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How Blockchain-Driven Supply Chain Transforms Procurement

A very fast emerging technology surrounded by a galaxy of buzzwords. But the truth is, Blockchain isn’t limited just to Finance & Logistics...

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Building A Better Supply Chain With Blockchain

For now, Blockchain-enabled Procurement transformation can be a true boon to Digital Supply Chain of tomorrow. Possessing a seemingly endless potential with regard to public awareness, global transparency, and security, the technology has already proven its vast commercial benefits in different industries. But only those who would sit sure to come forward — being among the first to deploy the Blockchain for Supply Chain Management — can quickly claim greater business value, in line with creating innumerable growth opportunities over a significantly longer timeframe than normal.

 

Key business areas taking on the Blockchain technology

Source: Deloitte’s Global Blockchain Survey

 

Blockchain for Procurement and Supply Chain Ops

Industry Prognosis by Gartner

Nowadays, due to the ever-growing need for having more loyal consumers, the modern Supply Chain is constantly pushed towards staying both agile and lean at the same time to get the clause and ramifications side of the original paper-based contracts fully automated — allowing the maximum level of trustworthiness, as normally they must have no humans or the intermediaries involved. Betting on total optimization and man-hour rationalization, the Blockchain in Procurement-side B2B transactions will be saving at least $50bn for private entrepreneurs by 2021 already (according to McKinsey global technology report to the US Federal Advisory Committee on Insurance). For instance, when the logistics operator is submitting a proof of delivery, then invoicing and digital payments would be triggered through the banking system in a self-driven manner. Thus, we can already achieve direct cost savings by getting the common requirements to working capital drastically reduced, in line with having Procurement operations rationalized to a new-brand level of simplicity.

 

How far along are companies with the Blockchain adoption?

Source: PwC Global Blockchain Survey

 

The Blockchain Technology To Tackle Money Laundering

Conclusive Framework by DAO

Considering that the Blockchain keeps the record of every payment transaction on its public domain ledger, it’s giving a great opportunity for identifying, tracking, and acting upon any malicious or just suspicious operation quickly and at ease. To that point, one of the core NGOs in charge of AML (anti-money laundering) and counter-terrorist financing regulations announced that a closely related Blockchain, Finance, and Procurement guidelines by the Decentralized Autonomous Organization (DAO) would be issued by June 2019. That would be the initial conclusive framework to define a virtual asset as a digital representation of value which can be traded, used for payment, transfer or investment purposes, at the same time coming without the status of legal tender in any jurisdiction, at least for the time being.

 

Currently leading industries in the Blockchain full-swing employment

Source: PwC Global Blockchain Survey

 

Blockchain For Supply Chain Management In A Nutshell

One of the biggest pain points of the technology is that even folks working in the industry-relevant space may represent the lack of a sufficiently well-developed understanding of the whole potential power, as well as general pitfalls it’s holding. The same thing is true for Blockchain and Supply Chain Management — ensuring your company is ready for the digital future is the key to building the right adoption strategy coming hand-in-hand with the proximate progress and global business expectations after all. When supported with basic auxiliary technologies like ML (Machine Learning) and Artificial Intelligence, Blockchain-enabled Supply Chain with fully digitized Procurement can readily enable some extra, much more nuanced, growth opportunities in addition to those stemming from a remarkably diverse Big Data analytics that creates extremely accurate sourcing prognosis and long-term Procurement planning.

Simply Better Connectivity For Intelligent Logistics

Employing the Blockchain technology for Supply Chain will make things easier with data connectivity for the lion’s share of Procurement documents to the products (services), namely when it comes to POs, bills of sale, delivery receipts, warehousing/handling slips, etc. It also offers a simple way of Inventory Management (Radio Frequency Identification, QR/good-old barcode tracking, origin and manufacturing certifications to confirm), vastly optimized data exchange & record keeping that drive significant transaction cost savings, as well as totally secure and 100% transparent option to create linkages for most of physical items like shipping containers to location, timing data, etc.

 

The biggest challenges & TOP-3 barriers stalling the progress with Blockchain

Source: PwC Global Blockchain Survey

 

Supply Chain Scalability, Security, and Efficiency

Blockchain’s most straightforward nature makes it possible to leverage the whole potential of Supply Chain and Procurement optimization to a theoretically unlimited level— supporting any number of shareholders and parallel activities without security implications, maximum compliant and always eligible conditions (smart invoicing, automated approvals, payments, real-time approvals & verifications handled in a fully self-driven manner, etc.). The Supply Chain scalability and workflow optimization opportunities understandably result in eliminating a huge bulk of G&A and overhead costs, in line with giving a spur to further enhanced Supplier Relationship Management that perfectly responds to specific supply-side demands and pre-defined performance benchmarks to pursue commercial goals.


While conventional models often fail to meet ambitious marks of large organizations spread across multiple regions (or even across the globe), the Blockchain-enabled Supply Chain may become true salvation to give redundancy and global interconnectivity a practical chance. With vast digitization and Supply Chain standardization, more accurate and synchronized contract management, secure collaboration for corporate buyers, B2B suppliers and their shipping agents — the process of manufacturing, sourcing, delivering, and eventually distributing goods and services on the target market (or selling them directly to the end-user) could benefit immensely from consistency, accountability and transparency the digital ledger technology is ultimately up to.

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