Federal State Autonomous Educational Institution of Higher Education

NATIONAL RESEARCH UNIVERSITY

"HIGH SCHOOL OF ECONOMICS"

Graduate School of Business

TEXT WORK
in the discipline "Digital Supply Chain Management"

in the direction of training 38.03.02 Management

educational program "Management of logistics and supply chains in business"

Done by:
Kolikov Mateo, BLG-191
Obukhanich Alexander, BLG-192
Demyanenko Daniil, BLG-191

Professor:
Rozhkov Maxim Igorevich

Moscow 2022
Table of contents
Technical part:............................................................................................................................. 2
Non-technical part........................................................................................................................ 3
Introduction............................................................................................................................. 3
Selected industry features and supply chain specifics.................................................................3
Literature review...................................................................................................................... 6
Company’s SC strategy............................................................................................................. 7
Features of blockchain solution used..........................................................................................8
How the blockchain-based solution is integrated with other digital SC technologies....................8
Logistic processes changes.........................................................................................................9
Financial effect estimation.......................................................................................................10
Supply chain performance change estimation..........................................................................11
Limitations............................................................................................................................. 11
Future development................................................................................................................ 12
Conclusion:............................................................................................................................. 13
Sources:.................................................................................................................................. 13
Applications:.......................................................................................................................... 13

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 Technical part:
NonceIndex index for “0”:
Text:
F@ck the police coming straight from the underground
Kolikov21
Hash:
07478a4421e74950b69d975a14bf20e5d6785b1f6ba88efff6e2ad44afe3143e

NonceIndex index for “00”:

Text:
F@ck the police coming straight from the underground
Kolikov224
Hash:
00f1d75a2b61c31042c22d1bd2bf19e47b68ba49a8f8ad1a724446af1caefcf6

NonceIndex index for “000”:

Text:
F@ck the police coming straight from the underground
Kolikov5120
Hash:
000617546c1381c6464f37ca478346de3738f450899adbb783f3ffd2e72d5ba3

NonceIndex index for “0000”:

Text:
F@ck the police coming straight from the underground
Kolikov105232
Hash:
000057d926d7d4025dfca5b200858645a9d4129fe11de1569fdab28d433d44f2

NonceIndex index for “00000”:

Text:
F@ck the police coming straight from the underground
Kolikov716137
Hash:
00000cfa315023b7332d20b716f6cf8b56b43f37183397b5068079d2622ebcb0

Non-technical part

Introduction

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 Automobile production is one of the most technologically developed sectors
of the world economy. Nowadays auto companies are paying attention to high
technology innovations. And the main reason for such a trend is the aim of global
society to reduce the impact of carbon dioxide, which is mostly produced by cars
all over the world.

Selected industry features and supply chain specifics

Modern cars production is more likely to be compared with the high

technology production of smartphones or other gadgets because it is clear that
components of modern cars are similar with the components of these specific
gadgets. Moreover, electronics from smartphones and cars are actually produced in
the same factories with the same manufacturing technologies.
Automotive market has diverse representatives of agents. Generally there are
4 types of them:
● Physical person
This market agent is the most common client in the whole automotive
industry. Most likely people buy cars for their daily usage.
● Entities
Entities can provide several services such as a distribution, repair actions,
support, etc but they also can be in the role of final clients.
● Government
Usually exercise control and regulation of economic relations in the car
market.
● Car manufacturers
Famous brands are constantly generating supply at the market.

In Diag.1 there is a comparative assessment of the production of cars of

various segments, which is associated with the presentation of cars in one form or
another. Passenger cars have dominated the world market for a long time with
demand, occupying more than 70% of the market. Next comes the LCV category
with a market share of 25%. Trucks and buses account for 4.3% and 0.7%
respectively.

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 (Diag. 1)
If we consider the leaders in terms of car production for 2021, then this
group includes China, the USA, Japan, South Korea and India. Such positions of
the country have been occupied for the last 5 years. The exceptions are Japan,
which was able to overtake the United States in terms of production in 2016, and
India, which only entered the top five for the first time in 2016, and until that
moment it was occupied by South Korea. Moreover, the Indian automotive market
is considered one of the fastest growing in the world. China is the absolute leader,
its production volume for 2021 amounted to 26 million units. The United States,
which ranks second, lags far behind its rival in terms of performance. Their
production volume amounted to 9.1 million pieces. According to the data for 2021,
Russia ranks 11th in the overall ranking with a total car production of 1.5 million
units.

1 China 26 057 243

2 USA 9 123 378
3 Japan 7 732 898
4 India 4 396 283
5 South Korea 3 462 376
6 Germany 3 353 245
7 Mexico 2 981 721
8 Spain 2 255 075
9 Brazil 2 071 270
10 Thailand 1 685 393
11 Russia 1 570 410

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 Chart 1 (Total car production in 2021, in pcs.)
Supply chain features
 High cost of a single unit. So, the risk of messing up even a small part of a
vehicle is huge. That's why supplies and their consistency of even small
pieces for cars is extremely important.
 Integrated Technology. Modern world becomes more globalized, parts and
materials can be shipped internationally at far cheaper rates than before. This
opens up many markets which had previously been either inaccessible or too
expensive to ship from.
 The Internet has made international commerce global. Manufacturers and
merchants can attract clients from all over the world using the internet,
where previously their clients would be limited to face-to-face interactions
and personal connections.
 Database software is a revolution in the automotive logistics world.
Nowadays every stage of the logistics process is connected with databases.
 Logistics Planning This technology has a crucial impact on the
improvement of auto industry logistics.
 Third-Party Logistic Providers. Third-party logistics (3PL) providers
always have a solution to make the supply chain faster and cheaper. This
also works for auto industry logistics . When their products, parts or
materials are needed, the 3PL providers have a delivery network that can
have their wares delivered quickly.

Literature review
1) ResearchGate Journal is used to share access to over 135 million publication
pages and stay up to date with what's happening in certain field or sphere. One of
this publications is “(PDF) How Blockchain Make Better the Supply Chain in the
Automotive Industry”
This particular article is providing information about blockchain in general and in
the case of the automotive industry as well. For instance, the author is making a
point of using the blockchain for tracking car-charge stations.

2) MOBI The Mobility Open Blockchain Initiative (MOBI) is a global non-

profit smart mobility consortium. MOBI and contributors create blockchain-based
standards to identify vehicles, people, businesses, and MOBI Trusted Trip. They
are building a Web3 digital infrastructure for connected cars and IoT commerce.

3) Cointribune - A French magazine with the slogan “La crypto pour tous” -
“Crypt for everyone” provides information (not investment recommendations)
through articles to promote the idea of blockchain and dedicate readers to the news
and nuances of this topic.
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(https://www.cointribune.com/ru/blockchain-ru/traceability-ru/bmw-
%D0%B4%D0%B5%D0%BB%D0%B0%D0%B5%D1%82-
%D1%81%D1%82%D0%B0%D0%B2%D0%BA%D1%83-%D0%BD%D0%B0-
%D0%B1%D0%BB%D0%BE%D0%BA%D1%87%D0%B5%D0%B9%D0%BD)
One of the articles in the magazine describes the BMW PartChain project.
According to company representatives, the project aims to provide more
transparent and efficient tracking of the supply of components needed to assemble
the group's vehicles.

4) BMW official web-site / How blockchain automotive solutions can help

drivers / Blockchain automotive solutions | BMW.com
BMW offers several options for using blockchain in their business in this article. It
should be mentioned that the article is written for different clients and investors of
the brand using simple definitions for basics of the blockchain. Firstly, the article
proposes a solution to the use of blockchain as a tool for tracking the mileage
traveled by cars. All information about changes in the car mileage system is
recorded in the blockchain. Secondly, it is possible to trace the raw materials used
in the development of various technical parts using the blockchain. Finally,
blockchain implementation is possible electric cars charging. “You drive your
vehicle to a charging station only to find that you don’t have the right kind of
customer card because you’re not signed up to the right provider.”

Company’s SC strategy

BMW.
The company BMB is headquartered in Munich, Germany. Major
expansions are observed in the US, UK, and Australia. There are some of the
Asian countries like India, Srilanka, Pakistan and South Africa that are also
considered as the growing market for BMW. Some of the important points are
given below:

 BMW manufactures cars in eight units in the United States, United

Kingdom, South Africa, and Germany.
 Magna Steyr, has collaboration with BMW in Austria.
 BMW makes engines at four additional locations, and other effective
associations have occurred in six different places of the world.
 The invention procedures of BMW are increasing progressively.

Mercedes-Benz.
As for inbound logistics:
 A consolidation center in Speyer for European suppliers.
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  Ship several hundred container ship every week via inland waterways and
rail lines to Antwerp and Bremerhaven.
 The global logistics company, Syncreon, manages the transshipment of
suppliers’ materials from trucks to container.
 The specialist transport company, Сontargo, is responsible for transferring
sea containers to trucks and transporting the containers to inland waterways
or rail lines.
 Materials will load onto freighters and transported to the main Mercedes C-
class factories.

As for outbound logistics:

Storage:
Global Logistics Center (Germersheim):
● Central warehouse for Mercedes-Benz
● 1.7 million square meters
● Effective storage area: over 1.1 million square meters
● Offers modern storage techniques
● Largest warehouse for vehicle parts for the automotive branch in the
world
Additional external locations: Worth, Ettlingen, Offenbach and Hatten,
France.
European Logistics Center (Valenciennes)
USA: MBUSI (Second central warehouse)
Dubai and Singapore: Regional Logistics Centers (RLC)

Features of blockchain solution used

BMW.
In the latest reports of BMW there were not many words about blockchain
and its implementation, but we know about several attempts of using it. Because
already in 2018 BMW has confirmed the creation of its own PartChain project.
As it was stated by company representatives, the main idea was to have more
transparency and efficiency of tracking components needed to assemble the group's
vehicles in the supply chain. But not only components are important for a
company. The BMW Group is also implementing a blockchain-based pilot project
that tracks the path of minerals. It’s always important to get information not
only about resources in production, but also in the product consumption stage. That
is why BMW, not only for the path of minerals, but also for the path of vehicles
uses blockchain and ERC-20 tokens to track vehicle mileage. According to
DOVU, the automaker established a blockchain-based database and completed a
test of distance calculation using DOV tokens based on ERC-20. But that is not all,

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even if we are talking about people and not cars BMW has a cover-based
"lifestyle" cover. BMW Korea rewards car owners with Southern Europe tokens
or “BMW Coin”, which can be redeemed for airline tickets and maintenance
payments. Also used for people - VeChain application. It is designed to protect
users from unscrupulous sellers who aim to deceive in order to increase the cost.

Mercedes-Benz.
In cooperation with, leader in cloud technologies Icertis, Mercedes
introduced monitoring of the standards and contractual obligations. If any sub-
supplier deviates from these contractual obligations, this becomes visible in the
blockchain maintenance protocol.
Another example of implementation is Daimler South East Asia. As a part of
the Mercedes Benz Group, the company launched its own Acentrik blockchain
service. It is built and developed on the Polygon blockchain. The service is
intended for corporate data exchange

How the blockchain-based solution is integrated with other digital SC

technologies

BMW.
In BMW, PartChain project combines blockchain technology with various
cloud solutions (for example, Azure from Amazon and Microsoft). For ERC-20
tokens, information is collected in real time using BMW equipment, after which it
is immediately transferred to the blockchain. The company noted that this
eliminates any attempt to change the mileage of the car.
But with minerals, the situation is different. The main question is: How can
BMW physically prevent material from being changed or mixed? This is done
using traditional SC methods such as barcodes and seals, as well as innovative
technologies such as chemical indicators. These are chemical additives that are
added to a batch of material to make it individually identifiable and machine-
readable with a scanner.

Mercedes-Benz.
The Mercedes-Benz solution is based on the experience of previous
initiatives. Already last year, a car manufacturer commissioned the development of
a blockchain prototype for the SC. The aim was to document contracts consistently
and transparently at all levels. This application is implemented across vendors and
their partners, also between all agents of the SC (from production to
sales&import), like accounting, but on a different efficiency level, to transfer all
data as in connection with the accounting system. Also the simultaneous
information processing from all suppliers of Mercedes ( Pic. 3), will lead to a faster
production process, which will free up time for improving imperfect processes
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 Logistic processes changes

BMW.
The BMW supplier network is extensive and international. Until now, all
participants in this ever-evolving network managed to supply data themselves.
However, thanks to the blockchain, which will be used by all enterprises supplying
components for BMW, it will be possible to track this or that part “at the touch of a
button”. PartChain.

Blockchain update Blockchain update Blockchain update

Part shipment from Part arrival at the Part shipment from

the factory sorting center the sorting center

Path of minerals from extraction to supply is not often monitored by third

part companies. So, mineral and other raw materials suppliers can somehow cheat
or just make mistakes. Blockchain is adding an opportunity to track materials with
the help of chemical traces. These chemical additives are mixed with monitoring
objects to make it individually identifiable.

Determined Trackable raw

Raw materials
chemicals materials

Mercedes-Benz.
SC has not only material flow but informational as well. Smart contracts
provides transparent informational flow for sales, storage, production, supply
agents through the smart contract. (Pic. 1)

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 Financial effect estimation

BMW.
Distance mileage tokens are most important for leasing, which is one of
BMW's most profitable directions. Every vehicle that is returned for resale
decreases in value due to how many miles it has traveled. How much exactly is
reduced, the blockchain must accurately determine with the help of DOV tokens.
For example, in Korea, the BMW organization offered its customers 900,000
“BMW coins” for the purchase of cars. They also offered double payments of these
coins during October for certain models of the BMW range. These tokens can be
spent on various services of BMW partners, including flights on Korean airlines,
the new platform allows buyers to also spend these points in BMW programs or
receive various discounts"
According to BMW, VeChain application saves an average of around
3,000 euros per car sold because of lack of fraud.

Mercedes-Benz.
Clear information about contracts, real-time visibility, shared among all
supply chain members, prevented overstocking and shortages. And for sub-
suppliers who know that all the deviations from their side are visible for everyone,
it is another bound not to fraud, while for Mercedes it is less money lost.

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 Supply chain performance change estimation

BMW.
Methods to fraud are prone to input errors and are uncontrollable, resulting in
incorrect or useless data and bad quality cars left in the market. All of the
blockchain changes will minimize the fraud level for components and minerals and
for information about the car, which means that in the BMW cycle will remain
better resources and cars.

Mercedes-Benz.
In addition to transparency and better data reconciliation across multiple
systems, Mercedes-Benz’s secret ingredient to protect privacy uses is called
"federated machine learning." This type of machine learning is created without
direct access to the training data, allowing the data to remain in its original
position, such as behind company firewalls.

Limitations

The intuitive and user-friendly operation of the Blockchain service platform

is significant for the success of both projects in BMW and Mercedes-Benz. Only
then companies will help their suppliers to easily get started with the new
technology, and attract the necessary users. Consistently establishing Blockchain
technology with all suppliers in the respective supply chain is a fundamental
requirement for the achievement of the goal: close cooperation for more
sustainability.
In spite of all this euphoria, there is still a lot of work for the developers to
do. The blockchain technology in its current form is not sufficiently fast or
scalable. Most blockchains can only process a handful of transactions in parallel.
In comparison, a traditional credit card network can process ten thousands of
transactions at the same time. As a consequence of its distributed validation
structure involving countless miners, all of whom need processing power, a great
deal of energy is required for the calculation, distribution and encoding of each
transaction.

Future development

BMW.
The BMW Group continues designing the future and is constantly driving
sustainability forwards with its innovations. BMW group is definitely sure that a
12
circular economy is vital for conserving resources and reducing carbon
emissions.Company think that circularity at the end of the autos use phase, they
can be used as a resource for new cars.
In the future, BMW is going to implement blockchain in all areas of its
activities, including the supply chain, from the extraction of raw materials, using
the example of the mining of ore materials already used, to the supply of ready-
made cars to various partner dealerships, moreover.Also the company is going to
cooperate with leading cloud companies for efficient computing.

Mercedes-Benz.
On the path to sustainable mobility, Mercedes-Benz is increasingly focusing
on procurement: together with the start-up Circulor, Mercedes-Benz is
implementing a CO2 (Pic. 4) transparency pilot project in the cobalt supply chain
as part of STARTUP AUTOBAHN. Project partners are using blockchain
technology to track emissions of climate-damaging gasses as well as quantities of
recycled materials in the complex supply chains of battery cell manufacturers. In
addition, the data network documents whether Daimler's sustainability standards
are being extended throughout the supply chain.

In addition, Mercedes-Benz is currently exploring the benefits of blockchain

technology in three strategic sectors. The first direction concerns a universal
platform for the operation of mobility as a service (MaaS). With smart contracts
being an integral part of such MaaS services, all relevant real-time data about
vehicles connected to the network and their usage can be collected and secured for
billing purposes.
The second major area of research concerns the digitization of contracts and
other regulatory documents. Here, they are still in the experimental phase, since
electronic contracts are not legally enforceable in court.
The third area where blockchain technology will have an impact is how
projects are funded and how revenues are distributed. Instead of raising capital in
the traditional way, blockchain will allow the value of assets or services to be
“tokenized”. This means that projects can be divided into small virtual shares that
can be sold, bought and exchanged.

Conclusion:
So, it is not yet worth changing everything over to crypto technology. In
many cases, a normal, protected database is totally sufficient. But the blockchain
path appears to be preordained. Its current state of development is comparable with
the internet from the early 1990s. But technical problems such as speed and ease of
use will be solved faster than at that time. The network is already there. The
opportunities are unlimited.

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 Sources:

1) Mercedes-Benz Cars drives "Ambition2039" in the supply chain: blockchain

pilot project provides transparency on CO2 emissions
2) Once round the block, please! | Mercedes-Benz Group > Innovation >
Digitalisation > Industry 4.0
3) Blockchain automotive solutions | BMW.com
4) (PDF) How Blockchain Make Better the Supply Chain in the Automotive
Industry
5) Strategic Supply Chain Management – BMW Case Study - Peachy Essay
6) BMW и VeChain выпустят блокчейн-приложение для защиты
владельцев авто
7) Производство автомобилей за 2021 год по странам. VERcity

Applications:

(Pic. 1)

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(Pic. 2)

(Pic. 3)

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(Pic. 4)

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