BLOCKCHAIN AND ERP

The term “blockchain” as well as its definition can be complicated and hard to understand. In simple terms, a blockchain is  a chain of blocks (not literal blocks) stored on a chain. The “block” is the digital information and the “chain” is the database on which the information is stored. 

So, what is in a blockchain?

Blocks are made up of digital pieces of information. They have three parts:

1.Blocks store information about transactions like date, time and amount of recent purchase. 

2.Blocks store information about the people participating in the transaction.

3.Blocks store information that differentiates them from other blocks. 

Blockchains work in a specific way to store new data. In order for data to be stored four things need to happen: a transaction must occur, that transaction must be verified, the transaction must be stored in a block and the block must be given a hash or unique code. (Investopedia)

Blockchain + ERP= Collaboration

So how do blockchains and ERP work together? Digital information from the ERP system needs to be stored somewhere secure, which is where blockchains come in. Here are some ways blockchain can supply to ERP. 

Blockchain adds transparency and auditability to an organization’s records 

Blockchain creates “smart contracts” or terms and conditions that must be followed for any transaction and can easily be automated within the platform. Smart contracts are becoming more popular within the manufacturing and distribution industries. The advantage to having smart contracts is gaining faster and hassle free business processes with the introduction of automation. 

Increases the security of records 

Blockchain can be used for verification and authentication of identities. By confirming personnel, the company can increase security by managing who has access to confidential information. Blockchain originated systems verification systems use a digital signature based on public-key cryptography and an automatic check of the correct private key, essentially meaning whoever has access to the private key is the owner of the information. Two other ways blockchain enhances security are preventing data leakage and detecting suspicious attempts of unauthorized access. Fortunately, this technology offers encryption, validation and decentralization making it impossible to hack.

Optimization and Speed 

After blockchain is integrated into a company’s ERP system, it allows for the optimization of its operations, internal data control, and business processes like intercompany transactions. This is where the benefit of having a smart contract comes into play because it can help automatically verify a transaction between companies. Blockchains also allow for minimal disruption to regular business processes and avoid adding steps to the people in charge. 

Boosts Visibility and Traceability 

Having blockchains gives companies the ability to have various types of information within the same chain, granting easy access to relevant stakeholders to highly sensitive information. Companies that require many people involved in a single process would benefit from having a blockchain integration as it would provide traceability. Blockchains let all participants in the process trace the product’s journey from start to finish, helping to eliminate mistakes along the way. 

Reduce Costs 

Manufacturers, distributors, and retailers are all able to use the same solution, which eliminates the need for a complex solution. By having a system that can track goods, expenses making it more efficient and helping to cut costs of having to maintain and audit the transactions. 

Blockchain integration with ERP is becoming more popular with these systems. As seen above, there are many benefits to adding blockchain to your current system. Are you interested in learning more? Contact us at 856-335-1010 or email at info@4acc.com !