Digital Twins in Logistics: A Glimpse Into the Future

Logistics is evolving as digital transformation takes hold. Digital Twins in logistics offer the industry new gains in efficiency and sustainability, promising a bright future.
30.06.23 Charles Griffiths
digital transformation

Digital twins are virtual replicas of physical products, systems, or processes that simulate physical counterparts in real-time.

Industry 4.0 promises to introduce disruptive technology and greater automation into industries like manufacturing and logistics. Digital twins can bridge the gap between physical and virtual worlds, unlocking the potential for predictive maintenance, improved operational efficiency, and minimising downtime and waste.

The global market was already valued at $11.12 billion in 2022. A projected compound annual growth rate (CAGR) of 37.5% between 2023-2030 highlights the important role digital twins will play in the supply chains of the near future.

Technology offers logistics companies new ways to innovate and streamline operations, and as such they should be aware of the latest developments. As a new era for logistics begins in Industry 4.0, understanding and harnessing the power of digital twins could prove instrumental in staying ahead of the curve.

Understanding Digital Twins

Digital twins are the virtual mirrors of physical entities. For instance, when trialling changes to a supply chain, a digital twin can be created to test in a virtual environment – without disrupting the existing operations.

Digital twins combine the Internet of Things (IoT) with big data, AI and machine learning to build virtual environments. Sensors attached to the physical entity gather real-time and historical data, which is then fed into the digital twin.

AI and machine learning then create real-world conditions, behaviours, and interactions within the digital realm. With this digital twin, teams can create hyper-accurate predictive models, test different scenarios, and foresee potential problems before they occur in the real world.

In manufacturing, digital twin technology is used to create accurate models of production lines, allowing operators to identify bottlenecks, improve efficiency, and reduce downtime. They can even simulate how new components will interact with existing systems before physical implementation.

In logistics, digital twins can simulate complete supply chains, providing valuable insights into areas like warehouse operations, inventory management, and transportation efficiency. Identifying potential disruptions facilitates the development of more robust, resilient, and efficient logistics networks.

The technology could drive revenue increases of up to 10% and improve product quality by up to 25%.

The Current Digital Twins Landscape

Digital twins are becoming more effective as the technology that powers their creation improves. AI models and machine learning algorithms are more powerful than ever. Cloud computing provides the necessary resources on demand, reducing maintenance and energy costs for expensive infrastructure.

It’s clear that technology like digital twins is growing in popularity. Digital transformation plans are in place for two-thirds of logistics organisations. Currently, the biggest barrier is a shortage of people and skills who can use the technology.

Organisations need to install IoT-enabled devices for digital twins, requiring robust networks and the machine learning algorithms and computing resources needed to analyse the data.

Digital twins technology is not yet widespread. However, its potential is being realised by logistics organisations across the world.

Maersk, one of the largest logistics organisations in the world, has set the ambitious goal of creating a digital twin of its entire integrated ecosystem.

While Maersk is a few years away from realising that goal, it has started to create digital twins of verticals within the organisational structure, such as vessels, warehouses and terminals.

For its terminals, teams are implementing a digital twin simulation product that uses vessel schedules, container volume, sensors and terminal data to determine what resources are needed and where depending on the ship and its cargo.

In an industry where unexpected events or delays could have catastrophic knock-on effects down the supply chain, digital twins help with predictability. Simulations allow organisations to make data-driven decisions to ensure the smooth running of supply chains.

The Future of Logistics with Digital Twins

According to DHL, widespread adoption of digital twins technology is likely in the next 5-10 years.

Digital twins could pave the way for entirely autonomous logistics systems, orchestrating everything from inventory restocking and warehousing to transportation and delivery. These systems could dynamically adapt to changing conditions, optimising routes and resources in real time.

Digital twins could help logistics operators create robust and resilient supply chains capable of weathering even the most unforeseen events by predicting disruptions and bottlenecks. They could also enable precise forecasting, reducing overproduction and waste and minimising the environmental footprint of logistics operations.

Logistics providers could significantly reduce operational expenses by optimising resource allocation and streamlining processes. Enhanced predictability and responsiveness would lead to improved service levels and customer satisfaction.

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Digital Twins in SMEs

While digital twins aren’t widespread yet, their potential is huge for both SMEs and larger businesses. As the technology develops and becomes cheaper, greater adoption amongst SMEs in particular is likely.

Accessibility is already improving. Amazon Web Services offers TwinMaker, an IoT-powered solution that helps businesses get deep insights into their operations. Microsoft Azure also offers digital twins on its cloud platform with Azure Digital Twins.

The Barriers to a Digital Future

The benefits of digital twins in logistics are clear. They enhance operational efficiency, provide predictive capabilities and facilitate proactive decision-making. All this helps organisations save money. The benefits ripple across the entire supply chain, from suppliers to end customers, creating a seamless, efficient, and agile logistics network.

However, all emerging technologies have barriers to adoption. There is a significant upfront cost of implementing IoT devices, robust network capabilities, the back-office IT infrastructure and upskilling staff.

Logistics networks are also complicated – one study found this as the top major barrier to digital transformation. Ironically, implementing digital twin technology would simplify networks by helping teams identify optimal routes and find efficiencies along the supply chain.

Despite these challenges, digital twins’ immense potential and benefits drive ever-greater adoption in logistics, turning the industry’s future vision into today’s reality.

Digital Twins Have the Potential to Transform the Logistics Sector

Logistics is entering a new era with Industry 4.0. Digital twins are just one technology that may be key to success in the future as digital transformation takes hold.

The future will witness these digital ecosystems mirroring, predicting, and optimising the physical world in ways we’re only just beginning to imagine. Access to more data and the ability to find greater efficiencies will help shape a future of resilient and sustainable logistics.

Would you like to understand more about how IT and Digital Twins can support your business?

Book a call with the AAG IT team today and we will be happy to discuss this, and any other questions you have, in further detail.

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