‘Chaining’ the warehouse


By using the body as a metaphor, we can analogise a warehouse as the heart and inventory as the blood within a business’s supply chain network.

WE ARE taught from a young age that the heart is one of the most important organs in our body.

It is the organ that pumps blood throughout our body supplying oxygen and nutrients to the tissues and other organs in order to function. Our brain requires oxygen or we will lose consciousness. Our muscles need oxygen in order to contract normally. If the heart stops functioning and ceases to pump blood, our entire body will struggle to function and eventually we will die.

A warehouse provides a constant flow of inventory to ensure the demands of consumers are adequately met on a daily, weekly and monthly basis. However, just as our hearts are susceptible to clogged arteries, arrhythmias and other congenital defects which need medical intervention, similarly warehouses are also prone to issues such as inaccurate inventory, redundant processes and lack of visibility that need some form of managerial or process intervention. The common theme or intervention that has been advancing the field of medicine and supply chain management is the adoption of ‘innovative technologies’.

One of these emerging innovative technologies within the field of supply chain management and logistics is blockchain technology. By the end of 2017, blockchain technology became a mainstream buzzword used in social and corporate settings.

This is mostly attributed to the incredible rise (and subsequent fall) of Bitcoin as an alternative payment currency. However, there are still many individuals and businesses that do not fully understand the potential blockchain technology holds, especially its role in the supply chain and the digitalisation of warehousing processes and functions.

According to Seebacher and Schüritz, blockchain technology can be defined as “a distributed database, which is shared among and agreed upon a peer-to-peer network. It consists of a linked sequence of blocks (a storage unit of a transaction), holding time-stamped transactions that are secured by public-key cryptography (i.e. hash) and verified by the network community. Once an element is appended to the blockchain, it cannot be altered, turning a blockchain into an immutable record of past activity.”

To put it more simply, a blockchain is blocks of data that are connected, hence the term blockchain, which is shared by all individuals or businesses in a network, thus making them accessible to relevant parties. The question you might be asking yourself right now is, “What is the use or significance of blockchain technology in a warehouse that is largely a physical and labour intensive domain?”

C.J. Cherryh wrote, “Trade isn’t about goods. Trade is about information. Goods sit in the warehouse until information moves them.” This is exactly the use and significance of blockchain technology in a warehouse. Blockchain can provide accountability, visibility, traceability and security of information to which other systems and processes are inferior in comparison. As the information on a blockchain is immutable, maintaining accurate documentation for audit by warehouse managers and other authorities is much easier and effective as no transaction or piece of information can be retroactively altered.

Due to the decentralisation component of blockchain technology whereby all information is shared to all parties within a network, the enhanced visibility and consensus protocols aid to mitigate any disputes among parties. These can include or be related to inventory levels, inventory reconciliation, charges levied, service level agreements and billing.

The benefit ultimately also reduces the time and costs involved in the above-mentioned activities.

The traceability benefit of blockchain technology improves the ability to find out where the inventory comes from and follow its route throughout the entire transformation and distribution chain. This enables warehouse managers to safeguard and have peace

of mind that the inventory coming into and flowing out of the warehouse is not counterfeit, unethical or detrimental to the reputation of the organisation. In the food industry, it’s imperative to have solid records to trace each product to its source.

Lastly, blockchain technology can also ensure added security to warehouses both in terms of authorised personnel access to the warehouse as well as securing of goods in storage. Digital identity management combined with tags or sensors affixed to pallets can ensure that access is provided only to authorised personnel to handle or move inventory and tampering of inventory is automatically recorded and alerted on the blockchain.

From an African context, the rise in urbanisation coupled with the increase of the middle class, it is predicted that the demand for goods is only going to increase. Perhaps it is time for organisations to have a check-up on the condition of their supply chain ‘heart’ and ensure that they are not merely ready to just adopt innovative technologies, but embrace them.