Bhaskar

Hitachi Shifts to Paperless, Secure Procurement Contracts with Hyperledger Fabric

07 Sep 2022

Read the full case study here.

Paper pushing. It’s synonymous with tedious, slow processes. Yet often, the pushed paper is vital to a company’s business. And contracts are especially important paper.

But digitizing a contract process isn’t as simple as it sounds. As the contract moves between parties, there’s a risk of tampering. Or mismanaging version control.

Many companies continue to use paper for their contracting processes to maintain security and trust. The procurement divisions of Hitachi, Ltd. were no different.

Hitachi is a Japan-based global technology organization. It focuses on digital innovation in the mobility, smart life, industrial, energy and IT sectors. The company has 873 companies across more than 100 countries with 380,000 employees worldwide.

At such a scale, Hitachi’s procurement divisions process thousands and thousands of contracts every month. That’s a lot of paper. That’s also a lot of time managing that paper.

Hitachi’s Service Delivery Division develops tools to help increase business efficiencies. It saw this as a perfect use case. Ultimately, an improved procurement process would help companies within the Hitachi group and their clients.

The team set about creating a secure contract management system. For eight months, they worked with procurement personnel to develop the solution. First, they needed to understand the paper process as it was working. The team considered how the process could be more efficient while also keeping the security and integrity of the documentation in place.

They chose Hyperledger Fabric, an open source blockchain framework from Hyperledger Foundation. Hitachi had already created blockchain-backed frameworks on Hyperledger Fabric in its financial and industrial areas, so the team members knew it could provide the advanced security needed for critical document processing.

The procurement division of Hitachi’s head office tested the new paperless, blockchain-backed, Electronic Signature Service (ESS). This division manages the contracts with 2,000 business partners.

It began digitally processing all new contracts in July 2021. Under the old paper-pushing method, the division processed about 333 cases per month. Now it is processing at least 400 contract cases per month — a 20% increase. And though they’re processing more cases, they’re doing them in less time than before. Division personnel now have time to focus on other important tasks like investigation, negotiation, and engaging with new contract companies.

The Hyperledger Foundation team worked with Hitachi on a case study that details the goals, approach and results of implementing this blockchain-backed, paperless procurement solution as well as plans to roll it out to all the procurement divisions. These divisions manage the 3,500 companies contracting with the Hitachi Group.