How digitization can overcome inefficiencies leading to skyrocketing overhead costs?
Every single dollar counts in a business. But sometimes, external factors out of our control cause overhead cost to skyrocket and the bottom line takes a hit
Most of the finance course books describe overhead costs as expenses associated with running a business that can’t be linked to creating or producing a product or service. They are the expenses the business incurs to stay in business, regardless of its success level.
Businesses whose supply chain include many intermediaries and stakeholders, suffer not only in terms of cash but also time.
Old practices and lack of digitization are the primary reasons behind the delays. Let’s consider the physical commodities trading industry. A single trade includes multiple stakeholders like supplier, buyer, trader, intermediaries, legal, bank, insurers, reinsurers, port authorities, logistics, shipping, Admin, HR and many more. Documentations and contracts are key to any trade and with documentation comes the time-consuming processing period which may even take months depending on scale and the parties involved. Even a minor error in documentation can cause the banks and insurance companies to reject your finance application. The shipping companies might halt the shipment mid-way if paperwork is not complete.
Companies nowadays use ERP systems to streamline the entire process of transaction, but it’s difficult to manage several products for there is no system/ platform that caters to the entire ecosystem.
With the use of blockchain technology, one platform is trying to solve this problem and bring efficiencies to this industry. Arkratos Blockchain solutions has developed a platform — KRATOS, a decentralized physical commodities trading platform that uses digital ledger and smart contracts to remove the hassles of documentation and processing time.
Smart contacts are contracts that self-execute when the predetermined conditions are met. For e.g., if a shipment has been received by the buyer as per the requirement, the contracts will execute, send the notification to the bank and process the payment. Gone would be the days when the buyer would send the paperwork to the supplier, then supplier would send it to the bank for payment and receive payment after several weeks of the transaction. This is an ideal situation not considering the delays which might happens if documents are misplaced, not received or have any manual error.
KRATOS is using blockchain to ensure that documents are not tampered, ledger to ensure data tracking and smart contracts to ensure speedy processing. Since it caters to all the stakeholder, it is a platform that removes the problem of managing several ERPs, which vary across companies as well as organization’s departments.
Commodity trading markets will undoubtedly receive the upgrade that the 3,000-years plus industry is in dire need of. Platforms like KRATOS will act as catalysts in reducing overhead costs, helping companies strengthen their bottom line.
