Along with other innovative emerging innovations, Blockchain is being actively promoted in many business fields. Still, the perception of this latest business method has some large holes. The article highlights the potential of Blockchain supply chain development for the automotive industry, technology’s mechanics and strength, and what it could mean for the supply chain C-suite.
Put simply, the blockchain technology has provided the foundation of a new type of internet by enabling digital data to be transmitted but not replicated. Picture a Google spreadsheet which is shared thousands of times over a computer network for a better representation of the protocol. Further, imagine that this network is built to update this spreadsheet periodically, and you have a clear idea of what is blockchain. Additionally, add characteristics of blockchain to that spreadsheet, like an immutable ledger, consensus mechanism, cryptographic encryption, and more. It makes it an ingenious invention that, if used as the underlying infrastructure, can revamp the entire automotive supply chain.
Advantages of Blockchain for Automotive Supply Chain
As blockchain is implemented to speed up administrative processes in supply chains, the additional costs incurred in the system are automatically minimized, thus maintaining transaction protection. Eliminating the supply chain middlemen and intermediaries reduces the risks of fraud, duplicates the commodity, and also saves money. Payments may be handled inside the supply chain by customers and suppliers using cryptocurrencies instead of customers and suppliers, rather than depending on EDI. It would also increase productivity and reduce the chance of missing goods with correct record keeping.
Trust and Security
Trusting with multiple participants in complex supply chains is crucial for smooth operations. For example, if a manufacturer sells his goods with suppliers, he/she should be able to rely on them for upholding safety standards at the factory. Also, trust plays a key role when it comes to regulatory compliances such as custom enforcers. Blockchain’s irreversible role in the supply chain is well-designed to avoid tampering with and confidence building. The blockchain avoids the threats that come with centrally controlled data by storing data through its network.
Its infrastructure lacks central vulnerability factors which can be abused by computer hackers. The internet today has security concerns common to us. To secure our identity and properties online, we all rely on the “Username / Password” scheme. Protection mechanisms used by blockchains use encryption technology.
The public and private ‘keys’ are the reason for this. A ‘public key’ (a long, randomly generated string of numbers) on the blockchain is a user’s address. Cryptocurrencies that are sent over the network are registered as corresponding to that account. The ‘private key’ is just like a code that provides access to its owner’s digital properties. After the data has been stored on the blockchain it is incorruptible. If this is valid, it would also entail the safeguarding of the private key by printing it out and making what is called a paper wallet to secure digital properties.
Blockchain for automotive supply chainSource: Deloitte
How can it Benefit the Automotive Supply Chain?
Automotive supply chain managers can use blockchain to multiple supply chain problems, like keeping complex databases and monitoring products and services. A far less corruptible and better-automated alternative to centralized databases is another advantage.
In the field of monitoring and testing products and services, a blockchain-based automotive supply chain management system allows for accurate record-keeping and monitoring of provenance as product information can be accessed via embedded sensors and RFID tags.
Blockchain may trace the past of a commodity right from its origin to where it is in the present time. Also, this form of exact provenance monitoring can be used to detect fraud in any part of the supply chain.
The car supply chain is a highly dynamic and big field with numerous participants, ranging from parts suppliers, producers to sellers. Delivering real customer value includes a review of existing infrastructure and business processes, as well as solutions that respect protection, confidentiality, and authorization permissions. Blockchain can prove an ideal solution. Blockchain can be used by automotive manufacturers to protect their brands against counterfeit goods and to build customer-centered business models.