Digital platforms and artificial intelligence processes
The Silicon Economy is a project of the Fraunhofer Institute for Material Flow and Logistics , supported by the German logistics industry. Together we are developing an open source infrastructure for the platform economy of the future.
According to current forecasts, the most successful business models in logistics will come from the platform economy over the next five years. Our understanding of the platform economy of the future is characterized by a diversity and coexistence of different logistics and industrial B2B platforms: the Silicon Economy. Logistics companies of all sizes will then have the opportunity to process their business activities fully automatically - from ordering to invoicing and transport.
For the individual company, the construction of a platform is still associated with enormous costs, is immensely complex and is also fraught with legal uncertainties. That is why we are working together to create the software and hardware environment for the autonomous, Artificial Intelligence-controlled logistics of tomorrow. Our new logistics operating system will meet the highest data protection requirements and can be used by any company, regardless of size.
The Silicon Economy is a synonym for an upcoming digital infrastructure or digital ecosystem based on the automated negotiation, scheduling and control of the flow of goods, enabling new, digital business models for logistics (among others). This digital infrastructure enables comprehensive transparency in value added networks and creates trust along complete supply chains, from the supplier of raw materials to the end customer – which is maybe the most important prerequisite for getting all companies to participate.
The Silicon Economy Logistics Ecosystem innovation project aims to develop a complete environment for this new Silicon Economy:
Numerous so-called development projects with companies make applications visible.
The Silicon Economy - a project of the Fraunhofer Institute for Material Flow and Logistics, supported by the German logistics industry - is intended to help a decentralized and open platform economy achieve a breakthrough in Germany and Europe as a counter-design to Silicon Valley. Silicon Valley stands for the platform economy in the B2C sector, with still relatively simple business models. The Silicon Economy, on the other hand, is the B2B platform economy with AI-driven processes. It is therefore both an open and federated ecosystem for artificial intelligence.
Today, it is not possible for individual companies to develop solutions quickly and agilely for the platform economy of the future. The approach of the Silicon Economy is therefore decentralized, federal and joint. This gives logistics companies the opportunity to use new technologies internationally across borders, to organize their processes more efficiently, flexibly and resiliently, and to develop new business models.
The Silicon Economy is being driven forward at Fraunhofer IML, supported by the logistics industry, as part of two major implementation projects. One of these is "Silicon Economy Logistics Ecosystem", the other is "Blockchain Europe", the project to establish the European Blockchain Institute in North Rhine-Westphalia (NRW). In both implementation projects, specialist and platform components for specific applications are being created as part of numerous agile development projects.
The basis of the Silicon Economy is open source throughout. Software and hardware components from the implementation projects are placed in a library ("repository"). Any company can use these open source components to map its own business model or to work on the corresponding standards. An organization that goes beyond the implementation projects to coordinate and manage industry involvement and future developments for the Silicon Economy and make them available to companies is currently being set up.
The threshold for companies to participate in the Silicon Economy is very low. Any company can download components and build its own business model on them. This opportunity is unique, will set standards and be disruptive at the same time.
The goal is to ensure that every company - whether a corporation, mid-sized business, small business or start-up - has the assurance that it retains sovereignty and "dominion" over its data in the Silicon Economy and does not have to fear that it will have to abandon its business model, surrender its data or be subverted.
In highly distributed and federated ecosystems like the Silicon Economy, data spaces are needed where data can be traded and exchanged securely and sovereignly. The International Data Spaces is an initiative with the goal of creating a secure, cross-domain data space that enables companies across industries and of all sizes to sovereignly manage their data assets. Gaia-X is a project to build a high-performance, competitive, secure and trusted data infrastructure for Europe. Both projects will meet companies' need for data protection and data sovereignty as understood in Germany and Europe. Logistics is an important use case for both initiatives.
In logistics and supply chain management many economically independent partners work closely together. Transferring liability and risk, multilateral data exchange and trust issues are only some of the challenges here. As a key technology, blockchain has the potential to make data exchange tamper-proof and to automate and autonomize a large number of processes in the supply chain, e.g. the smart euro-pallet. Instead of consignment notes and lengthy, manual invoicing processes, goods can be invoiced in real-time by means of blockchain. With several hundred million euro-pallets and thousands of logistics service providers in the region, blockchain technology offers real added value.
In the Blockchain Europe innovation project, the European Blockchain Institute in Dortmund, NRW, is being established and a research program is being developed for the institute:
The silicon economy is the data and platform economy where people, companies, autonomous vehicles and IoT devices interact with each other. The term “Silicon Economy” plays on its proximity to Silicon Valley, but in fact it stands for a paradigm shift: the proprietary, i.e. manufacturer-bound, systems from Silicon Valley are being replaced by open, federal structures in the Silicon Economy. These ensure data sovereignty and create new, common standards for all. The most important innovation topics for realizing open and federal platforms are artificial intelligence (AI) processes, autonomous devices, smart contracting and distributed ledger technologies. All of these technologies are already available in Germany and have already been tested in industrial projects. Companies in the key business location of Germany thus have every opportunity to actively shape the new Silicon Economy in Europe and to prevail in the Silicon Economy as a whole.
“However, it is both the goal and an opportunity of the century to create a complete environment for the new “Silicon Economy” and thus shape the future. Starting with logistics, this comprehensive vision could be successively transferred into products and business models.”
Prof. Dr. Dr. h. c. Michael ten Hompel
It is no coincidence that it is logistics in particular that has proclaimed the coming of the Silicon Economy: logistics will be the first industry in which platforms, blockchains and artificial intelligence (AI) processes will prevail in huge numbers. This is because logistics can be completely algorithmized and because it is more highly standardized than any other industry. The potential for the use of artificial intelligence in logistics is therefore immense. AI will penetrate logistics in its entirety beyond the visible, from the single machine and the factory through to global value networks. Technology equipped with AI such as intelligent containers and pallets that negotiate autonomously, direct their way to the recipient and trigger payments by themselves, or swarms of autonomous vehicles in factories, are examples of how value chains will work in future.
The digital infrastructure of the Silicon Economy is based on the automated negotiation, scheduling and control of goods flow. This infrastructure allows companies to trade their data without losing sovereignty. Trust in both the security of the data and the quality of the service “Made in Germany” is the prerequisite for companies to participate and become involved in the Silicon Economy.
The “Big Picture” for this implementation, including the necessary technologies, already exists: a complete data chain from data generation in the Internet of Things (“IoT Broker”) and the trading and booking of data (“Blockchain Broker”) through to the organization of (logistical) processes (“Logistics Broker”) with the all-encompassing secure data room (International Data Spaces IDS) and the platforms above it to realize the new digital business models.
This infrastructure not only makes it possible to achieve nationwide transparency in value creation networks, it also creates the necessary trust along complete supply chains - from raw material suppliers to end customers.
Logistics connects places and companies in global networks – starting with the physical flow of materials and goods and the exchange of data through to the financial flow in logistics management. In this context the following applies: logistics is the basis of world trade. Whoever controls the world's logistics chains controls the world's economy. Today, logistics is the third largest industry in Germany. Several German logistics companies are to be found among the top ten in the world. In addition, Germany is the “logistics world champion” (World Bank). But you don't stay world champion forever, you have to become world champion again and again.
In view of the high degree of standardization in logistics, it can be assumed that logistical AI will shortly negotiate the world's flows of goods and control, schedule and distribute them. In the B2C business, platforms such as Amazon, Uber and Alibaba have already succeeded as monopolists in taking over macroeconomic business and logistics processes. In the B2C segment Amazon has proven how a new business model can completely change and even dominate a market within a few years through the intelligent combination of logistics and IT. However, the market leadership among B2B logistics platforms is only just being decided. With its Silicon Economy concept, logistics can now stake its claim for the future.
Fraunhofer Institute for Material Flow and Logistics IML