Mercedes-Benz has developed a platform based on blockchain technology that aims to increase transparency and sustainability in complex supply chains.

The carmaker, a division of the German multinational automotive corporation Daimler AG, has partnered with US -based software company Icertis for cooperating in the development of blockchain tech for supply chain use.

The partners have jointly developed and programmed a prototype based on the technology that allows for the storage of documentations and contracts in complex supply chains.

The project allows for the creation of a transparent and sustainable mapping of sorted documents across the entire supply chain, with the pilot having now entered the testing phase.

Wilko Stark, a member of the divisional board of management Mercedes-Benz Cars, purchasing and supplier quality commented: “Blockchain technology has the potential to fundamentally revolutionise our procurement processes and could affect nearly the entire value chain.

“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.”

Colleague Sabine Angerman, head of purchasing and supplier quality for raw materials and strategy added: “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.”

Mercedes-Benz stated that its parent, Daimler, requires its direct suppliers to vigorously pass on and control standards and contractual obligations regarding working conditions, human rights, environmental protection, safety, business ethics and compliance within the supply chain.

“The blockchain prototype allows a transparent mapping and understanding of this transmission across the entire supply chain. Should one of the sub-suppliers deviate from the contractual obligations, this becomes visible in the blockchain, similar to a secure accounting system,” the company commented.

Sustainability requirements

Placement of contract clauses in the blockchain creates a sustainable transaction book. The disclosure and confirmation of Daimler’s sustainability requirements can be retraced by all supply chain participants, ensuring that global procurement and contractual practices meet the required standards. Confidential information is not visible.

The prototype creates trust in the integrity of the supply chain by disclosing sustainability-related information, without revealing competition relevant information.

A further application is the traceability of components and raw materials. Complex supply chains can be disclosed, the origin of which can be traced across the partners involved. The effectiveness of a blockchain depends on the quality of the data and the level of digitisation.

Mercedes-Benz added that its parent has already been using blockchain technology in other domains. In 2017 Daimler became a member of Hyperledger, a project of the Linux Foundation for the development of blockchain-based technologies and applications based.

Also that year, Daimler and Landesbank Baden-Württemberg (LBBW) jointly used blockchain technology to execute a financial transaction for the first time: Through LBBW, Daimler launched a €100 million “corporate Schuldschein” – a type of private placement – in parallel with the process required by regulatory authorities