BLOCKCHAIN TECHNOLOGY- THE FINEST WEAPON TO TACKLE SUPPLY CHAIN FAILURES AND BOOST ECONOMIC RECOVERY
Resilience in supply chains depends on trust, transparency and integrity, which can be improved through responsible deployment of blockchain technologies that offer a “shared truth”. Block chain technology can help tackle supply chain failures exposed by the COVID-19 pandemic and also boost the economic recovery process. Crises such as the corona virus pandemic dramatically increase pressure on governments and businesses to maintain resilient supply chains. The pressure created by the COVID-19 outbreak on global trade systems highlights an urgent need for global cooperation to maintain and strengthen the resilience of international supply chains which depends on trust, transparency and integrity, and can be improved through responsible deployment of blockchain technologies that offer a “shared truth”.
Blockchain – Panacea for Indian auto sector?
The automotive sector is ever-evolving and industry players are constantly driving innovations to increase efficiency, improve security, reduce environmental impact, and refine customer experience. Blockchain, the public digital ledger technology will be the next major disruption in the auto sector. The coronavirus crisis has given a push towards the wider adoption of advanced digital technologies in the struggling automotive sector and blockchain could be one among many technologies that will be gaining prominence in times to come. India has been comparatively slow in leveraging the technology but it is slowly warming up to the emerging opportunities in this domain.
Blockchain, primarily associated with cryptocurrencies, is a decentralized, distributed digital ledger for maintaining a permanent and tamper-proof record of transaction data. No data stored on the blockchain can be modified or erased without all of the participants agreeing to the change which prevents any possible fraud. Auto OEMs in India have demonstrated a willingness to adopt emerging technologies in the last decade with even India’s leading tyre OEMs testing multiple blockchain pilots.
The Blockchain technology is redefining a new chapter in the global automotive industry because of its capacity for secure, verified digital transactions in real-time to introduce cost savings, faster and more efficient operations, and better service. Global car manufacturers have been making investments in the space with the launch of MOBI (Mobility Open Blockchain Initiative) in that brings together major automakers (BMW, General Motors, Ford and Renault) and leading blockchain and technology startups and premier organizations for vehicle identity blockchain standard (VID) that creates a digital twin of each vehicle in the blockchain.
Auto OEMs in India have also demonstrated a willingness to adopt emerging technologies with even India’s leading tyre OEMs testing multiple blockchain pilots. The viability of a blockchain platform improves with increasing adoption and this will only gain traction in the coming years. To succeed in the post-COVID new normal world, Indian auto OEMs will need to transform and incorporate digital solutions at an unprecedented scale. Blockchain is a good solution to track & improve visibility across a multi-tier supply chain network structure to reduce overall risk.
The government is also considering the potential usage of blockchain technology and the need for shared infrastructure for its different use cases.
EMERGINGBLOCKCHAIN- USE IN AUTO SECTOR
Many business models have vast lacunae and face a number of challenges that blockchain can help address like increasing scalability of shared fleets by allowing fractional ownership and external investment through blockchain. Globally, Daimler has launched a Crypto Car Wallet to make transactions easier. The data can be transferred to insurance companies and all processes that require manual data insertion (transaction costs and details) could be streamlined.
On the supply chain side, blockchain is being used at various levels- from verifying the source of materials used in a car’s construction to vehicle shipments which can be optimized by the seamless integration of digital contracts, shared inventory and logistics information, pricing, invoicing and payments. Disaggregating electric vehicles into core components for chassis, battery and onboard systems and managing visibility across the value chain is another use in the EV industry
Critically, providing distinct and immutable tags for spare parts using blockchain can help prevent counterfeit issues, expedite vehicle recalls if required, and increase vehicle safety as a result. Interestingly, General Motors has been planning to deploy blockchain technology with a patent for a blockchain-powered solution to store and manage data from autonomous vehicles.
The Indian automotive industry can gain a lot from the adoption of blockchain as the technology offers multiple directions for development in bolstering the supply chain, safety and security of vehicles, and car servicing. This is turning out to be critical since blockchain as a technology is proving to be critical as an anti counterfeiting tool. However, the challenge is not about finding diverse applications, but the willingness to move beyond POC/pilots particularly in areas such as supply chain, procurement, inventory tracking, shared vehicle ownership etc.
Blockchain technology is one of the most revolutionary modern technologies today. Its conception in 2008 has been revolutionary, disrupting the finance landscape and giving rise to a number of possibilities in the healthcare sector. It is proving to be critical in the Auto sector. The decentralized nature of blockchain has led to a great deal of success with the ongoing evolution of blockchain technology, and it continues to grow, especially in manufacturing, distribution, public sector and infrastructure.
This technological innovation was originally designed as the framework for the now globally renowned crypto currency Bitcoin, but has since expanded to be successfully utilized in many different avenues across the board. The highly adaptive technology is invading new industries on a daily basis, and it’s no surprise to find it in automotive. Blockchain is revolutionizing the automotive industry in multiple ways, going so far as to affect change at its roots.
For years now, the automotive industry has dealt with an influx of counterfeit car parts issues. Counterfeit car parts are a monumental problem for this global industry and the consequential market. In fact, counterfeit car parts are costing the automotive industry and drivers as a whole around $45 billion dollars a year. The damage that the counterfeit industry is doing directly affects driver and passenger safety as there is no way of guaranteeing that these counterfeit products are manufactured in the same way as their authentic counterparts.
Blockchain happens to be one of the strongest solutions in progress out there today.