Mahindra Group and IBM both aim to enhance security, transparency, and operation processes of supplier-to-manufacturer trade finance transactions. Using a cloud-based application on the blockchain, the process will enable involved parties to execute actions on the same permissioned distributed ledger. Each party will only be allowed to update their 'process' while safeguarding sensitive information they wish to keep private, which will ensure trust, transparency, efficiency, and consistency.
Traditionally, suppliers face problems with their customers taking long periods of time to pay their balances and, in turn, making it difficult for them to obtain business credit in the interim. Mahindra and IBM's solution will revolutionize a financial process known as invoice discounting, which provides recipients instant access to capital tied up in outstanding invoices. This process is a way for businesses to borrow money based on the amounts due from customers.
Supplier-to-manufacturer invoice discounting has historically been difficult, slow, and risky; requiring each party to maintain and manually update separate ledgers, and making them vulnerable to human error. This inefficiency leads to inconsistent records, resulting in delayed payments and capital that cannot be accessed.
Blockchain technology can aid companies like Mahindra to access transactions recorded on a shared ledger in near real-time. Lula Mohanty, Managing Partner of IBM Global Business Services (IBM ISA), states:
"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."
The Mahindra Group also seeks to expand blockchain technology to other industries outside of the financial sector, such as Agritech (the use of technology in agriculture) and the auto business. Working with IBM, Mahindra will continue to build, test, scale, and refine solutions that powers mobility, drives rural prosperity, and enhances urban lifestyles. Increasing business efficiency serves as the catalyst for Mahindra's vision and it starts with the supply chain. As the company moves forward with IBM, the advance of the blockchain has the potential to push India's financial services into the future.
Read the full press release below:
Mahindra and IBM to Develop Blockchain Solution for Supply Chain Finance
MUMBAI, India and ARMONK, N.Y., Nov. 30, 2016 /PRNewswire/ -- The Mahindra Group, one of the largest diversified multinational group of companies based in India, and IBM (NYSE: IBM) today announced the development of a blockchain solution that has the potential to reinvent supply chain finance across India by enhancing security, transparency and operational processes.
This cloud-based application, one of the first projects of its kind in India outside of traditional banking, is designed to transform supplier-to-manufacturer trade finance transactions through a permissioned distributed ledger. The blockchain-based supply chain finance solution will enable 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.
Invoice discounting, the process of bundling and selling invoices at a discount, is a major source of working capital finance for many suppliers. This new solution aims to enable more suppliers to access credit, with the goal of driving more financial inclusion throughout the supply chain. Supplier-to-manufacturer invoice discounting processes have historically been said to be difficult, slow and risky, requiring 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 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," said Anish Shah, Group President (Strategy), Mahindra Group. "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."
Blockchain technology can help enable Mahindra Finance 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. This is a radical process and technology shift which has the potential to drive business growth 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.
IBM is rapidly expanding its blockchain consulting services and capabilities and actively working with clients to understand what it takes to make Blockchain ready for business. Through its open source contributions to the Hyperledger Fabric and its blockchain services on IBM Bluemix cloud, developers can easily and quickly develop applications while testing security, availability and performance of a permissioned blockchain network. IBM is committed to advancing the science of blockchain, helping to remove complexity, and making it more accessible and open. Financial services, supply chains, trade finance and logistics, IoT, risk management, digital rights management and healthcare are some of the areas that are poised for dramatic change using blockchain networks.
The Mahindra Group focuses on enabling people to rise through solutions that power mobility, drive rural prosperity, enhance urban lifestyles and increase business efficiency.
A USD 17.8 billion multinational group based in Mumbai, India, Mahindra provides employment opportunities to over 200,000 people in over 100 countries. Mahindra operates in the key industries that drive economic growth, enjoying a leadership position in tractors, utility vehicles, information technology, financial services and vacation ownership. In addition, Mahindra enjoys a strong presence in the agribusiness, aerospace, components, consulting services, defence, energy, industrial equipment, logistics, real estate, retail, steel, commercial vehicles and two wheeler industries.
In 2015, Mahindra & Mahindra was recognized as the Best Company for CSR in India in a study by the Economic Times. In 2014, Mahindra featured on the Forbes Global 2000, a comprehensive listing of the world's largest, most powerful public companies, as measured by revenue, profit, assets and market value. The Mahindra Group also received the Financial Times 'Boldness in Business' Award in the 'Emerging Markets' category in 2013. Visit us at www.mahindra.com.
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