Digital Twin technology is making its way into the logistics space, and with it are new ways for organizations to experiment, prototype, and implement new strategies to keep their supply chains strong. Vice President Ian Mallison and Senior Manager Jarrett Hendricks from Supply Chain Solutions discuss the history of Digital Twins, their impact on other industries, and how they are improving the way freight forwarders can service their customers.
Chris Parker (Host): Hello everyone and welcome to the Expeditors Podcasts, where you can hear about front of mind topics and the logistics and freight forwarding industry through the lens of a global logistics provider. I'm your host, Chris Parker. And today we are talking about a little thing called the Digital Twin. It's a technology that's been around for actually quite a while and many industries are starting to use it to plan, prototype, and implement their growth. And the logistics industry is no different.
We'll cover history, application, benefits and the costs of working with Digital Twins. But personally, the Digital Twin is triggering an existential crisis of whether or not I am living in a simulation. So to help me process all of this is Vice President of Supply Chain Solutions and returning guest, Ian Mallison. Ian, welcome back.
Ian Mallison: Thank you, Chris. It's a pleasure to be back, I'm glad what I said on the last podcast didn't bar me from this one. So I'm delighted to join you again.
Chris Parker: Yes, the revolving door is open to you.
Ian Mallison: Right. Absolutely.
Chris Parker: And if Ian were the face, I've also brought the brains behind the Digital Twin, at least for Expeditors, and that is our Senior Manager of Supply Chain Solutions, Jarrett Hendricks. Jarrett, how are you doing today?
Jarrett Hendricks: I am well, thank you very much and thanks for having me.
Chris Parker: Since folks already know Ian and we don't want to belabor how great and wonderful you are, just give us a quick recap of who you are and what you do as the Vice President of Supply Chain Solutions.
Ian Mallison: Well, Chris that's very kind of you to set me up in that way, but I have the pleasure of running the global Supply Chain Solutions team, which is effectively works as an in-house consulting team, servicing both Expeditors' customers and non Expeditors customers too. And within that overall remit, we offer consulting services and also as this podcast is going to explain a wonderful product that we call the Living Model, which is our brand name for a Digital Twin.
Ian Mallison: So overall the global team is about 40 people and all of us are pseudo-experts now in the Digital Twin, which is something that's really starting to gain momentum, as you said in your introduction over the last two or three years. So yeah delighted to be able to talk about it a little bit more today.
Chris Parker: Yeah absolutely and we are happy to have you back. And so Jarett since you're new to here, I want to get to know you a little bit more. Who are you, why are you the way you are, And what do you do as Senior Manager of Supply Chain Solutions?
Jarrett Hendricks: Well, I don't know if we want to go deeply into why I am who I am. I'm not sure we have enough time there but yeah. So I worked for Ian and I've been with the company for 20 some odd years in the industry for about 30 plus and my role is to lead the Living Model service, which as Ian mentioned is our Digital Twin technology as a service offering. My background is a lot of logistics. I've got an engineering background and now leading the Living Model Service.
Chris Parker: How'd you get into logistics and eventually into this Living Model Service?
Jarrett Hendricks: Well, I started logistics, loading aircraft on the ramp at Phoenix for a company called America West Airlines. So I started there. Now some of our top folks started as runners I started as a cargo handler and then worked for a domestic forwarder and then an international logistics company and then finally Expeditors. So I've had a lot of experience in logistics, both on the IS operations, sales and debt management, and now consultant.
Chris Parker: That's incredible and one question that I do like to ask people, I'm always curious is why do you care about what you're doing today with Digital Twins?
Jarrett Hendricks: Well, Digital Twin is an exciting technology. We all believe very passionately that it is simply a better way to manage a supply chain. So it's always good if you can be passionate about what you do and this is something that it's easy to be passionate about because of the benefits that it can return in terms of better managing supply chain.
Chris Parker: Let's go ahead and jump into today's topic. So first things first for anyone who has never heard of this before, what is a Digital Twin?
Ian Mallison: What is a Digital Twin? That's a great question. Well, all of us at some time have been in a Digital Twin, whether you've been in a simulator or in the fairground and in one of those rollercoaster simulators or learned to drive a car or an airplane or a helicopter, all of these simulators are Digital Twins.
Ian Mallison: So Digital Twins, aren't new. In fact, I think, I think back to the 1970s. So the NASA was one of the first ones to create a Digital Twin in order to be able to look at the behaviors of the engines and the rockets and simulate what was going to happen rather than practicing with the real one and throwing them up in the air and seeing what happens. So Digital Twins have really forged their way into a place where people can practice and explore, understand what's happening and then also not only understand what's happening, but perhaps look at some changes that you might want to do within a safe environment.
Ian Mallison: And then of course, if you do make any changes and implement those changes back in the real world, how you might measure those changes and make sure then that any cost savings or alterations actually did in the real world, what they were supposed to or what they looked like they would do in that simulated world.
Ian Mallison: So yeah, the Digital Twins, taking the world of supply chain now are becoming quite popular in being able to give customers full visibility of their supply chain. Whereas in the past perhaps it was rather fragmented and perhaps they multiple systems of records, multiple transport providers, all providing data separately. To try to mash all of that together in one place could have been in a spreadsheet. Good luck with that.
Ian Mallison: And so now the Digital Twin concept really is some advanced database or as an advanced database and optimization tool, which allows customers to really for the first time get a full view of exactly what's happening in their real world, but created in a digital environment. And then like I said, they can start to play games with it, which is fantastic.
Jarrett Hendricks: Very simply stated a Digital Twin is a virtual representation in virtual space of a physical structure in real space and the information flow between the two that keeps the virtual synchronized with the real and it is that last part the information flow between the two and the way that the virtual models must be constructed in order to accept that flow of information. That is the key difference between Digital Twin technology and the classic model based engineering that we've been doing for quite some time.
Jarrett Hendricks: And then as Ian had pointed out, right? This approach allows you to fully understand what is currently happening in the physical structure that you're twinning or modeling. It allows you to explore what will happen as changes are made to that physical structure or process and then to measure changes that you may impose upon it, right? And measure execution to design, as you say. So, that essentially is what a Digital Twin is.
Chris Parker: Ian, you've brought up if I've been in a Digital Twin before. I've been in a simulator at the fairgrounds, I've gone through a driving tool of some sort. Why not just call it a simulation? Why are they different? How are they different?
Ian Mallison: Well, they're not necessarily different. I mean, they're basically the same thing. So a Digital Twin is that virtual image of the real world. And I'm a huge Formula One fan, Chris, and I watched these drivers drive around some of these racetracks around the world with just enormous accuracy and speed. But of course, before they get to the racetrack, they sit in this simulator, which is a Digital Twin and are able to practice then and understand it, feel the way that the car is going to react and then apply that. So once they practice and understood it, seeing exactly how it's going to react, they then able to apply that into their real racing. And also they might have even tried different techniques, different speeds, different corner techniques, et cetera, within the simulator. And then they can see how it's going to apply in the real world and make those changes.
Ian Mallison: So I was saying in the world of supply chain, it really does help customers get a better picture of how the supply chain is responding, what perhaps is the current cost overall of their supply chain, what's the responsiveness of that supply chain, what's the carbon impact on their overall supply chain?
Ian Mallison: So that's the first real powerful benefit of this tool, which is visualization to start with, just understanding what's going on today and then you can then start to make some simulations about, well, what if we change things? What if disruption occurs? How could we best explore some opportunities? What if we try different new and different things. So, that's what this tool really benefits customers in order to do.
Chris Parker: Before we go into how logistics companies are using Digital Twins. I want to take a step back and let's look at this a little bit more industry agnostic, but what's the last 10 years been like for the Digital Twins? How are they being used today? How have they been received? How are they impacting the world essentially?
Jarrett Hendricks: So right now, Digital Twins are being deployed for three main purposes, either to design better physical structures and that's what our Digital Twin is focused on the Living Model. Maintenance to maintain systems, either through diagnostics, advanced prognostics, to understand when systems are going to go down or things are going to go down and to intervene in order to keep that from occurring or execution to optimize in real time, the operation of systems.
Jarrett Hendricks: And really if you go out all the way back to the 70s, the original NASA Digital Twin was a combination of the three, right? They used it to design their module while it was in space they used the information flow to execute and to maintain those systems.
Jarrett Hendricks: Currently it started gaining traction about three or four years ago in manufacturing. So now you're using it for machines to keep more of designing the systems but also maintenance and now of course, they're being used in the energy side of transportation in terms of building jet engines and any type of advanced engineering applications. It's getting a lot of traction there. They're also starting to gain traction with freight trains and real time adjustments based on the weight and in the fuel efficiency, air flow, things like that.
Jarrett Hendricks: But in logistics, mostly it is focused on either design of systems of networks, either the network topography if you will, where your nodes are and are they positioned correctly, do you have the correct number of them, transport flow strategy through them. So that is really where they're starting to gain traction in logistics.
Chris Parker: These Digital Twins within logistics world, are they only provided by logistics companies or have you found organizations able to adopt their own or to build their own?
Ian Mallison: So we've found a number of different versions of Digital Twins in talking to our customer base, primarily around software providers. So customers have perhaps invested in their own software in order to be able to create some version of a Digital Twin. Our service offering as the Living Model is slightly different in that we are a managed service, so we're not a software provider. So it's not a software as a service, SaaS service, our service is a managed service.
Ian Mallison: So we provide a great deal of human interaction, as well as the tools behind the scene in order to be able to provide the customers with what they need. But we do find that human element is vital. Being able to understand the flow of data that's coming into the Digital Twin in the first place. Also recognizing perhaps some of the weakness in that data that's coming in as well and being able to identify that. And also using machine learning together with human endeavor to make sure that the information that's flowing into the system is as accurate as it possibly can be.
Ian Mallison: And then the outputs. So the outputs that come out of the visualizations and the outputs that come out of the Digital Twin is something that, again, takes a great deal of human intervention in making sure that those outputs are conducive to the customer's needs. They are constantly evolving, constantly changing and they bring a lot of observations that the customer then wants to drill down on. Which is, "Well, what if we move this or I noticed something strange is happening with my supply chain over there? Let's take a closer look at that."
Ian Mallison: So by visualizing the behavior of a supply chain, it generates an awful lot of questions or it ratifies that it's working well. Whichever way you want to look at it. It's very useful to have that kind of insight.
Chris Parker: You brought up a really good point there with the fact that this Digital Twin technology is constantly changing. What's that speed been like? And how have logistics companies or the logistics industry been able to keep up with it? What is being done now or what conversations are being had to in order to stay on top of all these changes?
Jarrett Hendricks: So I think it's important to point out that in the logistics space, we're not seeing a lot of Digital Twin technology. If you think about it, to create a Digital Twin, you need advanced simulation and optimization software, you need industrial engineers, and you need an understanding of logistics. And so if you put all those three things together a company can do that by themselves.
Jarrett Hendricks: But if you're going to do that for another company, then of course you have to have that software, you have to have those people, you have to have that. And that's what we are doing and what we're really not seeing other logistics service providers doing, not saying that there aren't other logistics service providers providing Digital Twin technology as a service. We're not aware of them but otherwise the way that you create a Digital Twin is by being a software company and providing consulting. So we really do feel that Expeditors is leading the market in terms of offering Digital Twin technology to our customers and the service.
Chris Parker: True or false the Digital Twin is the golden ticket, then. We can just call this, right now. All of our problems have been solved by the Digital Twin, is that true?
Jarrett Hendricks: No, certainly not but it is definitely a better way to manage a supply chain and I have often used the example of, do you need a Digital Twin in order to manage your supply chain? No. Companies have been managing their supply chains for quite a long time without it but I always draw the example of our ancestors navigated the oceans, sailed the oceans for centuries, without the benefit of a technology based navigation aids. But would they do it now? There is a better way to do it in Digital Twin technology is that a better way?
Ian Mallison: Yeah. So I've been talking to a lot of customers, certainly over the last 12, 18 months about this technology. And it's been a fascinating conversation. And with Jarett's analogy that we know about navigating the globe, I've got a more domestic one.
Ian Mallison: Its you remember when you didn't have a dishwasher Chris in your house. Well, you might still do you might instead wash the dishes and then there's a dishwasher sales person whose stood next to you saying, "Hey, I've got something that's really going to help you and automate a lot of the functionality and just help you get a better life." And you are going to say, "I haven't got time to look at this dishwasher. I'm too busy washing the dishes." That is the perfect analogy.
Ian Mallison: That's what at the moment customers are saying. "I'm not quite sure what this strange thing is that you call a Digital Twin. I'm interested but I'm super busy at the moment and somewhat distracted in what I do." So that's very much a key point as well. Which is actually if you do take a little bit of time out of your day to research this and even give it a try, you might find that it does actually help in the long run with the day-to-day activities that you're so busy firefighting with.
Chris Parker: That's a very good point. What else stands in the way of adopting a Digital Twin into the way that your company does business?
Jarrett Hendricks: Well, first off you have to have visibility into the activity of our supply chain. Digital Twin technology is another manifestation of that truism, "visibility is going to help you improve the performance of your supply chain," and this is exactly that, but what is data and what is visibility, right?
Jarrett Hendricks: It is the data that describes activity that is occurring in your supply chain. So if you don't have this visibility to that activity, then you're going to have a hard time building a simulation of that, a virtual rendering of it. So the data is a certainly a barrier or can be a barrier.
Jarrett Hendricks: This is a technology that can help you overcome that barrier though, as well, right? By exploiting the visibility that you do have. And as you work towards getting more better data, this can really highlight areas where your data may be deficient as you start running models and simulations using that data. It can expose those weaknesses and incense you to start going back to the source to correct those weaknesses and improve the quality of your data or the clarity of your visibility.
Jarrett Hendricks: So certainly data can be a barrier if the natural resistance to a change in the way that you do things, right? I think our biggest competitor is the do nothing, right? To continue to manage the supply chain, the way you're managing it right now. You can certainly continue to limp by and watch pass by or rather not watch pass by all of the opportunities to improve your supply chain that you're not exposed to because you don't have this process in place.
Ian Mallison: If you compare the classic modeling network design techniques, which we still do as part of our overall group. One of the biggest time factors of any research or modeling is as Jarett referred to is the data. It's collecting the data, cleansing the data and understanding the dynamics of that data.
Ian Mallison: If I take an average lead time for a project to say 90 days from kickoff to feeding back the results to the customer. 70% of that time in that 90 days is going to be collecting data, understanding it and visualizing that and creating the base case in order, then to be able to come up with some ideas about how you might optimize it or change it or improve it. So the flow of data is absolutely critical and one of the issues of course as Jarett was referring to.
Ian Mallison: With the Digital Twin, it solves one of those problems and the flow of data is continuous. Now, whether that's every hour, every day, every week, every month, the flow of data can be determined into the Digital Twin environment on a regular basis and I should add that flow can be through API or EDI or flat-file transfer. You can even send an Uber with some data in it if that's what you want to do. So for us it doesn't matter how that data actually gets positioned within the Digital Twin. It's what you do with it then.
Chris Parker: So it needs to be constantly flowing?
Ian Mallison: It needs to be constantly flowing, but by having that regular flow of data, then that already puts the customer in an advantageous situation because the data's there immediately available to us to be able to start to manipulate and start to understand, rather than running around the building, trying to find it say, "Hey, I've got a good idea. Let's look at how we can optimize something."
Ian Mallison: Step one is let's find some data so that's already in place. So projects can be turned around within days or weeks, rather than months, compared to a traditional modeling approach.
Jarrett Hendricks: That flow of information. That is one of the three main parts of the Digital Twin. And just before we leave that, another thing that is a barrier is fragmentation in the number of service providers that you have, right? Because it all comes down to the flow of information, the training information, the more partners that you have, anytime you move data between systems, you have to translate that data and the more times you're moving data, the more partners that you have, the more translations you have the more opportunities for mistranslation.
Jarrett Hendricks: So while visibility across the supply chain, as a key enabler is true. Fewer deeper relationships also promotes better clarity, quality of visibility. So that's also another inhibitor of applying technology if you have so many service providers that you can't corral the data.
Chris Parker: It makes me think of that old fable about the group of blind men who find this mysterious creature. They describe it in different ways and it turns out that they're all talking about an elephant. The more providers that you're working with, there's going to be different interpretations and different offerings, different levels of quality of the data that you're receiving. How the heck do you parse through it and then provide it to the Twin in a way that makes the most sense and also gives you the clearest picture possible that you can get back.
Ian Mallison: That's very good. But I remember that fable as well. I've seen a cartoon version of that one too and there's a fifth wise man that find something on the floor that has come out of the elephant and that they have a slightly different perspective of that one. So, that was a good cartoon.
Chris Parker: Yeah, he learned the most that day.
Ian Mallison: He did. Yes.
Chris Parker: Okay. So Digital Twin we were talking a lot about data and how Digital Twins will benefit from a lot of data to build a strong simulated environment. What about companies that don't have that historical data? Do they lose out on whatever benefits that other companies could be getting from this?
Jarrett Hendricks: Well, there are ways to simulate transactions in order to create it. Ultimately we use terms like simulation, but they have deeper engineering connotations as well and the simulation versus optimization, the different solve types and that key to this is a simulation of a supply chain. And a simulation, you have to have the activity that is occurring. Now, whether that's historical activity or whether it's forecasted activity or projections of activity, you have to have something to create that simulation.
Jarrett Hendricks: And you can do that if you don't have historical information or it's changing so quickly or so dramatically, that it really doesn't have any relevance to the current situation, for example the year that we've just gone through, the disruption that COVID has ensued a lot of the modeling that we're doing, we're basing on 2019 data, just because 2020 was so abnormal, but there are ways to simulate transactions or activity. If we don't have that.
Chris Parker: How do we as a freight forwarders or other logistics companies what do we get out of the Digital Twin? How does this make us a better provider?
Jarrett Hendricks: Oh, well, that's a really good question. What this allows us to do in conjunction with the customer is just have a better understanding of what's happening in their supply chain, right? And objective understanding of what's happening. So we find that it greatly deepens the transparency, the trust within the relationship.
Ian Mallison: Yeah, it's an interesting dynamic, Chris, because the Digital Twin is agnostic. So it's not related to any particular freight forwarder or transport provider. It's an extension of the customer's world of which involves multiple service providers and multiple partners. So really then it provides meaning and understanding to the customer. So they can then react to it within their real world. Which may or may not include certain freight forwarding companies or certain partners.
Ian Mallison: So the design functionality that simulation functionality enables them to take that next step and implement or execute against some of that design work the Digital Twin has created for them which, like I said, may involve changing multiple things with multiple partners. One of which may or may not be Expeditors. So, it's an agnostic service for the customer to be able to utilize.
Chris Parker: Yeah, absolutely. All right. So last question for you guys is then what are the qualities, if any of a company that makes sense for them to engage with Digital Twins is any company too big or too small for this kind of technology?
Jarrett Hendricks: Maybe too small, right? There is an investment to this or if you have a completely static supply chain that isn't changing, you're not growing, you're not experiencing any type of disruption and you're not looking for opportunities so there are potentially companies like that. And certainly whether you have somebody build a Digital Twin for you or whether you have them operate a Digital Twin for you or whether you do it yourself.
Jarrett Hendricks: The software and the hardware and the industrial engineers, they're not inexpensive. So you do have to have a certain amount of transportation spend in order for this to make sense. But in terms of the low end, there probably is a company that would be too small for this. But in terms of on the large end, again if you think about this in terms of research and development for the supply chain, which is what it is then what company is not going to benefit by better understanding their supply chain and driving efficiency into it and waste out of it. So there's no upper limit to a company that could benefit from this technology.
Chris Parker: For sure.
Ian Mallison: I'd like to add as well, a slightly different spin on that, rather than at a company level is more as a personal level. We found that the individuals that we deal with in our customer base have real game changers. They are very dynamic individuals, have a lot of questions, "What if I need to know, I need to understand, I need to perform, I need to improve my overall supply chain environment?"
Ian Mallison: So engaging with people that are genuinely trying to improve their overall situation within their company, that's a very common trait and dynamic, and also it makes them look very good, Chris, internally. No doubt about it, because the outputs, the visualization, the information that this tool then provides them they can then take that internally into their boardroom and provide pretty mind blowing information, which has never been seen before in that organization.
Ian Mallison: So I'm not going to say a byproduct of the Digital Twin gets promotion for some of these customers, but I'm going to say it certainly can make them look very good and in the right situation.
Jarrett Hendricks: Yeah. That's actually a really good point that Ian made. This is a tool that helps you establish and demonstrate mastery of your supply chain. And that can be a great personal benefit for either account managers or people like the customer.
Chris Parker: If people were thinking about, "Hey, I would like to be a game-changer," and they want to get into contact with either of you, where could we direct people to learn more and have more conversations with you about Digital Twins?
Ian Mallison: Yes, Chris. Well, absolutely you can look me up on LinkedIn and my details are available there and also course through Expeditors branches and there's an easy way to get in contact with me and any other Supply Chain Solutions team, frankly. Globally, we're always willing to help and sit down with customers and just talk about their supply chain.
Chris Parker: And Jarett you actually had a blog post about a Living Model that I'm going to share in the show notes here on our Horizon blog. Is there any other ways to get into contact with you to learn more about your thoughts on Digital Twins?
Jarrett Hendricks: Yeah, same as Ian I'm available on LinkedIn and of course anybody you talk to, if you take your normal channels into Expeditors , they'll find their way to Supply Chain Solutions and into us.
Chris Parker: Yeah, absolutely. Well, thank you so much for your time, gentlemen. This is a fascinating topic. Really appreciate your time. Take care.
Jarrett Hendricks: Good. Thank you very much.
Ian Mallison: Thanks, Chris.
Chris Parker: Thanks for listening to today's episode. If you've got any questions or want to learn more about today's topic, check out the show notes for more information. And before you go, make sure you're subscribed on whatever podcast app you're using so you won't miss the next episode. To learn more about Expeditors, you can find us on LinkedIn, Facebook, Instagram, and Twitter, or simply visit us at expeditors.com. Take care, and I'll see you next time.
