Before the onset of the current pandemic, companies are already increasingly interested in the idea of a self-healing supply chain. Steve Banker of ARC Advisory Group stated in a recent Forbes article, “The term “self-healing supply chain” is beginning to be used. This term reflects the idea that parameters should automatically update. It also includes the idea that the best plan is useless if unexpected events occur. It is important not just to create an optimum plan, but to be able to replan using a robust control tower as needed. A self-healing supply chain is impossible without a robust supply chain digital twin.”
Business continuity refers to maintaining, adjusting or rapidly resuming business functions in the event of a major disruption. In a recent report titled “Beyond COVID 19: supply chain resilience holds key to recovery” – Baker McKenzie and Oxford Economics cited that the pandemic has resulted in an unprecedented global supply chain crisis. Forecasting global recovery as early as H1 2021 in the hardest-hit manufacturing sectors, the firm alluded to digitalization of supply chains as strategic for businesses to achieve resilience and sustainability.
On this road to recovery, it is essential that businesses continue to stay ahead of the curve. In the recent months, I had conversed with supply chain professionals in the process manufacturing industries to learn how their organizations were adapting and achieving business continuity by leveraging digital twins.
Let me share with you what I have observed and learned in different phases since the onset of the pandemic.
Phase I: Protect the people and the business
Keep plant operations personnel safe
The priority at the onset of the pandemic was to keep employees safe. To offer support to those returning to work, some companies have incorporated social distancing constraints into their production planning and scheduling digital twins in order to help keep their manufacturing operations personnel safe. While generating optimal manufacturing plans and schedules, the digital twin technology ensures that operations personnel are working in a section of the production facility with adequate physical distancing to keep people safe while simultaneously considering complex manufacturing equipment constraints related to using alternating lines/equipment on various days of the week.
Gain insights to financial and operational implications of business scenarios
The other priority was to protect the financial health of the business. Many organizations mobilized a team responsible for evaluating the financial and operational implications of numerous short to mid-term business scenarios. I learned that a company had been using their end-to-end supply chain planning optimization digital twin to run and analyze a significant number of scenarios every day immediately at the onset of the pandemic. Their digital twin allows them to easily change time period specific data assumptions related to supply and demand conditions spanning their global supply chain. Since their digital twin makes use of holistic mathematical optimization methods, they were able to rapidly develop a portfolio of supply chain “game plans” on how to best respond to circumstances as the future unfolds. My big takeaway is that supply/demand scenarios analysis has rocketed in importance in the process manufacturing industries since the beginning of the pandemic.
Phase II: Adjust processes to achieve continuity as supply/demand conditions fluctuate
Keep work-from-home and on-site teams aligned constantly
Maintaining business continuity and safe reliable supply chain and manufacturing operations became much more challenging when some of the people who usually work at the manufacturing sites were directed to work from home. This included schedulers, material planners, engineers, supply chain planners, shipping coordinators to name but a few. A manufacturer in Saudi Arabia is utilizing a Sales and Operations Execution (S&OE) platform to keep all their team members aligned and working towards common goals. Their S&OE solution provides them with detailed forward-looking visibility 120 days out into the future. Most impressive is that it is connected to a schedule optimization high-fidelity digital twin. This enables the producer to have visibility to actual demands for finished goods and also optimize their daily optimal run rates and campaign transitions of each feed to maximize profitability. Most importantly, their supply chain and operations teams are able to identify problems ahead of time and work together to resolve them.
Quickly adjust to keep demands, capacity, supply and operations execution in synchronization
I learned of a company that produces some materials that has been in higher demand in past months that leverages a scheduling optimization digital twin which helps them to align demands, capacity, supply and operations execution team members daily. The digital twin allows them to adjust to changing conditions and helps them improve cash flow, ensure on-time shipping performance and flex production output.
Phase III: Prepare for the recovery
Monitor demand for signs of recovery and hopefully rebound
Since the beginning of the pandemic, most companies that I have spoken to are reporting that the accuracy of their demand forecasts are considerably less accurate than before. Forecasting digital twins were never designed to handle the profound and fundamental changes that have occurred in consumer behavior and upstream business demand patterns as a result of the pandemic. There is a good article that was published recently in the MIT Technology Review on this topic entitled “Our Weird Behavior During the Pandemic is Messing with AI Models”. In preparing for a recovery, some companies are using digital twins to help them closely monitor changes in demand trends week-over-week as part of their weekly Sales and Operations Execution (S&OE) meetings.
Redesigning supply chain and manufacturing to be more resilient
The pandemic has exposed the vulnerabilities in today’s global supply chains that were designed for efficiency. There is an opportunity for manufacturers to (re)design their businesses to make them more resilient. This will involve analyzing and building redundancies for critical product lines and associated production and supply capabilities including reviewing existing suppliers and locations; substitution options; as well as existing manufacturing locations and the current flexibility of manufacturing resources This is an area where an end-to-end supply chain optimization digital twin can be leveraged to explore and analyze various supply chain and manufacturing (re)design alternatives to build more resilient businesses.
Strengthen your supply chain with self-healing capabilities
Digital supply chain planning and scheduling twins are often used to make customer order promises and commitments. There are significant risks to customer service levels and on-time in-full (OTIF) KPIs if digital twins get out of synch with reality. Self-healing supply chain capabilities ensure that supply chain digital twins remain as accurate as possible, reflecting demonstrated plant, equipment and process performance. This is achieved by automatic detection of data inputs that may no longer be valid amongst the tens to hundreds of thousands of manufacturing data inputs (e.g. processing times, yields, setup times, cleanout times, transition times, etc.) used supply chain digital twins. Self-healing supply chain capabilities help identify these proverbial needles in the haystack with minimal time and talent input. Self-healing supply chain capabilities can also combine both predictive and prescriptive technology. For example, low-touch machine learning (ML) is used to predict with high degrees of certainty manufacturing equipment/asset failures weeks in advance. Prescriptive mathematical optimization (MO) methods in supply chain planning and scheduling digital twins make use of these advance equipment failure warnings to answer the question “When should we take planned downtime (in advance of the predicted failure event) to ensure minimal disruptions, costs and impact to customer order commitments and relationships?”
Digital twins are proving to be critical tools for many manufacturers in the process industries during these uncertain times. Digital twins provide insight so organizations can adapt to this new operating environment and keep supply chain and manufacturing operations running as nimbly and efficiently as possible. Building digital capabilities now will help organizations prepare for the ongoing uncertainty that is likely to continue into 2021 and beyond.