Digital Ventures has shared about Blockchain and its role in disrupting industries such as the financial, energy, and even the food sector. Recently, Digital Ventures has introduced Blockchain that will disrupt the supply chain system, called the B2P (Blockchain Solution for Procure-to-Pay). We have teamed up with SCG to launch a platform which is a solution for Procure-to-Pay.
Sharing about the collaboration that brought about Blockchain to the supply chain, Orapong Thien-Ngern, CEO of Digital Ventures, explains that Digital Ventures’ mission is to focus on technological R&D that has the potential to spin-off as solutions for the business sector. An example of such technology is the “Blockchain”, especially for the supply chain. This is because this process still has various gaps and problems that await solutions. B2P becomes a platform where Blockchain can be used to enhance the Procure-to-Pay process. This is a significant process in the supply chain that can be digitalized to improve convenience, security, and speed. Also, this change will support the government’s E-tax invoice policy.
Understanding the problems in the conventional Procure-to-Pay process and why Blockchain is a smart choice.
Procure-to-Pay is the process of purchasing and procuring materials for product manufacturing or service businesses. Procure-to-Pay has several related parties namely the Buyer, Supplier, and the Bank, thus, the procedure involves various communication, confirmation, and verification. As a result, problems arise and causes the working process to be inefficient. Some prevalent examples are as follow:
- Delay of the verification process in each step. The orders of large organizations sum up to a tremendous amount each year. The conventional Procure-to-Pay requires original documents, verifications, and request for amendments, all of which, consumes time for sending them back and forth between the Buyer and Supplier. As a result, time and documents may get lost along the way.
- Waste of resources due to a large amount of paper. Although most of the documents are now sent via emails, nevertheless, related parties in the Procure-to-Pay process still need to present the original document as proof. Aside from the waste of time for logistics, the paper also becomes wastes. Some large enterprises may consume up to 2-3 million pieces of paper per year.
- Complex payment processes. The Buyer is required to approve the payment and notify the Bank. Afterward, the Bank will issue a cheque to the Supplier, the Supplier will need to collect the cheque, and deposit the cheque at their preferred bank. This is a complex process which wastes resources.
These problems are encountered by both the organizations and their business partners causing each process to be delayed and numerous resources are wasted, all of which, highly effects business costs.
Unlock Blockchain’s potential, a platform for Procure-to-Pay.
Referring to the abovementioned problem, we realized a gap that requires improvement to enhance the efficiency of the process. The B2P platform has adapted the nature of Blockchain to Procure-to-Pay.
- Each process of Procure-to-Pay involves numerous related parties. The Blockchain enables everyone to jointly manage the process in a single platform.
- Related parties share the same set of data. Blockchain allows authorized users to view the same set of data on the platform. They are not allowed to revise, modify, or delete the data from the system. The proof of transaction is visible on the system, thus, it is credible and allows easy tracking if changes are required.
- Once transactions occur, the Buyer and Supplier immediately share the same set of information without having to send the document back and forth like in a conventional way. Moreover, the system automatically rechecks the information on the purchasing order, goods receipts, and invoice, this is called the 3-Way Matching. This replaces the human verification process which may risk errors. Once the system’s invoice approval is visible to the Bank, they will transfer the sum to the Supplier on the due date.
As Blockchain enhances Procure-to-Pay, related parties benefit a great deal.
Once the process is more efficient, Buyers who are different organizations and the Suppliers will benefit from the new form of Procure-to-Pay.
- Fewer business costs. This is acquired from using lesser resources such as less paper, fewer logistics costs, less time for tracking document, and fewer errors from human document verification.
- Enable Buyers to greatly increase and expand their business partners without having to increase any resources. This is because the Procure-to-Pay process is automatically managed via this platform.
- Suppliers are able to request Invoice Financing. This is done by using the invoice as guarantees for bank loans. The system allows users to immediately request for Invoice Financing while the Bank can also immediately recheck the invoice and other documents via this system, thus, the approval process is faster.
- Additionally, this platform supports the E-Tax invoice submission according to the Thai government’s requirements.
We hope that you now have a better picture of the Blockchain application that will disrupt the Procure-to-Pay process. For more information about the differences between the conventional and contemporary Procure-to-Pay on the B2P platform, please visit https://www.youtubetofb.com/ytidM91q7ip-9Iw.