How blockchain technology can revolutionize automobile traceability
When multinational automakers initially started looking into the potential use cases for blockchain technology in their sector, compliance was rapidly highlighted as a promising area. Blockchain can be a very effective tool for tracing anything, from the supply chain for an avocado to the ownership of a non-fungible currency, because it is immutable (NFT). It can operate as a trust machine because it can be spread across multiple participants while maintaining data confidentiality. Automakers rapidly saw the promise of blockchain technology in their own supply chains, allowing them to more easily determine the origins of all of the components in each vehicle.
Some, but not all, of the automobile parts are manufactured by automakers, while the rest is often outsourced to hundreds of suppliers. There are participants in the supply chain who generate raw materials in addition to component providers.
Everyone involved in this supply chain is ultimately responsible for the car’s safety. Working jointly to guarantee that each part, procedure, and assembly fulfills the standards necessary to assure customer safety and satisfaction is a time-consuming and costly process. From glassmakers and metals manufacturers to components makers and distributors, task groups must be formed and audits done across the supply chain. New laws in the European Union, which went into effect in September 2020, increased the criteria for approvals, testing, and the number of vehicle inspections undertaken across the continent.
Using blockchain technology to make compliance in the automobile industry easier
Renault has been collaborating with IBM since the end of 2018 to develop a blockchain-based solution that would bring together all of their suppliers on a single platform to validate the conformity of all car components from design to manufacture. Last fall, a successful trial was held in collaboration with multiple equipment manufacturers and at Renault’s Douai facility. All participants were able to access and share compliance data in near real-time. Following the trial’s success, XCEED (eXtended Compliance End-to-End Distributed) began additional onboarding members, beginning with three Renault partner plants.
Large automobile companies and suppliers can benefit from compliance information sharing and reduced costs and effort associated with audits, thanks to an industry-wide solution that is also tailored to regulatory requirements. Anyone in the supply chain can do it with a few easy clicks rather than forming a task force to gather and check a part’s or series of parts’ compliance history.
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Companies can begin to experiment with various ways to make use of this information exchange as more organizations join XCEED. Because of the increased visibility in the supply chain, recalls could be carried out with more precision and speed. Companies should also start searching for methods to operationalize this information and use it to improve their sales and purchasing strategies. Software is a more important component of automobiles. The ability to track parts and components will become increasingly critical for tracking software versions and assuring compatibility with the rest of the vehicle.
Blockchain technology is a tried-and-true method for improving supply chain collaboration. Companies are continuing to invest in blockchain to make their supply chains more durable, automatable, and transparent, ranging from food to pharmaceuticals. Supply networks that are more efficient are also more long-term. Compliance is merely the beginning of enabling new methods for businesses to work with their suppliers and vice versa.