Blockchain has the potential to have a huge impact on procurement and sourcing. Currently, it’s early days, a bit like the initial stages of the dotcom boom – lots of companies are launching and some are failing. Many still associate blockchain exclusively with cryptocurrency, and admittedly there are limited proven use-cases. At a time when so many emerging technologies and practices are vying for attention, it requires a leap of faith to give blockchain focus. How does blockchain compete with AI, RPA, Big Data, virtual assistants and all the other trends that are driving industry transformation?

Here are the three main reasons that I am backing blockchain as the next big disruptor for procurement:

1) It will unlock the next wave of efficiencies

It will unlock the next wave of efficiencies by getting rid of waste and duplication across customers and their supplier ecosystems. The status quo, where customers and suppliers maintain local records of every transaction, means that there is significant duplication where different players process, validate and store information about the same event.

A move to distributed ledger technology such as blockchain allows for a single, immutable, secure record of every transaction to be maintained, eliminating the need for all this local work within the four walls of each enterprise. Maersk and IBM are predicting that their new blockchain platform will save the global shipping industry billions of dollars a year.

2) It will enable greater trust

It will enable greater trust, despite confusingly being called a ‘trustless’ technology. What ‘trustless’ means is that records are maintained across an entire network as opposed to being verified by a single party such as the organisation that initiated the transaction, or a central authority that might be vulnerable to fraud, infiltration or attack.

In addition, once a transaction is added to the blockchain it can never be changed, so this allows for superior auditability and greater confidence. For certain types of product where provenance is important (food, luxury goods and similar) this allows companies to make a better consumer offer. For example, Everledger’s Diamond Time-Lapse product can validate the provenance of diamonds, ensuring that they are real, not stolen and do not come from mines with a poor human rights record.

3) It will automate fulfilment of contractual obligation

It will automate fulfilment of contractual obligation without the need for separate automation technology. ‘Smart contracts’ can be set up so that when conditions are met, payments or other value transfer can happen automatically. For example, discounting structures can be automatically applied without the need for extra administrative work or specialist billing systems.

Managing supply chains in today’s connected environment is extremely complex. Blockchain provides solutions to questions of efficiency, transparency, and security, and has the potential to transform the supply chain and logistics industry. Bring it on.