Blockchain in Procurement: How Can the Technology Be Used for Acquiring Goods?
Procurement plays an important role for any organization as it involves the process of obtaining goods and services for company’s work, as well as negotiating contracts and establishing payment terms. Procurement is not always effective since it is a complex system which includes many elements – however, the problem can be solved by integration of blockchain. Let’s discover how DLT can improve procurement processes for organizations.
Smart contracts – software programs being run on the top of blockchain – can improve the efficiency of traditional contracts. Being automatic, they get executed themselves in case all agreements and terms are respected.
For procurement, self-executing contracts will eliminate the need for involvement of the third party and will benefit the delivery as well – as soon as payment is received, a delivery is triggered automatically without any delays.
Contracts on blockchain allow to avoid any manual checking of documents which increases the speed of the process and leads to significant cost savings.
Managing Purchase Orders and Analysing Spendings
The traditional order management system is slow as it involves several people who control processes. Blockchain integration into procurement can enhance the order validation and approval, as well as invoice processing.
As for analysis of the expenditures, DLT helps to create more predictive and prescriptive analytics. It may lead to more effective distribution of money available for acquiring goods.
Trust and Transparency
One of the main problems existing within the procurement process is the lack of trust between involved parties. As blockchain is the secure ledger with the transparent system – no data stored on the ledger can be altered or deleted – the parties can trust each other easily.
The corruption or fraud are impossible with blockchain as the information can be accessed and checked by anyone at any moment.
For example, the leading diamond company De Beers uses blockchain in order to track precious stones the whole way from the moment they are mined until they are delivered to consumers. With the transparent system, the company makes sure that it sells genuine diamonds and avoids any potential problems.
Transactions with DLT become faster and present lower fees to organizations in case they make orders from different countries.
Moreover, as DLT keeps all the information, procurement transactions no longer need to be recorded on invoices.
Also, suspicious transactions can be easily and quickly identified – it means that there is no chance that money will be stolen from the company or used for personal purposes.
DLT improves procurement and helps businesses to succeed. It allows the efficient organization of goods acquiring processes which leads to fair deals, higher transparency and enhanced trust between parties.
DLT applications into different industries will be discussed by crypto experts at the Blockchain & Bitcoin Conference Switzerland.
More details about the event and registration.