Digital Twin promises several advantages for Warehouse management, but what is this concept? Can it apply to your business?

Digital Twin, a concept that originated in the space industry, is gaining attention due to its vast potential in various sectors, including Logistics. This series of articles will go through Digital Twin’s application in several aspects of Logistics, starting from Digital Twin for Warehouse Management.

An overview: Digital twinning definition and its main features


In a research conducted by DHL, a digital twin is defined as “A unique, virtual model of a physical thing. It typically connects to the thing, updates itself in response to known changes to the thing’s state, condition or context.”

The origin of the concept dates back to 2002 when Dr. Grieves from the University of Michigan gave a presentation called “Conceptual Ideal for Product Lifecycle Management.” 

The concept in this paper contains all the key elements of Digital Twins which are:

  1. a real entity
  2. a virtual entity
  3. data flow from the real entity to the virtual entity, and vice versa 
  4. virtual sub-entities.

Afterward, NASA adopted and developed the theory. Using paired simulations, it refined and selected the optimal solutions for the Apollo 13 spacecraft repair in 1970. The technique continued to evolve and became digital twining since the early 2000s but only gain popularity when key supporting technologies reached a certain maturity. Some of those are:

  • low-cost data storage and computing power
  • fast wired and wireless networks
  • affordable and proper sensors

DHL also indicates that digital twinning is much more complex than other pre-existing 3D modeling methods, and there are numerous contributors to this advanced simulation model. However, the majority of experts agree on five key factors below that distinguish digital twining:

factors of digital twin
These characteristics help resolve current issues or improve the efficiency of warehouse operations. (Source: Deloitte)

Specific characteristics of warehouses that make digital twins so valuable

In recent years, Digital Twin for Warehouse management is gaining popularity thanks to its benefits. Let’s go through some of them.

All – around – the – clock operation

First of all, warehouses generally operate 24/7, and it is very costly to shut them down for rearrangement and optimization. However, it would be detrimental if companies weren’t to seek renovations. Because the complexity of stock-keeping units (SKUs) classification (due to the rapid expansion of e-commerce) is increasing, and the competition of providing faster delivery is on the rise.

Digital Twinning can generate virtual avatars of every asset of the warehouse and conduct simulations on floor plans, workflows, SKU mix, and shipment profiles, McKinsey indicates. This approach could be more cost-effective than shutting the warehouse to run tests in the long term.

Various factors in the warehouse can impact assets’ conditions

Secondly, various factors in the warehouse can impact assets’ conditions. Given the fact that Digital Twin represents an entity at one specific condition, companies can examine different possibilities of an item in other situations without the risk of damaging it.

Improve Quality control procedures

Thirdly, current quality control procedures require a large amount of manual work. Meanwhile, Digital Twin can update the host object’s status continuously. We can also save more human capital if assets’ conditions are supervised automatically and only need manual checks in specific cases. 

Solve difficulties in micro and macro governance

Finally, the nature of warehouse complexity creates difficulties in micro and macro governance. Thus, the ability to simulate different parts and functions of the warehouse both mutually and individually would facilitate experts to see issues both holistically and in detail.

Suppose digital twinning is correctly integrated with other advanced techs such as intelligence (AI), machine learning, and augmented/virtual reality (AR/VR). In that case, managers can gain insights and teach the system to solve similar problems next time they arise.

Benefits of digital twins for Warehouse Management

According to McKinsey, the global budget spending on warehousing is around $350 billion, and it keeps increasing each year. With digital twin applications, warehouse efficiency is predicted to rise by 20-25%. This improvement is likely to bring about a notable saving on operating and capital expenses.

Additionally, digital twinning allows the companies to gain a bigger picture of warehouse operation and make drastic changes, rather than settling for partial enhancements of the current layout and process.


Furthermore, this technology enables better estimation of potential effects of mechanization and automation possibilities, covering all the spectrum of vendors and products available.

Last but not least, firms can resort to digital twins in VR/AR personal training. For instance, DHL deploys AR/VR picking systems training with wearable equipment gadgets such as Google Glass Enterprise Edition or Microsoft HoloLens to help employees practice vision picking tasks on simulations before actually delivering the job.

Remaining challenges of Digital Twin for Warehouse management

Despite such promising advantages, manufacturers still face difficulties developing and integrating digital twins into Warehouse Management’s current operation. DHL analyses seven main obstacles that worth considering:

  1. Cost: considerable initial investment in platforms, model development, and maintenance.
  2. Precise representation: impossible perfect simulation leads to unavoidable assumptions, simplifications in model development, and compromise with the desired outcome.
  3. Data quality: underlying risks from inconsistencies of data streams
  4. Interoperability: limited alternatives of technology providers.
  5. Education: Adoption of new working processes that challenge change management and ability building.
  6. IP protection: risks of product and customer data exposal that require more restrict data ownership, identity protection, data control, and access governance.
  7. Cyber Security: possible new points of entry for cybercriminals.

Confronting these obstacles requires lots of effort from the business. However, Mrs. Janina Kugel, board member and Chief HR Officer of Siemens, suggests that the change must be rooted in a leadership approach. Managers and leaders should be more open to learn, guide and empower their employees towards the new technology shift that was merely fictional 20 years ago. Each manager and leader needs to enhance their knowledge and their communication and other soft skills.

In a nutshell, Digital Twinning is a promising technology with multiple applications that could benefit warehouse management. It is predicted to be one of the change-makers in the sectors soon. Thus, it is wise to research and consider appropriate adoptions for your warehouse to keep pace with or even gain a competitive advantage in the Logistics industry.

Read more: Digital Twin Series Part 2: Digital Twin Application in Shipments