Emerging technologies consistently present new opportunities for Procurement to adapt for their own working practices – especially when it comes to helping improve processes, increase traceability, reduce costs and automate laborious activities.
Blockchain for instance is a potential game-changer for the management of supply chains, helping improve transparency and traceability, enable faster product delivery and make financial transactions to suppliers more streamlined and some organisations are already realising the benefits it may have.
What is blockchain?
Working as a distributed and decentralized digital system, a blockchain is a peer to peer network that sits on top of the internet and is a means of recording transactions between multiple parties, but in a secure and verifiable way.
When blockchains are used for cryptocurrency networks, it enables unlimited secure transactions between anonymous parties with no need for an intermediary (such as a bank). All the transactions made are permanately stored within the blockchain, with multiple ledgers kept with multiple peers on the networ and updated in real time.
When used in the supply chain setting, blockchain would allow limited transactions between known parties in order to protect the business and their operations against possible threats and malicious actors, while making the entire transaction faster with better performance.
For blockchain to become a defacto technology within the supply chain management solution, new industry standards would need to be established with investment into application developement also running concurrently - but indications are that several major procurement players are already making steps to making this a reality.
The use and advantages of blockchain in the supply chain
As supply chains evolve and transactions become more complex (especially in tail end spend), ERP (enterprise resource planning) systems used by most companies start to see limitations as it requires manual audits and inputs to keep data flowing consistently, this could mean data is prone to errors which may lead to poor decision-making.
A great advantage of blockchain usage is the possibility of capturing errors in data, duplicate payments, and possible shipment problems in real-time, opposed to many ERP systems that only highlight these errors after the transaction is completed, with users having to trace back through the flow to see in which step it occurred.
Implemented correctly, Blockchain can allow transparent end-to-end tracking of what's happening in the supply chain and as more companies digitalise their procurement processes and keep a decentralised record of their transactions, the transparency that blockchains provide gives more visibility not only to the organsation and its suppliers but even to consumers.
There's a lot of room for blockchain to be adopted and developed for the supply chain, but as more and more companies realise how the end-to-end traceability, financing, coordination and product delivery may benefit from this technology, the effort to implement it will increase.
To find out how Maistro's solution is changing the way organisations are managing their suply chain, get in touch for a demo.
