What are the benefits of the integration of ERP system with blockchain
Higher data security
Blockchain enables tracking of the user who makes any changes to it. It also confirms authorized personnel through the use of digital signatures based on public-key cryptography and keeps the secret key to determine the owner. Businesses that integrate with an ERP system perform optimally and earn higher profits in the long run.
Blockchain is capable of validating transactions and creating an immutable record of data that can be shared among multiple endpoints. This means that any changes made to the registry or any contract will be visible and traceable. This is especially important when managing ERP systems because broken records can lead to audit or financial reporting issues.
Furthermore, by integrating ERP systems with blockchain, it may be possible to detect suspicious unauthorized access attempts and other security threats in real-time. Blockchain addresses these issues because it provides encryption, validation, and decentralization. Because the records are not stored in a central location, which could reveal a point of failure, blockchain is virtually impossible to hack.
A smart contract is a blockchain-encoded protocol that aids in the automation of a business transaction. It is analogous to automatic credit card payment. There is no need for a website log in or confirmation for this. Smart contracts have several advantages, including faster and easier business processes. Companies can use multiple smart contracts to automate a large number of time-consuming manual tasks at the same time.
When a company receives a product order, a smart contract can automatically initiate the shipment. Similarly, when that shipment leaves the office or building, an invoice may be generated. When the payment is received, the invoice is automatically recorded and closed. In this scenario, invoices are one component of existing ERP systems that can be standardized on a blockchain system.
Restricting payment risk
Blockchain technology is well-known for its security features, particularly in financial transactions. It ensures that financial transactions are risk-free. This is why blockchain-based authentication systems are used by banks and insurance companies. The integration of blockchain and ERP ensures that all B2B purchases and payments are automatic and risk-free.
It calms payment transactions and ensures that they are risk-free and automated. It offers a peer-to-peer transaction platform that facilitates the exchange of financial resources in a risk-free environment. Hackers find it difficult to penetrate the system and steal the money because it operates on a decentralized model. Furthermore, blockchain ensures that every transaction is compliant with the law.
Identifying the users’ identity
One of the most important blockchain applications in ERP is the ability to verify and authenticate identities. ERP systems have long been used for financial transactions such as insurance and financial company claims processing. Companies must verify customers' identities or authenticate financial transactions as part of this process. Identity can be verified and validated using blockchain technology. The blockchain is used by insurance companies to validate their clients' identities in order to process claims or confirm financial transactions.
Transparency and clear reporting
Blockchain has altered how parent companies and their subsidiaries conduct intercompany transfers. Almost half of industry leaders plan to use blockchain as their primary intercompany transaction management system. Blockchain is also increasing the transparency of supply chain operations.
Blockchain allows companies to store various types of information within the same chain, allowing relevant stakeholders easy access to highly specific information. Manufacturing, for example, necessitates a large number of stakeholders involved in the supply chain process in order to easily track the journey of products until they are delivered to clients. A blockchain integration would provide real-time product traceability.
Companies are spending millions of dollars to implement ERP systems with the intention of using them for years, which is also an expensive endeavor. As a result, they are creating connectors and modules that can interface with existing blockchain networks. Furthermore, there are numerous efforts underway to establish Blockchain's capabilities. As a result, once the technology matures, it is expected that adoption will increase at a commendable rate.