Mercedes-Benz launches a breakthrough blockchain-prototype to deliver sustainable supply chains

Mercedes-Benz Cars and enterprise contract management solution provider, Icertis have entered a partnership to enable a consistent documentation of contracts in the supply chain.

Presently, Daimler requires its direct suppliers to vigorously pass on and control standards and contractual obligations with regard to working conditions, human rights, environmental protection, safety, business ethics and compliance within the supply chain. The launch of its Blockchain prototype, however, will allow for a transparent mapping and understanding of this transmission across the entire supply chain.

Should one of the sub-suppliers deviate from the contractual obligations, it will become visible in the Blockchain. Acceptance by suppliers and partners is now being tested in a pilot project, and feedback is being obtained by the company.

"Blockchain technology has the potential to fundamentally revolutionise our procurement processes, and could affect nearly the entire value chain,” explained Wilko Stark, Member of the Divisional Board of Management Mercedes-Benz Cars, Procurement and Supplier Quality. “Global supply chains are becoming increasingly complex. With our Blockchain prototype, we are in the first step testing one of diverse possible applications with the aim of increasing transparency beyond our direct suppliers."

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The disclosure and confirmation of the Daimler sustainability requirements can be retraced by all participants in the supply chain, boosting credibility and transparency. It also ensures that global procurement and contractual practices meet the requirements of Daimler AG. The prototype will create trust in the integrity of the supply chain, without revealing competitor information.

“The transmission of contracts to each member of the supply chain is the prerequisite of cooperation with our suppliers, especially in terms of sustainability and ethical conduct. The Blockchain prototype opens up completely new ways to make purchasing processes simpler and safer,” says Sabine Angermann, Head of Purchasing and Supplier Quality for Raw Materials and Strategy at Mercedes-Benz Cars.

The intuitive and user-friendly operation of the Blockchain service platform is significant for its success. It will also enable the increased traceability of components and raw materials across the supply chain. However, the effectiveness of the Blockchain will rely on the quality of the data and subsequent level of digitisation.