The logistics landscape is driven by rapid technological change. Logistics players find themselves on a constant quest to optimize their operations. Digital twins – which, in short, represent a virtual replica of a physical object, process, or system – may be a game changer in this. In logistics operations, digital twins are commonly deployed to synchronize the physical with the virtual world and thus enable remote management of a wide range of logistics operations including warehousing, sorting centers, or transportation networks. As an example, track and trace can be regarded as the most rudimentary digital twin.
Where digital twins can make a difference
At first glance, the spatially distributed nature of logistics operations probably seems like one of the most intuitive areas for deployment of digital twins. Yet, digital twins are currently not universally found in logistics operations, despite the availability of required underlying technologies, such as different kinds of sensors, IoT infrastructure, analytics capabilities, and 3D visualizations to model physical settings in great detail. Therefore, the question arises where in logistics the use of digital twins is likely to unlock the greatest business value.
Let’s start with considering the concept of digital twins in more depth. A digital twin is called twin due to the aspiration to clone the original as perfectly as possible. Not a single, but a blend of multiple technologies becomes necessary, depending on the digital twin’s purpose. In its most basic version, a digital twin is descriptive. It senses and shows: it collects near real-time data through sensors and visualizes the data in a 3D representation, making it intuitively usable. In a more advanced form the digital twin thinks: it allows for simulation of scenarios, analysis and prediction. At the end of this spectrum the most advanced digital twin can be found, which autonomously acts: it takes business decisions based on the insights it generates. As an example, it may recognize irregularities in a process, evaluate options for remedy and remediate the real life process accordingly.
3 areas for adoption of digital twins
The relatively low profit margin in logistics (compared to other industries) limits room for experimentation with new technologies that don’t promise immediate net financial return. In light of this, the following three areas appear promising for early adoption:
Digital twins are likely to emerge in large-scale transportation networks where they will represent standardized transportation aids, such as unit load devices, platforms, cages, or containers. This can improve the utilization of transportation aids in a ‘steady state’ scenario as well as enable the rapid redeployment of such aids in case of a major network disruption such as the failure of a handling hub.
- Digital twins may likely emerge in logistics operations where frequent management interventions are crucial. For example, live reconfiguration of picking routes in a warehouse based on online orders can reduce picking costs, especially in complex multi-user warehouses with many, frequently changing stock-keeping units. In contrast, real-time, precise location information of a container on an ocean vessel travelling from Asia to Europe cannot be ‘managed’ while on board.
- Digital twins may become more common at the interface between logistics operations and manufacturing processes. Already today, logistics operations are often deeply integrated with production processes. Deploying digital twins in this context could create additional efficiencies primarily within the production process rather than the logistics process in isolation. For example, improving the just-in-sequence inbound management at automotive production facilities could further reduce capital costs.
Besides these areas for early adoption, digital twins are likely to create greater value if their purpose goes beyond basic track and trace functionality. Digital twins could monitor whether goods are handled according to their specifications (e.g. not being dropped) or whether certain environmental conditions (e.g. temperature) were satisfied at all times. This is for example relevant for high-value pharmaceuticals that get compromised if exposed to high temperature.
Summary
All in all, the concept of digital twins holds great promise to enhance logistics operations, although logistics providers and their customers are likely to try out this new concept only in selected areas that promise an instant financial return. This will change over time as costs of digital technologies decrease. This will be an exciting journey and I personally look forward to the innovations that digital twins will likely spur in the years to come.
About the author
In her role as Associate Partner and Head of Practice Group IT & Digitalization at DHL Consulting, the management consultancy of Deutsche Post DHL Group, Gesa oversees projects that cover the whole range of IT & digitalization at Deutsche Post DHL, from solving organizational challenges in the IT function to data strategy and technology implementations.
