Lenovo Transforms Supply Chain Operations with Blockchain
Lenovo is a strong believer and developer of innovative solutions, so it is not surprising that the company would adopt emerging technologies internally to optimize its own supply chain. Lenovo has consistently been recognized as a global leader in supply chain, but is always looking for new ways to improve operations. To optimize the movement of raw materials, components and $43 billion in finished products each year between factories, distribution centers and customers, Lenovo has implemented emerging technologies such as blockchain.
Blockchain is a digital, decentralized ledger database that records and stores all transactions between users on a given network. Transaction records (or ‘blocks’) are timestamped and cryptographically secured, locking them in a linear, chronological order. This provides a transparent, immutable collection of every record, safeguarded against tampering.
With blockchain, leaders at Lenovo aim to improve visibility and efficiency, drive revenue growth, and ultimately transform their supply chain from a cost center into a profit center.
“We already have best-in-class systems and processes in place, and have been recognized by Gartner as an industry leader in supply chain excellence,” said Bobby Bernard, Global Procurement and Supply Chain Executive for Lenovo’s Data Center Group. “But we’re always looking for ways to optimize operations even further, and blockchain stood out as the ideal way to increase visibility and transparency across the supply chain.”
Vishnu Kotipalli, Lenovo’s Global Supply Chain Strategist, also saw a clear advantage in using blockchain: “It’s the ideal platform for recording supply chain transactions, as it makes it much easier to track and audit the movement of goods,” he said.
Blockchain Increases Transparency and Efficiency in Inventory Procurement
Inventory procurement was a logical place to test blockchain as a proof of concept. Previously, Lenovo used paper to exchange purchase orders and invoices with original equipment manufacturing partners. Bernard saw a huge downside in this process: “It’s a lot of paperwork, which inevitably leads to inconsistencies due to human error, forms lost in the shuffle and so on,” he said. “We want to put this entire process onto the blockchain to make it completely transparent. So rather than sending paper or electronic documents back and forth, everyone will be able to exchange information securely via a blockchain platform. And there can be no question of when a supplier submitted an invoice, for example, as the transaction record is there for everybody to see.”
Moving the procurement process to blockchain also saves a tremendous amount of time. What used to take weeks and even months with the exchange of paperwork now takes only days or hours on the blockchain platform.
Passing Successful Blockchain Solutions on to Customers
Building upon this success, Lenovo plans to implement blockchain technology in other areas of its supply chain, including asset management, supplier onboarding, business partner compliance, software royalty management and tracing the origin of minerals and metals used in production. And ultimately, the company plans to offer blockchain-based supply chain solutions as services to its customers.
Having experienced the benefits of blockchain firsthand, Bernard is excited to help customers institute this emerging technology in their operations as well: “We know from our own experience how powerful a tool blockchain is and the potential it has to transform supply chain operations for the better – now we want our customers to realize that power too,” he said.