IBM and Mahindra aim to reinvent supply chain finance through new blockchain solution

By: Beth Betts

2, December, 2016

Categories:

News -

  •  
  •  
  •  
  •  
  •  
  •  
  •  

 

 

 

A new blockchain solution has been developed by IBM and India-based Mahindra Group that is capable of reinventing supply chain finance across the country by enhancing security, transparency and operational processes, the companies claim.
The cloud-based application, which is one of the first projects of its kind in India, is designed to transform the supplier-to-manufacturer trade financial transactions through a permissioned distributed ledger.

 

The application will allow all parties involved in the transaction to act on the same shared ledger, with each party updating only their part of the process, ensuring efficiency, consistency, trust and transparency, while safeguarding sensitive information. The new solution will allow suppliers involved in invoice discounting to access credit, with the goal of driving more financial inclusion throughout the supply chain.

 

Invoice discounting is a process of bundling and selling invoices at a discount. Supplier-to-manufacturer invoice discounting procedures have historically been said to be difficult, slow and risky, because it requires each party to maintain and manually update separate ledgers. Human errors during this process have been known to create inconsistent records, ultimately resulting in delayed payments and capital that cannot be accessed.

 

The solution can be utilised by Mahindra Finance to access transactions recorded on a shared ledger in near real-time, enabling it to develop and offer new products to small and mid-sized enterprises.

 

Anish Shah, group president of strategy at Mahindra Group, said: “The Mahindra Group is pioneering the use of blockchain to disrupt its traditional businesses and drive future growth. We are actively looking at other applications across the Group in financial services, auto, mobility and agritech. This proof of concept represents a significant step forward in making blockchain, still a new technology, a more compelling and efficient supply chain solution for Mahindra Finance’s small and mid-sized enterprises loans business. Working with IBM, we will work to build, test, scale and refine this solution over time.”

 

©iStock.com/Valerie Loiseleux