A WHITEPAPER from the Melbourne Business School suggests organisations can use so-called “digital twins” to enhance supply-chain visibility and brace for disruptions.
The whitepaper, Building resilient Australian Supply Chains, urges organisations to move beyond a crisis management mentality and anticipate future disruptions.
The Melbourne Business School’s Centre of Business and Analytics partnered with information technology consultant Accenture to publish the paper.
Vivek Luthra of Accenture, a co-lead author of the whitepaper, said organisations need to be able to map their entire supply chain networks to understand where the potential faults might lie.
“This extends beyond knowing just your own suppliers, but also the networks your suppliers rely on – which can be difficult, with some smaller firms reluctant to share details for fear they might be squeezed out of the market.”
Professor Yalçın Akçay, centre director and co-lead author on the whitepaper, said Australian organisations face an added layer of complexity because of the country’s geographical isolation.
“As an island nation, we already conduct 98% of our trade through ports compared to the global average of 90%,” Mr Akçay said.
“Add to that our overreliance on imports, which make up 21.60% of GDP, and there is so much pressure on Australian ports that any disruptions to sea freight and shipping container costs can have detrimental effects.”
Mr Akçay said truck driver shortages and surging fuel prices are exacerbating challenges for internal logistics.
“Extreme weather events brought on by climate change are also putting local transport infrastructure at risk, with the New South Wales Floods earlier in the year exposing how vulnerable we are,” he said.
“The NSW floods saw a huge disruption to the supply of fresh fruit and vegetables to many areas of Australia, with Victoria also reporting shortages in basic goods such as tissues and toilet papers again.”
The whitepaper suggests organisations create digital twins to enhance visibility along supply chains, test for weaknesses and understand risks to revenue.
Report authors describe digital twins as virtual renditions of organisations’ physical supply chains, created by integrating information from multiple sources into a data take.
The authors said it is now feasible to build digital twins that can simulate complex supplier networks and understand the weakest links by assessing various disruption scenarios.
“With the technology now available you can model exactly what would happen to your supply chain if there was a sudden spike or drop in demand for a specific product, or if there is a disruption to a port or hub, or a shortage of transportation labour,” Mr Luthra said.
“By using data, technology and artificial intelligence you remove the uncertainty. Once you know the risks, you can immediately identify areas for improvement and develop future mitigation strategies.”
