Mercedes-Benz jumps onto the blockchain bandwagon
ALTHOUGH complicated to implement, blockchain is an interesting technology when it comes to providing transparency and accountability.
For that very reason, a significant number of businesses are exploring the deployment and use of blockchain solutions within their supply chain functions — including Mercedes-Benz.
The German automaker recently announced that it is trialing blockchain technology with a partner in order to bring more transparency in its complex supply chain.
Mercedes-Benz, a division of Diamler, requires its direct suppliers to vigorously pass on and control standards and contractual obligations with regard to working conditions, human rights, environmental protection, safety, business ethics and compliance within the supply chain.
“Blockchain technology has the potential to fundamentally revolutionize our procurement processes, and could affect nearly the entire value chain,” said a member of the divisional board of management at Mercedes-Benz Cars, Procurement, and Supplier Quality Wilko Stark.
“Global supply chains are becoming increasingly complex. With our Blockchain prototype, we are in the first step testing one of the diverse possible applications with the aim of increasing transparency beyond our direct suppliers.”
Supply chains thrive on the blockchain
According to the team, blockchains allow for the transparent mapping and understanding of transmission across the entire supply chain.
“Should one of the sub-suppliers deviate from the contractual obligations, this becomes visible in the blockchain, similar to a secure accounting system,” explained the team.
The placement of contract clauses in the blockchain creates a sustainable transaction book. As a result, the disclosure and confirmation of the Daimler sustainability requirements can be re-traced by all participants in the supply chain.
This ensures that global procurement and contractual practices meet the stringent requirements prescribed by Daimler.
Further, the prototype hides confidential information and creates trust in the integrity of the supply chain by disclosing sustainability-related information, without revealing competition relevant information.
Successful blockchains need an ecosystem
“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 Mercedes-Benz Cars Head of Purchasing and Supplier Quality for Raw Materials and Strategy Sabine Angermann.
“The Blockchain prototype opens up completely new ways to make purchasing processes simpler and safer.”
The company’s pilot hinges on the fact that the prototype it has created is intuitive and user-friendly.
The team realizes the importance of building an ecosystem around the blockchain in order for this project to be a success.
Consequently, establishing blockchain technology with all suppliers in the respective supply chain is a fundamental requirement for the achievement of the goal: close cooperation for more sustainability.
Mercedes-Benz said the prototype has already been introduced to suppliers and partners. It is now being tested in a pilot project, and feedback is being obtained.
If all goes well, the project is expected to be scaled up and provide a strong use case to other companies exploring the use of blockchain in the supply chain.