Volvo Group has been testing the development of its own cryptocurrency to use for supplier transactions, a report said.

On July 15 local time, blockchain media outlet U.Today reported that automaker Volvo is reviewing a closed blockchain environment to simplify transactions among material suppliers, transport providers and the company.

The details were disclosed in a recent interview by Ivan Branko (이반 브랑코), who oversees information management, artificial intelligence and analytics in a Belgian logistics operations unit. Branko said Volvo is looking at distributed ledgers as a way to reduce supply chain inefficiencies and is now developing its own cryptocurrency for supplier transactions.

Volvo's approach focuses on business needs rather than experimentation with the technology itself. Branko said when considering technologies including blockchain, it looks first at business value and specific requirements, and whether they can help day-to-day operations.

A key issue Volvo is targeting is the complexity of supply chain transaction structures. Branko said it explored with some transport providers whether transactions among material suppliers, transport providers and Volvo could be handled in a blockchain-based closed environment. In the process, Volvo created an "in-house cryptocurrency" tailored to the purpose of the experiment and began reviewing whether it could reduce the complexity of transaction procedures.

The idea is to tie a payment instrument and an information record system into a single structure. Branko said it would use a cryptocurrency as a single means to facilitate exchanges between suppliers and Volvo, while storing all information related to transport orders on a ledger.

Volvo also sees perceptions that equate blockchain with cryptocurrency speculation as a barrier to adoption. Branko pointed to what he called a mistaken stigma that blockchain is linked only to speculation as the biggest obstacle. He said the company wants to use blockchain as a tool to improve security and stability as it shifts from a department-by-department approach to a collaboration-centered structure.

The experiment is focused less on moving into an open cryptocurrency ecosystem than on designing a system in which limited participants in a complex supply chain use the same ledger and the same payment instrument. The key, therefore, is not token issuance itself but whether supplier settlements and transport order information management can run within a single system.

Volvo is not viewing blockchain as a standalone technology and is reviewing it within existing information management and analytics systems. Against this backdrop, whether the in-house cryptocurrency experiment will move into actual operations, and how far it will expand supplier participation, are expected to be points to watch.

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