Tag Archives: blockchain

4 Reasons for Procurement to Back Blockchain

What is blockchain? How can it impact your organisation and help establish trust? Why should procurement be embracing it?  We answer all of your burning blockchain questions… 

Blockchain belongs to the (long?) list of buzzwords that are part of the growing hype surrounding new technology. Many people equate blockchain with Bitcoin, the first relatively mainstream cryptocurrency. For some, this association makes blockchain seem like something for hackers and illegal commerce, and far removed from typical B2B or B2C applications.

However, what many may not realise is that blockchain can have a significant impact on business because it can be a powerful tool in establishing trust. Trust is at the heart of business and drives:

  1. How we cooperate with other people (blockchain makes it easier to build trust in new business partners),
  2. How we automate activities (blockchain can ensure that a “machine/process” performs as expected)
  3. How we make decisions (blockchain creates more confidence in data),

What Is Blockchain?

Blockchain can be intimidating. It is a complex technology and understanding and explaining it is far from easy (I still haven’t entirely figured it out). However, for procurement and supply chain professionals, understanding what blockchain enables and the associated implications is much more important than knowing how it works. What makes blockchain so valuable is linked to how records are added to the database:

  • A network of computers stores and verifies any new record, making the blockchain more robust than a single instance (like in most traditional databases),
  • Every transaction (“block”) is linked to the previous one (“chain”), creating complete traceability and preventing any data alteration,
  • It is decentralised (peer-to-peer), which means there is no authority deciding the rules or with a personal interest in manipulating data in one way or another.

Data in the blockchain is therefore immutable and impartial. It is shared among parties (publicly or privately) and cannot be changed by anyone.

“Protected from deletion, tampering, and revision. In this world every agreement, every process, every task, and every payment would have a digital record and signature that could be identified, validated, stored, and shared. Intermediaries like lawyers, brokers, and bankers might no longer be necessary. Individuals, organisations, machines, and algorithms would freely transact and interact with one another with little friction. This is the immense potential of blockchain.” The Truth About Blockchain, Harvard Business Review

Therefore, blockchain is a form of digital trust. More trust makes doing business easier, streamlines many processes, and creates transparency. Furthermore, and more importantly, it means that blockchain can serve as the backbone for new types of cooperation between machines (M2M) and between humans (H2H) that were, until now, limited by the cost of building trust or by a lack of trust altogether.

Businesses and business relationships stand to benefit significantly from what blockchain technology has to offer, and here are the main reasons for why procurement and supply chain professionals need to start taking notice:

1. Streamlining Operations

Beyond making transactions more secure and efficient by removing intermediaries, blockchain technology can also increase transparency in the supply chain. At each step of the value chain, from the extraction of raw materials to the customer, blockchain technology can store and record every transaction and exchange of ownership. This would provide companies with a complete, trustworthy and traceable record that would facilitate and simplify the process of due diligence, which companies need to complete in order to ensure compliance with rules and regulations restricting illegal or unethical corporate activities (child labor, modern slavery, conflict minerals, product traceability, fraud, counterfeit, etc.). Not only would this streamline internal processes (increasing efficiency and reducing costs), it would also establish more trust between companies, suppliers, regulatory bodies and the consumer. This is why many companies with a complex supply chain in industries with strict regulations and requirements related to product traceability (pharmaceutical, food & beverage, etc.) are already testing blockchain technology for that purpose.

2. Better Cooperation Between People

Blockchain can also enhance and improve Human-to-Human (H2H) cooperation because collaboration between people also relies on trust. This is particularly true when partners do not know each other, which is especially common in new business models (platform/ gig economy).

Identity and reputation are the two pillars of building trust. Because of its cryptographic nature, blockchain embeds mechanisms that ensure that users are who they say they are. That covers a user’s identity and extends to other credentials:

“Using the blockchain and strong cryptography, it is now possible to create a certification infrastructure that puts us in control of the full record of our achievements and accomplishments. It will allow us to share a digital degree with an employer while giving the employer complete trust that the degree was in fact issued to the person presenting it.” Certificates, Reputation, and the Blockchain, MIT Media Lab

Reputation is nothing more than the result of past transactions. As noted earlier, the blockchain logs all transactions securely and transparently. So, the blockchain makes it easy to measure and know someone’s reputation. Blockchain therefore makes it easier to do business with new partners by reducing the costs and risk which are often associated with new business relationships. Traditionally, a fear of risk and unexpected costs has been behind the rationale to aggregate spend towards a limited number of suppliers and/or to favor (consciously or unconsciously) incumbents. The use of blockchain can allow procurement organizations to revisit their category strategies!

3. Better Cooperation Between Machines

With blockchain organizations can

  • Trust the data stored in it,
  • Create new data collection points by digitalising more processes,
  • Execute automated programs (called smart contracts).

This creates a distributed system (data + process) that they can trust (completeness, accuracy, authenticity, resilience). So, it is possible to automate further without being exposed to typical risks due to lack of data, poor/corrupted data, unreliable execution, interferences by third parties/intermediaries,…

Blockchain is the ideal infrastructure for machine-based activities that the Internet of Things (IoT) has been lacking. It opens the door to new “apps” that will run precisely as programmed. An immediate area of application that is relevant for Procurement is Supply Chain Management.

For example, companies can track the movements of a container at all times. Whenever it reaches specific points, the blockchain will record the activity and smart contracts will execute automated actions (e.g. registration for customs, payments,…). The same concept also extends to upstream/downstream activities like inventory tracking/management or ordering/requisitioning/replenishing.

4. Better Insights with the Convergence of IoT, AI, and Blockchain

“Blockchain and AI are the two extreme sides of the technology spectrum: one fostering centralised intelligence on close data platforms, the other promoting decentralized applications in an open-data environment. However, if we find an intelligent way to make them working together, the total positive externalities could be amplified in a blink.” The convergence of AI and Blockchain: what’s the deal?, Francesco Corea

When considering the Internet of Things (IoT) + Blockchain and adding Artificial Intelligence (AI) to the landscape, a bigger picture emerges that covers data, insights, and actionable intelligence: the core of business activities! When combined, these technologies represent an opportunity to address the “big data” challenge summed up in the “6 Vs”: Value, Volume, Variety, Velocity, Veracity, and Variability.

Some of the latest technologies represent critical components for building better insights and actionable intelligence:

  • IoT = Provides the ability to collect more information (Volume) and in a real-time manner (Velocity & Variability). This is especially true when monitoring physical supply chains (e.g., sensors and geolocation for containers) and changing demand (e.g., sensors in machines for predictive maintenance). It is the foundation that makes gathering data possible and keeps the Big Data engine running and improving (e.g., machine learning).
  • Big Data = Makes it possible to consolidate, aggregate, and slice more data coming from multiple sources (Variety), both internal (e.g., ERPs, or other information systems) and external (e.g., IoT sensors, third party data providers…).
  • Blockchain = Increases trust and reliability (Veracity) in the data collected and stored which is a critical factor in trusting the insights and decisions derived from that data. It also creates a “data backbone” that can be utilized to create interoperability (internally and externally) opening the door to further automation and “interconnections” between physical and financial supply chains.
  • AI = Exhibits tremendous computational capacity to analyze massive sets of data to build new knowledge (Value) and continuously learn and improve from new data.

Too Good to Be True?

Blockchain represents an important for the business world. Procurement organisations cannot afford to ignore it because it has the potential to open doors to further improvements from streamlining paper-based processes to enhancing cooperation and developing new strategies and supporting new operating/business models.

Despite the potential benefits, however, organisations should still make an informed decision about testing blockchain bfore rushing in. Blockchain is still a relatively new technology, and in addition to understanding the potential it holds, procurement organizations also need to understand the limitations and risks, which we will cover in our next article. Stay tuned!

7 Procurement Trends To Watch Out For In 2018

Which hot topics and trends will everyone in procurement be talking about in 2018…?

What’s the buzz in 2018? We’ve done a spot of investigating to identify all the hot topics the procurement world is excited (and concerned!) about in the coming year…

1. Technology Hype Won’t Let Up

Steve Banker, writing for Forbes, concurs stating that “emerging technologies such as blockchain, 3D printing, autonomous mobile robots, IoT, machine learning, and related technologies continue to get a tremendous of amount of publicity.

According to Supply Chain Digital, “The pace of innovation is picking up steam at an exponential rate.

“Robots, self-driving vehicles, electric trucks, blockchain, the Internet of Things (IoT), and new mobile-enabled categories are all poised to explode onto the scene in one form or another.

“It’s hard to predict what’s real and what will fade away, but expect 2018 to become a year of heavy innovation for supply chain leaders, even if it’s experimental.”

Vivek Soneja, writing for EBN online  asserts that “Blockchain capabilities have transformed collaboration across trading partner networks”. He believes Blockchain will “enable much tighter collaboration across supply chain planning and execution decisions. ”

Read our latest articles on Blockchain by Basware’s Paul Clayton and  InstaSupply’s Simona Pop.

2. Brexit Will Continue To Cause Disruption 

“While 2017 was the year of Brexit uncertainty, 2018 will be the year where things start to change,” asserts Francis Churchill on Supply Management.

Last year CIPS revealed that 63 per cent of EU companies planned to move some of their supply chain out of the UK as a result of the decision to leave the single market and customs union.

“The slower-than-expected progression of Brexit negotiations has put off business investments in current or new UK operations,” explains Gary Barraco on Global Trade Mag. Recent readings on economic growth showed investment by companies to be flat in the second quarter.

“Supply chain executives are voicing concerns about tariff and quota changes, hoping to keep trade open and flowing as it does today. For manufacturing to remain strong, the raw material imports from Asia need to remain duty and tariff free, as they are currently in the customs union. Costs could go up without the trade advantages, leading to higher export costs from the UK.”

We discuss the implications of Brexit for procurement in this Procurious blog. 

3. Cognitive will reign supreme

Global Trade Magazine predicts that “by the end of 2020, one-third of all manufacturing supply chains will be using analytics-driven cognitive capabilities, thus increasing cost efficiency by 10 per cent and service performance by 5 per cent.”

And IBM predict that, by this point, all of our important procurement decisions will be made with the assistance of artificial intelligence. We know that our teams must “transform or die” if we don’t want the function reduced to the back office,  facing extinction.

But if you’re still feeling a little overwhelmed by the magnitude and potential of cognitive technology or simply wondering how to get started, this Procurious article has some great advice.

4. Transparency

Paul Martyn , writing for Forbes, spoke to Sue Welch, CEO, Bamboo Rose, on her supply chain predictions for 2018, discussing why “transparency and sustainability will be practiced with more vigor in 2018.”  She said ” ‘There’s been an explosion of demand from consumers to know where their products are originating and the required information is extremely granular. For example, with a package of carrots, consumers want to know not only the farm where they were harvested, but also the row and lot number where the carrots were planted.’

“Welch, whose company, Bamboo Rose, works with a number of top retailers and apparel companies, expects traceability demands to not only shape how consumers buy, but how companies will source and market their services.

“Smart retailers will begin to market their products from an information/sustainability-first standpoint and to be credible about it, they’ll need to invest in integrating technology that makes this level of transparency possible at every level of the supply chain.’ ”

5. Cybersecurity

Global Trade Magazine predict that by the end of 2019, cybersecurity will have surpassed physical security as a top concern for one-half of all manufacturers, and in the transition to digitally enabled, cognitive supply chains, cybersecurity will have become a top investment priority.

“High-profile hacking cases that compromise sensitive information for millions of people will continue in the coming year.” states Soneja, “With the proliferation of data and connected endpoints, companies will need to step up their security and privacy protection protocols in 2018.”

Earlier this year, we spoke to Craig Hancock, cybersecurity expert and Executive Director of Telstra Service Operations on the dangers of cyber crime. Read the full article here. 

6. Back to basics

“While a number of new trends are giving procurement leaders directions to explore in 2018, many supply chain professionals are still aiming for easy-to-understand goals” explains The Strategic Sourceror.

“According to Deloitte’s latest research on chief procurement officers, cost advantages and cash flow improvements are still the bread and butter of the supply chain. Traditional efforts to improve contracts and advanced, tech-driven strategies can deliver favorable costs to companies.”

7. Big data is a big deal

“In the context of the supply chain for most businesses, big data and predictive analytics are still an untapped resource that can potentially provide insights which help anticipate or respond to events or disruptions,” explains Raanan Cohen on Supply Chain Management review. 

“Unpredictable consumer behaviour, traffic or weather patterns, and labour unrest are all external events that can disrupt a supply chain and lead to increased costs and customer service challenges. Big data can help organisations become better trading partners to their customers and suppliers. But before insights and analytics can be leveraged for a better supply chain, there’s a huge task at hand for the many organisations that need to first collate data points from all sources and align them to their business operations.”

2017 Rewind- The Impact Of Blockchain On Procurement

As part of our 2017 Procurious rewind, we’re taking a look at the top blogs of the year. Blockchain was one of the hottest topics on the site this year. It’s time to brush up on your knowledge and understanding right here, right now! 

Blockchain technology will not only impact procurement and procurement professionals but is expected to be more pervasive in our business and personal lives than the internet itself. To put the enormity of impact on procurement and procurement professionals in perspective picture yourself twenty years ago trying to explain how the Internet is going to change things. Where would you even begin?

Like the Internet the Blockchain is a network. In the case of Blockchain comprised of decentralized “ ledgers”, many are referring to it as Internet 2 or more commonly the Internet of Value or Internet of Trust.

The benefits

The most important thing to understand is that Blockchain addresses many of the most critical problems we’ve encountered doing business on the internet.

1)  Security: Practically speaking the Blockchain is unhackable.

2)  Transactions are verified by network participants (consensus), eliminating the need for third-party intermediaries’ (banks) costly, time-consuming and predominantly manual settlement processes. In addition to slowing down our supply chains banks alone have estimated these processes are costing them more than $20 billion annually.

3)  Eliminating high transaction processing costs for high volume/low margin retailers who accept credit cards could significantly add to their bottom line.

4)  Once transactions are verified they are secure and immutable. (unchangeable)

5)  The immutability of the Blockchain means that supply chain provenance can be assured. This is particularly important for conflict minerals, pharmaceuticals, food and many other supply categories where provable chain of custody is critical.

6)  Payments can be made directly from buying entity to selling entity “ledgers” by-passing intermediaries (banks, brokerage, clearing houses, title companies, etc.)

7)  Payments can be automatically triggered based on the codified terms of “ Smart Contracts” stored in transaction blocks.

8)  Blockchain capabilities will change, if not eliminate the role of accounts payable and accounts receivable departments.

9)  Blockchain enables the concept of micro-units and micro-payments. It is estimated that approximately one -third of the world’s economic opportunity exists for products and services such as energy or digital rights where backend settlement costs currently constrain those markets.

10) It is also estimated that 25 per cent of the global population does not participate in the global economy because they have no bank accounts and/or credit cards. Without these tools they cannot participate in the Internet economy. The primary reason they do not have these economic tools is because they cannot prove their identities. Immutability of the Blockchain can enable these people.

What do I need to understand?

The capabilities I’ve outlined just scratch the surface on how Blockchain impact all of us. Aside from the aforementioned, as a procurement professional are several important things to understand.

1)  Blockchain is a much wider and more pervasive concept than Advanced Cognitive Systems, Big Data, Predictive Analytics, Robotics, 3-D Printing or even the Internet of Things. In fact these technologies will become infinitely more practical and secure because of Blockchain.

2)  Do not think of Blockchain and BitCoin, FinTech or Crypto Currencies as synonymous. They are not.

3)  Do not think that it will take 20 years to mature and be mainstream. The estimate is 5-7 years for full maturity.

4)  Do not assess progress by the US/Euro FinTech Community. While they were the first to recognise Blockchain’s inherent value and arguably have the most to gain by adopting it, they also have the biggest hurdles to overcome and could very well be last to cross the finish line.

5)  Don’t make the mistake of waiting to become knowledgeable about Blockchain; it is the most highly disruptive technology we’ve seen since the Internet and it won’t wait until you are ready for it.

Michael Shaw is CPO and Executive Board Member of Sourcing and Procurement Executives (ACSPE) and Chief Information Officer at Blockchain Executive.  This article was originally published on LinkedIn

Don’t be Fooled and Underestimate Blockchain

Do you find it comforting to dismiss blockchain as “flash in the pan”? Simona Pop believes you’d be a fool to do so and explains why it will live up to the hype.

There is a pattern emerging where new technologies are treated with a certain degree of skepticism. After the initial wave of excitement and expectation, many of the game changing advances are suddenly approached with a “flash in the pan” dismissal.

Is it meant to reassure comfortable people and businesses that carrying on as they are is the better option? Why risk innovation when you can draw out a tradition type stance?

But this isn’t the technology’s fault. Many of these advances are – when divorced from the Gartner hype cycle and the hashtags and actively placed in their proper context – exactly as exciting and game changing as they seem, if not more so.

Blockchain is a high-profile victim of this phenomenon: as a distributed ledger technology that promises faster, more secure payments, many industries have been exploring its possibilities and many more have been writing and talking about it.

Purchasing is no exception. And while blockchain technology may have limited application in other professions, in this one, it will live up to the hype. As a means of reducing costs, improving efficiency, controlling fraud, and boosting transparency, it has tangible, real-world benefits for procurement functions – whatever the market or business they work within.

In a recent article, Paul Clayton, Head of New Service Development for Basware, states:

”In 2017, blockchain is word of the year, it’s absolutely everywhere. But it’s not earth shattering, it’s not the third generation of the Internet it’s just an interesting concept with some obvious benefits and flaws.”

Let’s go through some of the reasons why Basware feel blockchain is not all it promises to be for finance and purchasing:

  1. “Whilst a blockchain itself is safe, an application using it remains hackable” – This is also true of your bank software, or Apple Pay or pretty much any software we are currently using for payments. It should not stop us using it or leveraging its deep transformational effects in how businesses operate.
  2. “It can be too transparent” – Technically true, but in reality the references to user wallets are encrypted key strings which, whilst easy to relate to the originating source and other related transactions, is not as easy to relate to an actual physical person. In much the same way as a credit card number isn’t easy to relate to a person without extra information.
  3. “It’s not the most elegant solution” –  Here’s where we strongly disagree. The elegance is in the simplicity. Banks have been trying to come up with distributed ledger technology since the 70s but they were hindered because they refused to be outside the transaction. By using TLS style encryption and cutting out the transaction verification at financial institution level, the whole transaction becomes significantly simpler.
  4. “You can still lose things!“ – Of course you can. You can lose your wallet too.

The argument that there isn’t really that much value in blockchain when the benefits of smart contracts and removing the invoice are tangible possibilities is nonsensical. Removing  the need for invoice processing is huge and any platform truly helping businesses handle their invoices and payments should know this. Invoice processing, and invoice fraud by proxy, are the biggest threats to company money out there today. Just look at Facebook and Google who were victims of $100M payment scam this year.

Blockchain automates trust

Trust is the cornerstone of every business relationship. On a fundamental level, you need to believe that the other person is who they say they are – and they need to believe the same of you.

In this age of phishing, malware, and general cyber security attacks, this seemingly simple principle becomes complicated. Login details are stolen and turned to criminal ends; high-level executives are being impersonated by hackers, who then persuade other parties to release vital funds; the sheer scale and variety of cybercrime is growing.

Blockchain provides a means of automating trust. By using permanently retained historical data to authenticate everyone involved in a deal, each side can be assured of the other parties’ trustworthiness: the seller and buyer alike are always who they say they are, and the product is the right product. What’s more, because prices cannot be modified, invoices will effectively be rendered obsolete.

This greatly simplifies the complicated, multi-faceted transactions that make up modern supply chains – maximising security and reducing the risk of fraud.

Blockchain is fast

Procurement functions will also benefit from the speed and efficiency of blockchain technology. For one thing, it’s fully digital: by taking the more time-consuming elements of a conventional transaction out of the equation, you immediately save time and resources that would have been spent on these tasks.

Shared access databases mean that it’s no longer necessary to manually scan invoices – dramatically accelerating the reconciliation process as all parties are allowed to view the same transaction.

Blockchain effectively cuts out the middlemen. By removing all intermediaries, it makes the processing of payments and transactions much faster: purchase order data can be exchanged on the blockchain at a far speedier pace than current levels will allow. This technology can also identify the nearest and most cost-effective vendors: decreasing lead and work time, and improving your operational efficiency.

Blockchain creates strong audit trails

Blockchain technology stores every detail of every transaction at every level of the supply chain. This will – as mentioned above – facilitate greater fraud control, and it will also offer transparency into issues of legality such as money laundering and the use of child labour.

And though it’s a digital technology, blockchain will also assist with the tracking and recording of physical items. As they are transported across local and international borders, they can be identified at each location – creating a strong and fully documented audit trail.

This kind of end-to-end visibility ensures that delays are rare and that missing items are found and allocated to supply routes more easily. This allows you to manage and optimize these supply routes with maximum efficiency – ensuring that no space is wasted and no customer disappointed.

It’s clear blockchain will have a significant influence on procurement and finance. The advantages of being able to streamline business processes, secure payments, and automate workloads shouldn’t be understated. Do the research, ensure you’re positioning your business correctly and you’ll be in the camp that benefits – today, and in the future.

See InstaSupply’s co-founders chat about blockchain and its vital role on our roadmap.

Blockchain: Are You Bothered?

There are so many misconceptions around blockchain and its potential impact. Will the fundamental concept of blockchain really have a significant impact on procurement, finance and supply chain?

Last month’s Procurious London Roundtable was sponsored by Basware

Blockchain is the coolest technology of the moment and the hype surrounding it only appears to be growing year upon year. Whilst the concept was first used for Bitcoin, the digital currency, its potential is far wider, and many industries are actively investigating the possibilities of using blockchain-based solutions.

But despite organisations around the world jumping on the Blockchain bandwagon and advocating for its enormous potential, do the majority of professionals understand precisely what it is, what it can do and the extent to which it will impact our businesses?

At last month’s Procurious roundtable, Paul Clayton, Head of New Service Development, Basware put us through our paces with an overview of blockchain technology and his insights as to why procurement pros need to be cautious not to overestimate it’s bearing on the function.

What is blockchain?

A blockchain is simply a digitised, decentralised and cryptographically secured ledger of transactions.

“The biggest misconception” Paul begins, “is that there is only one blockchain. There are actually many blockchains in use today throughout many different industries.”

“Blockchain is actually only a concept, whose origins go back to academic work in the early 90s, rather than a thing. The concept was first publicly used to allow the crypto-currency Bitcoin to be traded virtually, anonymously, and without the need for a centralised bank.”

“Blockchain technology says where something has been transferred to and retains a trace of the transfer. Conceptually a blockchain acts like is a single ledger, a source of the truth if you like. In reality, it is physically distributed where there are actually multiple ledgers, known as nodes, that all work together to come to consensus on where something has been transferred to, which is then shared between them.”

An obvious advantage of this technology, is that it’s very difficult for you to break the integrity of the ledger. “There are multiple copies of the same ledger and so if someone hacks one it becomes immediately obvious that it is different.”

The flaws at the heart of blockchains

Whilst a blockchain itself is safe, an application using it remains hackable – Security researchers and hackers have proved it’s possible to hack someone’s Bitcoin wallet and empty it of crypto-cash. Mt. Gox infamously lost 7 per cent of all Bitcoins in circulation in 2014, which were worth, at the time, approximately $473 million. It also appears to be an uphill battle trying to prosecute someone for taking a Bitcoin

It’s can be too transparent – With public blockchains, once a transaction and its associated data have been placed onto a blockchain, anyone and everyone who has access to it can view everything, whether you like it or not

It’s not the most elegant solution – The very nature of the deliberately distributed ledger with multiple copies (nodes), means that you have multiple nodes undertaking exactly the same piece of work ie working out where something has been transferred to. From a pure computing power point of view, for certain applications, this is a highly inefficient way of doing things.

The blockchain for Bitcoin for example, has already had to be re-designed to increase its scalability as the number of Bitcoins in circulation and the growth in the associated transactions meant that the ledger became too unwieldy and it was taking too long for it to update.

You can still lose things!

Even if you know where something went, you can still then lose it. Who could forget the unfortunate James Howells, who mistakenly threw out a hard drive containing 7,500 Bitcoins, now estimated to be worth $7.5 million

 

Blockchain for business

There are some who would argue that these problems have been addressed and eliminated for blockchain for business. Paul is not one of them!

“The distributed nature of ledgers means blockchain is good at maintaining the integrity of who owns something but what it cannot do is determine whether the person who put something into a system owned it in the first place.”

This means, when making a transaction via a blockchain, the recipient needs to be able to trust the supposed owner of the thing that is being exchanged. “You are, essentially, reliant on the veracity of the source of what goes in to the blockchain.”

For example:

Does the “owner” actually own the rights to the house they are trying to sell you?

If you’re exchanging metals, does the “owner” have documents to prove they have the rights to the gold?

It might be good at preventing a fraudulent transfer of an asset but blockchain is “next to useless at establishing if a person owned something in the first place”

“As a ledger system it is extremely inefficient, almost clumsy in the way it works. In certain circumstances, where there are a high volume of transactions it uses so much computing power it’s almost not worth it.”

“And it’s for these reasons that, whilst it will have applications in many areas from supply chain through to electronic voting, blockchain won’t change the world!”

Where is the value for procurement?

“Is there value in blockchain tech? Yes. Does the value match the hype right now? Not even close!”

“From a procurement point of view the biggest area of impact right now is most likely to be in supply chain applications. There are obvious applications for the transfer of title and bill of lading. Of particular interest in this space right now are supply chains that can be subject to fraud such as pharmaceuticals and food

Going beyond that the application of so called “smart contracts” to a blockchain can help automate certain business processes. Smart contracts, are pieces of computer code attached to a blockchain that automatically execute an action once a set of agreed criteria have been met. For, example, a smart contract could be used to automatically pay a supplier once the buyer has received their goods without the need for invoice processing and payment.

” In 2017, blockchain is word of the year, it’s absolutely everywhere. But it’s not earth shattering, it’s not the third generation of the Internet its just an interesting concept with some obvious benefits and flaws.”

Last month’s Procurious London Roundtable was sponsored by Basware

8 Reasons You Won’t Want To Miss Basware Connect

Basware Connect is just around the corner, and is shaping up to be one of the highlights of the 2017 procurement event calendar. Procurious has the inside word from our knowledge partner Basware on the top eight things to watch out for on Wednesday 18th October.

  1. The very latest on Industry 4.0

Whether you’re from the procurement or finance function, it’s almost certain your role is already being impacted by the many facets of the 4th industrial revolution. From ‘business as usual’ technologies such as PDF e-invoicing to large-scale futuristic disruptors including blockchain, robotics, machine learning and predictive analytics, it’s up to you to keep up with the latest news on how the revolution is progressing and Basware Connect will help you to do just that!

  1. Engage with a blockchain guru

Blockchain has well and truly arrived, and organisations are scrambling to understand how they can incorporate this technology to reap the security benefits, keep ahead of the competition and avoid getting left behind. It’s a hot topic: Procurious’ own articles on Blockchain have attracted a lot of attention, demonstrating that procurement professionals are increasingly eager to get to grips with what this technology can actually deliver. Simon Taylor, one of the most recognised thought leaders on Blockchain and DLT, previously established Barclays bank as one of the leaders in blockchain thought and action. He is set to deliver one of the most anticipated sessions at the conference.

  1. Learn how to fail forward

We’ve come a long way from the days when failure was seen as career damaging and shameful. Today, businesses are embracing failure as an exciting, enlightening step towards success. Black Box Thinking author and Times Columnist Matthew Syed will demonstrate how to redefine failure in your organisation, taking attendees through his thought-provoking approach to high performance in the context of ever-increasing complexity and rate of change.

  1. Get to grip with megatrends

Don’t miss out on seeing Eric Wilson, Basware’s VP Purchase to Pay, speak about megatrends. We’re biased when it comes to Eric because he’s already proven himself to be a thought-leader in his profession via his excellent contributions to the Procurious Blog. Check them out:

  1. Will my job be lost to automation?

Automation has been impacting human roles for at least two centuries. In the US, over 50 per cent of the population was employed in agriculture in 1900, down to around 2 per cent today. Chair, Non-Executive Director and Business Advisor Natalie Ceeney will examine the coming impacts of AI and machine learning. Natalie has operated at Board level for fifteen years, holding three significant CEO roles. She is currently Chair of Innovate Finance, the members’ body for FinTech, and a non-executive Director on the Board of Countrywide PLC. She’ll be providing attendees with some examples of why some of the biggest brands have failed to stay ahead while others succeed.

  1. Get your questions ready for Basware’s executive team

Eric Wilson isn’t the only senior exec that Basware is putting on the stage. A line-up of Basware’s thought-leaders and top consultants will be presenting, and (importantly) will be available to answer your questions about the platform itself. Highlights include Ilari Nurmi, Basware’s SVP Purchase to Pay, who’ll be talking about “what’s hot right now” in the company’s solution roadmap, Andrew Dos Santos, Principal Business Consultant will be on hand to offer advice and Senior Product Manager Theresa Lacey will be demonstrating new functionalities and future plans.

  1. Immersive workshops

Nobody wants to sit back and listen for an entire day, which is why Basware has included some immersive workshops for audience members to roll up their sleeves and participate in. A highlight is the “demo area”, where attendees can see demos from across Basware’s product portfolio and speak to their experts. You can get hands-on with Marketplace, and even go as far as ordering a pair of wireless headphones to take home with you! Now that’s a valuable takeaway to bring back to the office.

  1. Network, network, network

Sessions aside, this event is an important opportunity to grow your professional network. Take along plenty of business cards, seize every opportunity to meet new people, and follow up by connecting with them on Procurious. To get the most out of the day, be sure to introduce yourself to the speakers post-event. Basware will provide the free beer, wine and pizza, you take the opportunity to network, network, network!

Basware Connect will take place on 18th October 2017 at CodeNode, 10 South Pl, London. Learn more about Basware Connect and register for free today.

“I Just Don’t See How Blockchain Can Apply To My Business”

Blockchain naysayers are echoing the words of short-sighted CEOs in the early 1990s who refused to recognise the disruptive potential of the Internet. American Blockchain Council Executive Director Jack Shaw demonstrates why businesses need Blockchain as a cornerstone of their digital transformation strategies.

Business Technology Futurist Jack Shaw is a keynote speaker at Procurious’ upcoming Big Ideas Summit in Chicago. Register now as a digital delegate.

Very few procurement functions are not currently going through some sort of digital transformation. Typically, the transformation includes building digital tools to enhance customer engagement, robotic process automation for rules-based activities, the use of big data and analytics to bolster decision-making, IoT integration, moving your business to the cloud, and – for some – bringing cognitive computing on board.

What’s missing from this daunting to-do list? The integration of Blockchain technology.

Jack Shaw explains why Blockchain needs to be a fundamental part of every business’ digital strategy: “Blockchain is unique among emerging technologies. Other technologies, such as IoT, can be extremely powerful as a ‘point solution’. This means they apply at a particular point in the business process, or even at a particular geographical location in the supply chain, to increase accuracy and speed.

“Blockchain, however, provides the infrastructural glue that ties these disparate technologies together into a single, coherent business ecosystem. You can have thousands of participants accessing timely, shared data, which allows you to step back and think about how the whole system can work more effectively.”

Two exciting benefits Blockchain technology will bring to the supply chain

Speed: Shaw talks about the incredible increase in speed of international trade transactions that Blockchain can deliver. “When I spoke at a global big data conference in China recently, a delivery of cotton from Houston U.S.A. had arrived at the local Chinese port three days earlier. With an international shipment like that, the paperwork involved normally takes around 10 days to settle. However, this particular shipment had been arranged with Blockchain and scanning technology, and it took a mere 10 minutes in total.”

Validation of providence: Supply chain professionals know the importance of transparency when it comes to sourcing products. Even if your first, second or third-tier suppliers seem legit, there’s also the risk that something illegal exists further down your supply chain, such as conflict minerals or modern slavery. With Blockchain, every step of the products’ lifecycle can be tracked and validated, all the way back to the extractive industries. As Shaw says, “Lack of visibility will no longer be an excuse.”

Cybersecurity and Blockchain technology

While it isn’t a magic bullet for cybersecurity challenges, Blockchain creates a level of trust that’s well beyond anything that has existed previously. Transactions are readily accessible (and transparent) for those who are authorised to see it, and un-hackable by those who aren’t. Not only are financial transactions more secure through Blockchain technology; it’s also very powerful for protecting data.

Shaw cautions that hackers could still find their way in by feeding incorrect data through in-house systems. “In a way, Blockchain will step up the requirement for improved data integrity. Technology such as cognitive computing only works if the data is valid.”

The Internet of Things (IoT) is another frontline for cybersecurity. “How do you know that the data you rely on to make decisions is actually from a particular device, and that it hasn’t been hacked or spoofed? Blockchain can provide an immutable record that uniquely identifies a data-providing ‘thing’ to ensure that you know your information is coming from that source.”

Shaw gives the example of odometers, where unethical car dealers can hire digital hackers to alter the mileage. Bosch has recently integrated Blockchain technology with odometers which upload digital readings hourly. “You can extend this concept across big data, analytics and cognitive”, says Shaw. “It only works if the data is valid, and Blockchain is one way to ensure that.”

Blockchain technology will be one of the many disruptive forces discussed on 28th September at the Big Ideas Summit in Chicago. Register now (it’s FREE!) as a digital delegate to access all the news and content from the event.

Blockchain Is Real. It’s Here Now And It’s Coming To Transform the World

Why are organisations so keen to bury their heads in the sand and pretend blockchain isn’t happening – it all starts with a severe case of NIH syndrome…

There are certain market analysts who would have you believe that the benefits of Blockchain technology are “Hype” and the real benefits are still 10-20 years away. There are several reasons for this:

Ignorance

Although many believe such firms to be thorough and knowledgeable about every leading edge technology, they are not. This is evident in a lack of participation in key consortiums and conferences and a lack of good research leading them to a parochial view of Blockchain’s Global impact which they put in print.

NIHS (Not Invented Here Syndrome)

“Coin the Term and Own the Market” has always been the mantra of some these firms.  “If we don’t say it is so – then it ain’t so.” There has been at least one attempt to rename the Blockchain market “Metacoin”- “Meta” meaning “about or referring to itself.” This shows a clear misunderstanding of the market.

It’s not “about the Coin”…

…whether Bitcoin, Ether, Zcash, or any others. Again, this is a very narrow view of what Blockchain is all about. What are most important are the underlying capabilities of Blockchain technology that enable those cryptocurrencies, but also enable many other unrelated and far reaching benefits.

Blockchain is not synonymous with Fintech or Bitcoin

Currently, Financial institutions arguably stand to gain the most by adopting Blockchain technology and stand to lose the most if they don’t. The major global financial institutions, especially those in the U.S. also face the biggest challenges in getting their objectives achieved.

Blockchain technology can resolve many inefficiencies inherent in the trade settlement process that cost them and customers time and estimated $20 billion per year. There are three major prohibitive factors in achieving this:

1.   Existing Technology infrastructure

Understandably financial institutions don’t want to start over redesigning their systems from the ground up so they are trying to select bits and pieces of Blockchain and integrate it with existing technology. History has shown this approach has never worked very well and could take years to accomplish if they are ever successful. This is one area where market or analyst skepticism is derived from. On this they are correct.

2.   Current Legislation

Mandating human intervention and oversight in settlement processes that Blockchain can negate the need for has hamstrung efforts even more than the technology issues.

3.   Ownership & Control of the processes and technology

Financial institutions want to own and control these processes via “private Blockchains” so they can make the rules and control the economy. “Public Blockchains” are like the Internet and are not controlled by anyone. We know how well “private internets” worked – remember “intranets”?

Ironically the public gave that “trusted intermediary” role to financial institutions years ago and they have abused it time after time. It was the Global Financial Crisis of 2007-2008 which motivated Satoshi Nakamoto to invent Blockchain to enable technology to do what we could not blindly trust banks to do for us. In spite of Dodd-Frank oversight legislation, the recent Wells Fargo debacle has shown that not much has changed.

With all of these challenges for Financial Institutions to adopt Blockchain technology, one might say, “Ok, now I understand why Blockchain is more hype than reality – lots of discussions, lots of promise, and a handful of promising but limited test-scenarios. Lots of investment, but not much to show.” Yes. One could clearly have that view if :

1.   You didn’t look beyond the Financial Industry,

2.   You thought Blockchain was the same as Bitcoin,

3.   You didn’t look beyond the borders of the United States, and

4.   If you ignored or were unaware of the implications of Blockchain security, record immutability, Smart Contracts, micro-units, micro-payments, and digital identification already implemented and working in many other countries in hundreds of applications across every industry sector.

Michael Shaw is CPO and Executive Board Member of Sourcing and Procurement Executives (ACSPE) and Chief Information Officer at Blockchain Executive.  This article was originally published on LinkedIn.

The Impact Of Blockchain On Procurement

Blockchain won’t wait for you to be ready for it, which means it’s time to brush up on your knowledge and understanding right here, right now! 

Vadim Sadovski/Shutterstock.com

Blockchain technology will not only impact procurement and procurement professionals but is expected to be more pervasive in our business and personal lives than the internet itself. To put the enormity of impact on procurement and procurement professionals in perspective picture yourself twenty years ago trying to explain how the Internet is going to change things. Where would you even begin?

Like the Internet the Blockchain is a network. In the case of Blockchain comprised of decentralized “ ledgers”, many are referring to it as Internet 2 or more commonly the Internet of Value or Internet of Trust.

The benefits

The most important thing to understand is that Blockchain addresses many of the most critical problems we’ve encountered doing business on the internet.

1)  Security: Practically speaking the Blockchain is unhackable.

2)  Transactions are verified by network participants (consensus), eliminating the need for third-party intermediaries’ (banks) costly, time-consuming and predominantly manual settlement processes. In addition to slowing down our supply chains banks alone have estimated these processes are costing them more than $20 billion annually.

3)  Eliminating high transaction processing costs for high volume/low margin retailers who accept credit cards could significantly add to their bottom line.

4)  Once transactions are verified they are secure and immutable. (unchangeable)

5)  The immutability of the Blockchain means that supply chain provenance can be assured. This is particularly important for conflict minerals, pharmaceuticals, food and many other supply categories where provable chain of custody is critical.

6)  Payments can be made directly from buying entity to selling entity “ledgers” by-passing intermediaries (banks, brokerage, clearing houses, title companies, etc.)

7)  Payments can be automatically triggered based on the codified terms of “ Smart Contracts” stored in transaction blocks.

8)  Blockchain capabilities will change, if not eliminate the role of accounts payable and accounts receivable departments.

9)  Blockchain enables the concept of micro-units and micro-payments. It is estimated that approximately one -third of the world’s economic opportunity exists for products and services such as energy or digital rights where backend settlement costs currently constrain those markets.

10) It is also estimated that 25 per cent of the global population does not participate in the global economy because they have no bank accounts and/or credit cards. Without these tools they cannot participate in the Internet economy. The primary reason they do not have these economic tools is because they cannot prove their identities. Immutability of the Blockchain can enable these people.

What do I need to understand?

The capabilities I’ve outlined just scratch the surface on how Blockchain impact all of us. Aside from the aforementioned, as a procurement professional are several important things to understand.

1)  Blockchain is a much wider and more pervasive concept than Advanced Cognitive Systems, Big Data, Predictive Analytics, Robotics, 3-D Printing or even the Internet of Things. In fact these technologies will become infinitely more practical and secure because of Blockchain.

2)  Do not think of Blockchain and BitCoin, FinTech or Crypto Currencies as synonymous. They are not.

3)  Do not think that it will take 20 years to mature and be mainstream. The estimate is 5-7 years for full maturity.

4)  Do not assess progress by the US/Euro FinTech Community. While they were the first to recognise Blockchain’s inherent value and arguably have the most to gain by adopting it, they also have the biggest hurdles to overcome and could very well be last to cross the finish line.

5)  Don’t make the mistake of waiting to become knowledgeable about Blockchain; it is the most highly disruptive technology we’ve seen since the Internet and it won’t wait until you are ready for it.

Michael Shaw is CPO and Executive Board Member of Sourcing and Procurement Executives (ACSPE) and Chief Information Officer at Blockchain Executive.  This article was originally published on LinkedIn.

How 9 Technologies Will Drive Global Supply Chain Disruption

Cloud corporations, supertrends, and potentially procurement without lawyers and auditors. Are you keeping up with technologies driving global disruption?

technological-disruption

Last week, Procurious attended the ProcureCon Europe conference in Berlin. You can read about our experiences, keynote highlights, and more on our Blog.

One keynote caught our attention enough that we felt it needed delved into in more detail. Professor Leslie Wilcocks, Professor of Technology Work and Globalisation at LSE, spoke about how procurement needed to prepare itself for digital disruption.

If you are a regular reader of the Procurious Blog, then you will be aware that we have a keen interest in future technologies. From drones and last mile logistics, to blockchain, we’re aiming to keep up to date with the impact on global supply chains.

So with this in mind, we revisit what was a fascinating keynote.

Prepare for Disruption!

Professor Wilcocks kicked off with the following statement: “Technology will disrupt pretty much everything between now and 2025.” This isn’t just the world of business, though that will see a massive change. But it’s also everything we do, see, touch, and encounter in our daily lives.

According to the GEP Procurement Outlook 2016, there are 5 so-called “supertrends” we need to be on the look out for. These are:

  1. Heightened impact of geo-politics
  2. Shift of economic power to the USA and emerging economies
  3. Continued decline in global commodity prices
  4. Increased impact of climate change
  5. Push to Digital

It’s safe to say that all five have been highly visible during this year. We’ll be keeping an eye out for 2017’s “supertrends” with great interest!

However, it’s the fifth trend that Professor Wilcocks focused most on. He believes that much of the interconnectedness and innovation being seen in procurement comes from the application of technology.

As we have frequently stated, procurement cannot afford to ignore technology. If it does, it cannot deliver true value to organisations, and faces redundancy, or obsolescence, in a fast-changing world.

Rise of “The Cloud Corporation”

Happily, the assembled procurement professionals were given a list of technologies to watch over the next 4-5 years. These fell into an easy to remember acronym, SMAC/BRAID.

  • Social Media
  • Mobile Technology
  • Analytics (Big Data)
  • Cloud Service
  • Blockchain
  • Robotics
  • Automation
  • Internet of Things
  • Digitisation or Digital Fabrication

These technologies all link together to help the emergence of digital businesses. Or as Professor Wilcocks put it, “The Cloud Corporation.” They also provide a number of opportunities and challenges for businesses. They need to be more agile, and manage on a ‘micromultinational‘ level, but it also opens up the potential for major process innovation.

However, Wilcocks did give one caveat on technology and innovation. No-one knows how to fully maximise the potential of technology. The only way to do this is by learning by making mistakes, something less agile organisations have proven themselves to be less good at in the past.

Transforming the Supply Chain

So how does all this fit together with disruption to the global supply chain? For the most part, the disruption has already started, and, as a result, organisations are playing catch up. However there are some tactics that can be used.

  • Organisational – realigning organisations strategy for supply chains on a functional, geographical or regional level.
  • Technological – ensuring supply chains are integrated to work best through better connectivity.
  • People – traditional pyramid structures aren’t optimised for the digital era. Human talent in the digital supply chain should be organised as a diamond, providing a more streamlined hierarchy, and better training opportunities at the lowest levels.

Switching the focus to the benefits of automation showed how the technologies could impact productivity. Traditionally, organisations have used five methods to transform their supply chains:

  1. Centralise
  2. Standardise
  3. Optimise
  4. Relocate to Low Cost Region
  5. Technology Enablement

However, there is a sixth that can, and is already, increasing productivity in supply chains – automation. It’s estimated that by automating, an extra 3-4 per cent can be added, on top of the efficiencies found in the other measures, by automating processes.

Final Word on Blockchain

There was one final word on blockchain before the end of the keynote. The disruption being caused by blockchain is, in itself, a protector for organisations from being disrupted. And organisations can leverage the technology to aid transparency, governance, and authentication.

Blockchain can also help with the evolution of “smart contracts”. These contracts can have rules set for automatically storing data, and executing commands.

Could it help to disrupt the disruptors? Probably, yes. Operating the technology at its most effective level could remove the need for banks, lawyers, credit cards, and even auditors, in the procurement process.

Whatever the challenges that exist, surely that’s something to aim for. Isn’t it?