The Mahindra Group, one of the largest diversified multinationals in India, and IBM have announced the development of a distributed ledger or blockchain solution that has the potential to reinvent supply chain finance across India by augmenting operational processes, transparency and security, according to an IBM press release sent to CoinReport.
One of the first developments of its kind in India outside of conventional banking, this cloud-based application by the Mumbai-based US$17.8 billion multinational group aims to alter supplier-to-manufacturer trade transactions for the better through a permissioned blockchain. The distributed ledger-based supply chain business solution will allow all parties involved in the transaction to act on the same mutual ledger, with each party bringing up to date only their part of the process, ensuring trust, efficiency, transparency and consistency while protecting sensitive information.
For numerous suppliers, the process of bundling and selling invoices at a discount or “invoice discounting” is a key basis of working capital finance. The Mahindra-IBM solution intends to provide more suppliers access to credit with the objective of pushing more financial inclusion throughout the supply chain. Throughout history, it has been said that supplier-to-manufacturer invoice discounting processes are risky, difficult and slow, necessitating each party to keep and manually update separate ledgers. During this process, human mistakes have been admitted to cause varying records, eventually delaying payments and capital that cannot be gained access to.
Anish Shah, group president (strategy), Mahindra Group, said on the occasion, “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.”
Using blockchain technology, Mahindra Finance can access transactions recorded on a shared ledger in near real-time, being able to create and offer new products to small and mid-sized businesses. A far-reaching process and technology shift, this has the potential to push business development into the future.
“Blockchain is poised to revolutionize business like the Internet did, and IBM is at the forefront of the revolution. We offer a comprehensive enterprise-class blockchain solution that is secure, scalable and reliable. The work with Mahindra has the potential to fundamentally transform the way businesses interact with one another and their customers and suppliers, and we’re confident that this engagement can be replicated not just in the finance industry but across other sectors as well,” said Lula Mohanty, managing partner of IBM Global Business Services, IBM ISA.