for visualizing and experimenting with warehouse layouts so that space utilization, SKU velocity, and safety can be optimized. Warehouse contents and priorities change continuously, and dynamic digital twins ensure the layout always reflects the latest conditions.

5. Reducing bottlenecks

A supply chain bottleneck is any issue or problem that causes items to move more slowly than expected. For example, when customer orders suddenly spike but not enough personnel are available to process shipments, the shipping process becomes a bottleneck. Most bottlenecks are obvious, but others are masked by conditions or related processes that make them harder to pinpoint.

The predictive and analytical capabilities of digital twins help to identify bottlenecks before they can impact customer fulfillment times. Many large organizations already use RFID tags to track material movement and send data to inventory management platforms and digital twins for analysis, with flow disruptions quickly identified and mitigated.     

6. Better inventory control

Digital twins require real-time data from inventory management software to create accurate models, and these models then elevate inventory management by improving visibility and breaking down data silos between supply chain elements. Digital twins also improve inventory control by:

• Automating inventory tracking and replenishment

• Simulating what-if scenarios to optimize inventory levels

• Improving overall supply chain visibility among stakeholders

• Assessing the potential impact of demand changes or disruptions

As we continue to move from digital shadows to truly interactive inventory management digital twins, changes like reduced or rerouted transportation services will instantly transfer from the digital world to real world logistics and operations.

The future of digital twins

Digital twins are already mirroring complex space vehicles, buildings, and factories in infinite detail, but the age of digital twins for inventory management has only just begun. In the next decade, digital twins will be redefined by increased artificial intelligence and machine learning capabilities to boost accuracy and performance, with improved interoperability between various elements of the supply chain to increase adoption. These developments will ensure inventory management efficiency and visibility continue to reach new heights.  

Digital twins: Final thoughts

A complex, modern supply chain can encompass millions of square feet of floor space and span thousands of miles, while the digital twin representing it consumes almost no space at all. The expense required to test inventory and warehouse management improvements in the physical world is quickly becoming prohibitive, which ensures the demand for digital twins will increase as customer expectations  rise.   

With a suite of cloud-based software solutions that include inventory management, mobile point of sale (POS), warehouse management, and full featured CRM, Agiliron provides the forward-looking, integrated, and mobile-friendly tools needed to support digital twins and other upcoming inventory management advancements. Agiliron also integrates seamlessly with all leading E-commerce platforms so you can sell in more places while managing from one.        

Digital twins are slowly finding their way into the realm of inventory management. The real-time data provided by mobile inventory management software is an essential building block for these futuristic tools. Our solutions experts can help you optimize and future-proof your own inventory management and multi-channel commerce processes through a prudent selection of software tools and practices. Contact us today to find out more.

Tags: inventory management