Most Chief Supply Chain Officers (CSCOs) are failing to fully account for their customers in their current digitalisation plans. According to a Gartner survey, a lack of recognition of the transformative potential of a digital twin of the customer (DToC), a nascent technology that can revolutionise demand forecasting accuracy, vastly improve customer experience and serve as a critical input to enhance the use of AI/ML tools.
The survey of 380 supply chain leaders in January 2023 found that while 60% are piloting or plan to implement a digital supply chain twin (DSCT), just 27% were also planning to incorporate a DToC as part of their digital strategy.
Gartner defines DToC as a dynamic virtual mirror representation of a customer that simulates and learns to emulate and anticipate behaviour. A DToC can and should complement a broader DSCT.
The relatively few CSCOs that are actively engaging in DToC pilots today are using the technology to help shift from a cost-centric and reactive posture to one that is instead proactive and growth-oriented.
“Supply chain leaders understand the importance of the customer in their physical supply chains, but most have not yet translated this lesson to the digital realm,” said Beth Coppinger, senior director analyst in Gartner’s Supply Chain Practice.
She opined that the opportunity for transformational benefits from a digital twin of the customer far exceeds the potential that most supply chain leaders see today.
Beth Coppinger
"A digital supply chain twin that includes a digital twin of the customer can account for changing customer behaviours under a variety of conditions and support the growth plans of the organisation.”
Beth Coppinger
Without an effective digital representation of their customers (e.g., retailers, consumers, patients, and machine customers), CSCOs will be disadvantaged in driving growth. Expected outcomes of the DToC include transforming demand forecast accuracy, increasing responsiveness and improving the customer experience, among other benefits (see Figure 1).
Figure 1: Expected Outcomes from a Digital Twin of the Customer Initiative
Source: Gartner (July 2023)
Among the potentially transformative benefits of a DToC is the chance to completely reinvent customer demand forecasting accuracy, which will augment and potentially supplant current demand-sensing tools. A future DToC will be able to accommodate many different inputs from a wide variety of sources and update customer behaviours and responses in real-time.
In parallel with AI, the DToC will be able to simulate different responses to natural language queries about customer demand and then feed those responses into the broader digital supply chain. This will allow supply chains to take a more proactive stance in responding to a wide range of disruptions and trends.
Perception among key barriers to adoption
Coppinger pointed to a lack of awareness of the transformational benefits of a DToC as compared to other emerging technologies. While 52% of supply chain leaders polled viewed AI as an “important and disruptive” technology and 40% indicated the same for digital supply chain twins, that figure dwindled to just 27% for a DToC.
Beyond perceptions, supply chain leaders pointed to a lack of digitalisation skills, concerns about customer trust and data privacy regulations as the top barriers to adopting a DToC. Many of the roadblocks to DToC adoption occur due to the need for the supply chain to integrate and align cross-functionally in areas including data, talent, and investment, according to Coppinger.
Coppinger says continuous collaboration between functions is difficult, but that is what is required for improving customer experience.
“Chief Supply Chain Officers who are focused on orienting their function towards growth (and not just cost) cannot afford to cede sole responsibility of customer experience to their business partners,” she concluded.
