Loading, unloading and managing inventory in the warehouse – that’s what inventory management is all about. Managing inventory requires a huge amount of time, effort and many people. The problems surrounding managing inventory in the warehouse include food spoilage, dead stock, storage cost, stock-outs, employee errors, etc. Most of the existing systems which keep track of inventories are outdated, so there’s an obvious need for something revolutionary to improve the industry. Here’s where blockchain and Modex BCDB (Blockchain Database) come in.
Blockchain adoption in the supply chain industry set to grow
According to the 2019 MHI Annual Industry Report, blockchain adoption in the supply chain industry only sits at 5% but is projected to grow to 54% over the next 5 years. The projected adoption is understandable, as blockchain presents a way for manufacturers to proactively manage inventory and drive business growth with complete transparency and real-time data flow from source to shelf.
The companies that choose to tap in now, will be ready to reap the benefits sooner rather than later. According to the same survey, manufacturing and supply chain operations continue to invest heavily in innovation. 57% of respondents said they are planning new technology investments totaling more than $1 million over the next two years, which represents a 10% increase over the 2018 report. 34% plan to spend more than $5 million and 22% plan to spend more than $10 million.
Supply and demand imbalances
Pratik Soni, co-founder and CEO of Omnichain Solutions, believes that inventory management is a game of reactive manufacturing planning and replenishment for most consumer packaged goods (CPG) manufacturers. “They see demand in the market increase and raise production in response. An item sells out, and they produce more to stock brick-and-mortar stores and online fulfillment centers. Many are resigned to continue operating in this reactive model despite challenges in trying to gauge and meet fluctuating demand. More often than not, a reactive model creates supply and demand imbalances, which can go a number of ways.”
An item may have been popular, but by the time a company is ready to restock, people may have already moved on to the next big thing. Businesses end up with excess channel inventory, which results in expensive carrying costs. There also comes the problem of what to do with the excess inventory. Do you sell them at significant markdowns? Do you move them to overstock stores, outlets or other secondary channels?
A company may under-project demand and not manufacture enough products. They then have to scramble to deliver adequate replenishment, while unhappy customers deal with out-of-stock items, leading to lost sales. So, summing them up, the main problems that arise in inventory management are the high cost of inventory, stock-outs, a high amount of working capital, shipping wrong inventory items, a high amount of obsolete inventory, employee errors and lack of optimization.
“The reason companies have to stick with a reactive model is the disconnect that exists between their upstream and downstream supply chains”, believes Soni. “After all, most are dealing with a complicated, widespread network involving disparate suppliers, manufacturing plants, distribution centers, and retail channel partners – each using their own processes and systems for managing transactions and the movement of goods. The resulting data silos mean manufacturers can’t get visibility into consumer-level demand ahead of time, so they can’t proactively plan production levels further upstream in the supply chain.”
A new, secure and more efficient approach: blockchain
Given its characteristics, blockchain can be the answer to all these problems. By design, blockchain enables consumer packaged goods brands and manufacturers to connect each party in their value chain — from suppliers and production sites to distribution centers and retail partners — with a holistic and permanent record of every single transaction that takes place. These records are stored and accessible to everyone within the network. This level of transparency and permanency can be helpful for manufacturers that have to manage product origins, traceability, potential recalls and even perishable goods that have a limited shelf life.
Any transaction recorded in the blockchain is immutable (not erasable) and there’s no chance of fraud. The decentralized record-keeping system makes everything in the network transparent so that the parties involved in inventory management can work with integrity. With a blockchain solution, the data flows seamlessly between parties in real-time, so manufacturers can gain instant visibility into consumer-level demand, something they could not achieve before.
As a result, they can more accurately forecast demand and proactively plan for manufacturing and replenishment, rather than simply react to stock-outs. This ensures that they always have the right types of product and amount of stock to meet demand, with limited excess. It is in this sweet spot that they can optimize revenue and profitability, while eliminating the potential for lost sales and carrying costs. This keeps the people in warehouses at check.
In managing inventories, especially in large warehouses, you cannot always generate more revenue, but there’s always room for reducing costs. With blockchain in place, there’ll be complete transparency in the network which provides the trust among involving parties and helps users track the exact path of the item including its origin. By seeing everything in real-time, it is much easier for the employees to manage excess inventory, clearing stocks, managing stock-outs and helps reduce employee errors.
The inaccuracies can be easily calculated which helps reduce costs and maximize revenue which is what a potential business always strive to achieve. Lower costs also serve as a competitive advantage, so your business will always be more efficient than competitors. Also, by keeping track of the sales cycles and production on a daily basis which is always easier on the blockchain, businesses can benefit by looking on it and plan necessary changes and implementations.
Reshaping inventory management with Modex BCDB
Modex BCDB is a new take on blockchain technology which removes the need to invest resources in blockchain training and facilitates fast adoption of the technology in businesses. The solution proposed by Modex is a middleware which fuses a blockchain with a database to create a structure which is easy to use and understand by developers with no prior knowledge in blockchain development.
As a result, any developer who knows to work with a database system can operate with our solution, without needing to change their programming style or learn blockchain. Through our blockchain component, Modex BCDB is able to transform with minimal changes any type of database into a decentralized database which holds the same valuable characteristics inherent to blockchain technology: transparency, increased security, data immutability, and integrity.
Thanks to its groundbreaking features and its true agnostic approach to both data and blockchain engines, Modex BCDB (Blockchain Database) can optimize real-time inventory management while providing accurate forecasting, transparency, better risk management. With Modex BCDB, companies in inventory management can keep a better track of production and sale, thus gaining a competitive edge and consolidating the effectiveness of the business.
Modex BCDB doesn’t work by deleting the existing database, or data entries. The database is maintained intact throughout the process, data integrity is ensured by calculating the metadata of the records and storing it on the blockchain. Moreover, the system does not restrict access to the blockchain or to the database, so when a developer needs to make a reporting or ETL transformations, they can always perform warehouse analytics by accessing the database directly. This is because Modex BCDB has been purposely designed to be agnostic. With our solution, clients are able to set up a network, regardless of the type of database employed.
Blockchain company Modex is promoting the adoption of blockchain technology and strongly believes in a future built around blockchain. Modex offers fully integrated services designed to solve the last mile adoption problem of the blockchain and aims to make blockchain user-friendly for every single device or person.
At Modex, we can innovate thanks to our incredible team of experts and we offer services for the entire blockchain technology ecosystem: Marketplace for Smart Contracts, community tools for developers and blockchain as database services for enterprises. In over two years, using cutting-edge technologies and with a clear strategy, Modex has evolved from the world’s first app store for blockchain into a complex ecosystem designed for developers’ needs and enterprises looking for blockchain solutions. Our mission is to spread and facilitate the adoption of blockchain into society and to solve real-world problems using this revolutionary technology.