When it comes to inventory management, retailers and companies traditionally operate under a reactive model. Inventory management with blockchain technology can help significantly reduce imbalances and inefficiencies faced by manufacturers.
According to a report, the adoption of blockchain in inventory management stood at about 5% in 2018. It is projected to increase to 54% over the next five years. The growing trend of performing inventory management with blockchain is understandable, as it enables companies to connect every part of their supply chain with a secure, transparent, and permanent record of transactions solving the biggest problems faced by inventory management teams.
Current Problems Faced in Inventory Management
The current inventory management is based on the supply-and-demand methodology. Companies face a huge challenge in managing their supply chain network with this technique. There is a lack of visibility down the supply chain which hinders the assessment of customer demand. These supply chains comprises multiple partners like suppliers, distribution centers, and retail partners. Each of these parties uses their own methods and systems for managing transactions and the movement of goods. This practice is highly inefficient as companies are always a step behind the market needs. There is always a possibility of delay in meeting the market needs, which leads to financial losses. Companies can face losses if they understock or overstock goods while anticipating market trends. Also, a lot of time and human resources are wasted if there occurs any miscommunication or error in the supply management system. Data manipulation and unethical practices followed by employees is also a serious issue faced by companies. Blockchain helps connect all the parties involved in a unified, fixed, transparent, and decentralized record. This helps minimize discrepancies and helps companies stay ahead of the curve.
Proactive Inventory Management with Blockchain
Blockchain helps each party involved in the supply chain to connect with the others. It helps improve communication between parties within the supply chain and leads to fewer errors. Blockchain helps in streamlining the workflow and maintaining a hassle-free and accurate system as the data is available in real time. Blockchain is a decentralized ledger that provides complete security and transparency to all the transactions that happen in the supply chain. The transaction records are stored and accessible to everyone within the network. The data once recorded cannot be changed without the approval of every party involved, and every transaction and change on a blockchain is traceable. This helps in reducing frauds committed by employees and provide for a time-saving traceable procedure if some instance of fraud arises. Companies can predict market demand more accurately by adopting blockchain technology. As a result, the inventory management team can proactively plan for restocking, rather than simply react to stock-outs.
Blockchain can help companies to change their existing approach to inventory management. Transforming inventory management with blockchain and other advanced technologies can help companies change their approach from reactive to proactive.