How Tesla And BMW Are Leading A Supply Chain Renaissance With Blockchain

The list of enterprises that have turned to blockchain in order to improve their supply chain production processes just got bigger, with two very significant names. In the past week, BMW released details about their project called PartChain that utilize blockchain technology in their logistics operations. Another big name, Tesla Inc, was also involved with a blockchain pilot project that provided improved sea waybill information and thus efficiencies for all participants in the project ran by a large shipping consortia. This comes as no surprise as, previously, large enterprises like Walmart and Nestle utilized blockchain as part of their involvement in IBM’s Food Trust provenance project. Interestingly, in all those cases the preferred blockchain protocol was Hyperledger Fabric, which is establishing itself as the dominant protocol for supply chain applications.

The blockchain consortia Global Shipping Business Network (GSBN), formed just a year ago, consists of the industry-leading ocean carriers operators like CMA CGM, COSCO SHIPPING Lines, Evergreen Marine, OOCL and Yang Ming and port terminals like COSCO SHIPPING Ports, Port of Qingdao, PSA International, and Shanghai International Port Group (SIPG) and Hutchison Ports. The GSBN is using the Hyperledger Fabric blockchain and recently did a pilot project with terminal operator Shanghai International Port Group SIPG and ocean carrier, COSCO. In this specific project, in line with the industry trend of digitalization of the usually very paper-intensive process, the handling of documents was done on a blockchain. Before, the shipping companies and the port needed to check and clear the paperwork separately, but now with the use of blockchain technology they are able to see the same amount of data at the same time and sign it off seamlessly. The containers filled with Tesla auto parts were able to be released faster with accelerated the cargo pick up with the one-stop, zero-latency and zero-touch blockchain advantage using the Hyperledger Fabric protocol. The pilot was technically supported by CargoSmart, a leading shipment management technology solutions provider based out of Hong Kong, which leveraged Hyperledger Fabric in order for the ultimate customer, Tesla, to receive the auto parts faster and cheaper. Recently, CargoSmart further enhanced the application to display laden gate out, appointment date, and terminal release, enabling shippers to have better visibility of their cargoes.

The GSBN aims to accelerate digital transformation of the shipping industry. It intends to provide a platform for all shipping supply chain participants to work collaboratively to accelerate technology innovation and develop solutions through trusted and secure data exchange platforms.

Similar to Tesla, the German automaker BMW, the world’s fourteen-largest producer of motor vehicles, looked into blockchain in order to optimize their processes, and are taking it a step further by starting their own blockchain initiative called PartChain.

One of the members of the board of management of BMW AG responsible for purchasing and supplier network, Andreas Wendt have explained that PartChain adds in an extra layer of tamper-proof and verifiable collection of data in their supply chain processes. While the first pilot was just to trace front lights, the roadmap is to also include raw materials, and the platform will provide end-to-end transparency and traceability, from the mine to the factory.

This move is designed to take the digitalisation of purchasing at the BMW Group to the next level. Our vision is to create an open platform that will allow data within supply chains to be exchanged and shared safely and anonymised across the industry.

It’s no shock that large automakers like Tesla and BMW are taking the lead in innovating and improving their supply chain processes. The benefits driven from using blockchain, like improved cost savings, enhanced traceability and increased transparency, are strong drivers for such innovations. In 2018 the specialized consortia Mobility Open Blockchain Initiative (MOBI) was co-founded by BMW Group and 120 other leading automotive, mobility and technology companies. The future is to connect as many counterparties as possible on the same network, and using advanced new technologies like Internet of Things, artificial intelligence, enhanced GPS, 5G wireless and, of course, blockchain are the stepping stones in a new connected future.