Digital twins for franchises: training, management and decision making

• Grant number: 22/13371-6
• Support Opportunities: Research Grants - Innovative Research in Small Business - PIPE
• Start date: July 01, 2023
• End date: March 31, 2024
• Field of knowledge: Applied Social Sciences - Administration - Business Administration
• Principal Investigator: Eduardo Ferreira Franco
• Grantee: Eduardo Ferreira Franco
• Company: Nextgoal Treinamento Profissional Ltda
• CNAE: Atividades de consultoria em gestão empresarial ; Atividades de apoio à educação
• City: São Paulo
• Associated researchers: Joaquim Rocha dos Santos ; Vinicius Picanco Rodrigues
• Associated scholarship(s): 23/09415-0 - Digital Twins for Franchises: Requirements Identification and Definition, BP.TT; 23/09414-4 - Digital Twins for Franchises: Identification and definition of indicators, BP.TT; 23/08042-6 - Digital twins for franchises: training, management and decision making, BP.PIPE

Abstract

The main objective is to develop a Digital Twin (DT) to be used by the franchisee in three moments: (i) Implementation/training phase; (ii) Business monitoring and management; (iii) Simulation of scenarios for decision-making. The technical-scientific challenge is in the need to create a DT capable of representing the complexity of the business, but also the complexity of the environment (market sector, seasonality of consumption, etc.), allowing the user's interaction with the solution to generate data, information and knowledge through experimentation, allowing decision-making. We will use the Systems Dynamics approach to modeling and development. System Dynamics has already been proved to be useful in the development of DTs, as seen in Sánchez et al. (2020) and Gejo-García et al. (2022), both in manufacturing. However, like Wache and Dinter (2020), we understand that the DT can also be considered in the context of management/strategy, successfully integrating into the organizational routine, and influencing it. We will use, as a methodology, the Modeling Process proposed by Sterman (2000), composed of five steps: (1) Articulation of the problem; (2) Formulation of the dynamic hypothesis; (3) Model formulation; (4) Test; (5) Policy formulation and evaluation. The process is iterative, the iterations can occur between any steps, that is, the process itself feedback its steps with new knowledge, which can change the understanding of the problem, the hypothesis, or the formulation of the model (STERMAN, 2000). The main expected result is a prototype of the DT. The strategy within the Modeling Process is to run a pilot application, applying the prototype in the training phase. With this application, we will be able to test the DT with respect to historical behavior and the correspondence of variables to their respective meanings in the real world. As well as understanding more about the usefulness of the recommendations considered in the model, since we will be in direct contact with a potential customer. The entry strategy in the sector is from the franchisor's side, because: The franchisor must offer support to franchisees; It is also the franchisor who makes decisions about training and management systems; and, Thinking as NextGoal, we see great potential for scalability of the product, as a franchise brand has several units, and accessing a brand, we can quickly scale to other units. Considering the user's point of view (franchisee/franchisor), the use of DT is capable of bringing benefits in different aspects: Financial (example: improving cash flow management); Marketing (example: support in market research); Commercial/operational (example: more access to managerial information); and Aspects of the franchise (example: a platform for franchisee training). Finally, the franchising market conditions in Brazil are quite attractive. The sector was booming before the COVID-19 pandemic, with a 6.8% growth in 2019, exceeding BRL 186 billion (ABF, 2020). After the drop in numbers with the COVID-19 crisis, the sector recovered quickly, growing in revenue in the last 5 quarters (until the 2nd quarter of 2022), with 16.8% growth in the second quarter of this year alone (ABF, 2022a). (AU)