Blockchain Procurement Reconciliation via Smart Contracts

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Solution Overview

Problem

The existing procurement systems face challenges in processing large amounts of data during reconciliation, leading to delays in real-time processing, expense reporting, and procurement payments due to their memory-intensive nature and reliance on manual data review.

Innovation Solution

A blockchain-based procurement system utilizing a billing smart contract that generates and manages purchase orders, processes payments, and writes proof of purchases and payments to a procurement blockchain, enabling real-time reconciliation and reducing the need for manual data review.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Measurement precision

If traditional procurement reconciliation processes are used to process large amounts of data across multiple entities, then data gathering and manual review can be performed, but processing time increases and real-time reconciliation is delayed

Engineering Contradiction:

Improvedata gathering completenessVSAvoidreconciliation delay

Core Design Contradiction:

Measurement precisionVSLoss of time

Solution Approach 1:

The patent replaces manual data review and traditional processing mechanisms with blockchain technology and smart contracts. The billing smart contract automatically generates purchase orders, tracks proofs of purchase and payment, and performs reconciliation without manual intervention, eliminating the time-consuming mechanical processes while maintaining data completeness through automated data collection from multiple entities.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Solution Approach 2:

The patent introduces a blockchain network as an intermediary layer between multiple entities (procurement systems, client systems, supplier systems, transaction processing systems). This intermediary enables automatic data sharing and verification across all parties, allowing real-time reconciliation by mediating data exchange and eliminating the need for sequential manual review processes.

Inventive Principle:

Principle #24Intermediary (Mediator)

2Measurement precision

If traditional procurement systems process large amounts of reconciliation data through multiple entities, then comprehensive data review is achieved, but memory and computational resources are heavily consumed

Engineering Contradiction:

Improvedata review comprehensivenessVSAvoidCPU and memory consumption

Core Design Contradiction:

Measurement precisionVSUse of energy by moving object

Solution Approach 1:

The patent replaces resource-intensive traditional data processing systems with blockchain-based smart contracts that perform automated reconciliation. The billing smart contract handles data processing distributed across the blockchain network, reducing the computational burden on any single system while maintaining comprehensive data review through automated verification of purchase orders, proofs of purchase, and payment records.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Solution Approach 2:

The patent uses blockchain's distributed ledger technology where each participant maintains a copy of the transaction data. This eliminates the need for centralized data storage and processing, reducing memory requirements while enabling comprehensive data review through replicated copies available to all authorized entities in the network.

Inventive Principle:

Principle #26Copying

3Reliability

If manual data review is performed across multiple entities in procurement reconciliation, then data accuracy can be verified, but processing speed decreases and real-time reconciliation is not achieved

Engineering Contradiction:

Improvedata accuracyVSAvoidreconciliation speed

Core Design Contradiction:

ReliabilityVSProductivity

Solution Approach 1:

The patent replaces manual data review with automated smart contract execution on the blockchain. The billing smart contract automatically verifies purchase orders, proofs of purchase, and payment records through programmed logic, maintaining data accuracy through systematic verification while achieving real-time reconciliation speeds impossible with manual processes.

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Solution Approach 2:

The patent implements automated feedback loops where the billing smart contract continuously monitors and verifies transaction data from multiple entities. The system automatically compares purchase orders with proofs of purchase and payment records, providing immediate feedback on reconciliation status and enabling real-time accuracy verification without manual intervention.

Inventive Principle:

Principle #23Feedback

Data Source

PatentUS11410136B2Procurement system using blockchain

Publication Date: 2022.08.09 AMERICAN EXPRESS TRAVEL RELATED SERVICES CO INC

AI summary

A procurement system and process using blockchain is disclosed. The procurement system may facilitate procurement reconciliation between procurement initiators, clients, suppliers, and/or transaction processors, using blockchain. Each party may comprise a blockchain node configured to interact with a procurement blockchain. The procurement process may be controlled by a billing smart contract and a client smart contract configured to enforce data workflows and establish trust between the parties.