Resolve supplier disputes on a shared data set
Sector: Tertiary sector · Industry: Retail · Organisation: The Home Depot, Inc. · Maturity level: Production
US home improvement retailer The Home Depot works with IBM on a distributed ledger that captures shipping, goods receipt and acceptance data from both retailer and supplier in real time. Because both sides see the same data at the same moment, the weeks- or months-long reconciliation of separate records over quantity and condition discrepancies disappears. According to IBM, the number of disputes fell by 65 percent and resolution time dropped from weeks or months to a few days.
Documentation status
- Project status: Production — In productive operation since 2019/2020 with ongoing integration of additional suppliers; IBM cites returns, inventory visibility and freight claims as areas for further development.
- Evidence: Evidence medium
- Editorial review: pending
Description
The US hardware chain The Home Depot uses a distributed ledger together with IBM to resolve disputes with suppliers on a shared data basis. Between goods receipt at the retailer and supplier invoicing, quantity and condition discrepancies regularly arise that can drag on for weeks or months because both sides keep separate records. In the shared ledger, retailer and supplier see the same shipping, goods receipt and acceptance data at the same time, eliminating the cause of most disputes.
The Home Depot operates the solution on the IBM Blockchain Platform and continuously integrates participating suppliers. The ledger includes shipping, goods receipt and acceptance data from both sides, so both have the same view of a delivery instead of having to reconcile conflicting documents later. All data, detected discrepancies and resulting decisions are immutably recorded in the distributed ledger, forming a complete audit trail. According to IBM, this results in a 65 percent reduction in disputes, with remaining cases resolved in days rather than weeks or months. IBM also describes the approach as a foundation for further procure-to-pay functions: suppliers can view inventory data in real time, returns can be tracked, and carriers can be connected to speed up freight claims. The real benefit lies less in the technology than in the changed relationship with suppliers, as disputes no longer arise from conflicting data.
Perspectives
B2B — organisations perspective
For trading and industrial companies with many suppliers, the case shows that the commercial dispute process can not only be optimised but eliminated at its root. Those who know their own dispute rates and resolution times can roughly estimate the savings potential based on IBM's reported 65 percent.
Employees perspective
In accounts payable and supplier management, work shifts from reconstructing individual deliveries from emails and documents to handling genuine exceptions. Goods receipt staff must record data more carefully and promptly because the data becomes immediately visible to both parties.
Benefits
General
- The number of disputes fell by 65 percent according to IBM.
- Resolution time shortened from weeks or months to a few days.
- All data, discrepancies and decisions form an immutable audit trail.
- The solution serves as a basis for returns, inventory visibility and freight claims.
B2B — organisations
- Significantly reduced processing effort in accounting and purchasing on both sides.
- More stable supplier relationships because disputes no longer arise from data discrepancies.
Employees
- Less reconstruction work from emails and documents.
- Clear decision basis for quantity and condition discrepancies.
Challenges
General
- The benefit grows only with the number of connected suppliers.
- The inventory management systems of both parties must be connected to the shared ledger.
- Retailer and supplier must agree bindingly on what counts as a discrepancy.
B2B — organisations
- Smaller suppliers need support with technical integration.
Employees
- Goods receipt must be recorded more promptly and carefully because data is immediately visible to both sides.
Technology foundation
The solution is based on the IBM Blockchain Platform and thus on Hyperledger Fabric as a permissioned ledger between retailer and supplier. A distributed ledger is central here because both contracting parties must maintain the same dataset without either being able to control or subsequently alter the other's records.
Implementation examples
Dispute resolution between The Home Depot and its suppliers
Discrepancies in quantity and condition arise between goods receipt at the retailer and invoicing by the supplier; because both parties keep their own records, resolution drags on for weeks or months and ties up staff in accounting and purchasing.
The Home Depot operates a distributed ledger with IBM, into which shipping, goods receipt and receiving data from retailer and supplier flow in real time. Both parties see the same data, largely eliminating disputes over quantities and condition.
The solution runs on the IBM Blockchain Platform; participating suppliers are continuously connected. All data, identified discrepancies and decisions made are immutably recorded, forming a complete audit history. According to IBM, the number of disputes fell by 65 percent and resolution time dropped from weeks or months to a few days; IBM cites future developments including inventory visibility for suppliers, returns tracking and connecting freight carriers to speed up freight claims.
65 percent fewer disputes; resolution time reduced from weeks or months to just a few days (source: IBM Case Study).
Conflicting data between retailer and supplier, lengthy dispute resolution times, lack of a shared audit history and strain on supplier relationships due to recurring disagreements.
Tags
Supply chain, Dispute resolution, Invoice reconciliation, Hyperledger Fabric, Retail