Open, agil and intelligent

Silicon Economy: the beginning of the platform economy#

Prof. Michael ten Hompel - Managing Director at Fraunhofer IML

Today, the increasing complexity of logistics and of supply chains can only be managed with digital platforms, on which data can be securely and confidently communicated beyond all borders by means of artificial intelligence. The Federal Ministry of Transport and Digital Infrastructure is funding a major research project at Fraunhofer IML with more than 25 million Euros in which the bases for an adequate, open and intelligent platform ecosystem – the Silicon Economy – are formed. Michael ten Hompel, Professor of Logistics coined the term and explains its mission.

Logistics is experiencing a turn of an era that could not be more fundamental. Digitization of everything and the artificial intelligence in everything will change everything for everyone. The platform economy - in logistics and beyond - is also facing such a turn of an era. After the B2C sector, more and more multinational logistics companies are now beginning to build powerful digital platforms in the B2B sector. The race for the platform is on and companies are realizing that they have to face the new challenge together. No logistics company has enough motivation, market power or resources to implement the "Big Picture" of a Silicon Economy on its own.

An alternative draft to monopolistic platforms

The Silicon Economy puts the concept of the platform economy on new foundations. It sees itself as alternative draft to monopolistic platforms that provoke isolated solutions and dependencies.

  • An open source infrastructure and freely available technical components – as a result a "Linux for logistics" – should lead to a diversity and coexistence of various logistical and industrial platforms. This procedure enables companies of whatever size in Germany and Europe to develop new data-based and data-driven business models.
  • The focus is on a secure data room in which companies can exchange and use data in a self-determined manner. It forms the core of a federal structure of the data economy. 
  • The infrastructure, the technical components and the data space, driven by artificial intelligence and other new technologies such as 5G, enable the complete autonomous connection of material, information and financial flow in the end.

The Federal Ministry of Transport and Digital Infrastructure recognized the importance of this concept early on and is promoting the establishment of the digital infrastructure and the development of the technical components with the "Silicon Economy Logistics Ecosystem" research project. Here, the basis for the Silicon Economy is formed. "Blockchain Europe" is inseparably linked to this, which will provide further components for the platform economy of a new generation. The future aim is that companies can select technical components, like from a library (repository), and set up their own platforms and business models based on common standards and a joint data space.  

Strengthening logistics, positive traffic effects

The digitalization of sustainable logistics systems does not only offer advantages for the individual company and therefore strengthens the logistics industry as a whole, but also generates important positive transport effects. That mainly includes the better use of transport capacities, better linking of the transport modes, optimization of traffic flows and reduction of emissions.  

Silicon Economy community: fellow campaigners wanted

For years, the world bank’s Logistics Performance Index has ranked Germany as "logistics world champion". Countries from Europe form the majority in the top 10. Yet, logistics is not immune to the fact that American and Chinese companies will outstrip them.  The race for the best business models in the platform economy will only be won by those companies that are willing to open up and take part in neutral platforms.

With Silicon Economy Logistics Ecosystem and Blockchain Europe innovation projects the starting signal was given. Now, speed is everything. Therefore, there is still the constant need to invest massively in the development of adequate platforms and algorithms.

For that purpose, Fraunhofer IML relies on an open source community of "Silicon Economists" – companies that want to contribute to fact that the Silicon Economy becomes reality in Germany and Europe. Fellow campaigners are very welcome.

ABOUT MICHAEL TEN HOMPEL

Prof. Dr. Dr. h.c. Michael ten Hompel is Managing Director of the Fraunhofer Institute for Material Flow and Logistics IML in Dortmund and holds the Chair of Materials Handling and Warehousing at TU Dortmund University. He is a member of acatech (National German Academy of Science and Engineering) and was inducted into the Logistics Hall of Fame in 2012. He is also board member of the International Data Spaces Association, member of the Management Board of the Competence Center Machine Learning Rhine-Ruhr (ML2R) and of the main board of Bitkom (Germany’s digital association) to name a few.

Last year, he presented the "Big Picture" of Silicon Economy to the professional community for the first time and since then, he has won over numerous companies to participate in the development of "Silicon Economy".

ABOUT THE PROJECT

As a result, "Silicon Economy Logistics Ecosystem" will support companies in developing new business models based on an open and intelligent platform ecosystem. Project partners are the Fraunhofer Institute for Material Flow and Logistics IML, the Fraunhofer Institute for Software and Systems Engineering and TU Dortmund University. The funding amounts to more than 25 million Euros over a period of three years. Silicon Economy Logistics Ecosystem is the most important innovation project of Silicon Economy. In a large number of technology-oriented practical projects – the so-called development projects – companies will implement selected technical components of the "Silicon Economy Open Source Repository" and test them during operation. These use cases serve to illustrate the advantages of Silicon Economy already an early stage of the major project.

You can find more on www.silicon-economy.com (currently only in German, by end of 2020 in English available as well).