Can blockchain help procurement to become an exponential organisation? - Can blockchain help procurement to become an exponential organisation?
CAN BLOCKCHAIN HELP PROCUREMENT TO BECOME AN EXPONENTIAL ORGANISATION?
Following on from my last blog about whether procurement can become an exponential organisation. I want to take a closer look at the use of blockchain and how it could help procurement to take a next step in the technology era.
A few weeks back I met with Tom Kriger, one of the co-founders of Innovation Block, he works with a young and vivid team who use technology to challenge contemporary ways of working by redesigning business models and processes. Together, we spoke about the use of blockchain technology in procurement and the use of Artificial Intelligence in recruitment (matching based on personality).
To put it simple, a blockchain is a new way of sharing and storing data. Let’s take a closer look.
Key components of blockchain:
- Data storage (only verified data can be stored in the ledger)
- Data distribution (everyone can have a copy of the ledger)
- Consensus (participants of the block chain network have to reach consensus in order to update the ledger with new information)
- When the majority of participants agree that the requested update is valid, the shared ledger is updated. This is one way to reach consensus, within the blockchain space there are actually several ways to reach consensus.
- The blockchain fundament relies on cryptography, algorithms and high level mathematics. By using these three fields, it is always provable that a blockchain is reliable.
Benefits of using blockchain
1. A single shared truth
If there is no consensus on the data that has to be uploaded to the blockchain, it will simply not be recorded. Therefore, we can always assume that, once recorded on the blockchain, transactions are 100% valid.
The shared truth makes this solution very beneficial in ecosystems where participants have no reason to trust each other. As blockchains are shared and all participants can see what is on the block chain (and transaction requests), the system offers transparency and as a result trust is established.
2. More secure than current systems
There is no single point of attack. As a cybercriminal, you cannot just attack one database, but you’ll have to continuously attack a majority of the databases.
Each data-upload in a block is directly connected to the previous one, meaning that it is extremely difficult to change it. Even if you would succeed to access the current block ‘to be added data’, you’ll also have to fraud the previous blocks and change the blocks that are added by other participants in the network, without alarming them as well.
3. Possible outcomes
Faster dealings due to 100% certainty of information. Double or triple checks will not be necessary since information recorded on the blockchain represents a single source of truth. Resulting in a simplified model with reduced complexity of managing separate systems.
Lower costs of process since the blockchain ensures trust between participants and, thus, massively eliminating overhead costs (fees to clearing houses or trusted third parties).
Multi stakeholder collaborations since there is a way to digitalise “trust” even though in the real world these stakeholders have no reason to trust each other.
Automated efficiency and increased speed due to Smart Contracts that can trigger real-world-scenarios.
Bringing it all together
In my last blog I spoke about how procurement can become an exponential organization (ExO) by using new technologies. This is typically one of the characteristics of an ExO next to seeking use of knowledge sources you actually do not own yourself.
Information is your most valuable asset and due to the use of blockchain more precious than any other asset you have, it is one of the keys to success.
We are making progress in the world of procurement by using new technologies; train and educate procurement professionals, but we need to start thinking in a more revolutionary way rather than in an evolutionary way if we really want to change procurement.
After all the great chefs in this world have changed the culinary world not just by using the same and existing technologies, but by educating themselves more and more, finding new ways of preparing ingredients and dishes.
3D food printing is one of the new developments in the culinary world. All these new developments will change our view on food and cooking, like new technologies will change our way of working.
Many thanks to Tom Kriger and his team for their input and sharing their knowledge on blockchain.
Global Head of Services Procurement, Hays Talent Solutions
Drawing on more than 30 years’ experience in sourcing and procurement leadership, Eric has all the trophies and battle scars of driving strategic procurement change, and will gladly discuss his learns with you.
Quoted as saying he stopped ‘buying’ in the 80’s Eric’s view of procurement is firmly vested in the importance of strategic relationship development, both internally and externally. When he’s not immersed in connecting stakeholders for services procurement solutions development Eric is a busy entrepreneur, educating the world’s top chefs as a certified olive oil sommelier.