Sweetbridge Rewards Use Case: The problem of supplier technology adoptionLarge pharmaceutical companies have a problem right now. They need to implement technological changes in their supply chain to meet new regulations on supply chain visibility and provenance. But, their suppliers are burned out from tech rollouts over the past decade. The suppliers also have different customers asking them to implement different types of technology. This makes it hard for suppliers to know which to choose. Suppliers are now telling customers, that they won’t make the implementations unless they are paid to do so. This is bad news for pharmaceutical companies at a time when many of them are also losing revenue from expired patents, not gaining new patents at the rate they did in the past, and being told by their board and stockholders they need to cut, rather than increase, costs in their supply chain.With Sweetbridge, companies like this can incentivize supplier compliance with easy to implement rewards that don’t increase supply chain cost and actually come from the discounts already being given to suppliers.Better yet, Sweetbridge benefits are designed to cascade all the way down the supply chain. Companies further down the supply chain have every incentive to adopt.The buyer, in this case, the pharmaceutical company, gets more cashback whenever the network grows. The seller, in this case, the supplier, gets SWC, an asset with a measurable NPV value, that they could use for cashback themselves with their suppliers, or sell to someone else who wants to use it. This is the only program where sellers receive payment, by way of an asset, for participating. We don’t know of any other reward program that benefits both parties in this way.The Sweetbridge rewards program doesn’t just provide rewards though, it’s integrated with a protocol that can also provide settlement, auditing, asset tracking, and complete transparency throughout the supply chain. All the things pharmaceutical companies are required by law to implement.Sweetbridge doesn’t charge you more than a 0.1% fee on transactions (less than your credit card systems). Sounds too good to be true? Our model is not set up to extract fees from stakeholders. Rather all of our money is made when SWC, the asset both you and your suppliers would be rewarded in, increases. Our interests are always aligned with yours.Pharmaceutical companies do have to give something up temporarily: currently, these companies get discounts from their suppliers. The discount can vary from one supplier to the next, or from one month to the next. With Sweetbridge, the supplier (SupplierA) chooses a constant discount, and instead of giving it directly to the Pharmaceutical company, Supplier A puts this discount into the two Sweetbridge Reward Pools. These pools are controlled by blockchain protocols rather than any one party. 50% of the discount goes into the network cashback pool and 50% goes into the seller-specific reward pool.At the end of the month, the pharmaceutical company gets cashback from the network cashback pool. They cannot receive more in cashback then their total in-network spending that month. However, the overall value they get from cashback and SWC they hold could be greater than the traditional discount they currently receive from Supplier A. Rather than getting their discount at the point of sale, the pharmaceutical company would now get it at the end of each month. A small price to pay for an asset with utility cashback value that increases when you buy more in-network, or when others (even your competitors) buy more in-network. If the pharmaceutical company also uses the Sweetbridge Invoice Financing protocol they could get the discount sooner than the end of the month if needed.Let’s look at the numbers for a pharmaceutical company, Company X, doing this with one supplier, Supplier A.Company X spends $100 with Supplier A every month. Supplier A always gives Company X a discount of about 10%. Meaning Supplier A only makes $90 from Company X, and Company X has a net spend of $90.With Sweetbridge, Supplier A would still get $90, but Company X would now pay the full $100 at the point of sale. $10 then goes into the Sweetbridge rewards pools: 50% goes to the network cashback pool and 50% goes to the seller-specific reward pool. $5 goes to the network cashback Pool and $5 would go to Supplier A’s Seller-Specific reward pool.At the end of the month, the money in the network cashback pool is divided between all holders of SWC who have allocated SWC towards cashback. The amount each SWC holder receives is based on:the Cashback Value of SWC (the amount of cashback you can get per SWC in the network)the amount that holder spent in networkthe number of SWC they have allocated towards cashback.If the Cashback Value of SWC is $2.50 per SWC, and Company X owns 2 SWC, then Company X would get back $5 at the end of the month. If Company X owned more SWC, or the Cashback Value of SWC increased, they could get more cashback. This encourages the network to grow.In this use case, Supplier A opts to use their Supplier A reward pool to send an additional $5 to Company X as a direct discount at the end of the month. This results in Company X still getting the same discount on their purchase that they are currently getting. Company X also has an asset that’s value is directly related to Company X’s purchases and activity in the network. In this example, the NPV value of SWC would be $10 per 1 SWC. That means that Company X, in addition to getting the discount they typically get from Supplier A, also now has an asset worth $20, which will increase in value whenever the network grows. Company X can help the network grow by purchasing more from Supplier A or by getting Supplier A to get their suppliers to join. In this manner, they can increase the value of their SWC over time.Because the Sweetbridge Protocol rewards anyone who grows the network, Supplier A would also “mine” SWC for the transaction they made with Company X.What happens if Supplier A does this with their supplier, Supplier B?Supplier A now has SWC, they could sell it or hold on to it, but they would get the most out of it by using it for cashback themselves in their supply chain. So Supplier A does exactly what Company X did. They go to their supplier, Supplier B, and ask to have their normal discount converted into a Sweetbridge Reward Program.Supplier A purchases $70 worth of materials from Supplier B every month. They typically get a 10% discount and only spend $63 with Supplier B. With Sweetbridge, Supplier A would now pay the full $70 at the point of purchase. Assuming the Cashback Value of SWC is still $2.50 per SWC, at the end of the month Supplier A would get back $3.50 in cashback from the Cashback Network Rewards Pool and $3.50 in direct cashback from Supplier B’s Seller-Specific Reward Pool. They now get the same discount as they got before, but in addition to it, they also have an asset that increases in value when the network grows.Supplier B still get’s $63 for the purchase made by Supplier A, but they also earn “mined” SWC for their part in growing the network.Let’s return to the top of the supply chain: If the next month Company X spends more with Supplier A than they did the month before, and in this way Supplier A grows the network, Supplier A would receive more “mined” SWC. If Supplier A spends more the next month with Supplier B then they did previously, then Supplier B would earn more SWC.Whenever the network grows, the Cashback Value of SWC also increases. This cashback is always limited by the amount you have spent in network. This keeps people from being able to game the system, you can only benefit from the system if you are actually using the system.Can you imagine what would happen if Company X got 25% of their suppliers to do this with them? How about 50%?Whenever more companies join the network the Cashback Value of SWC increases, which in turn increases the NPV value of SWC. The network benefits you even when it’s small, even if it’s just you and one supplier, but the benefits increase when more people join. You want others to join, you even want your competitors to join.If their competitors join, the value of your SWC increases.The benefit you receive is greater the earlier you join. Early adopters are rewarded for taking the risk of adoption.It’s the first, and, as far as we know, the only, economic model that allows everyone to win and all parties to be aligned in a shared goal: to grow the network. Competitors can keep competing with each other, while at the same time working together towards the common interest of growing the network.etbridgeSweetbridge Rewards Use Case: The problem of supplier technology adoption was originally published in Sweetbridge on Medium, where people are continuing the conversation by highlighting and responding to this story.