In 2025, the procurement landscape is undergoing a significant transformation. Blockchain technology, particularly through smart contracts and tokenisation, is challenging traditional contract management methods. This shift promises enhanced efficiency, transparency, and security in procurement processes.
The Rise of Smart Contracts
Smart contracts are self-executing agreements with terms directly written into code, operating on blockchain networks. They automatically enforce obligations when predefined conditions are met, eliminating the need for intermediaries. The global smart contracts market is projected to grow from USD 2.69 billion in 2025 to approximately USD 12.07 billion by 2032, reflecting a compound annual growth rate (CAGR) of 23.9%.
Tokenisation in Procurement
Tokenisation involves converting rights to an asset into a digital token on a blockchain. In procurement, this can mean representing purchase orders, invoices, or entire contracts as tokens, facilitating easier tracking and transfer. This approach enhances liquidity and enables fractional ownership, making procurement processes more flexible and accessible.
Benefits of Blockchain in Procurement
Enhanced Transparency: Blockchain’s immutable ledger ensures all transactions are recorded and visible to authorised parties, reducing the risk of fraud.
Improved Efficiency: Automated processes reduce manual intervention, speeding up procurement cycles and reducing errors.
Cost Reduction: By eliminating intermediaries and streamlining processes, organisations can achieve significant cost savings.
Data Security: Blockchain provides robust security features, protecting sensitive procurement data from unauthorised access.
Challenges and Considerations
While the advantages are compelling, several challenges must be addressed:
Regulatory Uncertainty: The legal status of smart contracts varies across jurisdictions, potentially complicating enforcement.
Integration with Existing Systems: Adapting current procurement systems to work with blockchain technology requires significant investment and change management.
Technical Expertise: Implementing and maintaining blockchain solutions necessitates specialised knowledge, which may be lacking in some organisations.
The Future Outlook
Despite the challenges, the momentum towards blockchain-based procurement is undeniable. As technology matures and regulatory frameworks evolve, adoption is expected to accelerate. Organisations that proactively embrace these innovations stand to gain a competitive advantage in efficiency, transparency, and cost-effectiveness.
Blockchain technology, through smart contracts and tokenisation, is poised to revolutionise procurement. While traditional contracts remain prevalent, the shift towards digital, automated solutions is gaining traction. Procurement professionals should stay informed and consider how these advancements can be integrated into their operations to drive value and innovation.
Sources:
Fortune Business Insights. “Smart Contracts Market Size, Share, Value, Global Report [2032]”
Apptunix. “2025 Guide to Blockchain Asset Tokenization Platforms”
Carmatec. “Blockchain in Supply Chain: Use Cases and Benefits”
Spendflo. “The Future of Procurement: Blockchain’s Role in Supply Chain”
