Digital technologies are rapidly changing the procurement landscape. Buyers, sellers, consumers and more are seeking trust and transparency.
Blockchain technology is constantly evolving to instil confidence in these stakeholders throughout procurement and their supply chains.
What is blockchain technology?
Blockchain refers to a ‘chain of blocks’ of information. For every ‘event’, there is a block of information associated with it as it occurs. As other related events occur subsequently, the associated event also has another block of information connected to it. You can then trace the history to the highest level of assurance as it cannot be edited. It is shared, secure, immutable and configurable.
This technology helps to provide a new level of transparency and traceability, which can be particularly helpful for tracking and providing visibility throughout supply chains. For instance, Circulor has helped companies like Jaguar Land Rover to ensure full transparency in the leather supply chain by using blockchain technology.
Solutions like this help to build brand trust, increase efficiencies and encourage collaboration with partners. Another benefit it that is also helps to reduce the need for paper-based trade and manual documentation, for example in smart contracts.
Blockchain is changing many industries – for the better
Friction is reduced within supply chains as traceability becomes more transparent. Admin costs are minimised along with product recalls. Suppliers can demonstrate compliance and share documentation/history of products with business partners and customers.
For example, the seafood industry faces challenges regarding ethical practices and how fish are farmed. Blockchain provides information on where, how and what the fish have been fed.
Similarly in the farming industry; IBM’s Farmer Connect programme helps connect coffee farmers directly with consumers. As a result, this builds transparency and loyalty by providing traceability back to packagers, roasters, millers and farmers. Consumers can see if the coffee has come from sustainable and ethical sources and farmers have not subjected to abusive practices.
Procurement can expect to see many benefits from this digital technology as the use cases expand and the technology evolves in parallel to more organisations undergo digital transformations.
- Blockchain can and is transforming procurement capabilities
- It helps to assure buyers, sellers, owners, traders, consumers and manufacturers about supply chain traceability
- It is immutable, unique and traceable for stakeholders to see
- Blockchain is typically deployed in combination with other technologies, often as an embedded solution
- Companies can move towards sustainable and ethical practices with blockchain technology