Why logistics needs shared standards

Companies develop commodities to better manage their own processes or because their customers expect such a service as a matter of course. Thus, the service neither represents a unique selling proposition nor can it be monetised. As a result, it makes little sense for any company to invest time, energy, and money into developing such commodities.

This idea forms the basis of the Open Logistics Foundation, which was founded by four major logistics players based in Germany – one of the central logistics hubs in Europe – and is now being supported internationally by an increasing number of companies from the logistics and IT sectors.

Until now, each company has developed such commodities for itself. The result is a multitude of different solutions that work side by side, but not together. Connecting these solutions once again costs time – and money. The fact that each company must keep its solution up to date, carry out updates, and fix errors is another cost factor.

Companies have sometimes different views on which services are non-market differentiating, depending on how certain processes are designed. Collecting and discussing these perspectives is a prerequisite for the development of any open source solution under the Open Logistics Foundation.

To ensure that the member-developed components benefit all companies of the industry, we need a shared understanding of the processes from the start. This common ground forms the foundation on which we can work.

Incidentally, these discussions about the true characteristics of a logistics service offer another added value that should not be underestimated: For many companies, it is a starting point for thinking about new business models internally – and focusing on what truly drives revenue.

The Open Logistics Foundation has developed a structured open ideation process for this exchange. We assess which logistics services are suitable for an open source project by asking: What are the basic functions with which companies can neither stand out from the competition nor earn money? Which features truly set companies apart and help them win customers?

How this works can be illustrated with the example of a refrigerator: Advanced freshness technology for the longer shelf life of vegetables is a differentiator — it’s what sells and is therefore a competitive advantage. But the light that turns on when the door is opened isn’t. That’s the kind of basic, non-differentiating feature the Open Logistics Foundation focuses on.

When the members of the Open Logistics Foundation move into concrete project work, they create software or software components that reflect a wide range of requirements and perspectives. This is the first step towards an industry-wide accepted standard.

Every development is placed under the Open Logistics Foundation’s open source licence and made accessible to the public in the Open Logistics Repository. The publication comes with an explicit call for widespread use and commercialisation.

Companies can build individual functionalities on top of these shared innovations, including non-open extensions and services. The Open Logistics Foundation License explicitly permits the integration of source and object code into other components for commercial purposes, combining it with other components, modifying it, and transforming it.

However, changes to the basis – the core of the code – continue to be made jointly and in one place: the Open Logistics Repository of the Open Logistics Foundation. This basis is what enables different systems to interact effectively with one another. Only in this way can the software or software components establish themselves as a market standard – for resilient and sustainable global supply chains.