Blockchain's impact on procurement and procurement professionals

| 0 Comments

Michael_Shaw_Blockchain.jpg

Is your procurement team ready for Blockchain? Michael Shaw, Chairperson of the American Council of Sourcing and Procurement Executives, explains in this month's SmartProcurement, that Blockchain - more commonly referred to as the Internet of Value, or Internet of Trust - will mature in five to seven years.

Impact of Blockchain technology

Blockchain technology will not only impact procurement and procurement professionals, but is expected to be more pervasive in our business and personal lives than the internet itself. To put the enormity of impact on procurement (and procurement professionals) in perspective, picture yourself twenty years ago trying to explain how the internet is going to change things. Where would you even have begun?

The nature and value of Blockchain

Like the internet, Blockchain is a network. In the case of Blockchain, the network comprises decentralized “ledgers”. Many are referring to it as Internet 2, or more commonly, the Internet of Value, or Internet of Trust. The most important thing to understand, is that Blockchain addresses many of the most critical problems we’ve encountered whilst doing business on the internet. These problems include:

  1. Security: practically speaking, Blockchain cannot be hacked.
  2. Transactions are verified by network participants by means of consensus, eliminating the need for third-party intermediaries’ such as banks, and costly, time-consuming and predominantly manual settlement processes. In addition to slowing down our supply chains, banks alone have estimated these processes are costing them more than $20 billion annually.
  3. Eliminating high transaction processing costs for high volume/low margin retailers who accept credit cards, could significantly add to their bottom line.
  4. Once transactions are verified in Blockchain, they are secure and immutable, as well as unchangeable.
  5. Blockchain’s immutability means that supply chain provenance can be assured. This is particularly important for conflict minerals, pharmaceuticals, food and many other supply categories where a provable chain of custody is critical.
  6. Payments can be made directly from buying entity- to selling entity “ledgers”, by-passing intermediaries such as banks, brokerages, clearing houses and title companies.
  7. Payments can be automatically triggered, based on the codified terms of “ Smart Contracts” stored in transaction blocks.
  8. Blockchain capabilities will change - if not eliminate - the role of accounts payable-, and accounts receivable departments.
  9. Blockchain enables the concept of micro-units and micro-payments. It is estimated that approximately one -third of the world’s economic opportunity include products and services, such as energy or digital rights, where back-end settlement costs currently constrain these markets.
  10. It is also estimated that 25% of the global population do not participate in the global economy, because they have no bank accounts or credit cards. Without these tools, they cannot participate in the internet economy. The primary reason they do not have these economic tools, is because they cannot prove their identities. Blockchain’s immutability can enable these people to participate in the internet economy.

Blockchain’s value for Procurement Professionals

The capabilities Shaw has outlined just scratch the surface of how Blockchain impact all of us. Aside from the aforementioned problems Blockchain addresses, as a procurement professional there are several important things to understand about Blockchain:

  1. Blockchain is a much wider and more pervasive concept than Advanced Cognitive Systems, Big Data, Predictive Analytics, Robotics, 3-D Printing or even the Internet of Things. In fact, these technologies will become infinitely more practical and secure because of Blockchain.
  2. Do not think of Blockchain and Bitcoin, FinTech or cryptocurrencies as synonymous. They are not.
  3. Do not think that Blockchain will take 20 years to mature, and become mainstream. The estimate is five to seven years to full maturity.
  4. Do not assess the progress of Blockchain by the US/Euro FinTech Community. While they were the first to recognize Blockchain’s inherent value - and arguably have the most to gain by adopting Blockchain - they also have the biggest hurdles to overcome, and could very well be last to cross the finish line.
  5. Don’t make the mistake of waiting to become knowledgeable about Blockchain. Blockchain is the most highly disruptive technology we’ve seen since the internet, and it won’t wait until you are ready for it.

For more information on Blockchain, join the Linked-In Blockchain Executive group.

Leave a comment


SmartProcurement Newsletter
X

Please enter your details below to receive the SmartProcurement Newsletter for FREE on a regular basis.

As part of the SmartProcurement Newsletter you will be receiving World Class Procurement News, Tools, Tips, Tactics, Procurement Training updates, Upcoming Events, and the latest Procurement Career Openings.

* Email Address:
* Title:
* First Name:
* Surname:
* Company:
  Position:
* Country:
* Public / Private:

 

Career opportunites

Marketing Executive

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Projects / Category Management
Geographical Area: Midrand GautengSalary: Market related2 Years Marketing ...More

Head: Supply Chain Management (P6)

  • <500 000 >500 000 Limpopo Permanent Procurement Management Supply Chain
North east of the Tropic of Capricorn, just ...More

Purchasing and Supply Manager

  • <500 000 >500 000 Gauteng Permanent Procurement Management Supply Chain
Purchasing and Supply ManagerThe CSIR has a vacancy ...More

Senior Manager Public Sector

  • >500 000 Gauteng Permanent Procurement Management Projects / Category Management
 Senior Manager Public SectorTotal Cost to Company: R1.1mil ...More

Senior Manager: Mining

  • >500 000 Gauteng Industrial Engineer Permanent Projects / Category Management
Senior Manager: MiningTotal Cost to Company: R900k – ...More

SUPPLY CHAIN MANAGER

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
SUPPLY CHAIN MANAGER(Total Cost to Company R750k – ...More

Master Data Management Advisor

  • >500 000 Gauteng Permanent Procurement Management Projects / Category Management
 MASTER DATA MANAGEMENT ADVISOR(Total Cost to Company R750k ...More

PRO - Performance Reporting

  • >500 000 Permanent Procurement Consultant Procurement Management Projects / Category Management
PRO - Performance ReportingTotal Cost to Company: R800k ...More

PRO - Risk & Governance

  • >500 000 Gauteng Permanent Procurement Management Projects / Category Management
PRO - Risk & GovernanceTotal Cost to Company: ...More

Supply Chain Site Manager

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
Supply Chain Site ManagerTotal Cost to Company R1mil ...More

Chief Financial Officer

  • >500 000 Gauteng Permanent Procurement Officer / Specialist
Chief Financial OfficerTotal Cost to Company R1.5mil – ...More

Process Engineer- WMS

  • <500 000 >500 000 Industrial Engineer Permanent Projects / Category Management Western Cape
Process Engineer- WMS(Total Cost to Company R350K – ...More

Forecast Analyst

  • <500 000 Analyst Permanent Procurement Management Western Cape
Forecast Analyst(Total Cost to Company R350K – R500K) Location: ...More

Group Category Manager: Indirects

  • >500 000 Permanent Procurement Management Projects / Category Management Western Cape
Group Category Manager: Indirects(Total Cost to Company R700K ...More

Group Category Specialist: Chemical

  • >500 000 Gauteng Permanent Procurement Officer / Specialist Strategic Sourcing
Group Category Specialist: Chemical(Total Cost to Company R700K ...More

Sourcing Specialist - 3rd party

  • >500 000 Gauteng Permanent Procurement Officer / Specialist Strategic Sourcing
Sourcing Specialist - 3rd partyTotal Cost to Company ...More

Global Procurement Lead (Processing)

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
 Global Procurement Lead (Processing)Location: JohannesburgTotal Cost to Company ...More

Global Supplier Performance Manager

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
Global Supplier Performance Manager Location: Johannesburg  Cost to ...More

Group Customer Service Lead

  • <500 000 >500 000 Analyst Gauteng Permanent Procurement Officer / Specialist
Group Customer Service Lead  Location: Johannesburg As the ...More

Business Intelligence Manager

  • <500 000 >500 000 Gauteng Permanent Procurement Management Supplier / Business Development
Business Intelligence Manager Location: JohannesburgLead the development, implementation, optimization ...More