Inventory Title-Holding Model for Just-in-Time Supply Resilience
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Solution Overview
Problem
Conventional inventory management methods result in increased financial burden and supply chain risks due to unreasonably low inventory levels or delayed cash flow, especially in 'just in time' inventory systems, causing friction among manufacturers, suppliers, and contract manufacturers.
Innovation Solution
An automated inventory management system using smart contracts on a decentralized computing environment to separate physical possession from title, allowing inventory to be held by a third-party title holder until specified conditions are met, enabling efficient transfer of title to the producer.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Loss of energy
If inventory levels are reduced to minimize carrying costs, then inventory carrying costs are reduced, but supply chain risk and resiliency worsen due to unreasonably lower inventory levels
Solution Approach 1:
The patent segments the inventory ownership from physical possession by introducing a third-party title holder. This allows the inventory to be physically present at the producer's location (maintaining resiliency) while the title remains with a separate entity (reducing carrying costs). The segmentation of title and possession resolves the contradiction by enabling both low carrying costs and high supply chain reliability simultaneously.
Solution Approach 2:
The patent introduces a third-party title holder as an intermediary between the supplier and the producer. This intermediary holds the title to the inventory while allowing physical possession to be transferred to the producer when needed. The intermediary structure enables the system to maintain inventory availability for resiliency while avoiding the financial burden of inventory carrying costs for the producer.
2Loss of energy
If inventory levels are reduced in just-in-time systems, then financial burden is reduced, but supply chain resiliency worsens due to delayed cashflow to suppliers
Solution Approach 1:
The patent implements preliminary action by having the third-party title holder purchase and secure the inventory before the producer needs it. This advance acquisition ensures inventory availability for resiliency while the producer only pays when the inventory is actually consumed or transferred. The preliminary purchase by the title holder resolves the contradiction by decoupling the timing of inventory acquisition from the timing of payment.
Solution Approach 2:
The third-party title holder acts as an intermediary that absorbs the financial burden of inventory carrying costs while enabling the producer to operate with just-in-time consumption. The intermediary structure allows the producer to benefit from inventory availability without bearing the financial burden, thus resolving the contradiction between reduced financial burden and maintained supply chain resiliency.
3Loss of energy
If title transfer is delayed until production need, then producer's financial burden is reduced, but supplier-producer collaboration friction increases due to push-inventory practices
Solution Approach 1:
The third-party title holder serves as an intermediary that facilitates smooth collaboration between supplier and producer. The title holder purchases inventory from the supplier and holds it until the producer needs it, eliminating the need for friction-prone push-inventory practices. This intermediary structure enables the producer to have inventory available without bearing carrying costs, and the supplier to sell to a willing buyer (the title holder), thus resolving the collaboration friction while maintaining reduced financial burden.
Solution Approach 2:
The system enables self-service by allowing the producer to access inventory from the title holder's holdings without requiring active inventory management or purchase decisions. The producer can simply request inventory when needed, and the smart contract automatically handles the title transfer and payment. This self-service mechanism eliminates collaboration friction by removing the need for negotiated push-inventory practices while maintaining the producer's reduced financial burden.
Data Source
AI summary
Systems and methods of managing inventory include a hybrid distributed computing system and database for recording title to the inventory in a third party after the inventory has been delivered to a location accessible to a producer (e.g., a user of the inventory). The cost and accounting of the inventory can then be managed separately from the physical possession of the inventory. The producer may then access and take title to the inventory on demand (as needed).