Toyota joins R3 consortium to study using blockchain technology to track auto parts

Toyota Motor Corp.’s Toyota Financial Services unit plans to start testing a blockchain distributed ledger this year while studying both financial and non-financial applications of the technology.

Chris Ballinger, CFO and head of strategic innovation at Toyota Financial Services, said the company's financial division sees potential for blockchain technology in systems other than settling transactions, particularly the ledger that underpins the bitcoin digital currency.

In order to jumpstart its blockchain testing, Toyota announced Thursday that it has joined R3CEV, a consortium dedicated to researching blockchain technology, becoming one of the few non-bank companies in R3.

Bollinger said that online distributed ledgers make it easier for participants to track the ownership of an asset, so this technology can be used to track the movement of auto parts between countries and regions. At some point in the future, blockchain may play an important role in connecting vehicles with drivers' personal devices and city and road infrastructure sensors. He said:

“This may be far-fetched and speculative, but it’s important that you get involved.”

Bollinger said a more accurate, real-time record of the thousands of parts that go into an average car could make Toyota more efficient. Such monitoring could also help during supply chain disruptions.

Chris Ballinger

Referring to the earthquake and tsunami that struck Japan in 2011, Bollinger said:

“If you have a tsunami and part of the supply chain is destroyed, as happened a few years ago, blockchain technology can provide better information about where those parts are.”

Toyota briefly closed two factories that year.

Bollinger said Toyota is looking to R3 to help the company further test blockchain technology and build related software. R3, whose members include Goldman Sachs Group and Morgan Stanley, recently completed a major technical test with five blockchains and three cloud providers to study how different combinations handle simulated transactions in commercial paper. Although the results were not released, they said the results will help R3 members build technical guidance for CIOs in the emerging era.