The Role of Blockchain in Automotive Supply Chain Management

The automotive industry has a highly distributed supply chain. A hiccup at one of the many supplier tiers can bring production to a halt.

Blockchain technology can track data in an irrevocable record that’s safe from tampering. It’s used for cryptocurrencies but can also help with legal contracts, property sales and more.

Smart Contracts

Blockchains can automate transactions and streamline the record-keeping process. This is because they eliminate intermediaries and guarantors from the chain of transaction, which reduces risk and costs for both sides. It also allows for better visibility into the status of a shipment and reduces delays.

The immutability of the blockchain network prevents any corruption or modification of the data. The verification of a block is accomplished by thousands of computers and devices, reducing the possibility of human error. Additionally, any computer that tries to modify the data in the blockchain network will be blocked by other computers from entering it, resulting in a tamper-proof and accurate transaction record.

Using smart contracts on a blockchain can help close the procure-to-pay gap and increase efficiency in the supply chain. This would allow sellers to be paid immediately, and buyers to lower their account payable expenses. The technology could also reduce dunning and collection costs, as well as minimize working capital requirements for both parties.

Smart Contrast

The blockchain system enables the secure and immutable storage of automobile records. It prevents records from being tampered with or hacked as it is accessible to only certain people with specific privileges and rights. The blockchain network also has the ability to trace tampering attempts by a node using a consensus algorithm. This helps to improve the security of the data stored on a blockchain network and reduce the risk of hacking or tampering in the automotive supply chain (Ayvaz & Cetin, 2019).

The blockchain system’s transparency features allow consumers to easily verify vehicle history and sources. It can also save companies money by simplifying and organizing financial transactions and order placements. Its documentation and traceability features also help manufacturers maximize their production capacity. Additionally, the blockchain system can reduce costs in departments such as auditing and reducing the need for manual work. It also ensures the integrity of the supply chain by allowing insurance companies to examine vehicle history.

Real-Time Identification

The automotive industry relies on a steady stream of incoming and outgoing materials. From the smallest components to the large-scale vehicles that roll out of factories, every part needs to be delivered on time and in the right condition. If one delivery is delayed, the whole chain experiences a disruption that threatens production and ultimately profits.

Carmakers use just-in-time manufacturing to avoid overstocking. They order materials to arrive at the factory as needed, eliminating the need for large storage facilities and cutting costs. However, this also requires a reliable supply network to keep up with demand and provide a flexible logistics solution when sudden challenges arise.

While technology has improved tracking of parts and materials, it’s impossible to make the automotive supply chain completely immune to all risks. Instead, smart companies are embracing pragmatism and agility. The best way to do this is by leveraging autonomous logistics systems that are capable of prioritizing orders and rerouting deliveries when necessary.


A lack of visibility has a ripple effect throughout an automotive supply chain. For example, when COVID-19-induced manufacturing disruptions shrank one car company’s end product inventory buffer to less than half its normal level, some customers rushed purchases so they could lock in their desired models before they ran out; the reduced supply (along with inflation) ultimately pushed prices up, but the higher price wasn’t enough to deter them from making their purchase.

For automakers, this translates to increased efficiency and resilience, as digitized business documents enable full supply interactions in real time and reduce the likelihood of unmanageable delays just days or moments before vehicles are set to launch. Moreover, transparency can help them avoid costly overproduction that can lead to unnecessary inventory build and lower sales.

BMW, Mercedes-Benz and Volkswagen have joined forces to establish a new joint venture platform called Cofinity-X that offers products and services to connect carmakers with their suppliers. These include applications for carbon monitoring, ethical sourcing and traceability, supply chain resilience and partner data management.

Changes in the Global Auto Industry

The global auto industry has been experiencing some big changes lately. Some big players in the industry are restructuring, while others are establishing themselves in developing countries and emerging markets. Read on to learn more about some of these changes.

China surpasses the United States to become the world’s largest automobile market

The Chinese auto industry has overtaken the United States to become the world’s largest automobile market. Sales in China have increased by double digits for several years. With the exception of the global financial crisis, the Chinese auto market has seen growth.

In the last two years, China’s auto export has grown by a whopping 102 percent. A growing middle class in tier 2 and 3 cities has led to increased demand for small and mid-sized vehicles.

During the first six months of the year, China’s total auto sales soared by 17.7 per cent. Automakers have been encouraged to open new plants in developing markets, and they’re also working to develop cheaper, smaller cars.

U.S. automakers are expanding to developing countries and emerging markets

The global auto industry has seen an impressive 35 percent growth in the last five years, but there is more to the story. In fact, a number of foreign automakers have started to expand into developing countries and emerging markets.

Several large U.S. companies are focusing on these areas, such as Ford, Nissan, and Toyota. They have invested in research and development, as well as manufacturing facilities in these countries to ensure they are competitive.

However, there are many risks involved in entering the market. From currency volatility to geopolitical risk, it is important to be aware of them before entering into a relationship with a country.

Electric vehicles and automated vehicles are key items to watch in 2022

Electric vehicles (EVs) and automated vehicles (AVs) are set to change the auto industry. EVs are a form of clean transportation that can reduce carbon emissions and improve fuel economy. However, they are still in their infancy. Automakers and suppliers face significant risks as EVs become mainstream.

In recent years, a number of major automakers have started putting forward a more comprehensive electrification strategy. These companies see electrification as a way to keep up with regulations and capture market share. They have also begun developing a wider range of models.

Ford expects to have 50 percent of its sales in electric vehicles by 2030. Meanwhile, Volkswagen and BMW both aim to sell at least 50% of their vehicles in this way by the end of the decade.

Toyota retains its status as the leading global automotive group in 2021

Toyota Motor Corporation retained its status as the world’s leading global automotive group in 2021. In 2021, Toyota Motor Company and its affiliates sold 1.3 million vehicles in 200 countries. While the company was unable to achieve its net-zero emission target in the near-term, it still aims to sell 3.5 million electric vehicles annually by 2030.

Toyota’s public messaging on climate policy is generally positive. The company supports the Paris Agreement and has consistently supported Japan’s long-term climate neutrality targets. However, it has limited support for decarbonization of the transport sector.

Last year, Toyota set a goal to invest US$35 billion in the development of electric vehicles. The investment is part of Toyota’s effort to sell 3.5 million electric vehicles a year by 2030. It is also part of the company’s strategy to increase its market share in the battery technology industry.

Chrysler is shedding thirteen thousand workers as part of its restructuring

The auto industry is in a state of crisis. Many companies have laid off tens of thousands of workers in the United States over the past year. However, it’s not all bad news. As long as large stakeholder groups can agree to cut debt and change their stakes, the company can stay afloat.

In the case of Chrysler and General Motors, the restructuring will include closing plants and laying off thousands of workers. These cuts are part of a broad attack on auto workers.

Chrysler and General Motors are following their Detroit counterparts into bankruptcy protection. If they don’t restructure, their factories will close for 11 weeks, through mid-July.

Quality and productivity improvement initiatives are key items to watch in 2022

The latest figures show that the global auto industry is a rather uninspiring place to be in. In fact, global sales were down by more than 25% in the first half of the year. While there were a few notable exceptions such as Nissan and Toyota, the aforementioned titans remained the exception to the rule.

As a result, the auto industry has a lot of room for improvement. There are several things to watch out for in the coming months. For instance, battery supplies are becoming an increasingly important issue as demand for new vehicles skyrockets. If supply can’t keep up with demand, metal prices could see an uptick.