The blockchain technology promises to improve the integrity and transparency of a variety of processes and workflows in industry and commerce, says Wipro global treasury and payments services executive business adviser Mary Ann Francis.
Blockchain is a method that relies on stakeholders having access to a shared ledger of content, which contains a complete list of all changes made by each party. Each change is represented by a block in the chain and with the current state of a process being the most recent block. This enables stakeholders to immediately see what the current phase of work is and the changes made throughout the process, improving traceability and auditing.
“Blockchain is not new. The community-based approach was developed in the 1960s, while chaining was developed in the 1990s. The hype around it is new, as the cryptocurrency Bitcoin was written using open source blockchain information in 2008. However, companies must understand that it is suited to applicable use cases,” she emphasises.
The most common applications for blockchain are in processes that require the input and collaboration of many stakeholders, such as industrial supply chains and financial services. The method is well suited for use in open communities of practice, including open markets or trade platforms, or in collaborative work environments, such as large-scale, multiple-stakeholder and international projects, as well as governmental projects and processes involving many agencies or departments.
However, the benefit of the technique arises mainly from the shared, common ledger or ‘chain of blocks’ because it enables stakeholders to complete their part of the process without disrupting the workflow.
One common use for blockchain in large international companies is to manage purchases while empowering individual buyers. For example, obtaining approval for a purchase might require that a set number of managers approve the purchase before it is validated. This removes problems of delays because of time zone differences and numerous players in the chain, an onerous process, to improve the speed of supply chain management while maintaining an audit trail.
Further, all stakeholders’ having access to the chain of events and changes makes the process transparent, which establishes trust while working in a “trustless” environment. This “trust” element is one of the reasons blockchain is being applied in the financial services industry, notes Francis.
The open nature of the method is also driving its use as a system to manage smart contracts, which typically govern changing business relationships and duties over time. They are also being used to manage consumer relations because consumers and the companies in question can view the contract, duties and responsibilities of any stakeholder independently.
Blockchain is well suited to use in crowd-sourcing, community, stock exchange, trade platform and crowd-funding environments, but is not necessarily suited for use in all financial or industrial processes, concludes Francis.