The concept of blockchain technology is a bit complicated although it is very useful in ensuring the accountability and transparency of the system. We have witnessed a number of companies cutting across the industry taking a plunge into the blockchain, and now another big corporate name has decided to embrace it. German luxury car maker Mercedes-Benz has announced that it has been trialing the blockchain to streamline its supply chain and extract more efficiency out of its value chain. The company also aims to achieve strict compliance of contracts from channel partners via the implementation of open ledger technology.
Just so you know, Mercedes-Benz is a part of Daimler group and is known for putting in rigorous hard work to maintain the quality standards on a number of aspects including environment protection, working conditions, corporate governance, business ethics, and workplace safety. Elaborating on potential benefits of adopting blockchain technology, Wilko Stark, divisional board member of procurement and supplier quality, Mercedes-Benz, said that the blockchain has the potential to revolutionize the procurement process by potentially affecting our entire value chain. Stark further added that adoption of the blockchain is really required especially in the backdrop of the emerging scenarios which are making the handling of global supply chain complex and tricky. With this new blockchain initiative, the company is aiming to make the systems and processes more transparent, and this transparency will go beyond its suppliers and benefit the customers.
The blockchain project team contends that the technology allows a transparent mapping of the processes within the value chain which, in turn, leads to a better understanding of the intricacies involved in the procedures. In case any channel partner deviates from the predetermined standards, the same will become visible on the blockchain immediately; thereby enhancing the transparency and accountability among the channel partners.
With the help of contract clauses in the blockchain, the company can easily create the transaction book which can be used by all the channel partners of a particular supply chain. This will help to ensure that commitments made by participants are fulfilled without any kind of unnecessary lag. Further, it will lead to consistent quality standards throughout the value chain to provide reliable experience to the customers each and every time. This, according to the blockchain team at Daimler, will help ensure that stringent quality standards laid out by the group are met without fail.
However, the implementation of blockchain project is not as easy as it sounds. Mercedes is well-versed with the challenges it would be facing once it decides to implement blockchain on its large and unwieldy supply chain. Deliberating on the challenges, Sabine Angermann who is heading Purchasing and Supplier Quality at the company, said that for the successful implementation of the blockchain, it is absolutely required that all of our channel partners must be provided with the contracts and putting these contracts on the blockchain is indeed a huge exercise. Providing everyone access to the contracts is the most important part for securing the compliance on various ethical and sustainability prerequisites set by the Daimler. The pilot project has really opened up new ways to make the purchase process faster and simpler, Angermann added.
The success of Mercedes’ blockchain pilot project depends on the fact of how intuitive and user-friendly this project turns out to be. Further, the long-term viability of blockchain requires establishing the technology with all the supply chain partners so as to secure compliance from the entire value chain.
Mercedes says it has already introduced the pilot blockchain project to its suppliers and is taking the feedback to identify the specific areas for the improvement. If everything goes well, the company is expected to scale up the pilot project and will use it in a full-fledged manner. The adoption of blockchain by the Mercedes-Benz can easily serve as an example for other automobile companies, and experts believe that it’s just a matter of time before the other car manufacturers also jump on blockchain bandwagon.