Is blockchain the future of inventory management?
Introduction
When it comes to distribution and inventory management, the current reactive model lacks balance and proper distribution. With Blockchain Technology, manufacturers, supply chain management, and retailers can benefit in terms of efficiency and transparency.
Here I will share the pros and cons of this innovative technology and whether it can be the future of inventory management. Before that, let’s take a quick look at Blockchain Technology, when it started and how it disrupted every industry.
Blockchain Technology
Satoshi Nakamoto, the pseudonym behind the popular digital currency Bitcoin, invented Blockchain Technology. Many attempts failed to solve the double-spending problem of cryptocurrencies before this technology was developed.
Cryptocurrencies have become possible because of Blockchain. Due to which many retail investors are able to earn their living by trading cryptocurrencies through crypto trader. Since people discovered that virtual currencies could give them better returns, they started to learn more about the technology behind them and how it works.
Gradually, people from different industries found that Blockchain can solve many real-world problems. So, they started implementing it in different sectors, and inventory management can significantly benefit from it. So, let’s see what the problems are with the current inventory management system.
Issues with the Current Inventory Management System
The present inventory management system works in the conventional supply-demand model. It’s not efficient because there is miscommunication between manufacturers, supply managers, and retailers. Everyone in the supply-chain system uses a different method to manage their inventory, which makes the whole process ineffective.
Apart from that, companies face many problems due to unethical practices and data manipulation by employees. Due to the errors, communication gap, and lack of transparency, companies have to bear huge financial losses. With the adoption of Blockchain technology, the losses can be significantly reduced by maintaining a proper flow of real-time data.
How Can Blockchain Solve those Problems?
The decentralized nature of Blockchain Technology allows every party in the network to connect with each other. Since everyone is connected, there will be fewer errors as they can communicate with each other. As data is available in real-time, it can streamline every process in the supply chain system efficiently.
Moreover, the permanent record of real-time data provides high security, and every party can clearly see every transaction in the network. It makes the whole network free from unethical practices, frauds, and errors. So, Blockchain technology can provide many potential advantages over the present reactive model of inventory management.
Advantages of Blockchain in Inventory Management
Here I have mentioned the advantages of Blockchain Technology in inventory management.
- The ability to provide real-time data can eliminate errors due to miscommunication, unethical practices by employees, and frauds.
- It can save a lot of time as every party can access the real-time data, trace goods transport, and ensure the quality of the products. It can potentially reduce workload and improve trust between different parties in the network.
- Blockchain can also reduce the cost of distribution of goods by properly channelizing the supply chain.
Drawbacks of Blockchain in Inventory Management
Although Blockchain has some benefits over the current model, there are some drawbacks that you need to consider before choosing it.
- Blockchain is still young, and every industry is not familiar with the technology.
- It will take a lot of time and cost to fully implement throughout the supply chain of a company.
- Since the technology is new, nobody knows about the potential flaws in this system. So, every company cannot take that risk and deal with the uncertainties.
- Companies need to train their employees to adopt the technology, which can cost them a lot.
Is Blockchain the Future of Inventory Management?
Only a decade has passed since Blockchain Technology came into existence, but it has wide applications in several industries. According to a recent report, only 5% of the companies have adopted Blockchain Technology for their inventory. Even though it has many potentials, it’s difficult to implement, and it’s still immature, and nobody knows about the uncertainties. So, it’s time to wait until more companies adopt this and explore the challenges in adopting Blockchain.
