For a long time, when big automotive companies first started examining the possibility of using Blockchain in this industry, they could conclude that compliance is one area that can take advantage of this technology. Blockchain is relatively stable, and so it can be used as a tool to trace things, right from the supply chain of a fruit or the purchase of non-fungible tokens (NFT). Companies can efficiently distribute it among different associates or partners, and you also get complete confidentiality of data. It can be used as a trust machine. From this, the automotive industry saw an enormous scope to use Blockchain in their supply chains. With this, they could quickly ascertain where all the components of the cars came from.

Even an average car has thousands of parts like screws, cup holders, seats, brakes, etc., that make up your car. Automakers produce only some parts, and for the rest, they work with hundreds of suppliers. Apart from the suppliers, their raw material suppliers are also included in the supply chain.

All the members of this supply chain are eventually responsible for the safety of the final product, the car. They have to work together to ensure that each part or process of an assembly line is according to the required standard and ensure customer satisfaction. This whole process is time-consuming, expensive, and exhaustive. It involves the formation of task forces and conducts audits of every part of this supply chain covering all the manufacturers, part-makers, and distributors. In September 2020, the European Union passed new regulations that proposed the requirements for the approvals, the testing, and how many checks to be conducted in the region.

How Blockchain can simplify compliance in the Automotive Industry

By the end of 2018, the renowned French carmaker Renault is working to create a solution based on Blockchain that would unite all their suppliers on a single platform. This platform would also be used to certify the compliance of all the required components right from the design process to the final production. In the last part of 2020, they conducted a successful trial with some equipment manufacturers where these associates were able to share and access compliance details with the data available. All this could happen in near real-time.

After the successful trial, they began getting new members on board and started this process in three of Renault’s partner factories.

This platform was designed for the whole industry according to their rules and regulations, especially in Europe in the first step. Due to this, not only large automotive companies but also small suppliers and manufacturers benefit from compliance information, thereby reducing the costs and efforts of an audit. The process was simple now. Earlier, they had to form a task force for compliance for the parts they manufacture, but now any supply chain members can access compliance information with a few clicks.

They have made more companies join their platform, and they have also started to experiment with the data and the information exchange. The system helped them conduct swiftly and more precisely as they had increased visibility in the supply chain.

These companies also started to look for other means to operationalize the data, which helped them refine their sales and purchasing methods. 

As this software became an essential segment in car production, and with the ease of tracing parts and components, it will be necessary to track software versions to ensure adaptability according to the rest of the vehicle.

Blockchain has proven to be very useful for the supply chain associates to work together and better. Apart from automotive, many industries like foods, pharmaceuticals are investing a lot in blockchains. It would help them to make their supply chains more transparent and flexible. This makes their supply chains more efficient as well as sustainable. Blockchain will hopefully open more ways for organizations and suppliers to work together better. Product compliance is only the starting.