The blockchain is revamping the industries in impressive ways by streamlining financial services. It has been providing new spurs and opportunities to all the sectors. Moreover, it has emerged as a reliable tool of empowerment, bringing transparency, credibility, and efficiency in the transactional process while offering significant benefits to its users. This nascent technology which is revamping various industries is all set to revolutionize the procurement process as well. Where do blockchain and procurement meet? Let's have a look.
1. Embedding Trust: Trust factor lacks amid the procurement professionals and the organizations which force most companies to involve bankers and insurance agents to mitigate risks. Establishing due diligence can be expensive and time-consuming. Here, blockchain plays a key role as data can be viewed but cannot be edited or deleted. Transparency will be a crucial factor here as a company, and the suppliers will be aware of every step of the process.
2. Automation of systems: Placing orders and processing the payments is still a manual process for many industries. It involves recording all the fine details about the buyer and the seller such as agreements, receipts, and other documents. When blockchain is in play, all the records are available under one roof. Smart contracts can be fed with all necessary information which will take care of everything.
3. Payment process: B2B payments become complex as everything needs to be put down on paper. Blockchain's smart contract system states that payments will be dispatched immediately and intermediaries won't be necessary. This contract initiates transaction only when all the existing conditions are fulfilled.
4. Enhanced Security: Just like any other industry, the procurement department also deals with sensitive data that could cost a company a lot. Cloud storage provides a safe environment but isn't as secure as the shared ledger and also the cloud storage is expensive.
5. Improved Productivity: One of the most significant advantages of integrating blockchain technology is to cut costs. This process enhances productivity- if there are smart contracts, data is secure, and there is no need for intermediaries, then an organization can save a lot. Automating the entire process enhances accuracy and also minimizes the chances of errors injected via human negligence.
The blockchain innovation has a lot to offer for the procurement sector, and therefore procurement professionals should start considering this innovation. Integrating this technology can be fruitful in the long run as it provides transparency, efficiency, and improved trust and security. But as we all know, blockchain is in its infancy stage and hence is suitable for pilot projects only.