Issues With A Typical Supply Chain
Supply chains have always been one of the most significant hindrances in manufacturing. It is a common experience that most companies face issues on a daily basis which require direct attention and quick response. With supply chain being at the core of business operations, these issues can directly affect the company in substantial ways. Some of the issues that affect supply chains include:
Keeping a detailed list of items in the right quantity, in the right place, at the right time, and at the right cost is very essential to the management of business activities. As an element of supply chain management, inventory management includes aspects such as controlling and overseeing ordering inventory, storage of inventory, and controlling the amount of product for sale. But the problems that occurs most times is how to implement the best inventory management techniques to ensure the best results.
As supplier management is fast becoming a leading priority for many companies, the need for more control of supplier relationships has grown out of a greater appreciation of procurement risks. Gaining awareness of how healthy the supply chain is a key issue. It means having visibility of suppliers and setting clear expectations of service. The main goal of good suppliers’ management is to utilize suppliers to drive down costs, improve profit margins and enhance product quality and flow.
Unfortunately, many companies lack supplier management capabilities, and as such, are unable to realize the full value of their supply base. As a matter of fact, in most cases, poor operational effectiveness often leads to costly disruptions and disputes which can prevent buyers from achieving margin and turnover targets.
Safety and Quality Maintenance
The rapid growth of supply chains brings concerns about the quality of products that are made in other countries. Particularly when components of a product need to meet regulatory standards. This puts companies at risk of recalls. This means that supply companies are responsible for ensuring suppliers and their products maintain safety and quality standards. Recalls or safety issues can tarnish the image of a company, and affect its financial base.
Most companies are too reliant on one supplier. Supply chain managers must mitigate risks so that an unforeseen contingency in from the supplier’s end does not halt the company’s production processes. Adequate backup plans help ensure that the company’s supply chain is flexible to handle changes. For example, if one supplier goes bankrupt, the company’s supply chain continues on without profits being affected.
Often there are problems associated with transparency in the two-way exchange of information between customer and supplier. Nowadays, almost everyone is curious about a product’s origins. Managing such information to ensure its accuracy, usefulness, and security is no small task. But, as complex as the task may be, the benefits to a company are often well worth the effort. Transparency, if wisely marketed, can win the confidence of consumers who are inclined to buy your products.
To address these issues, some companies like IBM and Walmart have virtually taken over their respective industries with innovations in supply chain.
Supply chains are what make the world go around. However, the problems with most supply chains, are things that happen in the middle of the process. Many companies know where processes start and where they end up. But how they get there, and what happens between each checkpoint, is relatively unknown.
Ceramics, for example, is sensitive material. It needs to be carefully handled, it needs to be kept within certain temperatures to ensure quality, and it needs to be tested, to ensure it adheres to the required standards.
The challenge with adhering to all these regulations comes down to the fact that many of the processes that make up a product’s supply chain are severely outdated. They are done manually, with orders being tracked by warehouse workers. And what happens if a shipment falls outside a certain temperature bound somewhere along the way? Is it considered spoiled? Is it still fine to move along to the next checkpoint? Should it be sent back to the original supplier?
The truth is, these decisions are made ad-hoc and left to human decision, when in reality, we have the technology today to automate almost every single portion of a supply chain’s process. It’s called Blockchain, and major producers are already beginning to experiment with this technology.
What is Blockchain technology?
The Blockchain is a decentralized public ledger where transactions are recorded and confirmed anonymously. It’s a record of events that is shared between many parties. The blockchain has the following major properties:
- It is transparent
- It has no single point of failure
- It cannot be controlled by any single entity.
- It cannot be corrupted
One of the best things about the blockchain is that, because it is a decentralized system that exists between all permitted parties, there’s no need to pay intermediaries and it saves time and conflict. The decentralized ledger could be used for smart contracts, otherwise called self-executing contracts, blockchain contracts, or digital contracts.
What are smart contracts?
A smart contract, also known is a computer program that directly controls the transfer of digital currencies or assets between parties under certain conditions. A smart contract not only defines the rules around an agreement in the same way that a traditional contract does, but it can also automatically enforce those obligations. It does this by taking in information as input, assigning value to that input through the rules set out in the contract, and executing the actions required by those contractual clauses.
Companies Utilizing Blockchain Technology
Many companies in the industry today are utilizing the benefits of these self-executing smart contracts. The first of its kind in building transparent tracking system in the industry is Armor Ceramics.
Armor ceramics is a High-tech Ukrainian company, focused on the production of refractories. As a subsidiary of Savex Minerals Enterprise. Armor Ceramic's goal is to phase out the necessity of imported products in the molded and unmolded refractory material market of Ukraine, creating of self-sustainable refractory market within Ukraine, and developing transparent blockchain-based tracking system. The company aims at creating an innovative industrial enterprise, which is capable of replacing imports in the relevant market segment.
First of all, let me tell you about the brains behind this project.
Armor Ceramics is a Ukrainian company formed by a team of industry experts. The Co-founders, Goncharenko Dmitrii and Onyshchenko Serhii both have over 10 years of experience in the international metallurgical company Interpipe and business experience respectively.
Other team members feature Suprun Alexander, the Chief Financial Officer. He was formerly the Chief Financial Officer of the insurance company PAO “Insurance Company Dnipromed”, he established financial reporting system compliant with The International Financial Reporting Standards (IFRS), he has been managing the cash flow of more than $50 million a year, optimized workflow for 80 employees, and implemented the ERP system. Since 2017, Chief Financial Officer at Armor Ceramics. He is engaged in assessing the risks and financial effectiveness of transactions, investment programs and projects of the company. He created a system for management reporting and a system for cash flow management. Alexander is responsible for all financial relations of the company.
The team includes Polyga Dmitrii, the Chief Technical officer, he has developed a product line of new refractory products, as a result reduced the costs of metallurgical plants by 30%. As a technical specialist, he was invited to the EZZ Steel (Egypt) plant for consulting. Since 2017, Chief Technical Officer at Armor Ceramics. Dmitrii is responsible for establishing and leading of the technical department, establishing quality control pipeline for raw materials, and general quality control of the products. Dmitrii is an expert in setting up a manufacturing process for new products.
Rybalko Alexander, the chief engineer, he was the head of production of high-refractory aluminous molded products at PAO “Zaporozhogneupor” – the largest producer of refractory products in Ukraine. Since 2017, Chief Engineer at Armor Ceramics. Responsible for optimization of raw materials and energy resources consumption. Expert in the production technology of pressed and vibro-cast molded refractories. Alexander regularly visits partner factories, taking part in testing of new products, communicating with colleagues and sharing experience.
The team also includes Selchuk Vladislav, the sales director. He was the Sales Director at LLC “Ukrainian refractories”. The company was selling Ukrainian and imported refractory materials to metallurgical plants. Since 2017, Sales Director at Armor Ceramics. Vladislav has ten years of experience in the refractory materials market. During this time, he built long-term partnerships with top managers of all metallurgical enterprises in Ukraine.
Also, one of the erudite members of the team includes Iegovskaya Natalia, the Head of Foreign economic activity department. She has headed the Foreign economic activity department at Savex Minerals. Since 2017, Natalia is the Head of Foreign economic activity department at Armor Ceramics. She is an expert in maintenance of import and export supplies, cooperation with freight forwarding companies, negotiating and setting up contracts with foreign partners.
The rest of the team consists of erudite professionals with many years of experience in technical, financial and Businesses.
This rare opportunity of having varieties of technically versed individuals has given Armor Ceramics an edge over other companies in the industry.
How it works
How does the whole solution works?
1. Overcoming the overwhelming demand for refractory products:
According to statistics, Ukraine has one of the 5 largest reserves of iron ore in the world. It is also one of the top 10 metal producers globally, and one of the world’s largest cement producers. As such, Ukraine possesses vast supplies of the raw inputs needed to create industrial refractory materials. The above-mentioned facts form a great demand for refractory1 products. Unfortunately, Ukraine does not produce a quantity and quality of refractory products proportional to its potential as a raw material.
Despite the opportunity for local production, 30% of refractory materials in general and 60% of refractory ceramics are imported, along with 20% of all molded products. Thus, the demand for local substitutes to import products is very high due to the high cost of imported products. Since Imported products of the required quality have a higher cost, and a number of shortcomings associated with delivery and production terms, Ukraine is seeing a huge demand for a domestic producer to completely or partly substitute the refractory imports market.
Being a subsidiary of Savex Minerals, Armor Ceramics solved this solution by specializing in the production of high-tech refractory products. To achieve this aim, the company plan to go for an Initial coin offering (ICO). The pre-ICO was scheduled to start on October 19, 2017, at 12:00 UTC, details of the ICO can be found here.
2. Effective Business Model
The team has devised import substitution for internal market as the best solution to completely displace the need to import goods. Also, efficient business plan is designed for customers to replace imported refractory goods to goods manufactured domestically. Putting all these measures in place, the enterprise is estimated to realize $250,000 per month, and the profit will be distributed among Armor Ceramics token holders.
In addition, a certain amount fee will be charged for adding information to the SupChain
3. Solving the problem of lack of access to trustworthy, useful, and unbiased data about manufacturers and their products:
In response to this problem, Armor Ceramics created SupChain technology. The SupChain technology is the next evolutionary step in supply chain management infrastructure.
The SupChain is an innovative technology to store and access refractories data via a blockchain, developed and implemented by Armor Ceramics. It is built on the Ethereum blockchain technology, and will allow all participants of the supply chain to track the step by origin of the product throughout the supply chain and its compliance with the established quality indicators, it will be the first transparent universal solution for product tracking system in the industry.
The system has the capability to allow enterprises exchange information, perform arbitrage functions, collect marketing information about clients and markets, as well as implement protection of property rights. The global result of the system expansion to all product manufacturers will enable the MANUFACTURER to work directly with the CONSUMER under profitable, flexible and reliable conditions.
The SupChain system allows you to:
- Access the production data and technical indicators
- Provide feedback regarding the quality of the supplied materials
- Make suggestions about improvements
With all these features of the system, all the data will be accumulated in the system, forming reference list for companies with the use of unmodifiable distributed ledger technology based on the Ethereum platform. The SupChain token creates an infrastructure with unprecedented transparency and reliability.