Blockchain Technology & The Reformation of Procurement as We Know It

by Steve Murphy 0

Whether or not one yet believes that blockchain-related technology is poised to take over the world, there is certainly enough conceptual application use –cases to continue speculation for quite some time yet. We at Mercator try to keep close, and in this particular piece the focus is primarily on the procurement space. Procurement technology in the industrial world is a massive business, and the use of blockchain technology certainly has its place in this discussion. Procurement of course leads one into the supply-chain, which then connects to various other processes to which the technology has been offered up as a game-changer.

So, after all this clamor, the question remains: What’s in it for procurement? How can the boundless potential of this simple but profound innovation be used to unleash advancements in smart contracts, anti-counterfeiting, supply chain tracking, real-time intelligence, predictive analytics, and last but not least, cheap and safe payment solutions?

In the wide-ranging set of business process applications, the piece touches upon smart contracts, fraud control, efficient buyer marketplaces, payments and financing. These are all components of the trade services space and certainly a key focal point for blockchain corporate use cases identified during 2016.

Some, like “Outlier Ventures,” wish to seize the opportunity to bring buyers together to facilitate a consortium mode of collective buying using blockchains to enable bulk transactions, using tamper-proof ledgers. Currently, one quarter of the cost of factoring and supply chain financing programs is related to risk of fraudulent and multi-financed invoices.

While one could argue that digitization of the procure-to-pay and trade services spaces has been underway now for years and is the real key to success, bloackchain certainly has a role to play. The ongoing questions are around the exactly how, is there industrial scalability, and even when is a blockchain really a blockchain, the answers to which will more fully unfold during 2017.

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group

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