Why did Volvo choose to use blockchain technology to secure the supply chain? The reason is here

Volvo Cars announced last week that it will use Oracle's blockchain platform to track cobalt materials, one of the main components of electric vehicle batteries. After Volvo launched its first pure electric vehicle XC40 Recharge, it proposed a new business strategy, including the introduction of electric vehicles every year by 2025.

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Mark Rakhmilevich, Senior Director of Oracle Blockchain Product Management, said:

“Cobalt is the core of electric car batteries, but supply is limited. Companies like Volvo are increasing production significantly, as half of Volvo cars will become electric cars by 2025. Each car needs 10-20 kg of cobalt in its batteries. ""

Volvo seeks transparent, reliable data.

Although cobalt is a key mineral in the manufacture of lithium-ion batteries, most of the cobalt production comes from the Democratic Republic of the Congo, which has been criticized for the immoral conditions of cobalt mining.

According to Amnesty International's survey, a large number of children, aged 7 years old, work in life-threatening conditions in the Democratic Republic of the Congo, mining cobalt, and eventually using these cobalt in smart phones, tablets and car manufacturing every year. Under these dangerous conditions, young children and adults usually receive only $1 a day.

Volvo will apply blockchain technology to provide global traceability across all of the original products used throughout its supply chain. Rakhmilevich explained:

“Volvo has tracked raw materials in the Oracle blockchain to ensure that the sources of cobalt they supply are clear, safe and free of unethical issues. Since this summer, we have been working with Volvo to implement material tracking. Application to capture data related to different points in the manufacturing process."

Volvo also works with traceability, service provider Circulor, to trace raw materials back to its battery manufacturers through the supply chain and then back to Volvo. This end-to-end solution will ensure transparent and reliable data sharing, which will greatly increase the transparency of the entire raw material supply chain.

Following successful pilots with Oracle and Circulor this summer, Volvo Cars has now reached an agreement with its two global battery suppliers (CATL in China and LG Chem in Korea) to implement traceability of cobalt materials this year.

Both Oracle and Circulor will operate blockchain technology in CATL's supply chain, and the responsible procurement blockchain network will work with responsible procurement experts RCS Global and IBM to promote the technology in LG Chem's supply chain.

The data captured on the Oracle blockchain platform will include properties such as cobalt source, weight and size, establishing a regulatory and information chain that ensures participants' behaviors are in line with globally recognized supply chain guidelines.

Rakhmilevich said:

“We have been working with Volvo and Circulor to implement material tracking applications on top of the Oracle blockchain. This will capture data related to different points in the manufacturing process, such as time, location, weight, size, etc. to ensure All materials used are accurate."

Blockchain is the ideal solution for tracking materials throughout the supply chain because it creates transaction records that cannot be changed, and also performs a common set of rules about what data can be recorded. This allows participants across the network to independently verify and review transactions.

“After ensuring that all materials are accurate, we record each data point in these transactions on the blockchain, making the data immutable and transparent across the network,” Rakhmilevich noted.

The challenge to overcome

According to Rakhmilevich, Volvo, CATL and seven other companies (participants in the supply chain) currently record about 28 million material scans and other production events on the Oracle blockchain platform each month. Although he believes this will expand over time (and eventually evolve into other aspects of the supply chain, such as tracking lithium and nickel), the real challenge is to properly manage the materials.

“Cobalt and other materials go through many complex stages to ensure that data points are captured in their original location. These data must then be scanned and protected, so it's important to ensure that data from physical sources is captured correctly,” explains Rakhmilevich.

According to Caspar Rawles, senior analyst at Benchmark Mineral Intelligence, Volvo is happy to use the blockchain to track its cobalt, but most of the cobalt in the Democratic Republic of the Congo comes from small independent mines. In this small-scale so-called “manual” mine, child labor and many fatal accidents have been reported.

Although Volvo is tracking its materials, the company also needs to carefully track cobalt throughout the supply chain, from the point of exploitation to the entire process of transportation in China. This ensures that the material will not mix with other minerals from the DRC.

Rawles told Cointelegraph:

“Volvo not only needs to track cobalt from the mine, it also needs to track the location of the cobalt until the battery is placed in the car to ensure that the material does not mix with unethical sources.”

Despite the obstacles, Rawles also pointed out that Volvo has taken the first step to prove that the use of technology can ensure sustainable and ethical products:

“As more and more automakers produce electric cars, they need to realize that dealing with the supply chain will be critical. It’s great to see Volvo now adopting blockchain technology.”