How Blockchain Can Help Businesses Respond Quickly to Consumer Demand

Companies tend to be reactive with inventory planning and responding to consumer demand. Even while they could “guess” that demand would spike during the holiday season, they would have no way of knowing how much demand would rise and fall without visibility into their supply chains. This almost always leads to supply and demand imbalances. Inventory planning, product replenishment, and demand forecasting in an increasingly complex marketplace involves the following problems:


  • Demand is constantly fluctuating.
  • Number of product items keeps growing exponentially.
  • Manufacturing lead times vary widely from product to product.


Usually when demand rises, manufacturers increase production output to meet the rising demand. However, sometimes they react too slowly and end up running out of stock for certain products. Such stockouts directly translate into lost sales. Conversely, when demand falls, manufacturers cut back production. If they are slow to cut back production, however, they may end up with an overstock of inventory items resulting in hefty storage costs and product markdowns after they depreciate in value.


Part of the problem with inventory data is lack of visibility into consumer demand via ordering patterns. Without full visibility into that data, companies cannot accurately gauge consumer demand, let alone make forecasts. The other part of the problem is that in today’s business landscape, supply chains span globally among multiple suppliers, production sites, and warehouses, each having their own data systems and processes. This leads to silos and fragmentation, where data is not easily shared among a supply chain network.

Being More Proactive Using Blockchain Technology

Blockchain provides a way for companies to digitize and track their transactions in an immutable and hyperconnected distributed ledger. Such a distributed ledger serves as a  data repository where all transactions are visible and available–in real time–to all parties within the network. These parties can include suppliers, production sites, distribution centers, and fulfillment centers.


This level of transparency builds trust, accountability, and collaboration. Data availability in real time helps manufacturers streamline operations and make critical decisions regarding inventory planning and replenishment in their supply chains. These organizations can gain instant insight into what consumers are buying, optimize manufacturing planning, and make more accurate forecasts based on consumer behaviors. They can also make sure they always have the right type of items and the right amount of inventory in their warehouses.

Reducing Counterfeits and Product Recalls

The two biggest problems with supply chains from a data perspective are:


  1. Understanding and knowing where your inventory is.
  2. Matching inventory items with the right customers.


The importance lies in knowing where an item came from in case something goes wrong. For example, if a batch of lettuce gets the blame for an E.Coli outbreak, it is imperative for the producer to trace the source of that batch and recall all batches originating from that source at around the same time. For instance, blockchain technology helped Walmart trace the origin of contaminated food in 2.2 seconds, instead of more than 6 days before they implemented the use of blockchain.


Similar traceability is important for luxury goods for counterfeit prevention. Each luxury item can be authenticated against data stored on the blockchain, where everything is visible and immutable. Customers can check that data to make sure the products they are buying are real. However, this only works if there is end-to-end consistency with recording every action on the blockchain such that there are no breaks in the chain that inject doubt about whether the item was really created in the specified factory.


Supply chain planning in a modern post-industrial world with multi-echelon global distribution networks is difficult and requires the emergence of new technology. In a complicated marketplace, it is all too easy to lose inventory data accuracy and supply chain visibility. Blockchain helps provide transparency while protecting the intrinsic security, veracity, and value of all supply chain’s data.


Above all, blockchain makes that data useful to all decision-makers within a supply chain network, helping their companies become more nimble and agile in a rapidly evolving marketplace where consumer behaviors can change in a flash.

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