Under the Hood of Innovation: How Blockchain is Changing the Auto Industry

Introduction

The automotive industry goes through an evolution and blockchain technology is set to define this revolution. This probably stems from the fact that as the automotive environment becomes even more convoluted with complicated supply chains, pervasive compliances, electric and autonomous vehicles, conventional approaches of handling these issues are insufficient. Thus, this growing need has led to the possibilities of blockchain-derived solutions across the automotive industry.

The exponential growth with time indicates the extent of disruption that blockchain technology is expected to bring to the consumer automotive industry. In addition, the application of blockchain goes beyond this view towards the consumer, with even more significant value at the supply-side, with better supply chain management, cost savings from the improved efficiency and compliance as well as security in automobile manufacturing.

Improving on the Supply Chain Visibility

Perhaps, one of the greatest areas where blockchain can transform automotive is through supply chain. Blockchain technology allows the creation of the common record that is opened to all the members of the supply chain and, therefore, offers the best control and visibility of each stage of the process.

The digital shared record that it creates offers full and accountable documentation of every part and component in a chain from point of sourcing to the point of use thus removing inefficiencies and possible weaknesses. For example, Toyota’s cars recall in 2009 involved 8. US automaker recalled 1 million vehicles due to gas pedals that stuck and or became unresponsive, which was capitalized at about $2 billion. The absence of tools to identify responsible suppliers presented a problem because it was hard to determine which vehicles were involved and, thus, the crisis entailed considerable expenses. 

A study that was conducted on workers across the supply chain revealed that more than a third of them applied blockchain with the view of cutting costs. Since the supply chain pro tool comprises a tracking system which has been elaborated through the use of blockchain and its potential for precise record-keeping and provenance, every product which was tracked in this system has the history, telling where it has come from and where is located now.

It also assists in identifying fraud cases and to avoid counterfeit parts that may be in the line of supply. It can be modified with the help of incorporated sensors in the parts or fixed RFID tags and even safe QR codes to preserve the integrity of the supply chain.

The following recommendations are in a bid to ensure that fairness and compliances are uphold in motorsports:

The automotive world which is largely associated with the consumer market is also going to be changed with the help of blockchain technology and here the market concerns the world of motorsport. Some essential areas where the application of blockchain technology gives a boost to preserving fairness and compliance concern motorsports.

Such a procedure as the targeting of car specifications and setups on a blockchain make it possible for the officials to easily check compliance with rules; this erases the need for long post- race inspections that currently leads to many hours of gapping before the winner is announced. Many of the compliance checks and balances can be conducted real-time throughout racing events to ensure that any breaches are noted, to maintain credibility of the race.

Furthermore, the logged data is an important data source by itself and must be made readily accessible with accurate and secure entries during a race to the race engineers. Use of blockchain guarantees that collected data is safe and has not been tampered with so as to help engineers to make adjustments based on performance indicators in real time.

Overcoming Challenges and Risks in Blockchain Implementation

Challenges and risks are always inevitable when transitioning to the use of blockchain technology; however, they have to be addressed and mitigated in order for the change of process to be effective.

Thus, despite the advantages of blockchain technology in the automotive sector, its application is not based on the application of failsafe recipes. It is important that participants in the automotive industry are aware of these challenges so that they can work at preventing them from becoming issues that hinder the use of this disruptive technology.

The first of them is the change of organizational culture, which is arguably the biggest barrier to large-scale adoption of innovation. The usage of blockchain technologies requires new qualitative changes in the industry that lays a focus on skills, you are hiring new profiles and training existing staff to work with them familiarizing with the new technology and its usage.

The initial cost that are invoked with the implementation of a blockchain system can also be high including IT infrastructure, new system hardware and software. Of course, these investments yield important expenditures beforehand, which can be not only intricate and demand more resources.

But these over cause long-term returns of investment and productivity enhancement from the application of blockchain to outstrip these cost expenditures in the long-run. It is this shift and need to want to give up those ‘classic’ vertically integrated closed shop approaches and adopt more open, collaborative structures. The non-adaptive companies will be left stranded while those firm that take the lead will have a first-mover advantage.

Conclusion

Automotive industry will never be the same again as blockchain revolution takes over it in the following ways. Transferring data in a more efficient and timely manner to implementing fair strategies and accurately awarding penalties in motorsports, this technology will disrupt the said industry in the future.

By recording car specifications and setups on a blockchain, race officials can quickly verify rule compliance, reducing the need for extensive post-race inspections. Continuous compliance monitoring during races can further uphold the integrity of the competition, while secure and accurate data logs empower race engineers to make informed strategic decisions.