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April 23, 2019

Volkswagen using blockchain for transparent supply chain

Optimising supply chains, eliminating error sources and guaranteeing social and ecological standards are the goals of a collaboration between the Volkswagen Group and Minespider.

By Olly Wehring

Optimising supply chains, eliminating error sources and guaranteeing social and ecological standards are the goals of a collaboration between the Volkswagen Group and Minespider.

The blockchain specialist is helping with a pilot project to achieve global supply chain transparency for lead.

"Blockchain technology makes it possible to trace the raw material back to the point of origin by means of digital certificates. The group plans to use this technology for further raw materials and their supply chains," the automaker said in a statement.

VW plans to use blockchain to ensure more transparency and security in the supply chain. Lead's point of origin is either a mine or recycling source.

The pilot project will involve suppliers and sub-suppliers that deliver more than two thirds of the group's total lead starter battery requirements.

Minespider has developed a proprietary protocol built on a public blockchain. A multi-layer architecture guarantees security of the sensitive supply chain data despite the open source approach. One layer of the protocol contains generally accessible information, a second layer contains the private data blocks which cannot subsequently be changed, and the third layer is the encryption layer.

The advantage versus a private blockchain is that everyone – from suppliers and sub-suppliers through to those directly responsible for mining or recycling the raw material – works with one system, even if several supply chains are involved.

This creates a common digital infrastructure that allows the transparent exchange of information.

"Digitalisation provides important technological instruments that enable us to track the path of minerals and raw materials in cross-border supply chains in ever greater detail," said Marco Philippi, VW's head of strategy group procurement.

"We will use the blockchain technology to make our processes more transparent and secure."

The pilot project will define the framework for broader collaboration. Following the successful completion of this pilot, it is planned to use the technology for further raw materials and their supply chains.

"We are witnessing a transformation of global supply chains," Nathan Williams, CEO of Minespider, said.

"Companies have the right to know that their suppliers are operating responsibly and with blockchain we finally have the tools to prove it."

The collaboration is the outcome of a 'Hackathon for Supply Chain Transparency' held in 2018 where Minespider came out on top.

During that event 100 people from various disciplines worked together to further develop innovative, digital solutions for more supply chain transparency.

The hackathon series continues this year. 

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