How Blockchain Promises Efficient Procure to Pay Operations
Supply chains are basically a series of transaction nodes that link to move products from one point to other. Obtaining and managing raw materials for manufacturing or providing a service are its prime operations. The biggest hurdle in Procure to Pay (P2P) operations is its disparate systems and processes. This is where Blockchain technology can be a game changer in a supply change management as companies can reduce time delays, costs, and human errors in cumbersome document transactions.
What is blockchain and Why it matters?
Born in the wake of global economic crisis blockchain is defined by Don & Alex Tapscott, the authors of book ‘Blockchain Revolution’ (2016) as “an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” By using mathematics and cryptography blockchain offers a decentralized database for any transaction involving value, money goods, property or even votes. We already know several of processes in Procure to Pay P2P require manual intervention and are thus prone to human error which adds fuel to the misery of cost inefficiencies. Blockchain eliminates these miseries through disintermediation, efficiency and fraud control.
3 Advantages of Blockchain in P2P World
- Enhances validation and mitigates fraud.
Blockchain technology can enable fast paced distribution of authentication rights along the Procure to Pay network. In other words it enforces patents and copyright as your innovation. It may be any piece of art or craft blockchain can prove that you have the ownership of your intellectual property. Placing certificates on a blockchain to prevent fraud may save insurers $ 50 billion annually especially when they are dealing in items where paper based authentication can be risky.
- Increases purchase order management
Blockchain identifies the closest cost effective vendor on the network. It eliminates the loss of time taken on vendor searches, purchase orders and goods receipts. Being a peer to peer system it basically cuts out the middleman. The simple two party nature is a real game changer when it comes to achieve an accelerated pace of doing operations.
- Blockchain implements advanced authorization
If the vendors decide to adopt this technology they can make use a well developed front-end system for authorizing vendors, defining newer catalogues and placing purchases.
Blockchain: The new kid on the block
Well blockchain is the future and by sheer stature not to be confused as a new kid on the block. Companies undertaking digital initiatives to gain a competitive advantage should not overlook blockchain. As internet has entered the age of value from an age of information and blockchain has acted as a game changer in it. It is a disruptive technology platform and World Economic Forum claims that this will upend business models and disrupt industries.
Top things to consider
- Ability to track and facilitate ‘Smart Contracts.’
- It eliminates the middleman enabling end user to interact directly with the ledger.
- Provides an instant, secure, and borderless transactions.
Automates payment protocols of permanent, irreversible and tamper-proof nature.