Mercedes-Benz Cars and Icertis, a leading provider of enterprise contract management solutions in the cloud, have developed a blockchain prototype for consistent documentation of contracts in the supply chain.
Daimler requires its direct suppliers to pass on and control standards and contractual obligations with regard to 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. Acceptance by suppliers and partners of the blockchain prototype is now being tested in a pilot project, and feedback is being obtained.
Blockchain technology has the potential to fundamentally revolutionize 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.—Wilko Stark, Member of the Divisional Board of Management Mercedes-Benz Cars, Procurement and Supplier Quality
The placement of contract clauses in the blockchain creates a sustainable transaction book. The disclosure and confirmation of the Daimler sustainability requirements can be retraced by all participants in the supply chain. This ensures that global procurement and contractual practices meet the stringent requirements of Daimler AG. 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.
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.—Sabine Angermann, Head of Purchasing and Supplier Quality for Raw Materials and Strategy at Mercedes-Benz Cars
Another 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 digitization. For this purpose Mercedes-Benz Cars will cooperate in partnership with its suppliers.
Daimler has already been using blockchain technology in other domains. Since 2017 Daimler has been a member of Hyperledger, a project of the Linux Foundation for the development of technologies and applications based on blockchain. In the same year, Daimler AG and Landesbank Baden-Württemberg (LBBW) for the first time jointly used blockchain technology to execute a financial transaction: Through LBBW, Daimler launched a €100 million “corporate Schuldschein” in parallel with the process that is required by regulatory authorities. The entire transaction was digitally carried out via Blockchain technology. Daimler is convinced that this technology offers even more potentials along the value chain.