Piecing together the supply chain infrastructure puzzle

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March 14, 2019
Piecing together the supply chain infrastructure puzzle

A supply chain infrastructure consists of physical and digital assets that move products from the manufacturing to retail level—and back. For most consumer goods brands and retailers, this covers systems used by suppliers and production sites, warehouses and distribution centers, trucks and couriers, and retail partners (both online and offline).

Yet in spite of everyone existing in a common network, few companies can say that their supply chain works effectively as one. Instead, it’s often more like a scramble of puzzle pieces, as each party relies on their own systems, databases and business rules. Unfortunately, these disconnects invariably lead to inefficiencies and supply and demand imbalances.

In this post, we will look at the systems that make up the supply chain infrastructure puzzle and how Blockchain offers a way to piece everything together.

Suppliers and production sites

Upstream in the supply chain, suppliers and manufacturing sites have varying levels of technical sophistication. We can separate them into three tiers:

  1. Tier one suppliers and manufacturers are more advanced. They use software, such as enterprise resource planning (ERP) systems and quality management systems. In addition to being large, they are usually farther along in the adoption of digital tools, making it easier to connect with other parties in the supply chain to support production planning.
  2. Tier two are medium-sized sites. Most of them use spreadsheets or a homegrown solution for production planning. They usually rely on email to work with the rest of the supply chain.
  3. Tier three suppliers and manufacturers have advanced machinery for production, but they still use paper and pencil to capture process data and plan production. With everything on paper, it’s hard for these sites to integrate with others in the supply chain.

Warehousing and logistics

When it comes to distribution, company warehouses, logistics providers and third-party logistics (3PL) providers manage the storage, fulfillment and shipment of goods. They typically use a warehouse management system to coordinate orders and direct staff or automated systems to pick the required products.

To ship products to stores, logistics providers or 3PL providers may use a transportation management system (TMS) to manage trucks traveling around the country. A TMS helps with prioritizing and scheduling deliveries, as well as tracking and tracing orders.

Retail channel partners

Online and offline stores tend to use internal ERP and Point-of-sale (POS) systems to manage existing stock, capture sales and calculate sell-through velocity. These systems help to gauge consumer demand and thereby inform production and replenishment upstream at the production level. Unfortunately, these two ends of the spectrum use very different metrics and key performance indicators, creating inaccuracies with demand forecasting and costly supply and demand imbalances.

How Blockchain pieces together the puzzle

Using a permanent, decentralized record of every transaction and product movement, Blockchain enables companies to connect their vast supply chain networks so that everyone can work together, no matter what system they may use.

All records are transparent and visible to everyone connected through the Blockchain, making it easier to identify sources of issues, costs, or inefficiencies. Real-time data flow via Blockchain supports proactive production planning, as organizations can see exactly what people are buying at the moment and stay one step ahead of the curve.

The benefit is an equilibrium between supply and demand with right product types and quantities available where they are wanted most. This reduces instances of stockouts and lost sales. Companies can minimize overproduction, excess channel inventory and the associated carrying costs. Ultimately, everyone is working on the same page to drive profitability and business growth based on accurate, real-time demand.

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