IBM develops cloud-based blockchain for India
Wed 30 Nov 2016
IBM has announced that, in partnership with the Mahindra Group, it has created a blockchain-based solution for supply chain finance intended to improve security and transparency in invoice discounting.
The partners hope to use this cloud-based blockchain service to reinvent supply chain finance transactions in India.
IBM and Mahindra have created and implemented the blockchain service in the cloud to help suppliers and manufacturers manage accounts on a shared ledger. This allows for transparency of supply chain transactions, specifically those related to invoice discounting.
Invoice discounting is the process by which unpaid invoices are bundled together by a supplier and sold at a discount. In essence, it allows a supplier to recoup a portion of an outstanding invoice before it comes due. This process is used to raise capital by suppliers, however, to date it has been a labor-intensive process requiring the manual maintenance of separate ledgers by all parties. Any inconsistencies between ledgers require a manual review of both ledgers, delaying payments and making the process less efficient.
With the distributed ledger capabilities of blockchain technology, all parties can access transactions on a shared ledger, eliminating the inconsistencies of the traditional two-ledger process. Updates to the shared ledger are delivered in near real time to all parties.
The Mahindra Group, a 17.8 billion dollar multinational based in Mumbai, intends to use the transparency of IBM’s distributed ledger service to offer fully scalable supply chain transaction solutions for small to mid-sized companies who can share financial information securely in the cloud.
Anish Shah, Group President (Strategy) for the Mahindra Group said, “The Mahindra Group is pioneering the use of blockchain to disrupt its traditional businesses,” adding that the company is exploring the use of blockchain in other areas, including agritech, auto, and mobility. Further, he said that the new cloud-based blockchain service developed with IBM “represents a significant step forward in making blockchain, still a new technology, a more compelling and efficient supply chain solution” for small to mid sized businesses wishing to obtain capital finance through invoice discounting.
“We will work with IBM to build, test, scale, and refine this solution over time,” he added.