3 reasons why blockchain will bring value in Procure-To-Pay process

Procure-to-Pay consists of the process of obtaining and managing the raw materials needed for manufacturing a product or providing a service. It includes the transactional flow of data that is sent to the concerned supplier as well as data that surrounds fulfillment of the actual order. Blockchain in Procure-to-Pay processes can bring greater value.

Procure-to-Pay (PTP) is the multi-step process that connects a client with one or more service/product providers. It also allows for the identification and authentication of stakeholders, service provisioning budgeting, invoicing, and payment settlement. One major challenge in PTP operation is disparate systems and processes. Large business units within a company have their own processes and tools for managing procurement. This makes data consolidation cumbersome. Sourcing, procurement, and accounts payable functions are typically run by different departments. These departments often optimize these procurement processes exclusively for their functions. Most organizations also use multiple ERP systems, which further makes it difficult to have a single and integrated source of truth for supplier and business data. These departmental silos are creating inefficient processes that are mostly manual and error prone. Additionally, several processes require manual intervention, thereby resulting in cost inefficiencies. The aim of blockchain in Procure-to-Pay processes is to provide sustainable cost reductions through disintermediation, efficiency improvement, and fraud control.

This technology has the potential to disrupt PTP processes and provide huge operational benefits in terms of speed, greater security and decreased workload.

3 Applications of blockchain in Procure-to-Pay

Implements Authorization

Blockchain applications have a developed front-end system for authorizing vendors, defining new catalogues, and placing a purchase. This application can be added on to blockchain transactions or leveraged through existing procurement systems, if vendors decide to adopt this technology.

Improves validation and authentication

Blockchain technology can enable swift distribution of authentication rights along the PTP chain. Thus, it can help in preventing fraud and improving security across the PTP process.

Accelerates purchase order management

Purchase order and receipt data can be exchanged on the blockchain at an accelerated pace when compared to current performance levels. It also helps in identifying the nearest and most cost effective vendor within the network. This ability helps in decreasing lead time and workload associated with vendor searches, the processing of purchase orders and goods receipts.

The blockchain is a disruptive technology platform; its purpose is to deliver transparency, security and efficiency in transactions. Blockchain has already demonstrated its strengths in securing international payments. It also provides transparency in vital areas like anti-money laundering (AML) and can add trust and efficiency. It has now reached global financial markets where current processes are challenged because of their lack of ability to handle the volume and velocity of data, which is required to be assessed in day-to-day operations.