The blockchain is a technology that many have heard about, but few truly grasp. More often than not, modern news agencies have focused on a single tiny element of the blockchain – its ability to operate a transparent currency system or cryptocurrency. Yet blockchain has a lot of applications in the business world. SAP blockchain provides a simple distributed ledger system that increases business operations’ transparency and allows suppliers and buyers to have more faith in purchasing. There are far fewer incidences of fraud, misuse of resources, and process inefficiencies when a company introduces the blockchain into its system. But what specific benefits does the blockchain provide for a business?
SAP Ariba is a fully-functional procurement gateway that many businesses already use. However, SAP Ariba can be integrated with the blockchain to add to its functionality. The massive supplier network in SAP Ariba makes it challenging to verify each individual supplier’s details. The financial information of each business needs to be checked before entering into a contract with them. The blockchain provides a safe, handy way to do so with data that can’t be falsified. The single-source-of-truth that the blockchain offers can’t be edited and is a matter of public record. Businesses can rest easy knowing that their suppliers are who they purport to be, thanks to information on the blockchain.
Supply chain management is one of the most vital areas that SAP shines as an application. Yet, a lot of the processes that take place in the supply chain are inefficient. Document movement and sharing are slow, and details may be edited to and from the source. It’s not surprising that businesses worry about fraud popping up due to their supply chain management processes. The blockchain helps to increase visibility through the transparency that exists as part of the technology’s structure. SAP has instituted a percentage of completion (POC) using Hyperledger Fabric that models the end-to-end process of a transaction. Thus, a business may have a single transaction going on that uses a smart contract and can track the completion level from the purchase to the delivery.
While SAP has a robust financial processing system in SAP S/4HANA, there’s still the constant threat of payment fraud. Supplier data entered onto the blockchain is secured, and any changes would have to be verified, ensuring that no one could edit records without permission. Additionally, complex records like Letters of Credit and Requests for Quotations could easily be verified without directly contacting the source of these documents. Since they are on the blockchain, looking up their time stamps and transaction data can verify their integrity. These documents can be time-sensitive and, as a result, may be subject to smart contracts, ensuring prompt execution and payment.
Putting Trust in the Blockchain
Because of how blockchains are developed, trust in a blockchain means confidence in the individual entities that make up the chain. Each node is responsible for keeping a full record of what has happened since the blockchain’s inception, making it impossible to counterfeit that data. If you buy XRP, for example, each person on the Ripple chain will know you own that asset and when you performed the transaction. The ability to immediately determine the time and volume of a transaction has its uses in business transactions as well.