Blockchain’s potential impacts on automotive supply chains to be discussed at NEWMATEC 2018

Equidato Technologies AG and Ernst & Young will jointly present a concept of blockchain-based automotive supply chain management at next week’s NEWMATEC 2018 Conference at the Partizan Hotel in Tále, Slovakia.

One of the biggest challenges which car makers currently face is supplier relation management. Manufacturers and large suppliers at higher supply chain levels typically use robust ERP systems, whereas suppliers at lower levels of the chain use less sophisticated solutions or even office applications. Heterogeneity and interconnectivity of IT environments and insufficient visibility of relevant information among individual actors in the supply chain represent the main technical problems requiring a response.

One of the possible solutions is blockchain technology, which includes features such as a shared ledger of transactions, ensured trust without the need for central authority, a shared consensus principle and a timestamp. Blockchain technology is also capable of ensuring the availability, scalability, irreversibility and retrospective verifiability of transactions using the most advanced cryptographic algorithms.

Jaroslav Kačina

“Slovakia ranks as the country with the highest per capita car production in the world,” Equidato CEO Jaroslav Kačina said. “It is the home to three key manufacturing sites run by Volkswagen, Kia Motors and PSA Peugeot Citroën, which will be joined by Jaguar Land Rover in the second half of 2018.

“The NEWMATEC 2018 Conference offers an excellent opportunity to present our innovative concept, as it is a respected, knowledge-based forum focusing on new material, technology and innovation defining the trends in the automotive industry. Taking into consideration the fact that this conference will involve the participation of representatives of car manufacturers and a wide range of suppliers of automotive parts, we could not have chosen a better event to demonstrate our vision.”

The main added value of the joint project of EY and Equidato is transparency in supply chain management, which brings more efficiency into the entire process, along with potential cost savings. The solution will focus on the cycle of ordering and supplying automotive parts, enabling the “visibility” of relevant information for all involved entities (car manufacturers and suppliers at all levels) with the aim of improving their individual, as well as joint decision-making. As a consequence of the future solution, lower extra costs associated with delays, omissions, inaccuracies, irregularities or turning the problem over to a partner from another supply chain layer, may be expected. This, in turn, should result in a reduced price of the final product and increased competitiveness on the market.

The future solution will also provide other advantages, such as access of all entities to up-to- date and reliable data on events in the supply chain, harmonization of data from various ERP systems and more targeted setting of production plans by OEM plants. Additionally, it will enable better verifiability of goods flow with regard to the just-in-time principle, stock optimization and last but not least, improved reaction of the entire supply chain to changes in orders and better analysis of the causes of supplier fluctuations. The solution even comes with the potential to use the data saved in the blockchain network as the basis for creating accounting records within the Order-to-Pay cycle (an order, delivery note, acceptance protocol and invoice).

“I personally see the biggest benefit or our joint efforts in wedding Equidato’s deep technological know-how with EY’s global advisory service potential,” EY’s Peter Borák said. “This resulted in the unique concept of applying the disruptive blockchain technology and its integration with ERP solutions in the field of automotive supply chain management and monitoring. I have not the slightest doubt that this fantastic combination of technological and advisory art will be of interest, not only for the car manufacturers themselves, but also for all companies that are part of the expanding automotive chain within and beyond the Slovak Republic.”