The Green Paradox: Can Sustainability and Cost-efficiency Coexist
in Supply Chains?
- Aaleyah Behera & Rashi Modi
Nestlé, a global leader in the food and beverage industry, has set ambitious sustainability goals, aiming for carbon neutrality by 2050 and ensuring that all its packaging is 100 percent recyclable or reusable by 2025. However, attaining these sustainability targets brings huge financial and operational burdens. For instance, the growing requirements to source cocoa and coffee from deforestation-free zones have raised procurement costs for Nestlé. Bio-based packaging material has doubled the cost of packaging. Similar issues arise with the high transportation costs that result from Nestlé's logistic investments in electric trucks and biofuels. There are serious doubts as to whether green investments actually yield profit.
Someaspectsofthecasepinpointanevenbigger dilemma in contemporary supply chains, typically referred to as the “Green Paradox”that sustainability and cost efficiency are diametrically opposed. Therein, companies struggle with these dual objectives when attempting to resolve long-term environmental impairment versus short-term financial stress in their supply chain operations.
This raises the central question: Can sustainabilitybeachievedwithcostefficiencyin the supply chain? Some say that sustainability measures pay off in the long run because they reduce waste and maximize energy efficiency. Others point to immediate financial burdens associated with these investments. This article will explorethis complex question: Is it possible for companies to integrate their environmental responsibilities with their economic goals?
WHYDOESTHISPARADOXEXIST?
1. HighInitialInvestmentCosts: In most applications, sustainable practices have
high upfront investment costs. For example, eco-friendly technologies might be too expensive to install with ethically produced materials having high procurement costs. A recent survey commissioned by the Economist Intelligence Unit and conducted with LLamasoft indicated that for 38% of companies, an increase in costs stood as a significant barrier to adopting sustainable supply chain practices.
2. Profitability Pressure from Shareholders: Shareholders typically favor quick financial returns, keeping companies away from investing in long-term sustainable initiatives thatmightnotbringinimmediateprofits.Such short-term focus discourages the implementation of sustainable practices that take time to yield tangible financial gains.
3. Difficulty in Transitioning to Sustainable Supply Chains: Present-day supply chains comprise highly complicated processes with numerous suppliers involved. It becomes very challenging to ensure that every component fulfills the sustainability criteria. The complexity of supply chains and their lack of transparency make tracking compliance impossiblethroughoutthewholesupplychain.
Industry-WiseCaseStudies:Successes& Struggles
Tesla’s Closed-loop Supply Chain: Turning Sustainability into a Competitive Advantage
Tesla proves that both sustainability and profitability can thrive in supply chain management, thus disproving the theory that these two forces are always in conflict. Insight from Tesla's 2021-2023 Impact
Reports points toward environmentally responsible practices in their supply chain that create profitability through resource efficiency, sustainable sourcing, and waste minimization.
The energy-efficient manufacturing of Tesla not only mitigates emissions but also saves money. The Gigafactories, including Gigafactory Shanghai, use 35% less energy per vehicle compared to the Fremont Factory. All Gigafactories and Supercharger networks are powered 100% by renewable energy. 49% of HVAC systems are managed through machine learning, which translates into enormous electricity savings and increased profitability through a more efficient supply chain.
Sustainability sourcing is now the second leg of Tesla'sstrategy,wherein it places importanceon its closed-loop battery recycling system. Recyclinglithium, cobalt,andnickel has greatly reduced dependence on mining and the damage it causes to the environment. In 2023, 43,000 Model Y vehicles were built with recovered materials from Tesla and 92% of the battery materials are recyclable. Tesla is also entering lithium refining at Texas with a cleaner sulfatefree process to minimize industrial waste. Such an approach will also reduce the vulnerability to commodity price fluctuations, promoting endeavors that will be already profitable in the long run.
In response to the environmental consequences surrounding vehicles' manufacturing, Tesla has embarked on a robust conservation of water and reduction of waste programs. For the last five years, water consumption has decreased by 25% per vehicle, while 90% of manufacturing waste is getting recycled. Heavy rainwater and condensationharvestingsystems furtherreduces dependence on municipal water, thus slashing operational costs and increasing climate resilience.
Tesla's eco-friendly generation and storage technologies transform sustainability into a profit center. Megapack and solar storage lessen dependenceonfossilfuelsthroughthestorageof
excess solar and wind energy. In 2023, customers of Tesla's solar systems produced sufficient zeroemission electricity to cover 3 times the required amount of energy needed to power all Tesla locations worldwide. The business generates revenues through energy storage solution sales, proving monetization through sustainability.
IKEA: Redefining Supply Chain Efficiency Through Sustainability
The journey of IKEA in sustainability and cost efficiency showcases how businesses can embrace sustainable long-term supply chain management in order to thrive. With the escalating dissatisfaction towards resource consumption and environmental consequences, this Swedish furniture giant carefully integrated various principles of circular economy, renewable energy projects, and ingenious innovations in logistics to create an edge over the competition, not justintermsofsustainabilitybutalsointermsofcosts.
Among IKEA's major shifts, the most realigned is energy sourcing. The company committed to sourcing entirely renewable energy- from wind and sun- for storesandsupplychainoperations.In2022,IKEAwas reported to have financed wind and solar projects to thetuneof€3.2billion,producingmorepowerthanit consumes. This has had a phenomenal bearing on a decrease in the dependency upon fossil fuel, cost reductions on its operations, and enhanced resilience of the supply chain against energy price variations.
When it came to the supply chain in manufacturing, the Scandinavian furniture giant IKEA started
Source: Tesla Gigafactory Process Flow Diagram (Source: Tesla)
adopting an increasing share of recycled and responsiblematerialsintheinputofitsproducts. By 2023, for instance, it would have had wood in 98% of its products either FSC certified or recycled; cotton was at 100% sustainably sourced. Evading virgin plastic completely and converting to totally recycled plastic not only increased the sustainability of IKEA but also saved the company a lot of money.
ItwasasignificantinnovationinIKEA’ssupply chain to use flat packs which significantly increased the efficiency of their transportation. By developing a compact, easy-load system for transport, the company reduced its costs on shipping and its needs for warehouse storage. In addition, this not only minimized their carbon footprint but also saved them about €1 billion every year.
Logistics improvements further proved that sustainability and cost-efficiency can co-exist together.IKEAaimstoreduceoverallemissions along the supply line by 80% by 2030 and go entirely to a zero-emission delivery fleet by 2040. This investment proves ground-breaking to lessen future costs dramatically on fuel and emissions. The impact of these initiatives is indeedhuge.IngkaGroup,thelargest franchisee of Ikea, announced a 24% reduction in supply chain emissions alongside revenue growth of 31%, compared to a fiscal year 2016 baseline. This shows that profitability and sustainability do not need to be contrasting goals since both can be achieved by developing a long-term efficiency-oriented supply chain strategy that respects environmental stewardship.
Bridging Sustainability & Cost Efficiency: StrategiesForModernSupplyChains
The challenges of going green in the supply chain will become even more urgent with the ever-increasingdemandtokeepeverythingcosteffective in this world of continuous business changes. It will call for revolutionary, strategic rewrites of old models that discuss the nexus of progress in environmental responsibility and long-term economic success. Here are some
action solutions, examples, and research-supported insights.
1.AdoptingCircularSupplyChainModels
Circulareconomy supply chains will bevery effective in reaching sustainability and cost-efficient goals. Circular supply chains focus on materials and resources reused, recycled, and repurposed, thus reducing the requirement for new ones that contribute to waste and additional costs.
Some methods are designing products for easy disassembly into parts at the end of their lives, using recycled materials in manufacture, and implementing product take-back schemes. Research indicates that circular supply chains can help reduce material costs and therefore improve operational efficiency. For example, Unilever has tried to integrate recycled plastics into its packaging with the twin goals of cutting the costs of raw material procurement and minimizing carbon emissions. By implementing circular practices, companies will bear significantly lower waste management costs, enhance sustainable perception of their brand, and build loyalty among their customers. Also, circular models secure resource availability as they minimize disruptions to supply chains, thus contributing to a competitive advantage.
Source: Circular Economy Framework (Source: Brunel Pension Partnership)
2. Leveraging Blockchain for Transparent and Efficient Supply Chains
Blockchain technology has revolutionary potential to make supply chains more transparent, more secure, andbetteroptimized.Itcanhelptracehowsustainable
raw materials are and satisfy environmental standards all along the line. Blockchain is a feature that enables the setting up of an irrefutable ledger of transactions, thereby making all sustainability claims verifiable like ethically sourced materials or carbon emissions data. Walmart uses blockchain for food traceability, enhancing product safety and minimizing food waste. Provenance is another blockchain company that shows the authenticity and sustainability of a brand to consumers and stakeholders, hence ensuring transparency.
Using blockchain reduces the risk of fraud, ensures sustainability practices, and it enhances consumer trust. The efficiency gains from reduced paperwork, faster transactions, plus reduced errors translate to cost savings in administration and compliance monitoring.
AI algorithms can forecast demand, for example, streamline inventory management, and optimize routing for the transportation of freight. IoT sensors provide inputs from actual supply chain conditions in real time and allow businesses to understand everything from temperature-sensitive goods to equipment health. DHL has adopted AI and IoT to optimize warehouse operations and save energy and operationalcosts.ByusingAIandIoT,acompanycan anticipate disruptions in its supply chain while minimizing overproduction, lessening excessive inventories, and enhancing resource allocation, translating to huge savings. These technologies also provide the benefit of sustainable operations through optimized routes, while at the same time using lower fuel rates and fewer emissions.
These strategies yield immediate benefits that are long-lasting, ensuring the sustainability of firms and future growth that will be required in an increasingly eco-conscious market.
Artificial Intelligence (AI) and the Internet of Things (IoT) are the technologies that have changed the face of supply chain management by making it more predictive, real-time, and more intelligent decision making. They work together to reduce inefficiencies, lower energy consumption, and, therefore optimize transportation.
CONCLUSION
In the past, an environmentally sustainable view was seen as an extra expense; however, examples have often shown that sustainability is not a cost but an investment in long-term resilience, profitability, and brand trust.
Source: Blockchain for Supply Chain Management (Source: Fluree PBC)
3. AI & IoT for Supply Chain Optimization
Source: DHL Smart Warehouse Initiative (Source: DHL)
Case Studies of Tesla and IKEA show that sustainability embedded into the supply chain strategy works to improve efficiencies, decrease waste, and ultimately save costs. Today, sustainability-fromcirculareconomymodelsto renewable energy investments and AI-driven supply chain optimizations - offers these companies a competitive edge. The takeaway is simple: sustainability can, in fact, coexist with cost efficiency, but this can only be achieved if businesses maintain long-
term thinking. While the transition may incur shortterm financial burdens, the costs of inaction will be higher-whetherfromdepletion ofresources, penalties from regulators, or erosion of reputation. The time to act is now. Businesses must future-proof their supply chains by making sustainability a core principle, creating resilience, remaining competitive and aligning with the dynamic expectations of consumers and stakeholders. The Green Paradox is not a conundrum. It is a challenge that innovative businesses must be eager to accept.
References:
● EXPLOREaselectionofourbrands. (2025, March 24). Nestlé India. https://www.nestle.in/
● Impact|Tesla. (n.d.-b). Tesla. https://www.tesla.com/impact
● Llamasoft, a Coupa Company. (n.d.). Cost is the biggest challenge for sustainable supply chains. Supply & Demand Chain Executive. Retrieved from https://www.sdcexec.com/sustainability/news/21044147/llamasoft-a-coupa-company-cost-is-thebiggest-challenge-for-sustainable-supply-chains?
● IKEA. (n.d.). Hej!welcometoIKEAGlobal. https://www.ikea.com/
● The value of IoT in supply chains. (n.d.). DHL. https://www.dhl.com/globalen/delivered/innovation/the-value-of-iot-in-supply-chains.html
● Plc, U. (2024, November 4). Unilever boosts investment in packaging R&D to cut virgin plastic. Unilever https://www.unilever.com/news/news-search/2024/unilever-boosts-investment-inpackaging-rd-to-cut-virgin-plastic/
Images:
1. Image 1: https://medium.com/tradr/teslas-approach-to-recycling-is-the-way-of-the-future-forsustainable-production-5af99b62aa0e
2. Image 2: https://www.brunelpensionpartnership.org/investing-responsibly/responsibleinvestment/circular-economy-supply-chain-management/
3. Image 3: https://medium.com/fluree/supplychain-889e2b9e5ce0
4. Image 4: https://www.logisticsmanager.com/dhl-implements-digital-twin-warehouse-for-tetra-pak/
Iam AaleyahBehera,asecond-yearBBAstudent specializingin Financeat Christ University, BGR Campus, Bangalore. With experience in financial operations through internships at firms like Rekonsile, I have developed a keen interest in optimizing business processes. I enjoy exploring how finance, operations, and sustainability intersect to drive strategic decision-making.
I am Rashi Modi, a second-year BBA student specializing in Finance at Christ University, BGR Campus, Bangalore. My internships at operations and supply chaincompanieslikeXpressbeeshavefueledmypassionforstreamlininglogistics and enhancing efficiency. I have a keen interest in the intersection of sustainability and supply chains, always looking for innovative ways to make operations both cost-effective and eco-friendly.
Rashi Modi
Rashi Modi
AaleyahBehera
RashiModi
The Future of Supply Chains: AI, Sustainability & Resilience in a Disruptive World
How AI, Green Logistics and Resilient Strategies are Transforming Global Supply Chains
- Himank Sankhe
"Thebestsupplychainsaren'tjustfastandcosteffective;theyareintelligent,sustainable,and resilient." ― Tim Cook, CEO of Apple
1)Introduction:WhySupplychainsmustevolve for the Future- Supply chains are the foundation of global trade and commerce, facilitating the efficient transportation of goods across industries and continents. However, recent disruptions, including COVID-19 pandemic, geopolitical conflicts and climate-related calamities have revealed weaknesses in global supply networks. The 2021 Suez Canal blockade, which halted roughly 12% of world traffic, resulted in massive economic losses estimated at $9.6 billion per day (Lloyd's List, 2021). Similarly, the war between Russia and Ukraine interrupted energy and agricultural supply systems, affecting industries around the world.
To flourish in this disruptive era, businesses are integrating Artificial Intelligence (AI), sustainable logistics and resilient supply chain methods.
2) AI-Powered Demand Forecasting and Inventory Optimization: Traditional supply chains use historical data and manual forecasting algorithms, which frequently fail to account for real-time disruptions. However, AI and Machine Learning (ML) systems accurately predict demand changes by analysing previous sales data, external market trends and even social media sentiment.
Case Study: Walmart Uses AI for Demand Forecasting
Walmart uses AI-driven predictive analytics to modify inventory levels in real time, lowering stockouts by 30% and extra inventory expenses by 15% (Walmart AI Report, 2025).
1: Growth of AI Adoption in Supply Chains, Gartner (2020–2025)
Digital Twins: Supply Chain Simulation in a VirtualWorld: In today's extremely dynamic and linked global economy, firms must foresee issues andimprovetheirsupplychainsinadvance.Digital Twins are virtual duplicates of physical supply chain networks they have emerged as a gamechanging innovation, allowing businesses to test various operational scenarios before making changes in real-world settings. Digital twins provide comprehensive visibility into supply chain operations by combining artificial intelligence (AI), Internet of Things (IoT) and real-time analytics, allowing firms to improve efficiency, resilience and sustainability.
How Digital Twins Transform Supply Chain Management: Digital Twins generate a dynamic digital picture of supply chains by collecting realtime data from sensors, IoT devices and corporate systems. Companies can then perform simulations
Figure
to:
✔ Anticipate potential disruptions like demand variations,supplierdelaysandlogisticalconstraints before they affect operations.
✔ Optimize inventory and logistics: Try multiple supply chain configurations to save money and increase efficiency.
✔ Improve sustainability by modelling the environmental effect of supply chain actions and identifying solutions to reduce carbon emissions.
This predictive strategy lowers risks, enhances decision-making and fosters more agile supply chainoperations.Herearetworeal-worldinstances of companies successfully utilizing Digital Twins:
Siemens Smart Factory, Germany: Improving Production with AI-Powered Digital Twins Siemens,aglobalpioneerinindustrialautomation,has used AI-powered digital twins to improve manufacturingandsupplychainprocessesatitsSmart Factory in Amberg, Germany. These digital twins simulate whole manufacturing processes to detect inefficienciesandbottlenecksbeforetheyexist.
Keybenefitsincludea20%reductioninsupplychain waste using AI-powered analytics that detect excess inventory, material waste and wasteful procedures, resulting in leaner operations. Siemens improves production efficiency by continuously evaluating data from IoT-enabled machines, resulting in predictive maintenance and reduced downtime.
Improved Quality Control - AI simulations enable manufacturers to test new production procedures virtuallybeforeimplementingthemonthefactoryfloor.
According to the Siemens Digital Report (2025), the corporationhasmanagedto minimize defects by 30% while boosting manufacturing speed. The success of digitaltwinsinSiemens'supplychainisalreadysetting new standards for Industry 4.0 manufacturing worldwide.
DHL's AI-powered warehouses transform logistics with digital twins: DHL, one of the world's leading logistics businesses, has implemented AI-driven digital twin technology to improve warehouse management and last-mile
deliveries.DHL'swarehousesareoutfittedwithIoT sensors, self-driving robots, and AI-powered simulations resulting in an interactive digital picture of its logistics operations.
Key Benefits: According to DHL Logistics Insights (2025), AI-powered digital twins have lowered operational expenses by 25% while increasing real-time supply chain visibility. This technology is now an essential component of DHL's commitment to sustainable and resilient supply networks.
3. Sustainability and Green Logistics: EmergenceofESG-CompliantSupplyChains
3.1 The Push for Carbon-Neutral Supply Chains: With the advent of corporate ESG goals and government sustainability laws, businesses are focusing onloweringcarbonemissions, optimizing transportation networks, and transitioning to renewable energy.
Case Study: IKEA's Supply Chain Objectives for Carbon Neutrality With the integration of electric delivery vans and warehouses powered by renewable energy, IKEA has committed to achieving 100% carbon-neutral logistics by 2030 (IKEA Sustainability Report, 2025).
2: Growth in Procurement Driven by ESG (Source: PwC, 2025)
Figure
Greenportsandrenewableenergyaretransforming the logistics business as global supply chains becomemoresustainable.AI-drivenoptimizations, electrification of transportation networks and carbon-neutral projects are creating new standards for efficiency and environmental responsibility. Singapore's Port of Tuas is the world's largest automated green port.
Singapore is setting the standard for sustainable marine logistics with the Port of Tuas, the world's largest automated green port. The port has effectively cut carbon emissions by 50% through AI-drivenrouteoptimization,electrificationofport operations, and smart grid integration (Singapore Maritime Authority, 2025). Key developments include automated container handling systems that maximize efficiency and reduce energy waste.
AI-powered predictive analytics for vessel traffic management, reducing idle time and fuel consumption. Integration of renewable energy sources, such as solar and wind power, to reduce reliance on fossil fuels. With these achievements, Singapore establishes a global standard for sustainable port operations, impacting future maritime logistics developments.
Amazon's Green Logistics Commitment
Towards Carbon Neutrality: Amazon is at the vanguardofgreenlogistics, aiming to achieve50% of its global shipments carbon-neutral by 2030 (Amazon Climate Pledge, 2025).
To do this, Amazon has made significant progressin:
• Investing in 100,000 Rivian electric delivery vans and increasing hydrogenpowered trucks.
• AI-Optimized Route Planning: Machine learningalgorithmsimprovedeliveryroutes to save fuel and increase efficiency
• Sustainable Packaging Initiatives: To reduce the impact on the environment, they are using recyclable and biodegradable packaging materials.
Amazon's logistics model, which balances operational effectiveness with environmental responsibility, serves as a model for future supply chains by combining artificial intelligence, renewable energy and sustainable infrastructure.
ThePathAhead: Eco-friendly logistics and green ports are becoming essential, not optional. Businesses that adopt sustainable supply chain innovations will have a competitive advantage and help create a greener future as regulations tighten and consumer preferences change.
4. Supply Chain Resilience: The Transition to NearshoringandMulti-SourcingReducing
SupplyChainDependenceonaSingleCountry:
The COVID-19 outbreak and the US-China trade war have compelled businesses to reconsider their sourcing methods.
Apple's $1 billion investment in India and Vietnam:
Apple is moving iPhone manufacture to India and Vietnam to diversify its supply chain away from China (Financial Times, 2025).
Figure 2: (Investment trends by region- Source: Deloitte, 2025)
5. The Supply Chain in 2030: Fully
Autonomous, Sustainable and Resilient: By 2030, the supply chain industry will experience a full revolution, including:
AI-Driven Automation: AI will control supply chain operations end-to-end, minimizing the need for human intervention.
Multi-sourcingandNearshoring:Businesseswill
distribute manufacturing across several regions to reduce risks. Companies that do not integrate AI, sustainabilityandresilienceintotheirsupplychains will struggle to compete in a hyper-digital and environmentally concerned society.
Carbon-Neutral Logistics: Companies will comply with ESG regulations, aiming for net-zero emissions.
References:
1. IKEA Sustainability Report FY24 https://www.ikea.com/global/en/images/IKEA_Sustainability_Report_FY_24_2025_01_27_2c359 89733.pdf
2. FinancialTimes,Apple’s$1BillionInvestmentinIndiaandVietnam https://www.ft.com/content/1d07a823-43da-4c1b-84d3-7e453ebb1b16
3. Amazon-The Climate Pledge https://www.aboutamazon.com/planet/climate-pledge
4. Walmart-AI-Powered Supply Chain Management Trends https://corporate.walmart.com/news/2024/11/20/2025-ai-trends-outlook
5. Siemens Digital Report on Industry 4.0. https://www.siemens.com/global/en/company/insights/tech report.html?gclid=Cj0KCQjwqIm_BhDnARIsAKBYcmu6xpebazUUJu6RJjJ5czTa3XA1r9GUZxlF1WDBDHyEYHYpnUEF4aAtyIEALw_wcB&acz=1&gad_source=1
6. McKinsey & Company-The state of AI: How organizations are rewiring to capture value https://www.mckinsey.com/~/media/mckinsey/business%20functions/quantumblack/our%20insigh ts/the%20state%20of%20ai/2025/the-state-of-ai-how-organizations-are-rewiring-to-capturevalue_final.pdf
7. PwC ESG Reporting Trends 2025 https://www.pwc.com/sk/en/environmental-social-and-corporate-governance-esg/esgreporting.html
8. Singapore Maritime Authority-Annual Report 2025 https://www.mpa.gov.sg/who-we-are/newsroom-resources/publications/annual-report
I am pursuing MHRD at JBIMS Mumbai, I hold a Bachelor’s Degree in Mechanical Engineering from University of Mumbai and Executive Diploma in Business Analytics from IIM Indore. My experience at DTDC and DXC Technology have ignited my passion for HR and Supply chain. I enjoy traveling to new places
HimankSankhe
Contemporary Topics in Operations and Supply Chain Management
- Mahek J Patel
Executive Summary
Digital Twin technology- the future of supply chainmanagementandoperationsisatechnology that provides real-time data-driven insights. Digital Twin Technology creates virtual representation of physical assets, processes, and supply chain networks, continuously updated through IoT sensors, AI-driven analytics, cloud computing, simulations and various data modellingtechniques.Organizationsleveragethis technology to enhance operational efficiency, predict disruptions, optimize solution and scenario planning. This article explores the applications, benefits, challenges, and future scope of Digital Twin technology across various industries. This articles also highlights the increasing importance of Digital Twin Technology in industry 4.0, the fourth industrial revolution,whereautomation,IoT,andAI-driven analytics enhance smart manufacturing and supplychainintelligence.
Introduction
This is an era of Industry 4.0 which contains complex global supply chain and increasing market volatility, companies are adopting advanced technologies to optimize efficiency, gain competitive edge, sustain growth and mitigate risks. Industry 4.0 which marks the integration and implementation of smart technologiesintomanufacturingandsupplychain operations. Digital Twin technology plays a pivotal role in enhancing supply chain transparency, predictive maintenance, and operational agility. Digital Twin creates a digital
copy and often an immersive environment that replicates and connect every aspect of the organizations. By replicating real-world operations in a virtual environment, businesses can simulate various what-if scenarios, detect inefficiencies, and make data-driven decisions beforeimplementingchanges.
Types of Digital Twin:
1. Components or Parts Twin: This type of twin focuses on individual part or component of a system such as gear, motor, chips etc. E.g. Rolls-Royce’sjetenginecomponent- turbine
2. Assets twin: This type represent group of components that work together as a part of larger system. E.g. Tesla EV Vehicle
3. SystemTwin:Thistyperepresents howassets work together at a system level. E.g. DHL Smart Ware House automation
4. Process Twin: This type captures the entire workflow or process from start to finish integrating data from various sources. E.g. Whirlpool (China)
WorkingofDigitalTwinTechnology:
Digital Twin technology creates a digital representation of a physical object, process, or system that is continuously synchronized with real-world data.
1. Data Collection: The object is fitted with various sensors such as IoT sensors, cameras, RFID tags, and embedded systems that are related to vital areas of functionality and collect real-time data from physical objects.
2. Data Integration: The sensors collect data about different aspect of physical object’s performance such as energy output, weather conditions, temperature and many more. The collected data is transferred to cloud-based platforms where it is processed and analyzed.
3. Simulation & Modeling: The processing systemreceivesthisinformationandappliesit to the digital copy which is created by using AI and machine learning algorithms that mimics the behaviour and performance of the physical counterpart.
4. Scenario Testing & Predictive Analytics: The digital model is now used to test various what-if scenarios, forecast potential disruptions, and suggest improvements.
5. Optimization & Decision-Making: The insights generated help businesses optimize operations, improve efficiency, and reduce downtime.
6. Continuous Learning & Updates: As new data flows in, the Digital Twin continuously updatesitself,ensuringthatthemodelremains accurate and relevant.
BenefitsofDigitalTwinTechnology inSupply ChainManagement:
❖ Down Time Reduction: Digital Twin helps to prevent failures by predicting them in advance, which, in turn, helps to reduce down time.
❖ Better Inventory Management: Digital Twin can identify faults tat develops in the system and get insights into what parts may need repair or replacement. This will help to better maintain the inventory.
❖ Better Research and Development: Digital Twin enables more effective research and design of the products.
❖ GreaterEfficiency: Evenafteranewproduct hasgoneintoproductionsystem,DigitalTwin can help mirror and monitor production system with an eye to achieve and maintain peak efficiency.
❖ PredictiveAnalysis: DigitalTwincanhelpto create various what-if scenarios to achieve greater efficiency of assets or systems.
Key Challenges in Modern Supply Chain ManagementandOperations:
Despite there are many advancements in the modern supply chain management and operations, but there are several challenges that hinders efficiency and operational effectiveness.
❖ Lack of Real Time Visibility: Traditional ware house management system lacks real timemonitoringdataleadingtoinefficiencies. Also, there is a very limited adoption of automation (Artificial Intelligence, machine learning, etc) in ware houses.
❖ InefficientWarehouseOperation: there is a high dependency on manual labour leading to increased human errors and slow order processing.Unoptimized pickingandpacking processes cause delays in order processing and dispatching.
❖ Inefficient Route Optimization: leads to longer delivery time and customer dissatisfaction.
❖ Manual Quality Inspection: leads to higher defect rate and quality control challenges.
❖ Inefficient Inventory Management: Poor demand forecasting and stock mismanagement lead to overstocking or stockouts, impacting revenue and customer satisfaction.
❖ Predictive Maintenance Gaps: Many industries face unexpected equipment failures due to the lack of predictive maintenance models, resulting in downtime and increased operational costs.
Real-World Applications of Digital Twin Technology:
Shanghai Automobile Gear Works (SAGW)SmartManufacturing
SAGW has implemented Process Digital Twins in mid-2019 developed by GE and named as Proficy Manufacturing Execution System to improve production line efficiency and quality control.
The company has achieved a 40% reduction in inspection costs, a 30% decrease in inventory levels, and an 80% reduction in required storage space by leveraging AIdriven Digital Twin models.
Rolls-Royce - Predictive Maintenance in Aerospace
Rolls-Royce also uses Parts Digital Twin technology to monitor and predict jet engine performance in real-time. Digital replicas of jetenginesaremadewhich allowengineersto analyze wear and tear, improving maintenance schedules and reduce failures.
This technology has helped Rolls-Royce reduce engine maintenance costs by 15% and improve fuel efficiency by 10%
Whirlpool-DigitalFactorySuccess
Whirlpool(China) has successfully implemented System Digital Twin
technology to optimize manufacturing operations and improve product quality.
By leveraging digital factory solutions, Whirlpool has converted 80% of its factory intoautomationbyconnecting300+machines together in span of 4-month time line and reduced unplanned downtime by 20% , improved production efficiency by 15% and the job rate reached to 45s and design rate is 35s.
Challenges in Implementation of Digital Twin Technology:
Despite having many benefits of this technology, there are 3 major challenges that arises –
1. High Initial Investment: digital twin contains various complex software’s and sensors which requires high capital investments initially. So only companies that have large capital surplus can implement or adopt this technology.
2. IntegrationwithLegacySystem: today also many companies use outdated Erp system which makes it difficult to integrate digital twin technology with the existing system.
3. Data Privacy and Security: since vast amount of data are processed on cloud many of which are sensitive and private. So, any unauthorized access, data breaches or cyber attacks can lead to potential damages to the company
Conclusion:
We are currently in the midst of industrial era 4.0 which is characterized by increasing automation, digitalization and connectivity in manufacturing andotherindustries.Inthisera,graduallyoverthe period of time, digital twin technology is revolutionizing operations and supply chain management by providing real-time monitoring, predictive analytics, and process optimization. In 2024, The global digital twin market was valued atnearly13billion$andisprojectedtoreach240 billion $ by 2035 which shows that digital twin is applied across various industries and companies
areimplementingthistechnologytogainbenefits. The real-world application serves as an example of how digital twin technology may lead to cost saving, greater efficiency, and increased decision making.
The effective use of digital twin demonstrates how they have the capacity to completely transform the entire supply chain or a parts of supplychain to gain competitiveedge andsustain growth.
References:
1. GE Vernova. (2023). Whirlpool's Digital Factory Success Story. Retrieved from https://www.gevernova.com/software/customer-stories/whirlpools-digital-factory-success-storyproficy
2. Shanghai Automobile Gear Works (SAGW). (2023). SAGWDigitalTwinImplementationReport.
3. Rolls-Royce. (2023). Digital Twin Technology for Aerospace Innovation. Retrieved from https://www.rolls-royce.com/innovation/digital/digital-twin.aspx
4. DHL. (2023). DHLDigitalTwinWhitepaper. Retrieved from www.dhl.com
MahekJPatel
Myself Mahek Jayantilal Patel and I am from Maharashtra (Mumbai). Currently I am pursuing Master of Management Studies (MMS) at Vivekanand Education Society’s Institute of Management Studies and Research (Batch 2023-2025). I have completed my graduate degree in Bachelor of science specializing in Information Technology. With a strong interest in operations, supply chain management, and digital transformation.
Contactusat:
https://www.instagram.com/opscentrix_iimrohtak?igsh=cm8xM2NuODR4cDUy https://www.linkedin.com/in/opscentrix-iimrohtak/ operationsclub@iimrohtak.ac.in