Mercedes Benz, owned by Daimler AG, has partnered with Icertis to pilot a blockchain scheme to see how the technology can help with the documentation of contracts in the supply chain. According to a press release, the aim is to assist Daimler in vetting third-party suppliers due to the large and intricate supply chains within the industry.
Craftily designed substandard parts often sneak into the automotive industry’s supply chains and they can make their way into dealerships and ultimately the vehicles of customers. This is not only potentially dangerous, but is something that can damage a dealer’s reputation as well as damage the customer’s impression of a brand.
The project is part of Daimler’s supply chain visibility initiative, where suppliers are instructed 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 Has The Potential To Revolutionize The Industry
By using the technology, any operational inefficiencies and failures will be detectable. Should a supplier fail to satisfy their contractual obligations, it will be reflected on the blockchain.
“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 Cars. “The Blockchain prototype opens up completely new ways to make purchasing processes simpler and safer.”
They have successfully developed a prototype and it is being tested at select suppliers under a pilot project. The company is receiving feedback while waiting for supplier and partner approval before expanding.
Wilko Stark, Member of the Divisional Board of Management at Mercedes-Benz said: “Blockchain technology has the potential to fundamentally revolutionize our procurement processes, and could affect nearly the entire value chain. Global supply chains are becoming increasingly complex. With our Blockchain prototype, we are in the first step testing one of diverse possible applications with the aim of increasing transparency beyond our direct suppliers”.
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