Blockchain technology poses a great opportunity for supply chain in the automotive industry. The technology can improve the process and make it more efficient and profitable. Blockchain-enabled platforms enable easy coordination of documents on a shared network making physical paperwork largely unnecessary. To overcome the problem of counterfeiting, recall of vehicle, and lack of transparency, among others, automotive OEMs are currently integrating blockchain with supply chain.
Another promising application of blockchain is tracking the origin and movement of goods and documents, such as components, finished products, bill of materials, vehicle documentation, letters of credit, among others, across a supply chain. Supply chains are prone to counterfeiting, forgery, theft, and other violations stretching across various steps of the supply chain. This issue can be resolved through the use of blockchain by creating a digital token corresponding to the creation of a high value item on a blockchain, which provides the proof of the point of origin of the item. Consequently, every time the physical good is moved across the chain of custody, the blockchain records the chain of transactions and stores the current location of the digital token. The token acts as a "certificate of authenticity" for the item.
Since blockchain transactions are irreversible and immutable, the token provides great assurance of authenticity than a piece of paper that can easily be forged or stolen. The final recipient of the physical item, whether a bank, distributor, retailer, or customer, on receiving the token can verify the chain of custody all the way back to the point of origin. Moreover, in the case of documentation, physical movement of items can be eliminated altogether.
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