Crowdz, a pioneering Silicon Valley startup, builds digitized, blockchain-based supply-chain networks designed to enhance the speed, efficiency, and financial performance of global supply chains. In the process, Crowdz also facilitates the selling of invoices and purchase orders, allowing small & midsize enterprises (SMEs)—which account for more than 70% of the participants in global supply chains—to get paid earlier than they otherwise would in order to keep the cash flowing at the best rates possible.
The Supply Chain Challenge
From the start, Crowdz recognized that global supply chains currently face three major challenges:
- More than two decades after the emergence of the Internet and ecommerce, 77% of global supply-chain transactions continue to be executed via antiquated, highly manual means, such as paper catalogs, paper forms, sales representatives, fax transmissions, email, electronic data interchange (EDI), and so on. The use of these methods can cause delays of days, weeks, or even months in the processing of orders and the settlement of financial transfers.
- The use of these same, highly manual techniques imposes huge inefficiencies on global supply-chain operations. Today, in the nearly $25 trillion global B2B commerce market, these inefficiencies result in at least $4 trillion in lost sales and added costs—each year.
- Financial performance. With supply chains, SMEs typically must sell their products on a delayed-payment basis via invoicing, which can result in delays in payments to SMEs of up to 120 days or more. Without steady, ongoing cashflow, many of these SMEs can’t survive, and up to half ultimately cease operating, causing supply-chain interruptions, lost sales, and frequent costly searches for alternative suppliers.
The Role of Supply Chain Financing
The last of these three challenges bears emphasis. The most common answer to the financial difficulties just described is supply-chain financing (SCF). With SCF, banks or other investors purchase SMEs’ invoices, giving the SMEs cash for their invoices almost immediately, less a discount on. Later, the SMEs reimburse the funding entity when their customers pay. The potential global market for SCF is immense, estimated at $9 trillion.
Despite the potential, however, only a small minority of SMEs now benefit from SCF because:
- Only a few of the enterprise-headed supply chains that SMEs belong to provide SCF financing.
- Banks usually buy invoices only valued at $500K+, which shuts out most lower-invoice-value SMEs.
- When SMEs do have access to SCF, the rates are punishingly high (~4-6%/month, or 45%+ annually).
- Newer peer-to-peer networks are limited by the fact that they must buy invoices on a one-off basis and then need to individually match funders to invoice sellers—practices that are not well-suited to enterprise supply chains, which demand more consistency and predictability.
The Crowdz Solution
Crowdz solves the supply chain’s operational and financing challenges by creating automated, fully digitized supply chains. The Crowdz solution is unique among contemporary supply-chain financing (SCF) applications, which consist largely of standalone financing vehicles. Crowdz, by contrast, is an entire supply-chain ecosystem, which brings product buyers and sellers as well as invoice buyers and sellers together onto the most efficient global supply-chain platform ever created, as follows:
- Crowdz fully digitizes the B2B buy/sell process via automated supply-chain product marketplaces that use artificial intelligence and advanced search technologies to accelerate the buying and selling of products, matching buyers to the most suitable sellers, while originating risk-rated invoices and purchase orders that are pre-configured for investor financing.
- Crowdz digitizes the invoices and other paperwork that flow from this buy/sell process, then places them on the Ethereum blockchain, where they are consolidated, transformed into digital smart contracts, and instantly transported to and from all transacting parties.
- Crowdz then automatically posts fundable invoices on the Crowdz invoice-auction exchange, where banks and other investors can bid on risk-rated (and ultimately packaged) invoices and purchase orders, enabling suppliers to receive instant, discounted cash payments for the value of their receivables.
The Ideal Leader for This Challenge
Payson Johnston is the CEO and Co-Founder of Crowdz. With 20 years’ senior-level supply-chain management experience, he served most recently as Senior Manager for Global Supplier Management for Cisco, the global networking giant. Among other responsibilities in this position, he developed and drove the commodity strategies for five global supply chains. He also designed one of the first-ever online supply-chain management systems, which is still in use today. More recently, he oversaw the creation of the first-ever blockchain-based supply-chain marketplace for processed raw materials.
Payson worked at the University of San Francisco as an Adjunct Professor and, recently, as an Instructor at the University of California, Berkeley Extension on the topics of sustainability and ethics, supply chains, risk management, and marketing channels. Payson holds an MBA from the University of San Francisco and an MA from the University of Nottingham.
Techstars and Barclays
Each year, Barclays—one of the world’s pre-eminent financial institutions—works with a number of innovative startups during its London-based Accelerator program powered by Techstars. The 13-week journey that begins each February gives some of the world’s most cutting-edge financial-technology (fintech) firms access to Barclays’ 328 years of financial expertise. It’s a collaborative process in which brilliant ideas can become problem-solving innovations with mass-market appeal.
The company that Barclaycard Payment Solutions sponsored during its most recent Accelerator is Crowdz. First and foremost, Barclays points out, Crowdz’s online product marketplaces connect businesses seamlessly and digitally—moving the entire procurement process online. The Crowdz solution also makes it much easier to find suppliers and to sell to other businesses. And, as part of this process, documents are digitized and placed on the Ethereum blockchain, meaning that transactions that used to take months can happen in milliseconds—the ultimate acceleration of the supply chain.
Source: The 10 Most Innovative SCM Solution Providers
