Listen to this blog

Exploring the Impact and Benefits of Blockchain Technology in Procurement

The invention of the internet in the mid-1900s revolutionized communication technology. Since then, few innovations have been as disruptive as blockchain in shaping procurement and industrial presence.

Now if your curiosity is piqued, let me tell you a thing or two about blockchain and its impact on procurement at a concept level without drilling into its anatomical detail. This will help you grasp the definition much easily. It’ll also give you the foresight to understand how leveraging blockchain will be a tremendous breakthrough in fulfilling your procurement goals.
Also Read: The Role of Blockchain and Generative AI in Procure to Pay: Enhancing Security and Transparency

What is Blockchain in Procurement?

So, blockchain in simple language is a shared database that is omnipresent across multiple computers at any given time. It is like a growing set of data or ‘blocks’ that continue to build on with timestamp with linkage to the previous block thus forming a chain. Blockchain database is owned by more than one person on a shared network. Any block added is irreversible which prevents data manipulation. Via blockchain, data recorded today is saved for posterity.

Although the blockchain is a shared network of data with multiple users, there’s one single initiator who owns cryptographic key that helps add a new record to the chain and enables synchronization of data across the network. The key prevents violation of transactions performed on this platform.

Here’s an analogy: In medical bookkeeping, every medical record can be considered a block with a timestamp. This builds a medical history which neither a doctor nor a patient can modify or alter although the doctor owns the key to add new records and the patient owns the key to access the same thereby keeping medical information intact between the intended parties.

For long, the blockchain technology in procurement industry has been examining blockchain to leverage its fullest potential; it is trying to understand its significance in procurement processes.

3 Key Benefits of Blockchain in Procurement for Procurement Industries:

1. Invincible & Forever

The blockchain is a safe method that requires no trust, and the procurement industry can smoothly run its transaction on it. It is through cryptography that blockchain technology leverages to ensure digital identities of parties involved are established correctly. And as discussed earlier in the example of the medical bookkeeping, there are private keys owned by parties involved in the transaction and hackers cannot replicate them. Procurement functions leveraging blockchain can rest assured that their transactions will never expire and data accumulates timelessly for easy reference.

2. Borderless & Speedy

Blockchain transactions perform borderless by incorporating local tax and regulatory laws through smart contracts thereby expanding the scope of one’s business. Because of digital ledgers that blockchain distributes across a permitted network, paper-based invoicing that is tedious and time-consuming is obsolete. It is fair to say that since a blockchain transaction is recorded across multiple parties; it establishes seamless supply-chain points which is a commendable feature for the procurement industry to benefit from.
Also Read: How to Transition to Paperless Invoicing: A Step-by-Step Guide

3. Visibility & Exploitation-Proof

For spend-analysis, blockchains offered end-to-end visibility for any category and given that the records are indestructible and not vulnerable to data-manipulation, all kinds of fraudulent possibilities are stalled. In fact, if there’s any kind of human joy that blockchain as a technology assures procurement is its ability to prevent child labor, slave employment, money laundering, diamond mining for war-funding, etc. So, if you are in the procurement industry, you can leverage blockchain to establish an audit trail to ensure your business is guarded against any nuisance.

Your key takeaways include:

Understand how blockchain works
Common apprehensions about blockchain
Benefits of blockchain for procurement
Impact of blockchain on procurement’s future

Are you ready to unlock the potential of these revolutionary technologies? Take the first step and explore how blockchain can transform your procurement processes today!