In argument to the absence of trust that was previously determined to state Blockchain Technology, it is actually elevated various business platforms to express transparency, security and accountability. The undeniable abuse of information and communications technologies at organisations split paths and concluded to loss of trust over third parties. However, for trust literature Blockchain eliminates various intermediaries’ risk to create a safe and secured framework for all. Since 2008, Blockchain has emerged as a solution for multiple industries like Banking, Healthcare, Government or Retail and Consumer goods.
This blog focuses on the revolutionary changes that Blockchain is bringing into Procurement. So, among many other ways, it helps in the accumulation of records as a digital ledger for processes involving one or multiple parties. It automatically adds a very new record for every new party leaving behind a digital footprint for every new transaction revisiting the Procurement Process.
The Procurement Process Involves:
Stabilised Procurement is essential for any business. It is the procedure of acquiring products and services from suppliers and vendors by emphasising on cost–effectiveness. But what are the steps that consist in this process of Procurement?
- Distinguishing Requirements
- Determine Specifics of the Requirement
- Sourcing and Scheduling
- Negotiation & Finalisation of Cost and Terms
- Purchase Requisition and Placing Order
- Delivery of the Purchased Order
- Dispatching for Evaluation
- Product/Service Inspection
- Processing Payment
- Keeping Record and Review
When do you restructure your Strategic Sourcing and Procurement organisation?
Be it globalisation or technological advancements around us; these have frequently impacted how businesses operate. A successful business is a product of labour and toil, and the synchronised evolution and seamless moving of all the departments in one particular direction. Procurement has played a critical role in advancing your business; however, it is most neglected and misaligned with the rest of the departments. You know you need to realign your Sourcing and Procurement Process and ensure business growth. In the absence of which, the organisation might suffer inefficiency and misconduct.
Where Blockchain and Procurement Meet
As discussed before, we had long passed the day when it was considered that Blockchain was meant for cryptocurrencies. The needful utilization of Blockchain is well interpreted for business, and organisations have started to acknowledge its benefit in leveraging company needs. In 2019, IBM partnered with Blockchain developer Chain yard for a Trust Your Supplier Blockchain.
Since Procurement is a labour–intensive and expensive process, businesses are digitizing the ins and around this arrangement. Blockchain is one such Emerging Technology that is benefiting the Procurement Process. As per the World Economic Forum, streamlining information with the help of blockchain has the ability to increase trade by 15%.
Analysing the use of Blockchain in Procurement
There are various benefits of using blockchain in your business. However, there are some that sourcing and procurement are utilising for leading the horizon as well.
- Smart Contracts– Smart contracts are self-executing contracts having the terms of an agreement between buyers and sellers been directly written into lines of code. The code lays across a well-distributed, decentralised Blockchain network. The code helps in controlling the dispatch, and transactions, which are trackable and irreversible.
- Building Trust– Business is all about trust, and a long-term business relationship is based on faith and confidence in the other parties. As said by Robin Sharma- “The Business of Business is relationship; the business of life is human connection”. Blockchain enhances diligence in Procurement. It helps keeps transparency for both parties, whether buyers or sellers. It creates a network that is easily accessible to partiers for looking into transaction logs– Eliminating the risk of delay and duplication.
- Heightening Security– A business involves various aspects of interaction and transaction. For a more secure idea, blockchain creates a decentralised ledger that is shared among a particular network to fill in sensitive data protection as well as maintain privacy.
- Automation and Standardization– The manual process of keeping ledger or records is inefficient and time–consuming. It also adds the risk of loss of data and errors. Blockchain, as a solution backs up the entire procurement process by digitizing and streamlining the procedure, untangling the complex, detailed documentation.
Apart from these Blockchain has still a lot to offer for the procurement function, which is the reason why procurement professionals should start considering its use at the earliest. Integrating this tech to a company’s processes will result in sift pay-outs to vendors, precise invoicing and save a lot of paperwork. If you are considering to implement Blockchain in your business and need help in familiarising your employees with the Blockchain Technology, visit us at biginnovationcentre.in and enrol to our Membership Programme to receive a greater understanding of various Emerging Technology.