Blockchain allows for effective supply chain management, production verification, streamlining logistics and implementing new production processes. How can this technology be applied in the automotive industry?
Blockchain in the automotive sector opens up new opportunities for the European car industry
XCEED is a blockchain technology project that has been developed by leading players in European automotive manufacturing – Groupe Renault, Knauf Industries, Faurecia, Simoldes and Coşkunöz. It was developed in collaboration with IBM, one of the leaders in the IT industry. XCEED itself stands for 'eXtended Compliance End-to-End Distributed'.
Tested on a macro scale on 10 September 2020, this technology will enable us to meet the expectations of the market even more efficiently. XCEED in the automotive industry is a way to effectively validate whether given components are being manufactured in accordance with current regulations and standards. The project is an opportunity to change the logistics chain of the automotive industry. Other brands that were not part of the XCEED project are also considering (or are already implementing) similar solutions. Why is this such a pioneering solution and what are the benefits of using blockchain technology in the automotive supply chain?
What is blockchain?
Blockchain is primarily associated with cryptocurrencies and NFTs, but it is also very widely used in industry. The day-to-day operation of companies involved in manufacturing, and particularly the supply chain, consumes vast resources and requires the exchange of a substantial amount of data. Blockchain networks were created with distributed processing in mind. Unlike traditional solutions, data is not stored on a single server. Instead, many devices keep parallel records using cryptographic functions. This makes such a solution much more secure and efficient, and the information is easy to check.
Historical data stored in the blockchain does not change. Processing information via this type of network guarantees respect for intellectual property and the possibility of keeping an accurate, transparent record of transactions – data entered into blocks has a fixed value after being made public. Blockchain also allows data to be shared only with authorised parties. For these reasons, it is such an effective option in a context where many companies involved in producing a technology are developing their own solutions. It offers a trade-off between integration and data confidentiality and control over their assets. The use of blockchain networks in the automotive and other industries is also very secure – such networks are not vulnerable to standard attacks. Breaking security using standard cryptographic techniques is practically impossible.
Another advantage of blockchain networks is efficiency. Distributed processing makes it possible to archive information much faster, including for example transaction data. The first tests of XCEED at the Groupe Renault factory in Douai could handle up to 500 transactions per second. XCEED itself was based on an open-source technology called Hyperledger Fabric, which has been successfully used in business applications for some time.
Practical applications of blockchain in the automotive industry supply chain
Blockchain will form an important part of the digital automotive revolution. Its application offers the chance to develop partnerships between leading companies, using their own solutions and technologies. The exchange of data between all entities will be monitored, secure and efficient, making it possible to integrate extensive systems. Until now, this has been a very difficult task – however, it seems that there is finally a solution that will work as a bridge between supplier and manufacturer resources.
Blockchain supply chain management is convenient and transparent, and the network itself remains open for further integrations. XCEED is available to global suppliers and OEMs across the entire supply chain.
What are some other reasons to use blockchain in the supply chain?
Supply chain companies will appreciate the value of blockchain primarily due to the ability to quickly exchange information that is not susceptible to manipulation or error. This will allow for rapid certification of vehicle component compliance. Verification can take place at any stage – from design to production. As a result, component companies will be able to respond quickly to queries from regulators about a particular system. This is very important especially as production regulations are becoming more and more stringent. In the year 2020, among other things, new standards emerged for type-approval as well as an automotive market surveillance system in the EU. The changes affect all types of vehicles – buses, cars, trailers, trucks and more.
XCEED is a direct response to the new regulations. The system is being implemented in cooperation with DG Connect (the European Commission's Directorate-General for Communication Networks, Content and Technology), which is responsible for European Union digital policy.
Blockchain in the automotive sector and Industry 4.0
A more efficient, effective and transparent exchange of data also opens the door to some solutions related to Industry 4.0. The XCEED project makes it possible to significantly reduce the amount of complex data that is exchanged between different entities. From the perspective of Industry 4.0, where information flow plays an extremely important role, this represents huge added value. Complex projects and procedures can be processed faster, while better integration between ecosystems will eliminate a large number of errors.
The role of XCEED for smaller companies and international entities
The system is also open to those automotive companies that are not capable of adopting the latest digital solutions. Smaller entities do not always have the opportunity to invest in the latest technologies, but XCEED opens the door to the entire automotive sector. The solution operates with the needs of the European market in mind, while allowing for third-party integration. However, it has been designed by default to make technologies developed in European countries more competitive. The very functioning of the automotive industry on the Old Continent is supposed, in effect, to adapt to the growing expectations and needs of customers, regulators, suppliers and manufacturers.