How COVID-19 Accelerated the Shift Toward Transparent, Data-Driven Supply Chains

The COVID‑19 pandemic has had a profound and lasting impact on global society and economies, reshaping supply chains in ways that many organizations will never forget.

In early 2020, shortages, shipping delays and workforce reductions triggered by social distancing forced supply‑chain leaders to resolve disruptions without inflating costs—avoiding inventory build‑ups or new regional hubs.

“With COVID, there were fewer people that were able to staff these supply chain processes – fewer people were standing on the inventory floor to see what products were there, fewer people were part of the warehouse management process, fewer folks in the yard to unload – folks couldn’t be there. Lots of weaknesses in the ‘traditional supply chain’ came out.”

Infosys Consulting reports that 57% of supply chains faced a 25% or greater reduction in operations.

Consequently, many supply‑chain managers have turned to a digital toolkit to gain clearer insight.

The two principal tools are supply‑chain control‑tower technology—a central hub that captures diverse processes and uses AI‑driven recommendations—and digital‑twin modeling, which replicates assets and processes to increase productivity, reduce costs and reveal gaps in today’s erratic supply, demand and logistics.

Register for IoT World 2021 here

Challenges to the Traditional Supply Chain

Experts say digitization is the key to addressing supply‑chain dysfunction.

“The traditional linear supply chain model is transforming into digital supply networks (DSNs), where functional silos are broken down and organizations become connected to their complete supply network to enable end‑to‑end visibility, collaboration, agility and optimization,” wrote Jim Kilpatrick of Deloitte.

A July report by McKinsey & Co., Resetting Supply Chains for the Next Normal, found that 93% of respondents to a survey of 60 senior supply‑chain executives planned to increase resilience—often through new sourcing strategies, a heightened focus on analytics and upskilling their workforces.

Moreover, 85% of respondents said they struggled with inefficient technologies, and 60% planned to implement advanced analytics to better understand their supply chains.

“Companies are going through a hard look at their operations and their supply chain,” said George Bailey, executive director and chief research officer at the Digital Supply Chain Institute (DSCI). “Companies are not going to win with higher costs in their operations – more inventory, more warehouses and so on. Automation and process change are even more important than ever,” he added.

Developing Data‑Driven Supply Chains

Understanding the dynamics of a supply chain—and accessing meaningful data—is a monumental task.

Managers need visibility into product availability, supplier inventory, logistics of sourcing materials, production timelines, equipment maintenance, and customer shipping.

Companies are therefore striving to become more data‑driven, whether that means counting inventory, tracking trucks, or sourcing an alternate supplier when one runs out.

Control‑tower technology offers a centralized console that aggregates data, uses machine learning to digest information, and provides actionable recommendations during unforeseen events. During Hurricane Katrina, for example, control‑tower tech helped reroute shipments to unaffected regions.

A McKinsey & Co. study found that 39% of Asian manufacturers have implemented a nerve‑center or control‑tower approach to boost end‑to‑end transparency.

Challenges to Integrating Supply‑Chain Data

Deploying a control tower requires substantial upfront effort.

Organizations with fragmented or low‑quality data must invest time to integrate legacy systems with newer, real‑time platforms. Data often needs to be translated and massaged before consolidation.

“Very old‑school systems—legacy ERP and inventory systems—overlayed with real‑time, insight‑oriented systems like fleet management and track‑and‑trace,” Pelino explained. “You’re bridging legacy systems with new connected IoT‑enabled systems. To provide that set of recommendations, you have to translate and integrate that data.”

Cultural shifts are also necessary. Many firms previously followed a “if it’s not broken, don’t fix it” mindset, but the pandemic exposed gaps in data insight that have made control‑tower technology, data integration and analytics mission‑critical.

Pairing Digital Twin Technology with Supply‑Chain Analytics

Digital twins—virtual replicas of real‑world assets and processes—enable companies to assess risks such as extreme weather, power outages and pandemics.

“Digital twins are helping [companies] do that what‑if analyses with a digital twin overlay to get very efficient, to get very granular on [risks],” Pelino said.

While still emerging, some organizations have already leveraged digital twins effectively.

Bridgestone Corp., a tire manufacturer, uses digital twins to model tire life, incorporating load, speed, road conditions and driving behavior.

Hans Dorfi, director of digital engineering, noted in a Deloitte report: “While analytics plays a major role, it only augments the digital twin. The digital twin captures the multidimensional performance envelope of tires and can also be applied to products in development where no data is yet available.”

A Juniper Research study projects the global digital‑twin market to grow 17% in 2021, reaching $12.7 billion.

Replicating physical assets and processes remains challenging, especially when integrating diverse legacy and IoT data sources of varying quality.

Forrester’s Pelino warned that “digital twins are only as valuable as the quality of data that enters the platform.”

Juniper Research co‑author Nick Maynard added, “Digital twins are only as valuable as the quality of data that enters the platform.”

A Gartner study on IoT implementation found that only 13% of companies using IoT projects already had digital twins, while 62% were working toward implementation.

Digital twins also expand the attack surface. “The attack surface has been extended,” Pelino cautioned. “Now that I’m connecting that supply chain—those assets, those vehicles—for someone who wants to do something bad, there are more places.”