Can Blockchain Improve the Automotive Recall Processes? A Use Case Example for the Automotive Industry

“62% of the auto industry expects blockchain technology to become a “disruptive force” within it by 2021.”—IBM

Last April, Korean’s leading car supplier, Hyundai, announced it would use blockchain’s distributed ledger technology for smartphone to EV pairing in an effort to increase environmental efficiencies and to customize a driver’s driving habits to be environmentally optimized for their particular driving needs. (Cointelegraph)

Is the automotive industry ready to adopt blockchain technology beyond a specific use case? Inherent to blockchain is the distributed ledger technology and its distributed system. It has broad appeal for a use case in the automotive industry. It has the potential to help the industry’s manufacturing supply chain, especially as it relates to recalls.

Advantages of Blockchain

Numerous advantages of a shared decentralized blockchain technology exist for the automotive industry.  While use case examples continue to grow—here are a few to help us get started.  Blockchain has the potential to help with vehicle safety and data security, provide supply chain transparency, help in manufacturing, and to be used for smart contracts and automotive financing.  Blockchain’s secured data management abilities may also be available to help infotainment, insurance, telematics and fleet management.  (Martin, Rick)

In this article, I focus on the ability for blockchain to trace components and parts, and the supply chain from production to show room.

Tracing and Part Verification

If you wanted to get specific information about your engine, transmission, or windshield, or anything about your vehicle there is one number you can use to trace nearly any component in your car—that is the vehicle identification number (VIN). The VIN is composed of 17 characters; it is a unique identifier for the vehicle. (AutoCheck)  It displays the car’s unique features, specifications and manufacturer; and can be used be used to track recalls, registrations, warranty claims, thefts and insurance coverage—all conducive to being used within a blockchain.

 

Image Source: autocheck.com/vehiclehistory/vin-basics

“In a blockchain-based manufacturing supply chain of vehicles, information related to vehicle parts such as its manufacturer, date of manufacturing, etc. will be captured and stored on blockchain,” says Faziya Chhipa.  With this level of tracking, manufacturers will be able to track the vehicle parts as they move from manufacturer, to distribution centers, to dealerships, or part supply outlets.

This enables everyone involved from service centers, supply stores, car manufacturers and the customer—to help trace and verify the origin of parts in the supply chain back to the original manufacturer. The blockchain system will be able to provide a unique ID for each part. This can contain key information about the part that includes manufacturing date and ownership-related data.

Total Recall

The requirement to trace components and parts are fairly standard. They’ve been in place for at least 20 years. However, glitches can occur resulting in “millions of dollars in lost sales, inefficient repairs and long-term damage to brands” to the automotive industry. As an example—a defective part in an air bag can affect tens of thousands of vehicles.

The first thing the manufacturer needs to know is: When and where did the defective part enter the production process. The second most important question the manufacturer will need to answer is: Which vehicles did that particular part find its way into. (SupplyChainBrain)

“A solution based on blockchain technology will enable car manufacturers to identify vehicles that contain defective parts, and issue targeted recalls or service bulletins for these vehicles,” writes Faziya Chhipa.  A blockchain solution can significantly reduce the costs of parts and component recalls, Chhipa continues. It can also track the status of the recall from tracking vehicles that show up at the dealer for repair back to the manufacturer for individual components. Furthermore, the tracking can be documented and used to meet regulatory reporting requirements to the government.

Connected Supply Chain

Cars are not built in a single plant location.  Transmissions for a Ford Mustang could be built in Windsor, Canada, and then installed in the vehicle in Detroit. An engine for an Infiniti could be manufactured in Tochigi, Japan, and the vehicle produced in Smyrna, Tennessee. Thus following the supply chain from production to show room, can be daunting with current database technology.

Blockchain technology can be used for each phase of the supply chain. It has the potential to connect the automotive “supply chain from manufactures automotive organizations to seamlessly order or sell, track and pay for goods once they arrive at their destination,” adds Chhipa.

In the end, because all the relevant data is managed on blockchain, transactions can be viewed and validated by all stakeholders in the blockchain network. Another benefit inherent with blockchain is that the payment processing can be done automatically from initiation through smart contracts.

Conclusion

We’ve come to rely on many regulatory bodies to protect the traveling consumer. The Department of Transportation is the primary investigator when it comes to any incident related to transportation. This includes all travel from the car you drive, to the airline you fly.

A significant part of manufacturing a car is the ability to trace all parts in a car to ensure the car will not fail while driving. Thus, the importance of traceability cannot be overstated. Blockchain has the potential to move the supply chain traceability for all cars, components and parts in a way that adds speed to recalls—which can potentially save thousands of lives, and also reduce the costs of all recalls.

In the end, the consumer wins when efficiencies and costs are improved when this blockchain use case is deployed.

 


Sources

AutoCheck, “What is a vehicle identification number (VIN)?” https://www.autocheck.com/vehiclehistory/vin-basics, July 2019.

Bowman, Robert J., “Why Technology Won’t Solve the Problem of Automotive Recalls”, SupplyChainBrain, July 2018.

Chhipa, Faziya, “Driven by Innovation: Why the Automotive Industry Should Take a Leap of Faith into Blockchain”, Deqode, February 2019.

Martin, Rick, “10 Applications for Blockchain in Connected Car Automotive”, Ignite, November 2018.

 

Comments

Recommended Stories

Market Update: Prices Drop as Crypto Sentiment Enters the Fear Zone

How Blockchain Networks Will Disrupt the Businesses of Today, and Signal the End of M & A

Will Blockchain Replace Centralized Databases? A Use Case for Decentralized Databases

Crypto Regulation Outlook in 2019 — What Is the Global Scenario?

India's Biggest Bank Plots Scary Debit Card Kill-Switch Similar to Crypto Ban

Farming in America—A Blockchain Use Case for Agriculture

CZ Claims Binance's Venus Stablecoin Project to Help Facebook's Libra

Pave the Way for Future of Fintech and Cryptocurrency

Meeting the Challenges of a Digital Healthcare System—Is America Ready for Blockchain Based Patient Records?