Mercedes-Benz develops blockchain-based system to boost transparency in supply chains

German car-manufacturing giant Mercedes-Benz is developing a blockchain platform aimed at improving transparency in complex supply chains.

According to a February 25 press release, Mercedes-Benz Cars has teamed up with US software developer Icertis to build a blockchain-based system for storage of contracts that can track whether the German company’s suppliers adhere to their contractual obligations regarding working conditions, human rights, environmental protection, safety, business ethics and compliance within the supply chain. The companies have already built a prototype that “allows a transparent mapping and understanding of this transmission across the entire supply chain”.

With the focus of the system being on sustainability, only the relevant contract clauses are visible on the blockchain, while “competition relevant information” remains hidden.  

Wilko Stark, member of Mercedes-Benz Cars’ divisional board of management, commented on the development, acknowledging the potential of blockchain technology.

“Blockchain technology has the potential to fundamentally revolutionize our procurement processes, and could affect nearly the entire value chain,” Stark said in a statement. “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.”

Sabine Angermann, head of purchasing and supplier quality for raw materials and strategy, also highlighted the technology’s potential.

“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,” Angermann said.

As noted in the press release, Mercedes-Menz’ parent company, Daimler AG, already has experience in using blockchain. The company is a member of Hyperledger, a Linux Foundation-led initiative for the development of technologies and applications based on blockchain. In 2017, Daimler and Landesbank Baden-Württemberg utilised blockchain technology to execute a large financial transaction.