Introduced in 2008 to underpin Bitcoin, blockchain technology revolutionized digital transactions. By creating a decentralized ledger of all transactions across a network, it allows for real-time tracking and management of B2B transactions by multiple participants simultaneously. This technology has profound implications for procurement and supply chain management, offering enhanced transparency, traceability, and security. In supply chain, blockchain facilitates order validation, invoice processing, and supplier management with unprecedented efficiency. It streamlines the source-to-pay process by providing an immutable record of transactions, reducing the risk of fraud and errors. Moreover, it enables seamless payments through cryptocurrencies, eliminating intermediaries and associated costs.
Blockchain-based innovations have transformed supplier credentials verification, ensuring authenticity and reliability in transactions. This technology optimizes the procure-to-pay process, enhancing the transaction cycle from procurement to payment. By leveraging financial technology, companies can unlock new possibilities in procurement and supply chain management, driving greater efficiency and trust across the ecosystem. Blockchain technology allows participants in the network to confirm transactions independently, without the need for a third-party intermediary. Smart contracts automate agreements, streamlining processes and reducing costs. Immutable records enhance trust among stakeholders, fostering collaboration. Overall, blockchain increases efficiency, reduces fraud, and improves accountability in procurement and supply chain operations.
How can blockchain technology benefit business supply chains?
Here’s how blockchain impact on supply chain can benefit businesses:
Improved transparency
Supply chain transparency can be achieved through visibility into supply chain activities, which is one of the key factors. Blockchain technology provides a clear and transparent record of all transactions in one place. It ensures trust and transparency when multiple agents are involved in various stages of the supply chain process. Moreover, it empowers the buyer by ensuring the traceability of all goods throughout the purchasing cycle. Additionally, data on product origins, quality, and handling can be securely recorded, bolstering product safety and consumer trust. Ultimately, blockchain’s transparency improves efficiency, reduces costs, and enhances overall supply chain integrity.
Smart contracts
Smart contracts are executable codes that operate on top of the blockchain. Their purpose is to manage contracts and facilitate deals across the supply chain. By enabling the creation of tamper-proof smart contracts, blockchain technology allows these contracts to self-verify their conditions. These new possibilities in contract management offer the potential for increased efficiency and improved business operations. Smart contracts are self-executing agreements that automatically trigger actions when predefined conditions are met, reducing the need for intermediaries and minimizing the risk of disputes. Overall, they streamline operations, increase security, and promote trust in various industries, from finance to supply chain management.
Greater opportunities to save cost
The increased trust and transparency brought about by blockchain technology can lead to reduced costs for organizations. They will no longer have to rely on expensive intermediaries or third-party verification systems. Just like cloud technology, blockchain can improve business operations. It is important to note that blockchain technology does not replace traditional procurement tools, but instead enhances their effectiveness. It is evident that blockchain technology can boost efficiency and lower the costs of procurement. This is just a glimpse into the potential long-term benefits of blockchain technology in procurement.
Market outlook: Improve the supply chain and procurement function
Our team at SpendEdge specializes in analyzing how blockchain technology can enhance procurement and supply chain functions across various categories. We keep you updated with the latest developments related to the use of blockchain technology in the supply chain and explore the blockchain technology-based solutions being developed by vendors to improve supply chain efficiency. We help you find and manage suppliers who deliver blockchain technology, stay up to date about adverse events at supplier organizations, and make relevant supplier insights your bargaining chip in future negotiations.
Understand the main KPIs and SLAs to evaluate vendors:
We can help you to identify the KPIs and SLAs of the suppliers you work with. The data collected for KPIs can be analyzed to determine if outcomes meet expectations. This analysis is useful in understanding what needs to be prioritized or corrected to achieve the pre-defined outcomes. SLAs can be used as written references in case of disagreements. These tools help businesses manage their operations efficiently, avoid disruptions, and meet customer expectations for turnaround time.
Identify best practices being adopted by peers:
At SpendEdge, we can assist in identifying best practices adopted by peers through its comprehensive data analytics and industry expertise. By analyzing vast datasets and market trends, we can pinpoint patterns and strategies that are yielding successful outcomes for similar businesses in your industry. We offer benchmarking services that compare your performance against industry peers, highlighting areas where you may need improvement or where you excel. Our experts also conduct competitor analysis to uncover strategies and practices that give your peers a competitive edge. By leveraging these insights, you can make informed decisions and adapt best practices to enhance your own business operations.
Conclusion
Blockchain technology has evolved into a transformative force in transactions and supply chain management. By creating a decentralized ledger, it securely and transparently records transactions across networks, bolstered by cryptographically protected identities and immutable records. This enhances trust and security in procurement, offering real-time tracking, transparency, and cost savings. Blockchain streamlines purchase orders and payments through smart contracts and cryptocurrencies, eliminating intermediaries and boosting efficiency. It also facilitates supplier management and verification, ensuring authenticity in transactions. As the procurement industry prioritizes trust and efficiency, blockchain provides a secure method for managing resources and optimizing supply chain operations. By integrating blockchain with procurement software, businesses can drive greater transparency and accountability, positioning them for a promising future in global markets.
Author
George Mathew
Associate Vice President, Sourcing and Procurement Intelligence
George is a procurement specialist at Infiniti Research and provides advisory services to clients across the pharmaceutical, CPG & FMCG, energy, and automotive sectors. He specializes in the procurement areas of industry benchmarking, cost modeling, rate card benchmarking, negotiation advisory, and supplier intelligence.
