7 Ways Blockchain Can Help Suppliers Keep More Customers

Today’s business environment remains fierce, especially with the pandemic creating global waves of uncertainty from market to market. Organizations, large and small, are finding ways to gain an advantage to help them not only survive, but to compete more effectively and thrive. This is why blockchain technology has become more prominent. Blockchain is more than a buzzword or flavor of the month. Its implementation and deployment across virtually every business sector is the future of doing business. But what exactly is blockchain? And why has it still not been embraced by every business, especially those used to managing multiple components within the order-to-cash process?

Part of the reason why there’s resistance to the acceptance and adoption of blockchain technology is the inherent confusion around what it is and how it can help organizations and whole industries. Any new technology can be intimidating. Like any new technology, such as the Internet, digital payments and artificial intelligence, blockchain needs clarity regarding how it can provide value not only to the largest corporations, but to smaller enterprises and startups.

What Is Blockchain?

In simple terms, blockchain is a digital, distributed ledger that records transactions between parties; these records cannot be changed or altered. Distributed ledgers are a compilation of digital data that are spread across multiple locations. It uses a peer-to-peer network that securely adheres to a protocol for inter-node communication and new block validation. These distributed ledgers are secure by design and easy to follow.

As such, despite being alterable through inputs, the recording process of the distributed ledgers are still verifiable and permanent, thereby making data more secure and trustworthy. Furthermore, blockchain is decentralized, meaning that there is no central administrator for the system.

How Does Blockchain Work?

Blockchain works in a multitude of ways, depending on how it’s used. Primarily, blockchain is used as a distributed ledger for cryptocurrencies (like Bitcoin and Ethereum), but there are many areas where blockchain can be used, such as finance, for smart contracts, video games, sales and marketing, and more.

Blockchain has several layers:

  • Infrastructure
  • Networking
  • Consensus
  • Data
  • Application

The infrastructure and network are basic building blocks, while consensus is the proof of work in transactions. Data consists of blocks, which are the transactions. These blocks can hold multiple transactions which are encoded into a hash tree and then linked into a chain. The application is the method in which blockchain is implemented, built on a variety of blockchain platforms to perform certain types of work.

For cryptocurrencies, blockchain is used to keep a record of transactions. Financial institutions use blockchain to promote efficiency by having a quicker system to record bank settlements. For smart contracts, blockchain reduces the number of entities that facilitate a contract by cutting out third parties and creating a reliable way to interact directly. The uses and possibilities of blockchain are endless.

Why is Blockchain Good?

Access to blockchain is not strictly limited to just one entity or party. Every party to a transaction may input or record information in a blockchain, but once that information is inserted into the digital ledger, no involved party may edit or modify it. This is good news for every party engaged in using a blockchain platform, ensuring transactions are handled in a trustworthy manner.

The benefit, therefore, of blockchain technology is its ability to make irreversible records in the digital world that can be accessed by parties with the utmost transparency and specificity. Ultimately, this translates into lower cost of doing business for suppliers. Ideally, suppliers can leverage blockchain for any component of the order-to-cash process to do everything from ensuring customer orders are accurate, maintaining inventory, submitting invoices and being paid instantaneously.

How Can Supplier Organizations Benefit From Blockchain Technology?

Owing to its very nature, blockchain technology offers a variety of benefits to suppliers. I’ve identified seven ways suppliers can leverage blockchain to better serve and keep customers.

Better Credit Reporting

Suppliers rely on credit reports to determine a potential customer’s ability to pay. Blockchain-enabled credit reporting is significantly more secure and accurate than conventional server-based reporting. Recent data breaches, where individual and business data is exposed or stolen, have proven this to be the case. Blockchain does allow companies to also consider non-traditional factors when calculating credit scores.

Improve Domestic and Cross Border Payments

It’s amazing that transferring money domestically and across borders in 2021 remains inefficient, slow and expensive. Because financial information passes through multiple banks during the process of making and receiving payments, a faster solution has been warranted for years. While ACH has come a long way in facilitating same-day payments, international payments remain a challenge. For cross-border financial transactions, blockchain makes the process faster, cheaper and more accurate.

For domestic and cross-border payments, blockchain remedies many of the hurdles parties face when making and accepting payment. By removing third-party facilitators, such as banks and other entities, blockchain enables nearly instantaneous payments from one country to another.

Initiate a System of Loyalty

As already noted, blockchain is a transparent, secure, and irreversible ledger that is guaranteed by nature of its distribution. This, therefore, can allow suppliers to formulate a sort of loyalty program or system to encourage partnerships.

Incent is a digital company that saw this opportunity and took advantage of it. Simply put, what Incent did was create a system of rewards for loyal customers by making use of the ledger to take note of all digitally trackable actions made by users or customers and. When certain thresholds or variables were met, they were then granted a reward in the form of digital currency.

Save Costs on Trusted Third Parties

Smart contracts are a hallmark of blockchain technology, making engagements between parties foolproof and trustworthy. As a result, doing business with entities such as customers, banks, or certification organizations can be done quickly, accurately and save suppliers money in the long run.

Better Engage Customers

Suppliers can retain customers by incorporating blockchain platforms into their interactions. With blockchain, suppliers have customer information at their fingertips while allowing customers to see, in real time, what’s available regarding inventory and how any purchase might fit within their credit allowance and when it can be delivered.

This allows suppliers to provide information to their customers instantaneously, providing needed details without the back and forth so common around many transactions. This helps build loyalty, allowing both parties to communicate effectively without actually communicating. Once a purchase is made, smart contracts capability allows for instantaneous payment without the hassle of a collections process or working to reduce DSO.

The convenience, transparency, and value customers receive from their suppliers using blockchain reassures them of the provider’s professionalism and responsiveness.

Formulate Your Marketing Plan

As stated before, the transaction records provided by blockchain gives businesses direct insight into customer interests. Considering that blockchain makes a record of every transaction with utmost specificity, a supplier can use this information as a base for its marketing campaigns.

Knowing the specific interests customers have is key to creating a great marketing plan. These specifics can be used to create new campaigns that target a customer directly in ways that are very specific to their needs instead of offering solutions that are general in nature. Furthermore, interactions are done and recorded in real time, providing suppliers great insight into customer behavior in a way that is reliable and predictive. This can also feed into a CRM system, allowing suppliers to set up special identifiers for your customers and facilitate real-time interaction.

Improve Supply Chain to Improve Customer Delivery

Supply chain management is primarily a business of numbers and units. Knowing every unit, value, or measurement is essential for creating an efficient and effective supply chain in order to meet customer deliveries. Blockchain technology allow suppliers to incorporate just-in-time inventory practices so they can reduce costs while maintaining customer satisfaction.

ERP systems have come a long way in the last 10 plus years. Implementing an ERP solution on top of a blockchain platform can super charge inventory management, materials management and customer delivery – all while saving money.

Blockchain is not a magic wand that simply solves every problem a supplier might have. Rather, blockchain is a dynamic platform that introduces unprecedented transparency, efficiency, cost savings and speed. Each of these things suppliers can benefit from, especially if trying to serve, retain and grow their customer base.