Hyundai will use blockchain to secure parts supply chain

Hyundai Motors has become the latest carmaker to explore the use of blockchain as a way to verify the authenticity of its spare parts and tackle counterfeiting.

Hyundai MOBIS, the company’s parts subsidiary, has launched a new MAPS (Most Advanced Parts System) software platform that uses blockchain and artificial intelligence to distribute after sales parts for 300 of its Hyundai and Kia brand cars.

Along with authentication, the system will support inventory and distribution planning of around three million parts, predicting demand, and will be used to track around 65 million units per year across 200 countries in Hyundai’s sales network.

The system started operation this year and will be used by around 100,000 people, including 35,000 parts distributors and maintenance shops and 16,000 dealerships for “parts purchase, logistics, and quality control.”

Blockchain technology is being applied as a pilot for product authentication as part of the management system, according to Hyundai.

“By distributing and managing the genuine information produced in each distribution stage, even the final consumer can easily check whether the product is genuine by scanning the QR code on the product packaging,” it said.

Blockchain is expected to be used in areas such as vehicle maintenance and insurance that require transparency of after sales parts information.

When a vehicle is at a repair shop, simply by scanning the vehicle number, the necessary parts can be found or the maintenance details can be transmitted to the customer. Vehicle owners will also be provided with a car account book-type maintenance function that manages the maintenance history through a mobile app.

Like most carmakers, Hyundai has been battling the distribution of counterfeit after sale parts, and launched a campaign in 2016 to try to raise awareness among its customers of the dangers associated with aftermarket, salvaged and recycled auto parts.

The consequences of poor quality parts may be simply mechanical failure, but could be life-threatening. There have been cases of counterfeit replacement airbags being fitted that are too powerful, causing injury when they deploy.

Some components – like spark plugs, oil filters and air filters – can pose a risk of fire if they fail, while the consequences of fake brake pads that fail prematurely is obvious. Body panels and other structural components may also not work properly with cars’ crumple zones, designed to prevent injury in the event of a crash.  

It’s an industry-wide problem. The US Federal Trade Commission (FTC) has estimated that counterfeit components cost the global parts industry $12bn in lost sales a year, including $3bn in the US alone. It also reckons that counterfeiting has cost the US auto parts industry 200,000-250,000 manufacturing jobs over the years.

The EU Office of Intellectual Property (EUIPO) meanwhile has published reports suggesting that around €2.2bn is lost every year by the legitimate parts industry to counterfeit tyre sales, with another €180m lost to fake batteries.

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