When manufacturers and distributors are blind to consumer demand as it is happening at the retail level, inefficiency and waste spread across the supply chain. In the replacement tire industry, that adds up to USD 2 billion a year.
Why? Without timely visibility, manufacturers over-produce the tires consumers don’t want by a systemic factor of 30 percent. And because they are manufacturing the wrong tires, retailers are experiencing a simultaneous 30 to 60 percent shortfall in fill rates of orders from suppliers.
Industry leader American Tire Distributors (ATD) is using blockchain to tackle the problem by convening a network, TORQATA, to serve all participants in the tire supply chain through shared, trusted information. For example, the network is using IBM Blockchain Transparent Supply and advanced analytics to build an automated replenishment system triggered by sales data from the tire retailers. The result is a demand-driven supply chain, which one study (PDF, 861 KB) showed can improve sales with on demand availability of products by 4 percent, cut operating costs by up to 10 percent and reduce inventory by up to 30 percent.