Introduction

Procurement plays a crucial role in any organization when it comes to getting the necessary goods and services for business operation.

Procurement managers are always on the run because of pressures they face on daily basis, they find it very difficult to set a balance between their work and personal life, they have pressure from stakeholders and they also need to see to it that vendors get the needed quality supply and also at the allotted time.

Because companies or any organization works with budget so this also poses management challenge to the procurement department because they must get quality supply of goods that is within the range of the company's budget.

Generally traditional procurement faces a lot of challenges which includes high cost, lack of transparency, lack of adequate security and inefficiency but blockchain technology has what it to requires to improve procurement.

pixabay

Blockchain can help.

Blockchain has the ability to improve procurement department and experiences have shown that blockchain really help to enhance procurement because of it's s key features which includes transparency, decentralization and security and these are the major challenges affecting procurement.

Decentralization means no central authority in control or intermediaries, immutability means all transaction are recorded and can never be changed or deleted, transparency has to do with everyone seeing what is happening in the system while security means all transaction are encrypt and are linked to previous transactions so no one can alter it

Traditional procurement today lacks transparency and this has resulted to many forms of fraud, human errors and compliance issues which has negatively affected the companies growth and finance.

Due to multiple intermediary and so many paperworks procurement takes a long time and this lose efficiency in the company and this also leads to spending more than expected.

Both direct and indirect procurement faces same challenges because they all pass through same stage of identifying their needs, the quality required, what will be the cost and how urgent it is needed then check out for suppliers and their prices as well as their qualities and how reliable those suppliers are before concluding the contract and placing the order as well as making payments.

Blockchain technology makes those procedure easier and faster, with blockchain technology a company can be able to track how contracts are initiated from the start and when the supplier will be able to meet up with the agree standard and quality of goods.

With smart contract procurement process will be faster because everything will be automated immediately the company and the supplier concludes the contract, as soon as the supplier delivers the goods or services smart contract will automate payment not waiting for weeks or even months before payment will be approved.

Because blockchain is decentralized it helps to reduce cost in procurement department because a company can just connect with a supplier through a blockchain network this helps to avoid paying fees that people who act as intermediaries demands.

Procurement are always victims of cyber attack and data breaches, blockchain technology can help out because it's uses advanced cryptographic techniques to keep all transactions secured making it impossible for unauthorized personnel to change transaction data.

Traditional procurement go extra mile just to secure financial transactions data and contract informations but with blockchain such stress will reduce because every important information will be stored in the blockchain that is safe and secured.

Procurement always find it difficult to manage more than one supplier because of the needed verification that takes place before a contract but blockchain technology makes it easier by providing all necessary record and information of the supplier and this includes the quality of goods and services of each supplier and how efficient they are when it comes to delivery.

Use cases of blockchain in procurement.

pixabay

IBM food trust.

IBM food Trust is a procurement that has leverage blockchain technology to connect with their participants and food produce, food supplies and everything is recorded in the IBM blockchain making it easier to trace all products and services and this has helped them to build customers trust in their brand.

IBM blockchain has been able to help in reducing food waste, improving food safety, producing quality food for customers and also improving efficiency in food networks.

Blockchain technology have also helped IBM food Trust to reduce food fraud because every supply are transparent and traceable.

Conclusion.

Blockchain technology will it help procurement department to achieve transparency, decentralization, and security but for a procurement department to adopt blockchain there will be a change of mindset among users, there will also be collaboration between customers, suppliers, stakeholders and regulatory bodies this will help them to walk collectively and benefit from leveraging blockchain technology.

Also it is very very important for a company to identify which aspect of procurement needs blockchain technology this will help them to focus on training or hiring blockchain expert who will work in that capacity.

Reference

Posted Using InLeo Alpha