How blockchain could help supply chain dispute resolution
Forbes reports on IBM's progress in harnessing the technology behind distributed ledgers to enable companies to communicate safely and immediately to resolve trade disputes.
Jerry Cuomo, vice president of blockchain technologies for IBM, stated during Money2020 that the company is looking at how companies could use permissioned ledgers to connect with other companies they know and (within limits) trust.
He says this could enable companies to “transact, resolve disputes and settle more efficiently than current practices”.
According to IBM, blockchain can be used to resolve supply chain disputes, which currently delay $100 million in payments for up to 40 days. The company has stated that this lag could be reduced to less than 10 days, freeing up a significant amount of working capital for firms.
Forbes reports that IBM has launched a proof of concept distributed ledger with members of IBM Global Finance. It also believes that the distributed ledger-based system could improve customer satisfaction. It explains that blockchain allows the trade participants to “go back to the last point at which they were all in agreement, and then figure out what went wrong. It could be as simple as seeing that a part shipped but never arrived because the address was wrong. Using blockchain simplifies a process that previously involved multiple phone calls, emails and even the occasional fax.”
CTMfile take: Many applications for DLT have been piloted and covered in the financial media and it's often said (notably by banks) that there is an issue of trust that we need to overcome in using new technologies, which could, for all we know, be vulnerable to new types of cyber crime. IBM's supply chain dispute resolution project could side-step this by setting up a blockchain-based system between parties that already have a relationship of trust with each other. In any case, the claim that it can reduce payment times to less than 10 days is enough to interest most firms.
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