The study aims at investigating the potential use of blockchain technology in procurement processes. To better understand how the procurement process works, the case study of Eni is analyzed. Eni seeks to decarburize all its products by 2050, and its fight towards the energy transition is committed to working with suppliers ready to support it in this vision. After understanding the procurement process within Eni and identifying the potential uses of blockchain within these processes, the chapter proves that blockchain could be a powerful tool for the procurement process, especially for supplier qualification.
TopIntroduction
The energy transition has been trending over recent years all over the world and particularly in Europe, fast-tracking the fusion of many technologies and shaping the new industrial environment (De Giovanni, 2021a). The energy sector is of the highest economic importance with a turnover of around EUR 1.9 trillion along the supply chain in the EU (Eurostat, 2018). This shows the significant impact the sector has on countries’ GDPs and how efficient the transition process should be to avoid massive capital and job losses.
Alongside the European Union as well as the European Commission, which have pledged in their 2030 framework on climate and energy to move gradually green (EEA, 2019), many companies in the energy sector have set up a clear roadmap, implemented many projects in different world regions and incorporated the 17 United Nations 2030 Agenda Sustainable Development Goals (SDGs) in order to comply with the new related regulations that are being implemented.
To this end, they are committed to working with suppliers who meet specific criteria in line with sustainability. A careful selection and evaluation of suppliers are the initial steps to ensure the sustainability of supply chains (Wenyan S., 2017). This endeavor is carried out by the procurement department, which includes procuring goods, raw materials, services, infrastructure, and maintenance in exchange for financial assets (Preeker and De Giovanni, 2018). It is part of the upstream supply chain that has the most profound influence on the overall supply chain and can affect its resilience (Sarkis J., 2019). Green procurement, however, consists of considering environmental sustainability practices in the most traditional procurement activities, from supplier selection to equipment or service delivery (De Giovanni and Cariola, 2020).
Studies show that almost 14% of the GDP expenditure in the European Union is dedicated to public procurement simply because a robust procurement system fosters development and brings economic growth to a country (Sanchez, 2019). Following the same trend, procurement in the private sector represents one of the most significant expenses. A report on best practices in procurement, written by the Aberdeen Group, an international marketing company, explained that the procurement of goods and services not directly involved in the production processes usually constitutes thirty to sixty percent of its total expenditures (Orr, 2002). Being part of the upstream supply chain, procurement has a high level of influence on the remaining part of the supply chain and, this is true even in terms of sustainability.
A survey carried out in Western European firms reveals that sustainable supplier cooperation generally positively affects firm performance across social, green, and economic dimensions. It adds that investments in sustainability result in sufficient returns (Hollos D., 2012). Therefore, supplier cooperation is one of the strategic points that can influence a company’s plans to go green.
Vendor selection is also viewed by industry and academia as a critical issue for the long-term success of supply chains (Wenyan S., 2017). The choice of suitable suppliers is then made through a qualification process based on the information provided by potential suppliers. However, qualifying and evaluating suppliers in a sustainability context is a multi-dimensional and complex activity depending on information. Indeed, information is critical in improving relationships between suppliers. Increased coordination between supply chain actors could reduce risks, costs and improve a supply chains’ overall competitiveness (Badzar, 2016).
When environmental information on suppliers is available, the qualification and selection of suppliers having high environmental performance can be facilitated (Sarkis J., 2019). Unfortunately, this information is not always accessible, and when it is, it is not easily certifiable or auditable. Furthermore, in order to be awarded lucrative contracts, suppliers tendering for a contract provide information on relevant environmental issues not necessarily accurate.