Adopting Blockchain and Smart Contracts to Overcome Procurement Challenges

By Sunil Sonkar
2 Min Read
Adopting Blockchain and Smart Contracts to Overcome Procurement Challenges

Procurement is the backbone of any organization and it often faces challenges. Traditional procurement processes mainly relies on manual and paper-based systems. It is therefore prone to errors, delays and lack of visibility. It is also complicated in tracking orders and managing inventory.

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Traditional procurement also suffers lack of transparency and trust. Hence, establishing long-term relationships with suppliers become challenging and gradually also increases the risk of fraud. It even inflates costs.

Blockchain technology offers a revolutionary approach in the segment. One impactful application is its supply chain traceability. Every transaction and movement of goods is reported on an immutable ledger and organizations gain unparalleled visibility with respect to origin, authenticity and condition of products. The practice boosts transparency and also ensures accountability at every step.

Smart contracts further streamline procurement. It is powered by blockchain and automates the process. It also reduces manual intervention. The self-executing contracts can trigger payments automatically upon fulfillment of predefined conditions. Hence, it speeds up transactions and simultaneously eliminates the need for intermediaries. It reduces costs and improves cash flow.

Moreover, smart contracts can manage complex procurement agreements. It can ensure compliance and resolve disputes transparently and efficiently. Decentralized marketplace is another blockchain innovation and it offers a transparent as well as secure platform for buyers and suppliers to interact directly. It promotes fair competition. Buyers can compare prices, evaluate supplier performance and make informed decisions.

Smart contract plays important roles in optimizing procurement. It automates various tasks. It can generate purchase orders automatically. It can verify supplier credentials, track shipments and trigger payments too. It simultaneously reduces errors and manual effort. It makes processes more efficient.

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