In the quest for sustainable production, manufacturers are increasingly adopting mixed-flow production modes to meet diverse product demands, enabling small-batch production and ensuring swift delivery. A key aspect in this shift is optimizing material distribution scheduling to maintain smooth operations. However, traditional methods frequently encounter challenges due to outdated information tools, irrational task allocation, and suboptimal route planning. Such limitations often result in distribution disarray, unnecessary resource wastage, and general inefficiency, thereby hindering the economic and environmental sustainability of the manufacturing sector. Addressing these challenges, this study introduces a novel dynamic material distribution scheduling optimization model and strategy, leveraging digital twin (DT) technology. This proposed strategy aims to bolster cost-effectiveness while simultaneously supporting environmental sustainability. Our methodology includes developing a route optimization model that minimizes distribution costs, maximizes workstation satisfaction, and reduces carbon emissions. Additionally, we present a cloud–edge computing-based decision framework and explain the DT-based material distribution system’s components and operation. Furthermore, we designed a DT-based dynamic scheduling optimization mechanism, incorporating an improved ant colony optimization algorithm. Numerical experiments based on real data from a partner company revealed that the proposed material distribution scheduling model, strategy, and algorithm can reduce the manufacturer’s distribution operation costs, improve resource utilization, and reduce carbon emissions, thereby enhancing the manufacturer’s economic and environmental sustainability. This research offers innovative insights and perspectives that are crucial for advancing sustainable logistics management and intelligent algorithm design in analogous manufacturing scenarios.