Blockchain & the Big Supply Chain Infrastructure Puzzle

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September 11, 2018
Blockchain & the Big Supply Chain Infrastructure Puzzle

An infrastructure defines the fundamental physical and organizational structures of any society or enterprise. For consumer goods and electronics manufacturers, their supply chain infrastructure consists of both physical and digital assets needed to get products made, transported from point A to B (and back) and sold to the end customer. It stretches across suppliers and production sites, enterprise resource planning (ERP) systems, warehouses and their intralogistics solutions, trucks and couriers, all the way down to the retail and e-commerce level – and everything in between.

Every link in the supply chain has a role in the movement and transaction of goods. However, in spite of everyone existing in a common network, few manufacturers can say their supply chain operates like a well-oiled machine. There are inevitably disconnects, which lead to inefficiencies as well as supply and demand imbalances. The problem is each party operates more like an island in the grand scheme of things, relying on individual systems, databases, metrics and rules. Instead, companies should rethink their supply chain infrastructure and reimagine it as a single, cohesive entity.

In this post, I will examine different components of a supply chain infrastructure – including their unique management systems – and how blockchain presents a radical, new way to tie everything together.

Suppliers, manufacturing sites, & technologies

Upstream in the supply chain, there are suppliers that are responsible for developing components and parts, and manufacturing plants where final products are assembled. They can be categorized in three tiers based on their technological capabilities.

  • Tier one suppliers and manufacturers are more advanced, equipped with software such as ERP systems, production planning tools, and quality management systems. These are familiar names such as Foxconn, Flex, and Foxlink. They predominantly have large, global footprints and have a digital presence that makes it possible to connect with other parties further downstream in the supply chain for more accurate planning.
  • Tier two are medium-size organizations. They may not have the latest and greatest technologies, but they do have tech-related processes in place. Most use spreadsheets or a homegrown solution for production planning. They have moderate levels of connectivity with the rest of the supply chain via email.
  • Tier three suppliers and manufacturers have advanced machinery and capabilities from an engineering perspective. However, most still use paper and pencil to capture manufacturing data and to coordinate production plans. They often don’t have ways to convert the written information into working documents, which hampers connectivity and integration with other systems in the supply chain.

Distribution & logistics

In the fulfillment and warehousing corner of the supply chain, there are logistics providers or 3PL providers that manage inventory storage, order fulfillment and the shipping of goods. They typically use a warehouse management system to capture inbound orders and direct either warehouse staff or automated systems to pick the required products.

On the freight side, the same logistics providers or 3PL providers may use a transportation management system (TMS) to manage inbound freight and trucks traveling across the country. A TMS helps with prioritizing and scheduling truck activity. It also provides visibility needed to track and trace orders, and anticipate possible delays in transportation.

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