Daimler Tests Blockchain Security Tech on Supply Contracts

Daimler AG’s Mercedes-Benz unit has begun using a blockchain security system in pilot programs with select suppliers.

Blockchain technologies—similar to those used for Bitcoin digital payments and other crypto-currencies—use a decentralized network to share data. Proponents maintain that such systems are virtually impossible to hack.

In addition, Mercedes believes blockchain improves transparency, safeguards confidential information and can help ensure companies throughout its supply chain adhere to the carmaker’s standards related to business ethics, compliance, environmental protection, human rights, safety and working conditions. The system also could be used to track the origins of components and raw materials.

Mercedes is developing the supplier system with Icertis, a Bellevue, Wash.-based provider of cloud-based contract management systems. The carmaker says the technology could “fundamentally revolutionize” its procurement processes, affecting nearly the entire value chain. But company officials caution that the effectiveness depends on data quality and the level of digitization.

Daimler also is evaluating the use of blockchain systems in other applications. The carmaker is part of the Hyperledger consortium to develop blockchain technologies and began testing blockchain-based financial transactions in 2017.