Blockchain and the chemical sector: New ways to finance the process industry

Authors: Tony Oehm, Jonas Gross, Philipp Sandner

The blockchain is catching on in the process industry by way of the financial department. It contributes to drastically reduce the cash conversion cycle and enables the supplier to access liquidity earlier. Buyers of chemical products rely on the continuous availability of their raw materials. In order to guarantee constant availability and quality of supplies, a high focus is put on monitoring, automating and digitising entire supply chains through measurement technologies and sensors along the path. Therefore, shipments can now be controlled and executed as needed to ensure that the flow of goods meets the customer’s requirements.

Activating assets in the balance

In addition to consumption-based provisioning through methods such as vendor-managed inventory (VMI), automated consumption-based financing is the next step to release capital tied up in the supply chain and thus reducing capital and transaction costs. In fact, in today’s production economy, the terms of payment only cover parts of the time where the capital is tied up in current assets. In addition, there are production and transport times or consignment stocks. The time span between from leaving the producer’s warehouse, to delivery and storage at the customer’s warehouse, to reimbursement can therefore easily cover several months. By applying innovative approaches like factoring, these unproductive…