25 April, 2018
Blockchain and distributed ledger technology is already in use by major banks, big data, and e-commerce leaders. Intermediary-free transactions will become the norm for the next generation of providers and consumers, with legacy systems appearing inefficient and absurdly expensive. In the case of B2B companies, blockchain allows for greater security, practical applications, and streamlined processes between companies.
The following outlines some specific benefits of blockchain technology in the B2B space:
A decentralized ledger allows the supply chain to run smoothly, with processing times significantly reduced. A shared record of events improves collaboration and facilitates efficient, streamlined processes for disputes. IT infrastructure costs would be reduced as well, since blockchain technology would provide a faster and more reliable system.
Due to the decentralized architecture of transactions, sales can be more easily processed. In contrast to B2C sales relationships—which can be as short-lived and one-dimensional as a single purchase at a brick-and-mortar store—B2B relationships are typically ongoing, with a long sales cycle. Trust and maintaining good-faith relationships is at the heart of these transactions, which blockchain can support due to its transparency.
Blockchain removes the middleman in transactions, which leads to reduced cost for B2B vendors and customers. Fees associated with credit card processing are completely eliminated, and direct relationships unhindered by intermediaries leave room for autonomy and speed.
The credibility and security of blockchain creates what Professor Kevin Werbach refers to as “a new architecture of trust.” A system that does not rely on intermediaries or biased institutions establishes trust, and B2B companies can benefit from that in terms of monetary and business relationships.
There are many cost reductions associated with blockchain technology in the B2B space. Eliminating credit card processing fees, speeding up transactions themselves, and streamlining the supply chain all reduce overhead associated with B2B procedures.
B2B companies do not rely on the traditional model that B2C companies employ for gaining traction, like advertising and loyalty programs. They are more reliant on tangible, verifiable improvements to their processes, manufacturing, and transactions. The increased trust, security, and efficiency of blockchain serves to help B2B companies greatly improve operating costs and relationships between companies.
Image from Pixabay.