Today Mercedes-Benz Cars announced it’s prototyping a blockchain network to enforce supplier contractual obligations, particularly for sustainability and ethical compliance. The project is in partnership with cloud-based contracts company Icertis. The news follows Friday’s announcement of a €1 billion ($1.14 billion) joint venture with BMW for mobility.
The first step in many blockchain projects is standardization. So Icertis is working with Mercedes to make contract documentation more consistent. Mercedes’ supplier contracts include clauses relating to working conditions, human rights, environmental protection, safety, business ethics and compliance. Adherence to these obligations and sustainability, in particular, is logged on a blockchain, so any deviations become evident.
Sustainability-related information is disclosed without revealing competitor-sensitive data.
“Blockchain technology has the potential to fundamentally revolutionize our procurement processes, and could affect nearly the entire value chain,” said Wilko Stark, divisional board member Mercedes-Benz Cars, Procurement and Supplier Quality. “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.”
In recent months ethically sourced minerals for batteries and electric cars has become a hot topic. Last month IBM announced it’s working with Ford to trace cobalt from the Democratic Republic of Congo (DRC). And since last year startup Circulor has been working with Rwandan mines to ensure ethical compliance for tantalum used in Apple batteries.
In the announcement, Mercedes referred to the potential for traceability of components and raw materials.
“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. The Blockchain prototype opens up completely new ways to make purchasing processes simpler and safer”, commented Sabine Angermann, Head of Purchasing and Supplier Quality for Raw Materials and Strategy at Mercedes-Benz Cars.
Daimler is a member of Hyperledger, part of the Linux Foundation. It has also dabbled with a token-based rewards system for staff to encourage environmentally friendly driving. One of its earliest blockchain experiments was in mid-2017 in association with German bank LBBW which involved the issue of a €100 million ($88m) “corporate Schuldschein”, similar to a bond. More recently Daimler Trucks has explored using blockchain to record the origin of commercial truck parts.
Another area of massive blockchain potential is mobility, especially when it comes to autonomous cars. On Friday Daimler and BMW announced the creation of a €1 billion ($1.14 billion) joint venture, unrelated to blockchain. The project covers journeys that span different modes of transport, public electric car charging points, digital parking solutions, ride-hailing and ride sharing.