To put it simply, Blockchain is a technology that can be likened to a huge decentralized ledger. Every transaction is traced, timestamped, signed and open for anyone and everyone to see.
Three blockchain models exist:
- The public blockchain: Understand a network open to all, all the nodes of the chain are accessible, no roadblocks.
- The private blockchain: Reserved for a limited number of participants, the channel manager can modify the protocol as he sees fit and no one can join without authorization. The value is limited since it does not make the connection between stakeholders.
- The blockchain consortium: It’s a mix between private and public, it involves several stakeholders, some nodes can be public while others remain private, each user choosing what he wants to share.
For procurement, several blockchain applications are possible.
It can be useful in the traceability of the supply chain, i.e. smart contracts can allow a company to manage supplier risk and could make it possible to manage payments without involving a trusted third party (understand the banks).
For example, if your order is canceled but you already paid for it, a smart contract might instantaneously pay you after getting an update from a trusted source.
Or if a supplier doesn’t fulfill its obligations and become a risk for an organization, smart contracts might stop or modify certain conditions right out of the gate to ensure regulatory compliance regarding your procurement processes.
Smart contracts may optimize payment terms of SMBs that need continuous cashflows and thus facilitate relationships with start-ups.
It could also help us secure, certify the sourcing of intellectual services in particular….But… What about intellectual property and how to manage it?
Legal questions arise and are still unanswered.