Industries like gas and oil operate in a procure-to-pay workflow model which has faced difficulties from supply chain disruptions such as those that were initiated by the ransomware attack on the Colonial Pipeline. This calls into question the effectiveness and trustworthiness of the procure-to-pay model and the need to innovate it, and blockchain technology may be the answer.
While the Colonial Pipeline debacle could be chalked down to cybersecurity mismanagement, it also revealed the severe weakness within the supply chain of the oil and gas industry, one where a single error can catalyze a whole host of issues. While procure-to-pay can offer organizations control and visibility over the lifecycle of their transactions with full insight into cash-flow and financial commitments, the risks it runs comes from being a system with significant users where a lot of information could go astray.
Invoicing in the oil and gas sector is also challenged by the complexity of pricing services that occur in remote locations that are difficult to track and account for. Visibility in operations is difficult in remote areas, but this compounds when considering that the people providing the services may not be ongoing employees. So, by the time financial leaders receive invoices, it is hard to ascertain what was actually provided and paid for. In many cases, financial leaders for companies in the sector are processing millions of records for millions of work orders that need to be validated and accounted for. The management of the data is too complex and requires a better system.
This is where an opportunity is posed for blockchain technology that can digitally streamline this process for financial leaders. Data can be recorded, consolidated, and streamlined easily with date stamps using blockchain technology. Together with artificial intelligence, this can digitize and secure information along a process train, mitigating transcription errors. Visibility can be achieved through the use of shared ledgers that enable relevant parties to track each transaction clearly. Blockchain can also mitigate fraud and identity threats through establishing trusted networks and a basis for the secure exchange of information.
Although blockchain’s technology hasn’t yet fully expanded to withstand the heavy demand of the gas and oil sector, its uses would successfully address the many inefficiencies in the procure-to-pay model.