9 minute read
Review of options for E-Business users
from ERP TODAY - ISSUE 1
by ERP Today
DLT IN BUSINESS
These days a blockchain system has the capacity to encompass many more types of information management requirements than just a cash exchange. Largely, due to its enhanced trust and transparency characteristics, a blockchain has the capability to improve trading relationships by expediting all kinds of business administration processes on multiple systems across multiple domains. This can also streamline operations and enable the reapportionment of costly administration resources; and other exulted benefits claim to address some of the heavy regulatory, governance, risk, and compliance burdens by enabling higher levels of security vigilance, verification, and veracity. That’s an impressive list for something that is, conceptually, quite simply a secure record of digitised data.
There’s yet more to it too. By further digitising and recording transactional data activities in a securely shared environment, a blockchain can significantly reduce audit and dispute costs and enable improved production quality assurance. To put that into some context, blockchain can aid industries that use supply chains, offer detailed and accurate logging for the intricate legal environment, as well as bring heightened levels of security to financial and health industry data transactions – to name just a few use cases.
Blockchain records ‘blocks’ of information im- WAYNE mutably, and it’s the se- LLOYD curity element that holds the most weight in converSMARTER CONTRACTS sations surrounding this relatively new technological kid on the block. Each piece of data that enters the ledger (for example, an invoice, a shipping order, a legal document, an actual financial transaction) contains proof of its origination, gets timestamped and is therefore locatable in a thread of a process that can only be accessed by approved parties. With that in mind, we can start to look how blockchain for business can improve efficiency by enabling such immutable accuracy.
BLOCKCHAIN FOR BUSINESS BENEFIT
While most of the early adopters of this emerging data logging technology have tended to be large and complex organisations with vast trading networks and multi-tiered channels, Wayne Lloyd, CEO of Smarter Contracts believes that blockchains will transform many back office systems and processes into front and centre technologies and opportunities. In doing so, companies will be able to create new, more immersive and relevant digital experiences for their customers, ultimately changing the way they do business.
“Today we have wine companies that have used the technology to track production from the grape to the bottle so customers can understand how much carbon was emitted in order to make the product, “ explained Lloyd. Another example that he highlighted in conversation with ERP Today is how China’s largest car brand BYD is using VeChain technology to track how responsible customers are at driving their blockchain-based electric cars (e.g. for carbon emission imbalances).
“These new data points will provide BYD with untold opportunities to interact with their customers and their partners, giving them a huge competitive advantage over those companies that choose to ignore its potential,” he said. However Lloyd also said that the traction regarding blockchain take-up will not be that fast due to the limited amount of people, relatively speaking, that understand the technology; and to code it that pool is even smaller. He said: “I speak with many business owners and it is unfortunate that many still base the opportunities of blockchain technology on the perceived limitations of Bitcoin, whilst others haven’t even heard of it at all.” He goes so far as to say that the companies which are not seeking to grasp the potential of blockchain in their business run the risk of becoming as irrelevant as those that chose to ignore the internet in the 1990s.
THE ROLE OF A BLOCKCHAIN IN ERP Blockchain is becoming a considerable element of the digitalisation and automation journey en route to creating a decentralised transaction processing One challenge to an effective blockchain is getting all the players on board. Collaboration is a necessity and can involve multiple external sources from multiple regions. In a supply chain environment for exammodel. In enterprise resource planning, various ple, all the stages of production and distribution must applications handle business operations such as adhere and comply with being involved. If a manufacstaffing, products, annual audits, procurement, turer uses blockchain but the distributor doesn’t, then and shipping; all of which have multiple informa- any activity after the product has been manufactured tional routes that need to be tracked and recorded and sent will not be logged. The chain of proof will for process evidence and compliance. By integrat- end prematurely in the overall process. For the entire ing a cloud-based blockchain platform, this data transaction system to operate beautifully and enable can be registered absolutely on a shared system smoother operations from start to finish, a high funcand accessed anywhere at any time by permit- tioning blockchain relies on all the parties involved to ted users. Should, for example, a commit to it. business need to confirm a piece of Once all elements required in the information, such as an order quantity approval or a logistics route, the “Blockchain chain are enlisted then the route to more streamlined business operations evidence will exist on the blockchain with the absolute security that the is a major become possible. To put that into working context we can consider a scenario information held there is authentic. element of the where, currently, more than 80 percent
The accuracy of the actual information is still subject to human error, digitalisation of the goods that consumers use daily are transported by the shipping indusinformation is always only as good as the source that created it. journey that is en route to a try. One aspect of this activity from a resource perspective is that the administration required, to process the logis-
It is this trusted level of trans- more trusted tics and adhere to all the transitional regulations involved in the movement parency that can reduce the automation of of these goods, is estimated to reach cost of operations by helping to identify gaps and solve dis- a decentralised one fifth of the physical transportation cost. According to The World Economic putes between company suppliers, buyers, and customers thanks to blockchain’s tracking and transaction model” Forum, reducing the resourcing effort load of such international supply chain requirements could increase global reporting capabilities. It can also trade by nearly 15 percent. Right on become the ‘one place to look’ for the point of this is the blockchain veninformation, which cuts down the ture between the shipping company, need to search several different locations (such as Maersk and IBM which aims to digitise a global supa team member’s computer or email account) for ply chain by introducing a ‘new form of command and a particular document. consent’ to the flow of information, empower multiple
There is a longer-sighted notion that blockchain trading partners to collaborate, and establish a single has the potential to strengthen the much wider shared view of a transaction without compromising procurement function, as in, evaluating quality, details, privacy or confidentiality. raising purchase orders, managing inventory, Another current example which highlights the benand even negotiating prices by spotting differ- efits of blockchain for supply chain visibility, qualences to identify the best deal for buying goods. ity and control comes from brewery company Alpha
But for now, with what seems like endless regu- Acid Brewing. The organisation has added its ingrelation stipulations and auditing requirements for dient suppliers of malt, yeast, and hops onto a blocktoday’s data and business transactions, blockchain chain distributed ledger using Intelligent Track and becomes interesting for secure access to authentic Trace from Oracle to keep an eye on the ingredients information trails for compliance. trail from the harvest crop, right through to the actual
DLT IN BUSINESS
production of the beer products and adherence from everyone involved in final route to the customer. The system the chain – granting access privileges provides valuable insight into each of the ingredient’s prime harvest time, “When the where necessary to help protect sensitive commercial information, while at the conditions and route of transit for those ingredients to the brewery, supply chain the same time granting new levels of commercial collaboration, visibility, which elements went into each batch is global this and accountability. There’s an AI elebrew, and where each brew ended up. Not only does this help to facilitate tar- can become a ment in this too, whereby involved parties can verify the obligations around geted recalls should they be necessary, it also gifts customers with knowledge and trust regarding the quality and oricomplex and time consuming agreed terms, and enforce compliance requirements such as GDPR, data security, International Trade in Arms gin of the product’s components. But blockchain can assist with far task fraught with Regulations, and Foreign Corrupt Practices Act. Any gaps or anomalies can more than product origination and resource costs, be highlighted and addressed sooner tracking. It can help to ensure that contractual commitments at each link in legalities and rather than later, smooth the overall process and avoid complicated proba supply chain are adhered to. Manufacturers – especially across boarders regulations” lems further down the line.. - need to ensure that suppliers comply to standards and commitments around, for example, privacy, sustainability, ethics, and labour laws. And from the other side, suppliers will want to prove that they do indeed comply, sometimes without having to fully disclose the details of their subcontractors. When the supply L ooking at the business operations opportunities that can be enabled by the implementation of a secure ledger-led environment, we can see that a blockchain is global this can become a complex and time chain has the potential to assist the development of consuming task fraught with resource costs, legalities, distributed and autonomous marketplaces. A blockregulations, and regional implications. chain-based transaction removes the need for third
Icertis, a provider of enterprise contract man- party oversight as the software itself is a controlled agement in the cloud, and Mercedes-Benz Cars and open framework that is visible to all permitted recently partnered to address such issues. In this participants. David Haimes, senior director of ERP case, smart contracts on Icertis’ blockchain founda- Development at Oracle, believes that blockchain will tion will help to make sure that global sourcing and eventually become a standard offering in cloud ERP contracting practices are in line with Merceded’s re- applications, saying that it allows asset owners to quirements for, amongst other things: working con- track and trade elements of value such as outstandditions, environmental protection, safety, business ing invoices in a secure, transparent, private, and ethics and compliance – all without compromising self-reconciling ‘chain’ of transactions. Organisacontractual confidentiality. In a consortium block- tions will be able to view their assets multi-dimenchain, an immutable public ledger of transactions sionally in terms of value; so instead of having just will hold the overall compliance terms to help with a face-value, they will have an opportunity value.
DE-RISKING DATA MIGRATION
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