When it comes to inventory planning and replenishment, companies and brands traditionally operate under a reactive model. Demand rises, so they increase production and output. Items run out of stock, so they send more goods to fulfilment centers. However, a reactive model also means they are always one step behind the curve.

Inventory planning, replenishment and forecasting become major challenges as they try to navigate an increasingly complex marketplace, where demand is constantly fluctuating, the number of SKUs is growing at an exponential rate and manufacturing lead times can vary significantly from product to product.

Moreover, a reactive approach invariably leads to supply and demand imbalances. Companies end up with excess inventory or slow turnover due to heightened output on items that were in high demand – but no longer are. This also results in hefty carrying costs ultimately leading to product markdowns. On the other hand, they may under-project demand and fail to deliver adequate replenishment on popular products, resulting in out-of-stocks and therefore lost sales.

The problem is lack of visibility into consumer demand. After all, today’s multichannel supply chains stretch across widespread suppliers, production sites and warehouses, with each using its own unique processes, databases and systems. This creates data silos and fragmented operations, making it hard to gauge demand downstream and properly plan upstream in the supply chain.

Now blockchain technology offers a radical, new way to connect these disparate parts. It enables companies to shift from a reactive approach to inventory planning, replenishment and forecasting to a proactive one.

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