11 Key Considerations for Blockchain in the Equipment Industry

Written by: equipmentfx

August 8, 2021

What is blockchain, why now and what to do about it

Block Chain & the Equipment Industry

This post is specifically for visionary leaders, decision makers, operations personnel and anyone with ideas or dreams to have better processes, better profit, better data management, better accountability and an overall desire to lean into the future with better solutions

Equipment Industries This is For

The “equipment” business, as reported by ELFA (Equipment Leasing & Finance Association) is a $1 trillion dollar market. Much of the information in universally applicable to almost any industry, but for the purposes of clarification, the main industries this addresses are OEM’s and dealer networks in the following industry categories:

• Construction equipment
• Agriculture equipment
• Material handling equipment (forklifts and warehouse equipment)
• Oil and gas equipment
• Cranes and rigging equipment
• Power generation
• Rental equipment
• Forestry equipment
• Airport and ground support equipment
• Leasing and finance (those that finance equipment in these industries)
• Private equity and venture capital (those that invest companies in these industries)

11 Point OEM, Dealer & Financial Services Checklist

The list of questions is a lot longer than this but for starters I’ve listed 11 higher level discussion points to talk about internally. “Block Chain” is a very current technology that only enhances what we do already on a day-to-day basis. The technology “stacks” are stable and integrate with many legacy business systems and data types.

Consideration #1: Estimate technology awareness level within your organization.

Is your company even talking about block chain? Are you so immersed on your own legacy system and current business processes you can’t absorb anything new, today? There are many applications for block chain, and it’s best to start with small projects, see the value, get buy in and systematically build onto the system until you have obtained your goal.

Consideration #2: Can you list top enterprises from industries that successfully adopted block chain.

Success stories in the equipment industry are hard to find, but they’re coming. From asset management, inspection, payment processing, activity authentication, there are numerous areas for improvement in several areas of your business.

Consideration #3: Evaluate competitor progress on block chain adoption.

Starting with core issues like asset management from OEM, to dealer, to the next level of buyer and seller of all equipment, there are numerous opportunities to capture data and manage TRUE equipment lifecycle opportunities. Have you looked around at your competition to know if anyone has done anything that has caught your attention? Ask questions in your OEM and dealer network. Has anyone seeing anything cool going on with the competition?

Consideration #4: Are there any emerging technology providers that have your attention?

If you’re in tune with the block chain community, from IBM on down, there are a myriad of service providers that have some amazing solutions to help you accomplish your goals of improving your business processes and security of each transaction. Google “block chain service companies” and other variations of the term, follow thought leaders, see what others are talking about online and in communities and separate hope from hype in key areas of your business.

Consideration #5: Consider joining a consortium

It’s a tough one to tackle early on, but if there are collective benefits from all involved, from OEM’s, to dealers and more stakeholders, there are ways to share costs for the collective benefit of the enterprise. But start with a quick list of high level questions, including:

• Who and what defines a “consortium” when thinking about collective group benefits. If other network partners refer business to us vs. self-developed business, are there collective benefits? What about outsource development partner models?
• What would the goal of the consortium be? Revenue play vs. other scenarios?
• What would the structure/governance model look like?
• What might the funding model be vs. cost of a contract? Is that a standard option to consider?
• Who owns the IP? And make sure to position this correctly from the start. Use of open standard, source license, what are the best options?
• What are the business, technology and regulatory risk factors?

Consideration #6: Identify critical and easy to eliminate barriers for block chain adoption.

There are a lot of reasons to say no to any initiative. From time constraints, cultural and technology adoption limitations to overall imagination when it comes to visualizing the possible against what you’re currently doing. But start with these high level issues in the beginning, the main issues are:

• General awareness & a clearly defined value proposition
• Regulatory issues
• Implementation, replacement of legacy systems, another new system??
• Security threats to information, concerns with competitive info being accessed
• Uncertain ROI – does this really do anything for your bottom line?
• Lack of in house capability to understand and make this a priority project
• Unproven technology
• Inadequate funding, and not a business priority

Settle in as a group and work through these issues in the beginning to see if block chain and it’s benefits are worth considering compared to the other company priorities.

Consideration #7: Define the use cases to be potentially applied within your organization.

There are many practical application and uses for block chain to improve your OEM or dealer on many levels, but to know if it’s a fit or not, go through an initial series of questions on use cases within your organization. To get you started, some key areas to consider are:

• Data validation
• Data access/sharing
• Identity protection
• Payments & digital currency
• Track and trace task completion
• Access to IP
• Record reconciliation
• Asset transfer
• Revenue sharing, commission splits
• Time stamping
• Current asset custody

Consideration #8: Shortlist and prioritize the potential profit of the implemented scenarios.

Very few of us have extra time to devote to an initiative as potentially large as adopting block chain into your business, process and culture. At the end of the day, it’s all about efficient processes that save time and money. You have to evaluate a lot of processes to understand fully where the opportunities are for significant improvement.

Starting with this list of areas, ask yourself and your team where the opportunities are for improvement. Just these four basic areas might yield significant improvement on many levels:

• Process efficiency
• Cost savings
• Risk reduction
• Time savings

Consideration #9: Estimate investment to obtain expertise for block chain expertise.

The equipment industry is one of the best known examples of having a pervasive “do it yourself” mentality. Some of the reasons are job security, some are well intentioned efforts to tackle it because “that’s what they pay me for”, and everything in between.

For this initiative, I highly recommend trusting a team of experts to evaluate your goals against the possible. Long term, it’s cheaper and more efficient, you’re not re-inventing the wheel, and the block chain company NEEDS your internal people to make this a success. But since evaluation is part of the process, evaluate the cost of expertise against the following:

• In house training courses on system use
• Ongoing support costs and contracts
• Initial costs of a solution
• Initial costs and process to determine if there is a solution, meetings, travel, initial assessment costs

It’s a good idea to outsource this initiative to an expert. There are too many key items in critical areas to miss that can have serious consequences. Many of the steps are unknown, the risk of taking too much time and designing the wrong solution are high. Get out of the DIY mentality on this initiative, you’ll be glad you did!

Consideration #10: Investigate and determine your compliance with industry regulations.

Depending on what your goals are with block chain, there are a number of key considerations to be aware of before undertaking any initiative. Some of the main ones include:

• Privacy
• Money transmission
• Know the customer/anti money laundering policy
• Informational reporting
• Securities law
• Financial reporting
• Tax
• Industry specific regulatory issues
• Geography-specific regulations (Patriot Act, for example)

Consult with an expert early in the process to make sure each of the above areas is researched and proper recommendations are made to all processes during your block chain initiative.

Consideration #11 Adoption and road map

As Stephen Covey used to say, “Begin with the end in mind”. As you move through the initial and ongoing path to block chain adoption and success, it’s important to develop a road map of key projects and milestones to keep your enterprise on task, progress visible and enthusiasm high.

About EquipmentFX Services

Over the years, the services we offer have evolved to meet each clients unique needs. We like to lead with our proprietary A3 assessment to really understand the gaps and opportunities. From there we can discuss follow on services we customize together.

The number one question we get after assessments are “Can you just do this stuff for us”, followed by “we have marketing people, how can we make them and our processes more efficient”. And sometimes we simply deliver the road map and provide support as-needed.

At the end of any engagement, you will have a formal framework and internal audit process to improve your program or build a program from scratch to create more new customers, and to sell more to existing ones.

To find out more about the EquipmentFX A3 assessment, digital marketing or technology consulting services, please contact us.

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