Blockchain in Supply Chain Management: A Case Study in the Automotive Industry

Blockchain in Supply Chain Management: A Case Study in the Automotive Industry

Copyright: © 2023 |Pages: 20
DOI: 10.4018/979-8-3693-0225-5.ch006
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Blockchain technology has been the focus of much attention and discussion recently. Its unique characteristics, such as immutability, transparency, and decentralization, create a great potential solution for many industries. Especially the automotive sector, which is known for its complex supply chains, large amounts of data, and wide-reaching infrastructure, can profit in many aspects by incorporating blockchain technology. To illustrate the advantages and potential of blockchain in supply chain management, this chapter includes a case study of one of the leading corporations in the automotive industry that has been increasingly committed to adopting this technology. The analysis uses a set of strategic analysis tools frequently used by managers for strategic planning to highlight the benefits and challenges of this approach. Besides contributing to the literature on blockchain and supply chain management, this chapter offers valuable insights for managers, namely in the automotive sector, who are considering adopting blockchain technology in their operations and processes.
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In the current reality, where the amount of available data and information is constantly increasing, ensuring data security is becoming increasingly important. Treiblmaier (2018) define blockchain as “a digital, decentralized and distributed ledger in which transactions are logged and added in chronological order with the goal of creating permanent and tamper-proof records” (p. 547). The benefits of blockchain technology are becoming more explicit and wide-ranging every day. As highlighted by IBM (2023), the advantages of adopting blockchain extend beyond enhanced security, greater transparency, and instant traceability. The technology also enables cost savings through increased agility, efficiency, and automation. Furthermore, by reducing paperwork and errors, it also decreases overhead and transaction costs, thereby reducing or eliminating the need for third parties to verify transactions.

Smart technologies have become essential tools for supply chain sustainability (Bentalha, 2022). Specifically, when it comes to the use of blockchain technology in supply chains, it fosters trust between trading partners, provides end-to-end visibility, optimizes processes, and enables faster problem-solving. As a result, supply chains become stronger, more resilient, and develop better business relationships that allow parties to act promptly in the face of disruptions (IBM, 2023).

This study focuses on the automotive industry, which is widely recognized for its complexity and importance in people's daily lives, particularly regarding safe transportation. The industry is responsible for complying with standards that affect every individual part of a car, ranging from the passenger seat to the radiator and headlights. Consequently, companies must manage hundreds of parts from dozens of suppliers, each operating at different levels of the supply chain. In addition to meeting safety standards and environmental regulations, they must also keep up with the latest technology and design trends. All these processes require tracking thousands of pieces of information from various sources, underscoring the significance and necessity of adopting blockchain in this industry.

As noted by Cole et al. (2019) the decision to adopt and invest in blockchain technology depends on the characteristics of a firm’s products and supply chain, being particularly relevant for businesses in which the safety of products is critical, the risk of quality failures or counterfeit parts is relevant, there are clear advantages in building stakeholders’ trust, and the supply chain is particularly complex. Furthermore, it is important to note that blockchain is still a relatively new technology undergoing development, testing, and research. Despite its widespread adoption in numerous industries (Aslam et al., 2021; Cole et al., 2019; Gurtu & Johny, 2019; Kumar et al., 2020), there are still many characteristics, benefits, and approaches that need to be thoroughly studied and tested. Its utilization is still superficial, presenting great potential for enhancing its use in various business contexts, economic segments, and numerous process improvements. In particular, this technology can provide important contributions to mitigate risks associated with supply chain management (Azevedo et al., 2023; Hald & Kinra, 2019; Kumar et al., 2020; Lai et al., 2021; Markus & Buijs, 2022; Sternberg et al., 2021; Tokkozhina et al., 2023; Zhou et al.).

In this context, the main aim of this chapter is to investigate the role of blockchain in the automotive industry and explore the potential benefits and solutions it can provide. By analyzing a specific case study, this chapter seeks to highlight the role and benefits of blockchain, specifically in the automotive industry. The guiding research question for this chapter is: How can the adoption of blockchain in supply chain contribute to the competitive advantage of companies in the automotive industry?

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