Usage of digital twins in supply chain risk management

Abstract

With industrial internet revolutionizing many ways we use data, companies and public sector alike are seeking ways to adapt this. One of the adaptions is called a Digital Twin (DT). Digital Twin is a digital replica of any physical object from which data may be collected, and which processes and exchanges data with its physical counterpart, allowing for automatic modifications in the physical part based on the data collected by the twin. The usage of DTs varies depending on the industry and the target, with numerous possibilities in the usage.

One of the ways of using DTs in business is adapting its usage to supply chains. When observing the supply chains (SC), managers often want to make sure the risks in the chain are as small as possible. The Digital Twin of a supply chain has a potential to answer that need. In this thesis, the current literature on the usage of DTs in supply chain’s risk management will be reviewed. The goal for the thesis is to answer whether the usage of digital supply chain twin can be feasible for companies seeking to optimize their SC risk management and to have a more efficient deployment of back-up scenarios in case of SC disruption. For the thesis, both conceptual literature and case studies focusing on specific fields of SC are reviewed.

The literature reviewed in the thesis indicates that adapting digital supply chain twins to company’s supply chain risk management function is a feasible solution for the company, as it makes the supply chain more visible, resilient, and provides effective recovery policies in case of supply chain disruption. It is also notable, that while the amount of literature on DTs in general is ample, its SC implementation-orientated research is still very limited. Furthermore, the case studies and conceptual literature reviewed for the thesis did not address the cost of digital supply chain twin, thus the discussion on its economical profitability as an investment is also quite narrow, and more research is needed.