Digital twins for supply chain resilience

Abstract

Today supply chains are working under high demand volatility, tight regulatory requirements and sustainability pressure. Existing literature considers digital twins (DTs) as technological tools to anticipate, absorb, adapt and recover quickly from disruptions as compared to strategic capability integrated into organizational processes. Tools alone cannot ensure resilience, and without integrating DTs into firm's core processes, it cannot develop the ability to sense, seize, and reconfigure and adapt to the uncertain nature of disruptions. This narrow focus is insufficient for real-world resilience needs, where real-time collaboration, continuous adaptation and learning from past data are critical. To address the gap between digitalization literature and resilience theory, we conceptualized a framework explaining how DTs enable supply chain visibility (SCV) and supply chain risk management (SCRM) towards supply chain resilience (SCR). Adopting a dynamic capability view (DCV), we used empirical data to explain the association among DTs, SCV, SCRM and SCR using partial least squares-structural equation modelling (PLS-SEM). Based on a 5-point Likert Scale survey questionnaire, data from 246 supply chain professionals were collected. DTs are key enablers of SCV with beta value of 0.759, which further facilitate SCRM with a beta value of 0.605. It is also found that DTs enhance the SCR (0.629) not only by improving the SCV and SCRM, but also directly facilitating the real-time simulations and predictive analytics. The relationship between SCRM and SCR (0.146) indicates that traditional SCRM practices without digital interventions are not very helpful towards SCR. Our study also indicates that SCV is critical as compared to SCRM (SCV-SCR with 0.272), indicating the importance of real-time information sharing. This study enhances the body of knowledge by expanding the theoretical boundaries of DCV, where the study highlights the role of DTs as a strategic enabler towards supply chain resilience. Managers need to invest in DTs to boost visibility and enhance risk management capabilities that lead to stronger SCR. DTs act as a sensing capability for SCV that acts as a foundation for seizing and reconfiguring the SCRM.