Leading German automobile maker Mercedes-Benz Cars has developed a blockchain-based prototype jointly with Icertis to enhance transparency in its procurement supply chain.

In a press release on Feb 25, Mercedes said its partnership with Icertis is to develop consistent, traceable, and transparent documentation of contracts in the supply chain for Mercedes. Icertis is a provider of enterprise contract management solutions in the cloud.

The prototype creates trust in the integrity of the supply chain “by disclosing sustainability-related information, without revealing competition relevant information”. Acceptance by suppliers and partners is currently being tested in a pilot project for the prototype, and feedback is being sought.

Mercedes’ parent company Daimler AG requires its direct suppliers to “vigorously” pass on, and control standards and contractual obligations of the working conditions, human rights, environmental protection, safety, business ethics and compliance within the supply chain.

The blockchain prototype helps to ensure that Mercedes’ global procurement and contractual practices meet Daimler’s requirements because any deviation by sub-suppliers will become apparent on the blockchain.

Wilko Stark, Member of the Divisional Board of Management for Mercedes-Benz Cars, Purchasing and Supplier Quality said, “Blockchain technology has the potential to fundamentally revolutionize our procurement processes, and could affect nearly the entire value chain.

Last year, fellow German car-maker Porsche AG announced it would increase its investments into startups over the coming five years by EUR 150 million ($170 million) – with a focus on blockchain and AI to “gain access to trends, new technologies, and business models.”

Blockchain has of late been increasingly applied to supply chain processes. Earlier this month, Itochu Corporation, one of the largest general trading enterprises in Japan, started building a blockchain-based traceability system for consumers and sellers to supply chain transactions via a smartphone app. Companies and organizations from Alibaba’s Tmall to Cargill in the US and WWF Australia have all begun looking into blockchain technology to track supply chains.