The Block-chain and the Disruption for automotive Industry

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So what exactly is a Block-chain? This question has been answered by numerous experts and I would encourage you to look up those articles. Should you be interested if you work in the automotive industry? According to a report published by Gartner“ Block-chain business value add will grow to $176 Billion by 2025.  The auto industry is poised to be greatly impacted by the advent of this technology.

Before we go further and for the sake of completeness of this article, I will attempt a very basic explanation of what a block-chain is.

In its simplest form, it is really a distributed ledger that stores information on various computers on any event that is connected via the internet and allows transfer of value.   An event could be a transaction, a data entry or even the execution of a software program. Once an event is added to a block, it becomes permanent and can be verified by all participants who have access to the block-chain. Block-chains are distributed and the associated cryptographic techniques to validate individual blocks make them very secure (almost more secure than any existing security system)

Data is stored in these blocks and each entity of the block-chain consortium can read and write to a block. These blocks are chained together to form an immutable version of the truth which cannot be changed.  This technology came about to power Bitcoin without the use of an intermediary like a bank to validate the authenticity of a transaction. Unlike traditional currency, the block-chain uses peer to peer technology to authenticate all transactions                .

Depending on if it’s a private block-chain, consortium or a public block-chain, the number of nodes can play a big role in privacy and performance. A public block-chain allows anyone to see and write records to the block-chain.  On the other hand, a private block-chain is a closed system that is controlled by one organization. Finally, a consortium is one where multiple nodes in the closed system have to be in consensus on the authenticity of an event.

Now that we have got the basics out of the way, let’s talk about some use cases for the automotive OEM, Tier 1 and Tier 2 supplier world.

 

Connected Supply Chain

Tracking and tracing individual parts across the inbound supply chain is complex and error-prone. Accurate, real-time information is not available and information is spread across individual databases. By using a distributed immutable block-chain ledger across all parties, an accurate view of the status, quantity and location of the individual parts can be established.

 

Traceability & Recalls

In 2016, over 53 million vehicles were recalled in the United States market alone. This is a staggering number with recall costs reaching into the billions of dollars for automakers. Many of the recalls involve product defects that are life-threatening. This poses a huge liability to the automakers. With block-chain technology the car and the individual assembled parts can be uniquely represented on the block-chain. If automakers have accurate visibility on the digital DNA of each part (including the defective part), we can quickly pinpoint which cars have the bad parts installed, and this will reduce the scope of the recall. This will result in massive cost savings for the manufacturer.

 

Spare Part authenticity

One of the major issues that plagues the automotive industry is the intentional substitution of original spare parts of vehicles with counterfeit parts by garage and service center owners. This affects the brand reputation of the manufacturer as most of the time these counterfeit parts underperform or at times malfunction. A block-chain based track and trace system can be leveraged to track the provenance of these spare parts right from their point of origin to the end users by validating each and every step in the supply chain. This helps in quick identification of counterfeit parts.

 

Shared Car Personalization

The sharing economy has disrupted many industries and the automotive industry is no stranger to this shift. Consumers are showing a preference toward shared mobility but at the same time expect a personalized service. Driver profile along with car customization preferences can be saved in a personal block-chain wallet.  Shared or leased cars will authenticate the driver using the wallet and the car settings are personalized based on the driver profile

 

Car Maintenance Records & Auto History

Consider that every car has on average 3 to 5 owners during its lifetime, it’s clear that 80% of car owners don’t know anything about their cars. According to CARFAX, 57 million vehicles operating on American roadways have open recalls. Services such as CARFAX make their names by alerting buyers to recall orders and other flaws in a used vehicle before it is purchased, but this promise isn’t as reliable as it may seem and a true block-chain will allow dealers, owners and insurance companies as well as OEMs to record every event.

 

In conclusion, the block-chain is already showing up everywhere and you should get ready to get involved so you stay ahead of the game, perhaps leading it or forever be left behind. The clearest manifestation of the block-chain revolution gaining momentum in the automotive sector was perhaps the launch of MOBI (Mobility Open Block-chain Initiative) in May 2018 that brings together major automakers (BMW, General Motors, Ford and Renault) and leading block-chain and technology startups and premier organizations such as IBM, Accenture, and ConsenSys. NGOs and academic institutions such as the World Economic Forum and Blockchain at Berkeley are also involved.

 

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