Gartner: Full value of supply chain ‘digital twins’ goes unrecognized

Most supply chain executives are not fully utilizing digital twin technology in their strategies.

A Gartner survey of 380 supply chain leaders conducted in January 2023 found that while 60% are piloting or plan to implement a digital supply chain twin (DSCT), just 27% were also planning to incorporate a digital twin of a customer (DToC) as part of their digital strategy.

Digital twins are interactive, artificial intelligence (AI)-based virtual models that serve as digital replicas of real-life objects and/or environments. Gartner defines DToC as a dynamic virtual mirror representation of a customer that simulates and learns to emulate and anticipate behavior.

[Read more: Lowe’s tests ‘digital twin’ of two physical stores]

Accordfing to Gartner, DToC represents a nascent technology that can revolutionize demand forecasting accuracy, vastly improve customer experience and serve as a critical input to enhance the use of AI and machine learning (ML) tools.

While 52% of survey respondents viewed AI as an “important and disruptive” technology and 40% gave the same description for digital supply chain twins, only 27% specifically described DToC as an “important and disruptive” technology.

 When respondents planning to implement a DToC solution were asked to name their expected outcomes from the technology (more than one answer permitted), responses included:

• Improved demand forecast accuracy (53%).
• Improved supply chain agility and responsiveness (50%).
• Improved customer experience (47%).
• Improved risk mitigation (45%).
• Reduced total cost to serve (36%).
• Improved order fulfillment (23).
• Increased customer loyalty (18%).
• Increased percentage of successful product and service innovations (12%).
• Improved environmental sustainability (5%).

“Supply chain leaders understand the importance of the customer in their physical supply chains, but most have not yet translated this lesson to the digital realm,” said Beth Coppinger, senior director analyst in Gartner’s supply chain practice. “The opportunity for transformational benefits from a digital twin of the customer far exceeds the potential that most supply chain leaders see today. A digital supply chain twin that includes a digital twin of the customer can account for changing customer behaviors under a variety of conditions and support the growth plans of the organization.”