Daimler turns to blockchain for procurement prudence

Consisting of more than 400,000 suppliers, Daimler’s supply chain is a complicated beast. Throw in creaking procurement software that’s a quarter of a century old, and supply chain management can start to look like the stuff of nightmares. As one of the world’s biggest automotive forms, Daimler knew it needed to modernise.

(Credit: Pixabay)

“The existing system was slow and inefficient and made it hard to identify all risks and obligations out of contracts,” said Ulrich Ochmann, from Daimler’s New Procurement System (NPS) division.

“We wanted sourcing and contracting to go hand in hand. In procurement you start with sourcing but immediately you also start your first contracts, and when this is joined in one powerful tool you have everything transparent.”

The tool that Daimler settled on was Icertis Contract Management (ICM), a cloud-based platform that gives visibility into renewal times, obligations and compliance, helping firms turn their supply chain data into strategic business assets. Building on this foundation, Daimler and Icertis discovered they could tackle more than just contract lifecycle management and sourcing.

An opportunity was identified to build on the ICM platform to address a key issue in supply chain management – improving visibility into how ethical and sustainable sourcing terms were being propagated down through the various tiers of Daimler’s supplier network. This led to the development of a joint blockchain initiative that could address the issue within Daimler’s Mercedes-Benz Cars division.

The Icertis Blockchain Framework gives manufacturers reassurance that all parts, services and supplies are ethically sourced and companies throughout the supply chain are fully compliant with key legislation. At the same time, suppliers can prove that they comply without exposing other details of their subcontracts with the broader supply chain, maintaining a level of privacy while disclosing the necessary information.

(Credit: Icertis)

The blockchain platform can also be used to enforce compliance requirements like data privacy (including GDPR), information security, International Trade in Arms Regulation (ITAR), Foreign Corrupt Practices Act (FCPA) and other regulations.

“From sourcing to contracting, we have gained speed, but it has also made us safer,” said Ochmann. “We have our risks transparent, we have our process transparent and our buyers like the software; it is easy to use. The software guides the buyer through the process, so the user always knows what to do next.”

Meanwhile, Daimler’s legal department is using ICM to better track deviations and contract lead times – data that can be used to further optimise contracting processes. Icertis says the platform has also helped Daimler’s 6,000 buyers significantly reduce contract cycle time, with the company now managing its entire roster of suppliers via ICM.