Digital Twin (DT)-based services including Industrial Internet of Things (IIoT) are essential for achieving the vision of Smart Production Logistics and enhancing manufacturing competitiveness. DT-based services combining IIoT provide real-time location of materials and optimization of resources for addressing mass customization and fluctuating market demand. However, literature applying IIoT and achieving DT-based services in Smart Production Logistics (SPL) is scarce. Accordingly, the purpose of this study is to analyze the combined use of DT-based services and IIoT in SPL. We propose a framework combining DT-based services and IIoT for the real-time location and optimization of material handling. The study draws results from an SPL demonstrator based on a case in the automotive industry applying the proposed framework. The results show improvement in the delivery, makespan, and distance travelled during material handling. The study provides critical insight for managers responsible for improving the delivery of materials and information inside a factory.