Cobalt Supply Tracking using Blockchain in Automotive Industry
Blockchain is expected to become one of the most important and indispensable technologies for the automotive industry throughout the world. With its unmatched features offering security, traceability and transparency of information and transactions, blockchain has utmost potential to strengthen the automotive supply chain process. In this respect, leading car makers are experimenting with the use of blockchain technology to trace supplies of Cobalt – a key ingredient used in electric car batteries. The concept is being pursued in a bit to tackle labor exploitation and enable greater sustainability with procurement of materials used in automotive manufacturing.
Cobalt is an integral component in manufacture of Lithium-ion batteries which are used extensively in electric cars and its sustainable sourcing has become a major challenge for car manufacturers over recent years. Using a transparent and reliable shared data network to trace Cobalt is expected to significantly boost supply chain sustainability, as any information about the material’s origin would not be prone to alteration.
In 2019, Swedish multinational car manufacturing company Volvo became the first carmaker to utilize blockchain technology to implement global traceability of Cobalt for use in its batteries for the XC40 Recharge P8 car, Volvo’s first fully electric car. The company partnered its two battery suppliers; CATL of China and LG Chem of South Korea with a leading blockchain technology firm to implement the initiative. CATL and LG Chem utilize blockchain technology across their supply chains independently, with technology firms Circulor and Oracle implementing it for CATL and Responsible Sourcing Blockchain Network (RSBN), along with IBM operating the technology at LG Chem. By introducing blockchain application in Cobalt procurement, Volvo has been able to acquire several attributes, including Cobalt’s origin, weight, size and other information to establish consistent behavior with OECD supply chain guidelines.
Ford, another automotive manufacturing giant has been pushing since 2019 to establish supply chain transparency in Cobalt mining using blockchain technology with IBM. The US-based company also acquires its electrical batteries from LG Chem, and procures Cobalt from China’s largest Cobalt producer, Hayou Cobalt. By implementing their supply chain over IBM’s blockchain platform, Ford would be able to trace mined Cobalt from all the way from underground reserves to LG Chem’s cathode plant in South Korea, to one of Ford’s manufacturing plants in the US. Regarding the initiative, Ford has said that they aim to create an “immutable audit trail” for Cobalt supplies on the blockchain while also ensuring greater transparency and commitment to curb labor exploitation to ensure child-mined Cobalt is not used in their Lithiu-Ion batteries. The project will be built using IBM’s blockchain platform, powered by the Linux Foundation’s Hyperledger Fabric.
Other car manufacturing giants have also tested blockchain applications in various supply chain processes over the years. German automotive brand Mercedes-Benz has partnered with blockchain experts at Circulor to track CO2 emissions in the environment using blockchain. Mercedes is also using blockchain to track secondary material across supply chains in battery manufacturing. Likewise, globally renowned automotive company BMW announced its plans to launch its blockchain-powered supply chain management solution called PartChain in 2020. The focus of the company is also to increase transparency and traceability of components and raw materials used in automobile production.
Blockchain’s general momentum in the automotive industry
According to a study by IBM, 62% executives from leading automotive companies believe that blockchain will prove to be a disruptive technology for the auto industry. It was also found that around 50% of the so-called leaders in automotive manufacture have plans to implement their own commercial blockchain network by 2021. Another manifestation of the auto sector’s invigorating interest in blockchain was seen with the launch of the Mobility Open Blockchain Initiative (MOBI) in 2018, where leading automakers came together with prominent blockchain and technology startups. The event was also attended by premier organizations such as Accenture, ConsenSys and IBM, along with institutions such as World Economic Forum also involved. A second edition of the MOBI also took place in February 2019 at the BMW Group IT Centre in Munich.
Blockchain application in vehicular space
Blockchain based automotive supply chain systems could track individual car parts that may get lost, stolen, damaged or replaced during delivery. Car manufacturers would have complete access to the transparent journey of each piece. Moreover, blockchain can also store different bills and quality inspection records established during the manufacturing process. This includes all kinds of transactions, payments and taxes, which can also be updated throughout the lifecycle of each part. In addition, blockchain has potential applications throughout the vehicle lifecycle as well, such as smart insurance, vehicle safety, buying, leasing and renting cars, etc.
A variety of different blockchain-based initiatives are being introduced by leading car manufacturers. German company Volkswagen is working towards building a blockchain-based tracking system to prevent odometer fraud. It will curb dishonest car sellers that manipulate odometers to produce deceptive mileage values.
Korean car manufacturing giant Hyundai has partnered with iBM to create multiple projects using blockchain and cloud-based AI to aid their supply chain and financing ecosystem. The usage of blockchain is aimed at not only automating manual processes at the company but also reduce cost, enable transparency and improve customer experience.
Furthermore, through the MOBI initiative, General Motors and BMW have partnered towards using blockchain technology in sharing self-driven car data.
A remarkable set of concepts exist and large-scale progress is already being made over the integration of blockchain within different operations of automotive manufacturing. Leading car manufacturers are relying on blockchain to trace Cobalt supplies in battery manufacture and to optimize supply chain. As blockchain becomes better understood among the masses, it is only expected to become a much greater source to many different applications. Other than its adaptation to source Cobalt, it is being used or tested towards other innovative solutions within the automotive industry, such as to track CO2 emissions and create safer autonomous vehicles. Overall, the technology is currently only at its grassroots and within the hands of the bigger players in automotive manufacture. However, it is only expected to grow exponentially within the coming decade and aid towards sourcing of other elements in the car manufacture supply chain, while also providing transparency and immutability to the overall car lifecycle.
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