Most products come to market through a complex network of negotiated collaborations that span suppliers, manufacturers, distributors, retailers, and more.
Often, these collaborations bridge countries and continents, meaning that parties must track regulations and contractual obligations from around the world. This challenge can quickly consume administrative time that erodes the profits for everyone in the production chain – and it can introduce risks that put some collaborations out of reach.
But blockchain can reduce this administrative burden and open the door to new partners by tracking each product with a permanent record. Grant Thornton tax director Doug Watson said, “To give a little more color to what blockchain is, imagine an intercompany supply chain – you have a subsidiary in China that produces a widget and sells it to the U.S. parent… You can make sure that that transaction is viewed as a block, and then you can say ‘What information do I want to store on that block?’ Then, you can add a smart contract, and connect it to the blockchain to digitize information… like purchase orders, invoices, transfer pricing policies. We see blockchain as really being a game-changer in the future, in the internal supply chain of a multinational company.”
Grant Thornton innovation director Malcolm Silberman said, “If you abstract a sort of mental model of what we’re trying to do in all these solutions, it’s first and foremost: We are bringing parties together. And obviously we’re doing that in a digital fashion, so that they can agree on documents and numbers – parameters that are in front of them… And so, that’s when it becomes very interesting and appealing to CFOs…”
Listen to Doug, Malcolm and Jeff French discuss the empowering role that blockchain technology can play in intercompany transactions.
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