The world is becoming ever more complex. And that complexity complicates almost every business activity conducted by consumer packaged goods (CPG) companies. As I noted in a previous article, “Most forms of AI utilized in CPG revenue growth optimization systems today cannot account for real-world market complexity. They leverage old linear regression techniques to solve a problem that is non-linear in nature, relying on traditional AI models that optimize one, two, three or four static constraints instead of the 28 or 30 constraints that CPG brands navigate daily. This leads to fundamental bottlenecks that hinder operational performance and ROI.”[1] Because digital twin technology can help manage that complexity, it is gaining popularity among CPG firms. Dick Weisinger, Vice President and Chief Technologist at Formtek, explains, “Digital twins are virtual models of real-world objects or systems that are connected to their physical counterparts through sensors and data. They enable businesses to simulate, monitor, and optimize their products, processes, and operations in real-time, as well as to test new scenarios and solutions without risking the actual assets. Digital twins have many benefits for businesses of all sizes and sectors, as they can help them improve performance, reduce costs, enhance quality, and accelerate innovation.”[2]
Digital Twins and Business Improvement
Digital twins come in various shapes and sizes. On a grand scale, they can be used to analyze factories, power plants, or smart cities. On the other side of the spectrum, digital twins can be used analyze the performance of single products. Weisinger notes, “Digital twins are not just a hype, but a reality that is already transforming many industries and markets.” When volatility, uncertainty, complexity, and ambiguity characterize the business environment, finding the best strategies and making the right decisions can be difficult. That’s why we developed the Enterra Global Insights and Decision Superiority System™ (EGIDS™). EGIDS let’s decisionmakers view a range of possibilities and potential outcomes that could occur as the business environment changes. EGIDS helps decisionmakers examine hundreds of different scenarios at computer speed so that the best course of action can be selected.
Journalist Rebekah Carter writes, “Digital twin technology isn’t exactly a new concept. It’s been at the heart of industrial transformation for a few years now, paving the way to the industrial metaverse, and industry 4.0. … From helping companies track and enhance employee performance to improving resource allocation and transforming remote hybrid work, digital twins hold endless potential.”[3] She suggests there are at least seven good reasons for companies to invest in digital twin technology. They include:
1. Digital Twin Technology Transforms Product Quality. Carter explains, “With the right digital twin solution, any company can experiment with different materials, production strategies, and simulations in a virtual environment, enhancing product development.” The staff at Digimarc agrees. They explain, “Digital twins can help you produce less waste, shorten time to market and keep up with customers by gathering constant insights about how they interact with your product.”[4]
2. Digital Twin Technology Can Improve Customer Experience. According to Carter, “Every enterprise, no matter which industry it serves needs to focus on exceptional customer experience to thrive in today’s competitive landscape. Digital twin technology can enhance the customer experience in a multitude of ways. … Digital twins can help you simulate experiences with customers, learn more about their behaviors, and build more comprehensive customer profiles.”
3. Digital Twin Technology Can Help Optimize the Supply Chain. As I noted in my previous article, “Optimizing revenue across the CPG landscape is undeniably complex. While digitalization offers promise for simplifying it, enterprise leaders must delve deeper to separate effective tools from snake-oil solutions. Knowledge is power, and will ultimately elevate your brand above the pack.” Carter adds, “Digital twin technology offers organizations an incredible way to track and optimize the performance of the supply chain.”
4. Digital Twin Technology Enhances Business Performance. Carter observes, “One of the major benefits of digital twin technology is that it provides companies with exceptional visibility. Digital twins can be used to simulate processes and procedures in an organization, offering valuable insights into ways to improve efficiency and productivity.” McKinsey & Company analysts believe a new type of cognitive digital twin technology can help even more. They explain, “Many organizations across industries are separately implementing digital twins and generative AI (gen AI) — two technologies with distinct value propositions and tremendous promise — to support a wide range of use cases. Gen AI can structure inputs and synthesize outputs of digital twins, and digital twins can provide a robust test-and-learn environment for gen AI. By combining these technologies, organizations could produce synergies that reduce costs, accelerate deployment, and provide substantially more value than either could deliver on its own.”[5] That is exactly what Enterra Solutions® has done in the Enterra System of Intelligence®. As I noted in another article, “[Systems of Intelligence] historically were unattainable due to technological limitations, but the emergence of next-generation technologies like generative AI and autonomous decision sciences have made them possible. Through the integrated adoption of SOI architectures, CPG and retail organizations can harness their data for mitigating risk, managing volatility and maximizing business value despite the chaos around them.”[6]
5. Unlocking New Revenue Opportunities. Carter asserts, “Digital twin technology can help companies reduce costs and increase profitability in a variety of ways. Not only do they help companies to design innovative products faster, reducing time to market, but they can also introduce new opportunities for revenue.” That was the goal when we created the Enterra Revenue Growth Intelligence System™ (ERGIS™).
6. Achieving Sustainability Goals. According to Carter, “A growing demand for sustainability is part of what has made digital twin technology so popular among industrial companies. … Digital twin technologies give companies an opportunity to experiment with different strategies for reducing carbon emissions and waste in their operations. By offering insights into current operational data, businesses can detect new ways to reduce their carbon footprint, whether by replacing materials in a product or automating the switch-off of IoT-connected devices.”
7. Digital Twin Technology Transforms Employee Experiences. Carter writes, “Digital twin technology, combined with the metaverse, extended reality, and IoT unlocks new ways to empower and engage employees.”
Concluding Thoughts
Nick De Klerk, Senior Director at TMX Transform, writes, “Businesses now understand that it is no longer a question of whether to digitize — it is now a question of how much, and how soon. At the forefront of this new digitally enabled strategy is simulation — a powerful validation, visibility and communication tool for businesses. … Using simulation, businesses can model hypothetical scenarios without having to physically change the asset. Whether a business problem lies in warehouse layout, inventory management, equipment monitoring, network design or process optimization, simulation is a problem-solving tool transforming global supply chains.”[7] The Digimarc staff adds, “Because of these benefits they provide throughout the supply chain — from manufacturing through distribution and product security — all the way to recycling, digital twins represent the next big evolution in the supply chain.”
Footnotes
[1] Stephen DeAngelis, “Why CPG Leaders Must Separate the Wheat from Chaff for True AI-Powered Revenue Growth Optimization,” Unite.AI 31 May 2024.
[2] Dick Weisinger, “Digital Twins: The Next Frontier of Business Innovation,” Formtek Blog, 26 February 2024.
[3] Rebekah Carter, “Digital Twin Technology: 7 Reasons for Enterprises to Invest in 2024,” XR Today, 3 June 2024.
[4] Digimarc Staff, “From CPGs to food, your products need digital twins. Here’s why.” Supply Chain Dive, 25 January 2023.
[5] Alex Cosmas, Guilherme Cruz, Sebastian Cubela, Mark Huntington, Sohrab Rahimi, and Sanchit Tiwari, “Digital twins and generative AI: A powerful pairing,” McKinsey Digital, 11 April 2024.
[6] Stephen DeAngelis, “Systems Of Intelligence: The Next Era Of CPG Value Chain Optimization And Decision-Making,” Forbes, 13 May 2024.
[7] Nick De Klerk, “The Simulation Solution: Reshaping Supply Chain Strategies,” Supply & Demand Chain Executive, 26 May 2024.
