- Dell digitized its supply chain to better respond to changes in demand, allowing it to quickly adjust operations and in some cases mitigate the effects of the semiconductor shortage, co-COO Jeff Clarke said on the company's Q3 earnings call.
- The digital model creates simulations and allows the company to plan for a variety of supply and demand scenarios, according to Clarke. It's helped Dell quickly make decisions on whether to cut SKUs or prioritize use of components when supply is tight.
- "We're able to do some scenario planning to understand what available supply we have based on the demand signal, and then shape the demand," Clarke said at the Credit Suisse technology conference this month.
Dell's direct selling model already gave it enhanced visibility into operations, Clarke said. But a digital model allows the company to have even more control over its supply chain and better shape demand.
The digital model runs a variety of simulations and Dell has used the insights to quickly make decisions on how to prioritize components during the ongoing semiconductor shortage. The company designs products so components can easily be interchanged or reused when necessary.
"That simulation allows us to make quicker decisions," Clarke said. "In this time and day, quick decisions equal execution."
Digital twins give businesses better visibility into inventory and operations, allowing them to detect and respond to possible disruptions or before they happen.
Microsoft's digital twin, for example, gives it eyes on every SKU, where they're headed and their estimated time of arrival. Unilever has leveraged the technology to create digital models of its factories, using data on everything from temperature to production cycle times to make operations more efficient. In one instance, the twin was able to predict the most efficient batch time using data on how long it takes to produce one batch of shampoo or detergent.
More companies plan to lean on digital twins after the pandemic showcased the need for agile supply chains that can quickly respond to volatility in supply and demand. An Accenture survey published in February found 65% of executives surveyed said they expect to increase their investment in the technology over the next three years.
"The constant through all the change over the past 18 months is the unprecedented demand for technology," Clarke said. "It is clear, technology is more essential today than ever before."
But the sheer number of scenarios companies can plan for can be overwhelming. For example, Mercedes-AMG Petronas Formula One Team teamed up with data company Tibco to create a better car by testing different track and weather conditions using a digital twin. With so many possible scenarios to account for, one of the biggest challenges in optimizing product design has been cutting through the noise of the data.
"With the setup, there can be over a billion combinations in areas we can tweak and setup parameters we can make," said Michael Sansoni, senior performance and simulation engineer at Formula One, in a case study of the project. "Each combination has the potential to be the fastest for that car on that day, that circuit, and that driver. We need to make sure we get that perfect combination."