Analyst Insight:
Artificial intelligence-infused digital twins promise to enable a production and warehousing system where every SKU, production line, forklift, storage area and freight movement operates in perfect unison. These cutting-edge tools are at the core of Industry 5.0, enabling real-time optimization and harmonizing human-centric technology with operational excellence.
Digital twins are transformative in their ability to replicate and manage real-time physical operations. Integrated into the sales inventory & operations planning (SI&OP) framework, they deliver unparalleled capabilities, including:
Real-time operations visibility. Managers gain a live view of all aspects of the production warehouse, from inventory levels to equipment utilization, enabling quick issue identification and resolution via the trained AI large language model (LLM) aligned to all the roles in the facility.
Predictive analytics. AI models anticipate potential disruptions, empowering leaders, managers and frontline personnel. Trained AI-neural networks indicate real-time proactive actions to the front-line personnel.
Scenario testing. Real-time simulation capabilities from the actual transaction flow allow for risk-free testing of strategic and tactical scenarios, improving operational foresight.
Continuous optimization. Real-time feedback loops dynamically adjust workflows to reduce waste and enhance efficiency to every changing supply and demand constraint in real-time.
Enhanced SI&OP integration. Digital twins ensure that all assets — people, processes, and equipment — operate at peak performance, minimizing waste and maximizing customer delivery rates
The integration of digital twins into an existing production and warehouse ecosystem entails a number of challenges, including:
System compatibility. Ensuring seamless communication among legacy systems and new AI tools.
Cultural adoption. Overcoming resistance to changes within operational teams, freeing up the planner role to perform more meaningful tactical activities.
Data integrity. Maintaining accuracy across interconnected platforms.
These challenges aren’t insurmountable, but rather opportunities for rethinking and refining operations. Early adopters of integrated digital twin systems reported impressive outcomes within just 90 days of implementation, including a 20% to 30% increase in operational efficiency; 40% reduction in labor costs; 35% to 55% improvement in space utilization; 50% increase in inventory accuracy; 5% to 10% reduction in cost per SKU; 20% to 50% increase in on-time, in-full delivery, and full return on investment achieved in as little as three months.
Industry 5.0 extends beyond automation, prioritizing collaboration between humans and adaptive technology. Emerging innovations like AI assistants complement digital twins by providing role-specific support tailored to operational roles such as production planners, warehouse managers, and forklift operators. These tools enhance employee productivity while fostering safety and operational efficiency.
Additional capabilities include predictive maintenance, self-optimizing warehouses that adapt dynamically to changing conditions, and seamless integration of visibility across the supply chain.
AI assistants further streamline workflows, reducing decision fatigue and enabling staff to focus on strategic initiatives.
Outlook: AI-infused digital-twins are reshaping the production and warehouse landscape, merging human insight with AI-driven precision at the job role level. Integrated AI-infused digital twins and AI assistants represent the future of SI&OP, delivering resilience, agility and competitive advantage.
This report was originally published on SupplyChainBrain magazine – access the full edition here.
