Blockchain will revolutionize procurement, but standardization is necessary first

Procurement organizations stand to benefit from the use of Blockchain, a technology popularized by Bitcoin and other cryptocurrencies. But standards will need to be accepted between procurement Blockchain users before the technology can go mainstream.

It’s all about Data Exchange

Blockchain is an open ledger technology popularized by its use in cryptocurrencies like Bitcoin. Blockchain technologies are decentralized transactional records, using independent nodes in a system to keep records valid. In this way, it is virtually impossible to counterfeit cryptocurrency: the network-enabled ledger won’t recognize it.

Similarly, under a system which required certain standards to be followed between users of the Blockchain, it would be virtually impossible to fake corporate proprietary data like GPS coordinates for a manufactured component’s origin or the overall lifecycle of a given product. With a strong enough network, all sorts of information could be freely available and secure between the network’s users.

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As standard-making body GS1’s Siobhan O’Bara notes, “With so many diverse use cases being piloted—from improving product recalls to helping companies meet regulatory requirements—industry has determined that blockchain should be examined more closely.”

The central question becomes what those standards should be.

Blockchain and Procurement: Big Potential

Being an open ledger means that Blockchain offers readily accessible, validated information within the network. This can enable better product lifecycle management, improved eSourcing, counterfeit detection, and myriad other benefits thanks to the security of the information interchange.

In a recent article, Bridget McCrea of SourceToday writes that Blockchain technologies must function under a set of standards to work well between procurement entities in different companies. GS1 did just that last year with its development of “foundation data structure and systems interoperability…” These mark the first steps toward a common structure for major procurement organizations’ Blockchain-enabled information networks.

As groups like GS1 continue to guide new organizations toward cross-company data synchronization, so too do the use cases for Blockchain seem to expand. The possibilities for Blockchain to deliver efficiencies across all levels of procurement may only be strictly limited by individual actors’ buy-in.

How big will this network become?

A select few are already forming the foundation of these data networks of the future, as the appeal of buying in grows with Blockchain’s great cost saving potential.

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