Economics of Digital Twins: Costs, Benefits, and Economic Decision Making

Published

October 30, 2024

Author(s)

Douglas Thomas

Abstract

This report examines the economics of digital twins in the manufacturing industry, including the costs, benefits, and economic decision to invest in the adoption of a digital twin. It characterizes the costs and benefits along with the circumstances under which digital twins are likely to be cost effective. The report develops a proposed 5-step method for investment analysis in digital twins. Finally, it provides an approximated estimate of the potential impact of the adoption of digital twins in the manufacturing industry to be $37.9 billion. A Monte Carlo simulation varying key factors of this estimate by -50 % and +20 % (i.e., biasing it downwards) and assuming that digital twins account for between the 80th and 95th percentile of data tracking and analytics investments by cost, puts the 90 % confidence interval between $16.1 billion and $38.6 billion with a median of $27.2 billion. From these estimates, one could reasonably surmise that the potential impact of digital twins is likely in the low tens of billions of dollars.

Citation

Advanced Manufacturing Series (NIST AMS) - 100-61

Report Number

100-61

NIST Pub Series

Advanced Manufacturing Series (NIST AMS)

Pub Type

NIST Pubs

Download Paper

https://doi.org/10.6028/NIST.AMS.100-61

Local Download

Keywords

Digital Twin, Manufacturing, Investment Analysis, Manufacturing Economics, Modeling, Data Utilization

Citation

Thomas, D. (2024), Economics of Digital Twins: Costs, Benefits, and Economic Decision Making, Advanced Manufacturing Series (NIST AMS), National Institute of Standards and Technology, Gaithersburg, MD, [online], https://doi.org/10.6028/NIST.AMS.100-61, https://tsapps.nist.gov/publication/get_pdf.cfm?pub_id=958153 (Accessed February 24, 2025)