Blockchain technology offers businesses a unique opportunity to build transparency into their systems – and Mercedes-Benz Cars is doing just that.
Using blockchain, the company aims to consistently document contracts and prove that it is meeting its standards and contractual obligations with respect to business ethics and compliance, environmental protection, human rights, safety, and working conditions within the supply chain.
“The transmission of contracts to each member of the supply chain is the prerequisite of cooperation with our suppliers, especially in terms of sustainability and ethical conduct,” said Sabine Angermann, head of purchasing and supplier quality for raw materials and strategy at Mercedes-Benz. “The blockchain prototype opens up completely new ways to make purchasing processes simpler and safer.”
The promise of blockchain
By providing a transparent and sustainable mapping of the transmission of contracts, the blockchain prototype will reveal any violations of contractual obligations committed by sub-suppliers. It serves as a sustainable transaction book where every step on the supply chain is both verified and traceable forever. Confidential information is not visible, however.
Blockchain therefore establishes the integrity of the supply chain. And as global supply chains continue to grow in complexity, the use of blockchain could affect “nearly the entire value chain,” said Wilko Stark, a member of the divisional board of management for procurement and supplier quality at Mercedes-Benz. “Blockchain technology has the potential to fundamentally revolutionize our procurement processes.”
Mercedes-Benz will help its suppliers get started with blockchain and aims to establish the technology among all suppliers in order to achieve more sustainability.
Other blockchain projects for automobile supply chains
According to Cointelegraph, in September 2018, Porsche AG also announced plans to expand its investment in blockchain- and AI-related startups, with the hope of “gain[ing] access to trends, new technologies, and business models” within the industry. In a press release from September 2018, Porsche noted that Porsche Ventures’ latest investment was a minority shareholding in a blockchain startup that allows customers to digitally track and manage the history of their vintage vehicles.
Another car manufacturer, Audi, announced last year that it had been testing blockchain’s ability to increase the security and transparency of its distributional network as well.