BMW accelerating blockchain use

BMW accelerating blockchain use after successful supply chain pilot

The German carmaker is aiming to ensure raw materials and components are fully traceable in its ‘highly complex’ international supply chain

BMW Group has announced plans to extend and accelerate its use of blockchain technology following a successful pilot program last year.

The German car-making giant believes blockchain could have established use cases throughout the automotive industry—but for now, its focus is using this method of tamperproof data sharing to ensure the provenance of raw materials and components is fully traceable in its international supply chain. 

Last year’s initial trial saw BMW Group successfully purchase front lights, and the company now wants to expand the project to a broader range of participants. Ten suppliers are going to take part over the coming year, the company said in a release.

Car batteries use a lot of cobalt, which must be transparently sourced to show it was mined responsibly and legally (Photo: BMW).

The experiment with the front lights had focused solely on tracking the progression of the parts through BMW’s complex and multi-stage supply chain.

The solution is known as PartChain, and utilizes a blend of blockchain and cloud-based technologies from the likes of Microsoft Azure and Amazon Web Services.

The automaker has big plans for PartChain, according to Andreas Wendt, who is responsible for BMW’s purchasing and supplier network.

“This move is designed to take the digitization of purchasing at the BMW Group to the next level,” Wendt said. “Our vision is to create an open platform that will allow data within supply chains to be exchanged and shared safely and anonymized across the industry.”

Instant transparency

According to the BMW Group, “considerable effort” is currently required to track a component’s origin or supply route—adding hurdles to already complex supply chains that span the globe. Many participants end up managing data separately, and IT systems are often unable to communicate with one another. As well as reducing the risk of manipulation, the carmaker hopes to become more efficient by delivering immediate data transparency “at the push of a button.”

Another of the company’s goals for PartChain is to eventually achieve complete traceability of raw materials from “mine to smelter.” 

That’s not just about supply chain efficiency. In January 2019, Ford participated in a blockchain pilot focused on tracing the source of cobalt, which is needed in batteries of electric cars. It is mined heavily in the Democratic Republic of Congo, where illegally mined “blood cobalt” is as much of a problem as blood diamonds. 

In recent years, the carmaker has been petitioning for automotive and mobility companies to work together—linking their business processes and coordinating more closely. BMW co-founded the Mobility Open Blockchain Initiative (MOBI) in 2018 to further this goal, warning that common standards are needed for this technology to achieve its full potential. The company now says it is prepared to share PartChain with the 120 firms—including Ford, GM, Renault, and Honda—already involved in this cross-industry initiative.

Blockchain goes mainstream

As Modern Consensus noted in its list of the 100 Most Influential People in Crypto 2020, this move by BMW Group is part of a wider trend. Blockchain is moving from an experiment to the mainstream, and the emphasis now is on firms who are actually using this technology in a real-world setting.

Toyota is another carmaker that’s set to start utilizing blockchain more extensively throughout its business processes this year. This is likely to extend beyond supply chains—and could transform the way customers manage their personal information and manage their digital identities. Like BMW, the Japanese company is also planning to collaborate with others in the industry.

An in-depth report by Deloitte recently revealed that the automotive industry isn’t alone, either. A survey revealed that 80% of companies believe digital supply chains will be the norm in five years’ time. Just 10% currently use blockchain, but projections suggest that it will be adopted by 56% come 2025.

However, blockchain may not serve as the single silver bullet that’s needed to transform supply chains in manufacturing. The report suggested that a combination of 11 technologies will be needed to tackle the challenges many businesses currently face, including artificial intelligence, robotics, cloud computing, and automation.

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Connor Sephton is a journalist with an interest in cryptocurrencies, personal finance, and financial inclusion—as well as the challenges the crypto industry faces in achieving mainstream adoption. He owns cryptocurrencies.