Blockchain Technology : Smart Solution For Vendor Governance
India’s service sector is the largest contributor to its GDP.
Numerous vendor contracts are entered via several financial institutions (software systems; operational systems; document platforms; electronic banking services, etc.). Even small financial institutions spend many thousand dollars, pursuant to the terms of these vendor contracts each year. Following the need for service providers, vendor contracts have been continued to grow as client organisations streamlining their operations and look to leverage capacity of technology for innovative solutions. This results in a dynamic business climate with challenges and opportunities. In these conditions, there is a considerable value for service providers with protection provided by well-drafted service level agreements.
ISSUES in the Current System
1. Feeble man, not the firm- Task of reviewing vendor contracts often assigned to those who sound familiar with technicalities of the particular operation in the question, not to those who are concerned with contractual terms.
2. Focusing more on cost metrics- Vendor contracts often executed by bank management with little or no consideration given to contractual terms.
3. Verbal Contracts- Vendors are often trusted implicitly, although the wording of contracts may vary significantly from provisions discussed orally (onward contracts contain terms which render previous oral discussions irrelevant).
4. Defining SLA- Improper due diligence that is acknowledging what your organisation actually need. Directly endeavouring on how to address service for product failures.
5. High consultancy cost- Also SMEs lacking vendor governance are not willing to spend money on the third-party consultancy organisations, unable to perform efficiently.
6. Embedded trust on Third-Parties- The agency providing consultancy may get biased, which can damage the offering party terribly.
Vendor Governance on Blockchain:
Blockchain technology enabled SLA management may not revolutionize the practice, but it could certainly increase efficiency, speed, and accuracy. Enabling the companies to digitize every component of the contract and validate the service, vigorously keeping its pace to the ground.
If service providers and their customers were to tie their payment systems and SLAs together on a blockchain in that way, it would increase the efficiency of outsourcing contract management with a great deal and hence with the proposed system, contract management will get automated.
Advantages of the proposed solution:
1. Self-Auditable- Blockchain based system will ensure that each party holds their end of the bargain without any need of the third party. Therefore the smart contract technology would trigger automated invoicing and payment processes between the two companies.
2. Cost and Time Efficient- The workforce and fees required for conducting these contracts will be reduced.
3. Even SMEs are Secure- SMEs which are trying to avoid paying fees for the consultation can now perform vendor governance cost efficiently.
4. Satisfaction- Enabling the businesses outlook for the value, service providers will get a look for the timely payment, therefore with the proposed system, both parties will be satisfied.
5. Scrutinising the SLA- With the advent of blockchain, SLA is full proof now without any chances of fraud.
6. A Trust-less System- The platform will ensure, immutable records holding, hence agency involved can’t perjure itself.
Advantages of Auxledger over existing blockchain solutions:
1. No Compromise with Privacy- Auxledger provides data reliability of a public network and transaction speed of a private network.
2. Vertical Integration of Third-parties- Multi-tier Networking of Auxledger will improve the scalability.
3. Interoperability- Interchain transaction will implement interconnectivity between different third party vendors.
Hence depending on the terms of vendor contract compliance one can use the programs cadent to measure contract compliance which on the other hand will be able to see rapidly whether your vendors are keeping up with their end of the transaction. This will enhance the established output for both existing and upcoming projects. Thus, simplifying the process of organization compound affairs in order to uplift efficiencies considering time management it will cut costs associated with vendor management. Moreover, creating a niche for safer and introspective environment Auxledger is growing a strong project management approaching a recurring measurement and data management.