Trust is an integral part of business, the digital world and our everyday lives

The world is getting smaller every day for consumers and businesses alike. Increasing globalization, a relentless search for new opportunities, and the need to optimize costs for businesses to stay competitve have made international trade the new normal. But despite the great opportunities in this brave new world, buyers and suppliers are still struggling to make trading transparent, reliable, and efficient.

Businesses face many challenges in domestic markets besides the many risks that come with just doing business. Add international trade into the equation and you can easily multiply the risks.

Partnership risks

As a fundamental necessity, companies looking to expand their sourcing to other countries need to know where their money is going and where their goods are coming from.

Large businesses may have the luxury of being able to do extensive market research and vet new potential partners, including examining all the available public financial information about potential partners, but smaller companies usually do not have this luxury.

But even if every company could research their potential partners, maintaining long-term partnerships can still involve many obstacles, such as political volatility, humanitarian issues, data security, and keeping track of economic and legislative changes. All of these can lead to increased costs, delays, and inconsistency if the company is not kept informed and able to take appropriate action on time.

Delivery risks

While partnership transparency issues may be challenges for executives to address, generally all businesses worldwide are preoccupied with the delivery of goods in the right amount, of the right quality, and at the right time. As shipping times can vary due to increased cargo traffic, much trust is placed on the supplier to deliver as agreed upon, but without any firm guarantee.

Payment risks

Suppliers biggest fears, on the other hand, may be not about getting paid for the delivered goods and services, but often abut the timing of payment. The most common financial problem worldwide in procurement is payments occurring later then agreed upon. This is often particularly a problem for small and medium-sized businesses, who usually cannot afford to enforce favorable terms and conditions to minimize this risk, which means often buyers aren’t really motivated to pay them on time as they believe they hold the trump card in that suppliers need them to survive.

There are a few ways to mitigate these risks, but most of these are costly and time-consuming, and further, enforcing additional terms and conditions for small and medium-sized companies could also mean a loss of business for them.

Procurean network’s ‘Trust rank’ serves as a intermediary between companies. It’s an indicator of Transparency & Reliability and an incentive for companies to act fair and reliably toward their business partners, both known and unknown.

By providing a neutral, open, and self-regulated market and by providing equal opportunities to all companies operating transparently with a clear cost or revenue advantage, we are not only connecting buyers and suppliers through their procurement interests, we are also creating a global network that encourages good business practices and transparency, which can help mitigate risks for all parties and send a clear message to any new seller or buyer of earned trust.

Tender corruption

Tender fraud is recognized as a global pandemic in the public sector in third-world countries, and even in developed ones, and while tender corruption in the private sector is rarely reported in the media, it exists and is acknowledge by industry leaders and professionals as a major issue.

Businesses and executives seeking to optimize their expenses or trying to operate transparently usually employ a common business practice to procure goods or services above a certain amount through a tender, and while in many cases they may have developed an internal process for managing this, usually there is no completely fraud-proof instrument to guarantee it.

Larger corporations may have their own procurement application solutions open to businesses and may possibly even have an internal Tender Committee, yet tender fraud can still occur because the system will usually be centralized and vulnerable and at risk of the principal-agent problem, where the interests and motives of stakeholders may not necessarily be aligned.

Procurean is built on blockchain, which enables us to remove the human factor out of the tender equation completely and to decentralize interactions in a business while running a fair tender process..

On Procurean, offers and their date of submission, e.g., for ongoing tenders, are stored securely, such that their information is immutable and is accessed only after the tender deadline. Winners are then selected fairly, based on the predefined criteria of the tender, and thus fairly and transparently awarded the business.

It’s a simple mechanism that just needed a technological solution, such as blockchain, to give it validity and a real-world value.

My vision for Procurean is not limited to it just being a network or platform for buying and selling, or for carrying out market research, etc.… but for it to be a symbol of transparency, fair trade, and good business practices, just as the term ‘gentlemen’s agreement’ once was, so that companies can wear this symbol proudly and other businesses will know they are a business that can be trusted.

Read more about Procurean on our website and in the Whitepaper.

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