3 cost-cutting benefits of Blockchain in the supply chain

Post by
July 18, 2019
3 cost-cutting benefits of Blockchain in the supply chain

When it comes to managing their supply chains, brands and retailers are tasked with finding the most effective way to move goods through the value chain—while keeping costs down and customer satisfaction up. It can be hard to get a handle on costs, however, without a comprehensive view across your supply chain.

Businesses today are managing complicated networks of suppliers, producers, distributors, and sales channels that each use their own disconnected system and metrics—a particularly challenging task for those still relying on manual methods or outdated software. The result?  Inefficiencies that eat away at your bottom line and inhibit growth.

Distributed ledger technology (a.k.a Blockchain) presents the ideal solution. Supply chain management platforms powered by Blockchain can help today’s businesses connect each link in their value chain with a permanent, shared record of all transactions and goods movement.

Brands and retailers can use this end-to-end visibility to tackle key issues that drive up costs and realize the following benefits of Blockchain:

  1. More efficient operations

Your business is only as good as your data. And when access to data is limited by a fragmented supply chain, so too is your business’s ability to track and measure key performance indicators.

Holistic data shared on the Blockchain offers businesses the visibility needed to dig deep into key operational issues, pinpoint sources of inefficiencies and identify excess costs. They can thereby make smarter, strategic decisions involving procurement, production planning, fulfillment, and more.

For example, businesses can evaluate supplier performance based on data logged on the Blockchain, and use that insight to build out a reliable network of key suppliers. This guarantees consistent access to quality materials and components, which will prevent costly delays and have a major impact on productivity downstream.

And when it comes to channel management, for instance, businesses can use real-time sales data to allocate products to warehouses and distributions centers based on nearby demand signals. With goods strategically positioned, businesses can reduce fulfillment cycle time and shipping costs while improving customer satisfaction.  

  1. Demand-driven business growth

Inventory forecasting, planning and replenishment can be major sources of frustration for many brands and retailers. They always seem to be one step behind consumers: loosely forecasting based off historical sales data, reactively adjusting production output after sales spike and sending replenishment after items sell out in stores.

This approach invariably leads to costly supply and demand imbalances. In short, they wind up with inventory they can’t move or not enough to satisfy demand.

Excess channel inventory comes with hefty carrying costs, including warehousing fees, insurance, taxes and losses due to shrinkage and depreciation. Overstock is eventually marked down or sent to discount outlets—finally selling at very low-profit margins or even at a loss.

On the other hand, out of stocks also cost companies big in missed sales opportunities and lost customer loyalty. In fact, a recent studyestimated that North American retailers are missing out on $47.4 billion each year due to missing items on store shelves.

Instead, Blockchain enables companies to see exactly what is being manufactured, shipped and sold at any moment for instant insight into inventory levels and real-time demand. They can then proactively optimize manufacturing planning and store-level forecasting based on true demand.

With the right types and amount of SKUs always available, with limited excess, companies can eliminate the costs of inaccurate inventory levels, keep customers satisfied and capture every sale.  

  1. Blockchain-as-a-service scalability

With large enterprises like Walmart and Target regularly in the news about their ventures into Blockchain, many small-to-midsized businesses have been hesitant to investigate the technology due to the perceived high cost of an enterprise-wide system.

In reality, the days of needing to invest in extensive infrastructure, lengthy implementations, and expensive updates are over. Now available through a Blockchain-as-a-service (BaaS) model, the latest Blockchain solutions bring benefits of distributed ledger technology to companies of all sizes.

BaaS implementations are fast and simple, as the platforms can be accessed from any device with an internet browser. And since they are available through a monthly subscription-based payment method, they are cost-effective for nearly any budget. Moreover, BaaS solutions are scalable and can easily grow along with your business trajectory.

Though many enterprises have traditionally treated their supply chain operations as a cost center rather than an integral part of their strategy for success, Blockchain offers a new approach. By leveraging the benefits of BaaS, today’s brands and retailers can gain the insight needed to reduce expenses, boost profitability and improve customer satisfaction—transforming their supply chains from a cost center to a competitive differentiator.

Case Study
White Paper

Oops! Something went wrong while submitting the form.

You Might Also Like...

Further Reading

Back To Top Arrow