Ways That Procurement Can Benefit From Blockchain Technology
Technology plays a crucial role in the success of any business, no matter the type or size. It changes the way businesses operate while improving productivity, minimizing errors, and improving efficiency. Among the latest technologies, the adoption of Blockchain technology has grown incredibly.
Blockchain technology is revolutionizing digital transactions in profound ways. It facilitates automated, faster, and more reliable transactions, so businesses don’t need to depend on third parties such as credit card companies and banks. This allows for cheaper and hassle-free transaction processes. The technology is being used to improve and streamline different aspects of a business, including both direct and indirect procurement processes.
Here are some of the ways that your procurement can benefit from Blockchain technology:
1. Smart Contracts
Blockchain can make your procurement process more efficient using smart contracts, self-executing digital contracts with predefined conditions. You can customize your smart contracts to include multiple parties across the entire supply chain, with the terms and value integrated from end to end. Smart contracts ensure automatic execution of contractual conditions at every stage and are recorded on the Blockchain, making it visible to all stakeholders. This helps strengthen your relationship with suppliers, simplifying finance operations and improving your business’ bottom line.
2. Visibility and Traceability
Nearly every business struggles with the traceability of contracts and invoices with its suppliers. Blockchain provides a verifiable audit of your supplier’s goods in the system. This helps ensure the traceability and authenticity of all products in the purchasing cycle. It also allows consumers and suppliers to better understand the entire procurement process. Using Blockchain technology, important supplier credentials, qualifications, and certificates cannot be compromised or forged.
3. Trustworthy Business Relationships
Due diligence plays a crucial part in onboarding new suppliers, and it helps establish good business relationships. However, due diligence can sometimes be repetitive and time-consuming, making businesses reluctant to invest their time and effort. Blockchain gives you access to transaction logs of participating parties, allowing easy analysis of pertinent facts. Not only does that help speed up due diligence, but it also makes the entire process simpler.
This also helps you rate the quality of services and goods delivered and the supplier’s overall performance. Increased transparency in transaction data and improvements in the due diligence process can also go a long way towards building trust and establishing good business relationships.
4. Eliminates Intermediaries
Utilizing Blockchain in procurement ensures a single source of information for all stakeholders in the network. This eliminates the need for intermediaries since important information can be shared across the network. Through Blockchain, all data and transactions can be synchronized across the network, allowing stakeholders to conveniently verify the calculations and work of others. This eliminates the risk of accounts payable problems such as rogue spending and invoice fraud, and duplicate orders, reducing the chance of discrepancies in your data while making the system reliable and secure.
5. Streamlining Operations
Integrating Blockchain in procurement can help enhance purchase order management. Blockchain ensures secure invoice processing, faster three-way matching, accurate order validation and approval, and improved request-to-receipt processes. This enables automation of your procurement process without the common risks brought about by intermediaries, delayed execution, and lack of data.
With transactions fully visible to all stakeholders, everyone can see any changes in real-time and take the appropriate decision. This helps streamline procurement operations and make them more efficient. Automation of procurement processes also reduces the chance of costly human error, making the entire purchasing cycle more efficient.
There are many ways that procurement can benefit from Blockchain technology. By automating paper-based transactions, Blockchain facilitates speedy approval and verifying of invoices, reducing payment delays. It also provides everyone in the supply chain full access to real-time, transactional data, increasing transparency and trust. Blockchain benefits your procurement by automating mundane tasks and ensuring equal visibility of transaction logs for all participants, including enhanced collaboration, transparency, security, trust, and reduced costs.
This article has been published in accordance with Socialnomics’ disclosure policy.