Some of the key industry pain points facing supply chain management include the complex, labor-intensive process of supplier onboarding and the trust deficit between the buyer and the suppliers. By implementing blockchain technology, these issues can be addressed and bring speed, efficiency and trust to the industry.
Today’s businesses are operating in an increasingly complex world in which risk and volatility are putting new pressure on day to day business operations. One of our internal studies show businesses are spending in excess of 50 percent of their revenues on procuring goods, and another study shows procurement responsible for more than 70 percent of revenues. Leading procurement organizations must excel in the fundamentals of reducing cost, ensuring compliance and driving performance.
Making the right decisions about suppliers and onboarding them quickly to enterprise systems can have a profound impact on success. Ongoing monitoring of supplier base and their external activities are critical to ensure that informed decisions are made with an eye on risks and compliance. Companies without these competencies leave the door open for loss of revenue, supply disruptions and brand damage. Furthermore, the ability to quickly access financial, environmental, human labor and other compliance information and take actions can provide a key strategic advantage over the competition.
Major parts of supplier lifecycle management (SLM) involve onboarding, evaluating and risk monitoring of the supplier base. While supplier onboarding is a one-time labor-intensive process, monitoring the/your supplier base for obsolete information and quantifying risks is a recurring process that drains valuable resources that could be focused on other strategic activities. Any delays in onboarding on to buyer systems can only mean delays in doing their first business transaction and receiving associated revenue for the products and services that could have been provided sooner.
In most companies, supplier onboarding warrants a complex process with multiple steps and multiple interactions with the suppliers. For IBM Procurement, onboarding a supplier requires the execution of approximately 70 steps that can take 35 days or more.” We have also discovered that a large portion (around 80 percent) of the information that multiple buyers request from individual suppliers remains the same.
At the heart of delays associated with this effort is a potential trust deficit between the buyer and the supplier. Imagine a future state in which companies can access a digital passport for each supplier that is authenticated by industry-reputed, third-party verifiers? Wouldn’t that shorten the supplier onboarding time and mitigate associated risks? This is where blockchain based solutions comes in handy.
Due to the inherent, trusted nature of blockchain technology such as immutability, provenance, and cryptography, blockchain solutions excel in addressing the trust and transparency challenges in a multi-party conversation.
Blockchain-based supplier digital passport
This blockchain-based supplier digital passport comes with an ecosystem of verifiers/auditors and certificate issues such as Dunn & Bradstreet, Rapid Ratings, Ecovadis, and others. It is agnostic of buyers and business networks such as Ariba, IBM Sterling Supply Chain Business Network, Ecostar, and Coupa. As the supplier base grows, development of AI-based solutions are planned to monitor the external publicly available information on a supplier to provide valuable insights to buyers to ease the burden on monitoring with respect to supplier risks and compliance issues. In short, this would also help buyers to reduce onboarding time, reduce risks, save cost and most importantly create trust in the value chain.
IBM in collaboration with its development partner Chainyard, has launched the first ever blockchain-enabled supplier management solution called Trust Your Supplier. This solution comes an ecosystem of all the constituents listed above including a market place where value added third party complimentary solutions are offered. This solution is focused on easing challenges associated with supplier onboarding and ongoing monitoring to ensure that risks and compliance issues are addressed.
Several branded companies such as Anheuser-Busch InBev, Applied Materials, Cisco, Flex, GlaxoSmithKline, Lenovo, Nokia have already agreed to leverage this solution and are on the governance board to help shape this solution for the future. This solution integrates with many third-party verifiers mentioned before and exchanges data seamlessly.
Transforming the supply chain
Blockchain-based supply chain management solutions are real, already transforming industries, and hold even more potential for the future. Many of our clients have signed on to the Trust Your Supplier built on IBM Blockchain Platform with The Linux Foundation’sHyperledger Fabric. We believe this not only transforms procurement organizations in individual companies but also help in evolving industry standards for supplier onboarding and management.
The list of business networks and third-party verifiers are constantly growing in this ecosystem. This solution is very easy to try with no upfront cost to see validate the benefits yourself. Learn more today about the Trust Your Supplier solution at and request a demo.
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