Blockchain-Based Vendor Management in IT: Challenges and Solutions

Abstract

The rapid evolution of the IT sector has led to increasingly complex vendor management systems, necessitating innovative solutions to handle the multifaceted challenges associated with these systems. Traditional vendor management practices often struggle with issues related to transparency, security, inefficiencies in communication, and trustworthiness among vendors. Blockchain technology, with its decentralized, immutable, and transparent characteristics, presents a compelling solution to these challenges. This research paper explores the application of blockchain technology in IT vendor management, focusing on its potential to address critical challenges and enhance the overall efficiency of vendor-related processes. The paper begins by outlining the inherent challenges in conventional vendor management systems, including difficulties in verifying vendor credentials, managing contracts, ensuring data security, and maintaining a reliable audit trail. These challenges often result in operational inefficiencies, increased costs, and potential risks related to vendor fraud or non-compliance. Blockchain technology, known for its secure, transparent, and decentralized nature, offers a transformative approach to these challenges. By providing a distributed ledger that records all transactions in a secure and immutable manner, blockchain can significantly enhance the transparency and security of vendor management processes. The paper examines how blockchain can be used to automate vendor verification, streamline contract management through smart contracts, and ensure data integrity across the vendor lifecycle.