Volkswagen Group collaborating with Minespider to use blockchain to trace raw material back to point of origin; pilot project on lead
The Volkswagen Group and blockchain specialist Minespider are collaborating to optimize raw material supply chains, eliminate sources of error, and guarantee social and ecological standards. The two will set up a pilot project to achieve transparency in the the global supply chain for lead.
Starting in April, Volkswagen will work with Minespider to trace the supply chain for lead from the point of origin to the factory. The point of origin will be either the mine or the recycling source. The pilot project will involve suppliers and sub-suppliers that deliver more than two-thirds of the Group’s total lead starter battery requirements.
Blockchain technology makes it possible to trace the raw material back to the point of origin by means of digital certificates. The Volkswagen Group plans to use this technology for further raw materials and their supply chains.
The solution developed by Minespider is a proprietary protocol built on a public blockchain; the Minespider Infrastructure is built on the Ethereum blockchain. Ethereum is currently the dominant player in smart-contract enabled blockchain platforms, and with the flexibility of ERC20 tokens and the robustness of a tested public blockchain, it will provide the best option for the development of a “minimum viable product” (MVP), Minespider says. Nevertheless, the Minespider Protocol is designed to be blockchain agnostic.
One layer of the protocol contains generally accessible information, a second layer contains the private data blocks which cannot subsequently be changed, and the third layer is the encryption layer.
The advantage versus a private blockchain is that everyone—from suppliers and sub-suppliers through to those directly responsible for mining or recycling the raw material—works with one system, even if several supply chains are involved. This creates a common digital infrastructure that allows the transparent exchange of information.
Digitalization provides important technological instruments that enable us to track the path of minerals and raw materials in cross-border supply chains in ever greater detail. Together with Minespider we will use the blockchain technology to make our processes more transparent and secure.—Marco Philippi, Head of Strategy Group Procurement
The pilot project on the supply chain for lead also serves to define the framework for broader collaboration. Following the successful completion of this pilot, it is planned to use the technology for further raw materials and their supply chains.
We are witnessing a transformation of global supply chains. Companies have the right to know that their suppliers are operating responsibly and with blockchain we finally have the tools to prove it.—Nathan Williams, CEO of Minespider
For decades, the Volkswagen Group has pursued the principle that sustainability and social responsibility do not start at the production plant. In a company with international production sites and sales activities in over 150 countries, due diligence is an enormous challenge and a major responsibility. The stated goal is to use industrial raw materials that are extracted sustainably in a socially and environmentally sound manner.
Going forward, Volkswagen will be using blockchain, the technology behind various cryptocurrencies, to ensure more transparency and security in the supply chain.
The present collaboration is the outcome of a “Hackathon for Supply Chain Transparency” held in 2018, where Minespider came out on top. During the event that is one element of the Volkswagen Group’s corporate citizenship, some 100 experts from various disciplines worked together to further develop innovative, digital solutions for more supply chain transparency. The hackathon series continues in 2019.