How can Blockchain help the Automotive Supply Chain?

By July 30, 2018 No Comments

The automotive sector is fast approaching a period of wholesale change. The future of this space will be almost unrecognisable when compared to where it is today and will be about more than just vehicles. In its current condition, the industry finds itself exposed to a number of problems like the opaque nature of the space, inefficient recall management and counterfeiting to name a few. These challenges have forced organisations to evolve their supply chain strategy and operations. This is because it looks like an improved supply chain will be an important way to set yourself apart from your competition in this industry.

Cutting Edge, strong, forward thinking technology that can eliminate the problems faced by the automotive industry is something all organisations in this space need to stay ahead of the curve. Today, that technology looks to be Blockchain.

What are some of the advantages of using Blockchain that will help bring order to the automotive industry?

  • Parts Provenance: Fake or duplicate auto parts very often find their way into the supply chain. This causes the possibility for failure as soon as these parts are installed which leads to damage in credibility for both the manufacturers as well as the suppliers. The current process of tracking parts helps automakers to detect fraud parts to a certain degree but these fake parts still manage to find a way to sneak into the supply chain. Blockchain enables the creation of a unique number or ID for every part as well as immutable timestamps, that is, the time since the part was made. To protect authenticity, these blockchain-linked tags can be set into parts.

  • Vehicle Tracking: Another challenge facing the automotive supply chain is the practice of making a sale on a vehicle in a showroom by a car salesman without reporting the sale to the bank that they have gotten a loan from for the same. The money made off of such transactions represents laundered money and is used by the dealer as capital which is used when dealing with suppliers and payroll. The bank can take the required course of action to reprimand the dealer if it is made aware of such incidents but this usually does not happen as the vehicle is sold legally and the capital is already spent. This leaves banks with little room to act. To address such challenges, they need a transparent way to access this information. Blockchain can provide this.

  • Inbound Plant Logistics: Being on time with distribution of deliverables is very important to being sure of efficiency and transparency across the supply chain. As a result, manufacturers have to coordinate efficiently with other parties of the inbound chain to deliver parts on time. A blockchain powered solution in tandem with Internet of Things sensors can give participants of the supply chain who have required access with a precise and transparent view of the product quantity, status and any other important data about it. This would be of great help to OEM plant manufacturers to plan their production schedule with more accuracy, increase traceability and bring order to the way goods flow. This would allow suppliers to optimise inventory, eliminate incidents of lost or wrong orders as well as decreasing the cost of warehousing.

  • Securing Car Applications: The current car applications allow people to do many things like car sharing, remote monitoring, route sharing, etc. Being able to do things like this is dependent on data shared by these people. The challenge in the current system is that the safety of this data is questionable. Blockchain can assure all parties of data security to do its distributed and immutable nature.

  • Insurance Processing: In today’s environment of a supply ecosystem with many partners, auto companies have to work with multiple insurance companies to effectively manage auto insurance. OEMs could use Blockchain and Smart Contracts to bring order to the whole process for the transfer and management of assets like auto insurance, loans and registration to name a few.


This industry is the main source of revenue, stability and pride in many countries across the world. If members of this industry leverage Blockchain as well as Artificial Intelligence and Machine Learning, automakers can eliminate the drawbacks of the current system by fostering transparency, bringing order to the various processes and provide entities involved with a variety of value added services.


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