Mercedes pilots blockchain in cobalt supply chain

Will Green is news editor of Supply Management
3 February 2020

Mercedes-Benz has begun a pilot project using blockchain to measure CO2 emissions in the cobalt supply chain.

The carmaker said the blockchain system records the amount of recycled material, the level of emissions and whether parent company Daimler’s sustainability requirements including working conditions, human rights, environmental protection, and compliance are passed to all the companies involved.

The move is part of efforts to create a carbon neutral passenger car fleet “in less than 20 years”, known as Ambition 2039, said Mercedes.

Markus Schäfer, member of the board of management of Daimler AG and Mercedes-Benz AG, responsible for group research and Mercedes-Benz Cars development, procurement and supplier quality, said: “With Ambition 2039, Mercedes-Benz Cars has set itself high goals. We can only get there in close cooperation with our suppliers.

“The key is transparency: it is our aspiration to make all processes transparent and traceable. We are the first manufacturer to use blockchain technology to map CO2 emissions in the global battery cell supply chain. In doing so, we are laying the cornerstone for effective improvements – for the environment and for our businesses.”

Mercedes is working with start-up Circulor on the project. In the long term it is pursuing the “goal of a circular economy and is working to close material cycles”.

The carmaker said it was conducting workshops with suppliers to identify CO2 reduction measures, with a focus on emissions-intensive materials such as battery cells, steel and aluminium.

The company has also formed a partnership with Farasis Energy (Ganzhou) Co Ltd for the supply of lithium-ion batteries made with renewable energy sources and recycled materials, which will “save well over 30% of the carbon footprint of future vehicle models’ entire battery”.

In January Daimler reported earnings before tax of €5.6bn in 2019, half of the €11.1bn it earned in 2018. It said costs associated with ongoing governmental and court proceedings related to diesel vehicles in various regions and markets could be up to €1.5bn.

In February 2019 Mercedes said it was testing blockchain to manage contracts and “revolutionise” procurement.

Separately, Gartner predicts 80% of supply chain blockchain initiatives will remain at proof-of-concept or pilot stage throughout 2022.

Andrew Stevens, senior director analyst with the Gartner Supply Chain practice, said: “Modern supply chains are very complex and require digital connectivity and agility across participants.

“Many organisations believed that blockchain could help navigate this complexity and pushed to create robust use cases for the supply chain. However, most of these use cases were inspired by pilots from the banking and insurance sector and didn’t work well in a supply chain environment.”

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