How Public Blockchains Could Supplement ERP Systems

How Public Blockchains Could Supplement ERP Systems

Enterprise Resource Planning (ERP) systems are by far the best investment you can make for your company. They can automate trivial functions like data entry, thereby allowing employees to focus on issues that require human creativity and intellect. Moreover, they also manage all business-critical functions like Marketing, Finance, Sales, Customer Service, Inventory or Warehouse management, etc. As a whole, they standardize business processes, maximize productivity, and cut operational costs.

But if you observe carefully, you will find that ERP systems don't do anything magical. They align transactional data (inventory, accounts payables, accounts receivables, sales, purchase) with your company's rules and policies. But they do it efficiently without committing any mistakes. They can automatically order raw materials and equipment from vendors when the inventory levels go low and monitor the workforce's performance.

Before the advent of digital systems, companies suffered a lot. Sometimes in millions of dollars. There weren't any systems to check the credibility of suppliers. If you got stuck up with a supplier who didn't send supplies on time, you didn't have many options. But with the introduction of ERP systems, things changed forever. ERP software struck off untrustworthy suppliers from the list and also levied penalty on them. They also helped lower down shipping costs and ensured that money thus saved was passed onto the customers in the form of discounts.

But there was a problem. Suppliers had to integrate with the ERP systems of each company. This process wasn't only tiresome but expensive too.

How can public blockchains supplement ERP systems?

As mentioned above, integrating with each company's ERP system comes with its own set of challenges. And it gets difficult for small-time suppliers to commit to them. This is where public blockchains play a revolutionary role. Suppliers can use standardized apps and tokens to perform functions such as the following:

a. To replenish stocks

b. To insure shipments from source to destination

c. To manage warehouse

d. To handle financial receipts

All of the things mentioned above can be achieved using Decentralized Operations (DeOps) Web applications. DeOps apps use shared facts and business logic that form the backbone of an end-to-end digital supply chain. They also eliminate the requirement of a centralized authority to monetize the data and overwatch transactions between multiple parties.

A few years ago, digital commerce meant preparing digital receipts through PDF software and emailing it to the supplier. The supplier would then scan the receipt through Optical Character Recognition (OCR) software to match the details. Before that, companies passed critical business information through fax, which came under scrutiny when these machines began being hacked to gain access to the companies' network. Today, companies are using Electronic Data Interchange (EDI) for sharing crucial information. But unfortunately, it doesn't share business logic and allows only two parties, at max, to communicate.

DeOps applications bring an end to this problem. They allow multiple businesses to interact securely and do commercial activities at lightning speed. The following two points explain how blockchains can supplement ERP systems:

1. Smart Contracts

Contracts make sense in an ideal world where everything is static and changes rarely occur. But the real world is dynamic and hence requires contracts that follow on the same lines. Smart contracts are dynamic and allow the involved parties to make changes with mutual consent. For example, when countries globally had announced nation-wide lockdowns, supply-chain companies couldn't deliver on time. Smart contracts helped tweak specific clauses that gave more time to supply chain companies to fulfill their commitments.

2. Supply Chain Communication

There is a chain of suppliers that collaborate to bring the final product to the market. Take the example of a geometry toolbox that consists of a pencil, protractor, and compass. Supplier A provides graphite. Supplier B provides steel, and supplier C provides rubber and so on. Finally, all these elements will be assembled in a manufacturing plant and marketed by the manufacturing company. Now, suppose supplier C provides low-quality rubber that leads to public backlash. In such cases, Blockchain comes as a boon. It helps by keeping permanent digital records that show the state of the product at each step. This allows stakeholders to pinpoint the exact location of the problem and brainstorm the solution.


Today, businesses of all sizes have an ERP system that allows them to automate their processes, thereby increasing their productivity, maximizing their revenues, and cutting down their operational expenses. Public Blockchains take this a step further. They allow multiple parties to interact and conduct commercial activities in a safe and secure environment. And the best thing about blockchain systems is that they allow stakeholders to locate problem areas and work together to find relevant solutions.

Author bio

Nishant Joshi

Nishant likes to read and write on technologies that form the bedrock of modern-day and age like Web Apps, machine learning, data science, AI, and robotics. His expertise in content marketing has helped grow countless business opportunities. Nishant works for Sage Software Solutions Pvt. Ltd., a leading provider of CRM and ERP Software to small and mid-sized businesses in India.

Publication date: 
12/29/2020 - 10:15

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