IBM and Chainyard are working to help alleviate some of the key challenges associated with supplier information management in a partnership that also involves Anheuser-Busch InBev, Cisco, GlaxoSmithKline, Lenovo, Nokia, Schneider Electric, and Vodafone. At the heart of the effort is IBM’s Blockchain Platform, which will serve as the foundation for improving supplier qualification, validation, onboarding, and lifecycle information management.
The Trust Your Supplier platform establishes a digital identity for suppliers that can be shared with any buyer on the network. For buyers, Trust Your Supplier provides immediate access, real time to updated and current supplier data; simplifies current technology and process; reduces supplier approval cycles; minimizes supplier risk; and ensures compliance.
Replacing Old Methods with Blockchain
Traditional methods of managing suppliers often involve cumbersome manual processes, which make it difficult to verify identities and track documents like ISO certifications, bank account information, tax certifications, and certificates of insurance throughout the lifecycle of a supplier, IBM notes in a press release. According to IBM, the Trust Your Supplier Network is currently in limited availability with existing partners with plans for commercial availability in the third quarter of this year.
“By using a decentralized approach and an immutable audit trail built on blockchain, Trust Your Supplier is designed to eliminate manual time-consuming processes and help reduce the risk of fraud and errors, ultimately creating frictionless connectivity across supply chains,” IBM adds, noting that by 2023, blockchain will support the global movement and tracking of $2 trillion of goods and services annually, according to Gartner.
By creating a “digital passport” for supplier identity on the blockchain network, Trust Your Supplier lets suppliers share information with any permissioned buyer on the network.
Blockchain technology helps to create a permissioned based data sharing network, which could reduce the time and cost associated with qualifying, validating, and managing new suppliers. It could also help forge new business ties between suppliers and buyers.
Third-party validators, such as Dun & Bradstreet, EcoVadis and RapidRatings provide outside verification or audit capabilities directly on the network, IBM notes in its release. The blockchain network can also connect existing procurement business networks by relaying necessary supplier data required for exchanging purchase orders and invoices, without the need for suppliers to enter it in multiple different networks and automating on-boarding process to those networks.
For example, a large company looking to collaborate with a supplier first needs to make sure that supplier passes a series of background checks and verifications. These "compliance checks" look into aspects such as the supplier's legitimacy, its track record, risks, etc. "Most big companies do this themselves," Vodafone’s Ninian Wilson told Forbes.“In turn, suppliers then end up providing similar, or the same information to many [different] corporate organizations.”
Added Trust for Customers
In addition to simplifying processes for businesses, this new blockchain-based system may also provide added trust for end consumers. "Our end customers for Vodafone expect us to make sure, when we are buying goods and services from suppliers, that we do it in an ethical way to a high level of standards and compliance," Wilson told Forbes.
"This helps us assure our supply chain and our buying activity so we buy goods, products, and services from companies [that] have been through appropriate compliance checks,” Wilson continues, “so then our end customers can be assured that we're doing the right things with the right suppliers.”
IBM has over 18,500 suppliers around the world and will begin using the Trust Your Supplier network initially onboarding 4,000 of its own North American suppliers over the next few months, it said. IBM Procurement projects a 70% to 80% reduction in the cycle time to onboard new suppliers, with a potential 50% reduction in administrative costs within its own business.