Exonum Partner Highlight: Oil and Gas Industry
Tags: Oil, Bitfury, Exonum, Blockchain, Supply Chain

Supply chains in the retail oil and gas industry are internationally distributed and often complicated. The timely flow of accurate paperwork is absolutely essential for operational success, but mistakes are often made. This is in part due to the manual reconciliation system that is time-consuming and subject to human error. There’s also the issue of tracking and processing expenses, as paperwork constantly changes hands. Using blockchain to improve the exchange of electronic data can improve efficiency and seriously streamline operational timelines and costs. In this article, we highlight the work of IT company IK Sibintek, who used Exonum to build a better supply chain for gas stations and their retail partners.

About Blockchain for Supply Chains

Blockchain can help simplify the complexity (and accompanying costs) of a supply chain by maximizing efficiencies and reducing the likelihood of error when sharing information and documentation. It can also enhance security, as the technology eliminates the need to trust any one person in the network. Data entered into the blockchain cannot be changed or tampered with, thanks to its built-in cryptography. The blockchain can then be easily checked by any member of the network. This means that there is no longer any need for intermediaries, and online audits can be conducted by any member of the network. The result is a system that reduces risk and lowers transaction processing costs. Up-to-date information on goods accepted by the network, as well as the reasons behind any “non-acceptance,” make it easy to increase efficiency. Blockchain can also provide added flexibility. A decision to place an additional order can be processed smoothly, without any hiccups.

The Use Case:

Sibintek’s goal was to create a unified trustworthy environment with its counterparties providing guaranteed data integrity, so that the data used and maintained by the system are complete, correct, and free of contradictions. There are large amounts of paperwork and emails exchanged by gas stations and suppliers when making orders. Each entity (gas stations and suppliers) uses its own accounting systems for managing this paper trail, often leading to supply order delays, inconsistencies and high-cost payment reconciliations. Classic integration methods (to help the systems communication with one another) weren’t a suitable solution. Blockchain, however, could provide a trusted shared-information environment which could be accessed and audited by any member of the supply chain network. Sibintek has chosen Exonum, Bitfury’s permissioned blockchain framework, as the most suitable platform for such a solution.

In Sibintek’s solution all documents (product nomenclatures, orders, invoices, and payment reconciliations) and actions (order confirmation, shipment notification, etc.) used in this supply chain are subject to blockchain storing and timestamping. Only nomenclatures that are confirmed and marked as relevant can be used to form a supply order (preventing confusion later on if different vocabulary is used by one of the companies). After the order is confirmed by the supplier, smart contracts are automatically generated from the order documentation and are checked to ensure they contain no errors or discrepancies. All documents and confirmations within the system are then signed by each entity, using a digital signature protected by their corresponding private key. After the order has been delivered and accepted, the payment can be immediately executed by the respective accounting departments, without any additional effort of the counterparties involved. Besides the other benefits of vastly accelerated processing times for each entity, a decreased number of order returns/complaints, and a significant reduction in operational costs for documentation processes, their Exonum solution’s main advantage is the absence of reconciliations of mutual settlements. Payment reconciliation reports are generated automatically from the trusted environment with the data that all participants are agree with. Overall, they found that using blockchain helped increase overall supply chain reliability and transparency for all parties.

A common question we receive from potential partners is whether using blockchain for your supply chain operations is safe and reliable. Our recommendation is that you consider using extra security precautions when designing your private blockchain platform. Exonum, for example, has the option for you to “anchor” your blockchain to the Bitcoin Blockchain or another public blockchain. It’s designed to give users the best of both worlds: access to the benefits of using the public blockchain with added security and control over their data.

In summary: Supply chains that use blockchain can benefit from streamlined operations, increased trust and more cost-efficient operations, which can lead to substantial savings across the network. Gas stations and their supply chain networks stand to benefit substantially by making the switch. To learn more about using blockchain in your business, visit www.exonum.com.

Original source: https://exonum.com/blog/exonum-partner-highlight-oil-and-gas-industry/