Co-Developing a Digital Supply Chain Management Suite

 

[By Mikael Lind, Wolfgang Lehmacher, Kenneth Lind, Teemu Manderbacka, Jens Lund-Nielsen, Eddie Olsson, Serge Schamschula, Erick Sirali, and Xiao Feng Yin]

Collaboration and data sharing remain major challenges in the supply chain and logistics industry. This, despite enormous progress in technological development. The virtual watch tower / VWT initiative takes a novel angle to address these two shortcomings. The vision is to create an ever-growing global community that co-creates a digital solution / VWTnet for enhanced visibility and improved supply chain risk management through private and public data-driven analytics and collaboration across supply chain networks worldwide. VWT combines collaborative software development for data sharing with community building for collaboration co-creating a public good. It is co-evolution that leads to transparency, which, alongside neutrality, brings trust as the basis for data sharing and collaboration. The goal is to establish a neutral entity backed by trustworthy and impartial actors to ensure continuity of the effort and solution for improved supply chain management.

A public good is like a lighthouse, nobody can be excluded, and everyone benefits. VWT’s primary goal is to drive on-demand collaboration around specified shipments based on improved visibility through data sharing. The VWT Community members stay in full control of the data. Everything happens in their Towers, and the data that is pushed and not pulled is governed by a commonly accepted code of conduct. No central database, no central infrastructure, and no central control is needed. There is no star topology but an ecosystem enabling unit that sits with the VWT Entity that holds the rules, registries, and the key to participation in VWT. VWT can be perceived as the internet of watchtowers. A co-created solution of the members, by the members, for the members. The VWT Entity is the guardian of the standards and protocols as well as the orchestrator of VWTnet and the VWT Community.

VWTnet does not aim to replicate current solutions but enhances Towers. Towers are off-the-shelf, tailored, or inhouse solutions to manage the flow of goods selected by VWT Community members. VWT complements the various Towers, some which are commercial, and brings value to the VWT Community members and opportunity to the commercial actors engaged in VWT. But not all actors that join VWT have a Tower. Therefore, VWT also develops and provides a minimalist Tower as well as an easy-to-use data push mechanism for those who do not wish to install a Tower at all. VWTnet is an open solution, with open standards enabling the exchange of data. Everyone involved in VWT Community shipments is asked through a power of attorney (PoA) to contribute and provide primary data related to specific shipments of VWT Community members. VWT will introduce a data validation mechanism to ensure data integrity. The open and collaborative nature of VWT, which manifests itself in the co-creation of VWTnet and its nature as a public good, also implies open standards and an open-source approach to software development. But not all software will be developed open-source, research institutes and commercial technology providers can also contribute to the development of VWTnet.

VWTnet consists of Towers, e.g., software installed by the users to manage the flows of goods, and a mechanism to push data to each other based on pre-agreed rules. The latter will also be developed in a minimalist form of open-source, but also a minimalist data pushing tool for those that don’t have and don’t wish to have a Tower, but who are part of a member’s supply chain in focus. This article outlines VWT’s approach to open-source development as a call for action to technology providers and software developers to join VWT and help to co-develop the reference code for VWTnet, a minimalist Tower, as well as an easy-to-use push mechanism for data exchange. Also, the article presents a response by TLIP (Trade & Logistics Information Pipeline) community that has replied to VWT’s call for action for ecosystem interoperability,

VWT - a public good as foundation for an open-source approach

VWT is a co-created solution that will be used for improved supply chain and carbon footprint management. VWT, as a community and a digital enabler, is designed as a public good.

VWT fosters co-opetition through governance rules by striking a balance between openness and control so that actors can share their special sauce without giving away the recipe. For example, using openness, VWT creates the possibility for cargo owners to receive data from multiple transport operators involved in their transports through APIs. Then, through control, it would provide governance for the data-pushing and data utilization process between various actors in the VWT Community. Open-source, open standards, and inclusiveness do not equal open data, which would be openly accessible to all, including other companies, governments, media, consumers, and citizens.

The creation and governance of VWT reflects public good thinking, which is based on the thinking of the American scholar J.F. Moore but goes beyond the original idea, as VWT envisages an ecosystem where actors not only co-envision the digital tool, named VWTnet, but also co-design its co-evolution.

Public good is ‘non-rivalrous’, i.e., an individual’s consumption of the good does not influence what is available for others; and ‘non-excludable’, i.e., no one can be excluded from consumption of the good. Typical example of a public good is a lighthouse where one ship’s use of the beacon does not prevent other ships from using the same.

The notion of ‘public good’ can be assumed to be ingrained in VWT as initial funding support came from governmental agencies in Sweden and Singapore to foster digital innovation and co-create economic and societal value for Swedish and Singaporean industries but also for every actor in related global supply chains. Also, technology providers co-create digital solutions responding to the needs of cargo owners, and transport and terminal operators.

The rationale for open standards and open-source

VWT as a public good implies the use of open standards and open-source to create a true inclusive asset available to all actors across supply chain networks in the world. An open standard is a standard that is openly accessible and usable by anyone. Open-source refers to any software whose source code is made freely available to the public for use or modification. However, open-source does not imply that the executable is free, and therefore, VWT will ask for a cost contribution for the management and maintenance of VWTnet and the expansion of the ecosystem. The use of open standards and open-source encourages open innovation for more inclusive and durable solutions.

In open-source software development, reference implementation exemplifies how software components can be designed and rolled out. For a distributed network collaboration like VWT, building a reference implementation has two goals:

• Supporting neutrality: competitive neutrality of the technical guidelines and directives to avoid biases that is facilitated and strengthened by making available a technically compliant, open, and free implementation, which is co-created by the VWT Community.
• Lowering entry thresholds: having access to an open and free version of a Tower and its components minimises the development effort required to enter the VWT Community and participate in its collaborative activities.

The benefits for developers go beyond the most immediate incentives for participating in open-source development, and includes opportunities such as learning, profiling and networking. During the process, the developers can benefit specifically from:

• Increased adoption: open-source software will enjoy broader adoption in the VWT Community due to higher accessibility and transparency. Developers can benefit from a larger user base, which can lead to increased brand recognition and market penetration. By participation, competing developers can grow their common market volume within which they then compete freely, building on the commonly developed base.
• Culture of innovation: open-source software fosters a culture of innovation by encouraging collaboration and knowledge sharing. By contributing to VWTnet, developers can position themselves as thought leaders and innovators in their respective fields within the VWT Community.
• Long-term durability: the robust and active VWT Community will provide continuous feedback which can ensure long-term durability of the open-source software provided by the developers.

Principles guiding the open-source software development effort

By applying certain principles for the prioritization of software components VWT can ensure return on investment.

The principle of shortest path to actual - be it minimal - usability, accelerates the progress of VWTnet in terms of functioning towers or tower components.

Establishing efficiently a layered and distributed network like VWTnet can start with technically compliant communication through developing software components that support a first iteration of data exchange protocols describing both the structure of data being exchanged (data format) and the mechanisms for performing such an exchange, including means of authentication and identification. Experience gained through practical evaluation and development then informs further improvements and the development of subsequent components in an iterative manner for fast incremental progress.

VWTnet creates value for the VWT Community

The VWT Community is a community of trust that permits that identified actors in the transport chain can push data on identified shipments and their transport progress to authorized receivers. This process is governed by a minimalist set of principles to ascertain the easy and rightful provision, access, and consumption of data. Data segregation is part of governance allowing use of specific parts of data sets. Data providers and consumers are actors along the supply chains operating individual Towers or supply chain technology solutions acting on behalf of the Towers. Each shipment identifies the actors involved in the transport to be invited to provide shipment-related data on status and progress. Only primary data will be shared via VWTnet, historic data is not accepted. The data should be pushed in near-real-time.

Final remarks – a call for action

VWT is designed as a public good which implies open standards and open-source. Considering rising disruptions and accelerating climate change VWT aims to develop the core components of VWTnet over the coming twelve months of the project.

VWT will leverage its community approach and community building capability to kick-off the builder effort at the Singapore Maritime Week 2024. A minimalist Tower and other tools contributed by the VWT Builder Community will complement existing solutions and empower Towers. At Singapore Maritime Week 2024, VWT will demonstrate parts of a ‘minimum viable product’ (MVP) and announce its open-source effort alongside its intention to progress the work on the VWT Entity.

This contribution covers the VWT open-source approach but is also a call for action to technology providers and software developers across the globe to join and co-create VWTnet. The VWT Community’s ambition is to drive major change bringing significant improvements in disruption and carbon footprint management to the supply chain and logistics industry in the interest of the entire ecosystem and probably the world.

We thank Abhinayan Basu and Trisha Rajput from Gothenburg University for their guidance and input to this article.

First Response to the VWT call for action – by TLIP community

by Jens Lund-Nielsen (IOTA Foundation) & Erick Sirali (Trademark Africa)

Firstly, it is with excitement we are providing this response by invitation from the virtual watch tower / VWT. From an ideology point of view, it feels like meeting a twin sister. Having only had first discussions very recently, it is still early in defining how the two ecosystems might collaborate posing some important questions around interoperability – both technically and from a governance perspective. As a matter of introduction, a few reflections on the status of our work on the Trade & Logistics Information Pipeline (www.tlip.io) project.

The Trade Logistics Information Pipeline / TLIP, a collaborative infrastructure for secure exchange of data and documents was launched as a response to the same challenges as the VWT initiative; “To facilitate sustainable trade by creating a neutral, open, collaborative, trusted and interoperable digital ecosystem”, which is also our mission statement.

We started with a startup mentality, driven by the goal to showcase feasibility by building and implementing a “minimal viable product” (MVP), or more appropriate a “minimum viable ecosystem” (MVE). The IOTA Foundation joined up with Trademark Africa bringing together technical capabilities with trade and development capabilities. Thus, building a decentralised solution with Kenya government and border agencies that will allow traders to establish a digital identity, and use TLIP to access relevant information and documentation such as the phytosanitary certificate, the Certificate of Origin, the Export Certificate etc. directly from the Kenyan Single Window system (Kentrade) and other relevant border agencies’ sources.

Figure 1: data sharing explained.

Each actor has access to a TLIP node that abstract away the complexity of securing data integrity, data sovereignty, and permission management (Figure 2). Thus, allowing these actors to build unique data spaces for consignments, shipments or products where each actor might hold different parts of the information of the lifecycle (Figure 1).

Figure 2: Infrastructure explained. Each actor has access to a node, either own node or a community node for smaller actors, that can convey trusted data between siloed organisational databases.

Interoperable digital formats of international trade documents are stored on a blockchain (a HASH), both by containing required document information, as well as pointers to the original data stores where the original document/information can be fetched, thus avoiding any central storage of proprietary data. Additionally, the use of decentralised digital identities allows to bring authenticity to the stored information and enable management of access control. On chain trade documents information is linked to their originator identity through a cryptographic digital signature, thus allowing any authority verifying digital documents to be able to also verify the authenticity and provenance of the carried information. This process, which is fully digital, auditable, and verifiable, eliminates the traditional delays caused by paper-based cross-border trading of goods. Today, the technical feasibility has been proven and TLIP experiences high interest from traders, forwarders, and border agencies.

Expanding the Minimum Viable Ecosystem

Now, Kenya has a system allowing the Kenyan ecosystem to start organising the export of goods digitally. This provides value adds in terms of visibility along the supply chain. But to take full advantage of this digital infrastructure, it is important that also Kenyan trading partners accept secure digital versions of the data instead of paper documents. The immediate value of business-to-business (B2B) sharing of data is eminent but the larger value results from securing digital processes both at exporting and importing clearance. The Kenyan TLIP deployment can be compared with a “phone” that is lacking some features that are available in other countries. Thus, the Kenyan government added information sharing to the Economic Partnership Agreement (EPA) such as the Kenya - United Kingdom (UK) EPA that uses TLIP as the platform to implement this commitment. Last year,  UK Cabinet Office, Kenya Revenue Authority and border agencies (from both countries) conducted information sharing trials on TLIP which resulted to positive and very insightful findings. We have been running pilots organising digital exchanges from Kenya and European Union (EU) into the UK. There are significant cost savings across product types and trade lanes. Furthermore, we are experiencing increasing interest to use this digital infrastructure to share additional types of information such as environment, social, and governance (ESG) data and full datasets allowing the traceability of products.

In parallel, additional countries and industry players have raised their interest expanding the scope of the TLIP operations to include digital trade corridors in East Africa with countries in the Middle East and Europe.

Open-source software, data standards, digital standards, compliance, and adoption

Like with the VWT initiative, our aim is a standardized public good solution, easily available for all actors at low cost and with low adoption barriers. In the following are some reflections on several key areas that have been addressed in the pursuit of our TLIP vision:

• Data standards: A key challenge is to ensure everyone talks the same language, e.g. use the same data standards, to be able to share and consume data from each other. TLIP is set up with APIs for GS1, EPCIS 2.0, and UN/CEFACT data standards. But there is a need to constantly encourage all actors to use common data standards. The work of the Digital Standards Initiative (DSI) is going to essential in these efforts to ensure interoperability on the level of data.
• Digital standards: Digital standards include how authenticity is secured using verifiable credentials, what type of encryption is used, and how the challenge of the digital identity is resolved. TLIP looks to the work of the W3C consortium as well as the European Blockchain Service Infrastructure by the European Commission, where the IOTA Foundation is a leading supplier. While there are still no global agreed standards a few leading approaches guide the technical community.
• Compliance: A lot is happening in the field of compliance that affect both the speed of adoption as well as the technical development. As an example, the Model Law on Electronic Transferable Records (MLETR) legislation that guides the digital use of transferable records, such as the e-Bill of Lading (eBL), has been widely accepted by the shipping industry and is currently being passed in multiple jurisdictions. It comes with technical guidance for the use of tokenization to ensure ownership transfer of digital records that are critical to ensure cross-industry adoption. Furthermore, there are several new legislation acts coming into force over the coming years, such as the EU Carbon Border Adjustment Mechanism (CBAM), the German Supply Chain Act, and other ESG-related legislation that will impact the use of digital solutions in supply chain management.
• Open-source:  ensure an open-source solution with a strong community is important for a multitude of reasons which have also been laid out in the VWT call-for-action article. Open-source can ensure robust code, innovation, and low cost and speed of adoption.

Of course, there is much more to be considered when building a new “standard” for the exchange of data and documents in international trade.

An impartial governance structure

TLIP was initially developed as a project of the IOTA Foundation and Trademark Africa, and the solution has been developed by a dedicated team of engineers, guided by above principles as design criteria. But it has always been recognized that this initial setup will not constitute the impartial governance structure necessary to achieve the TLIP vision.

Thus, we needed to involve additional actors that can support the mission of facilitating sustainable trade by creating a neutral, open, collaborative, trusted and interoperable digital ecosystem. On February 27th, 2024, during the WTO MC13, a Collaboration Agreement was signed by six organisations to collaborate and drive the development and implementation of the necessary and relevant governance setup. These organizations represent an interest in improving global trade but are all non-profit organisations: 1) Trademark Africa; 2) IOTA Foundation; 3) World Economic Forum; 4) Institute for Export & International Trade; 5) Global Alliance for Trade Facilitation; and 6) Tony Blair Institute for Global Change. These organizations will be the initial guardians of the TLIP ecosystem and open-source software. Furthermore, they also bring a distinct perspective on economic development and inclusion as well as implementation power across multiple countries, where they operate as development partners to governments.

The commitment is to setup the structures, including technical, standards, industry, and government focused committees and the funding model for the mid- and long-term operation and development of the solution.

Conclusions – ecosystem interoperability

The conversation with the VWT leadership team and the call-for-action article leave a question open about “ecosystem interoperability”. In addition to ensuring data and technical interoperability, there might also be a need to define ways of ensuring that different ecosystems working in the digitalization of international trade converge over time. There are differences in how the two ecosystems are evolving and, in the tactics, to ensure adoption – and there might be additional ecosystems having similar visions as VWT and TLIP. As a public good that is ‘non-rivalrous’ and where ‘co-opetition’ prevails, we at TLIP are committing to further engage with VWT to find robust course of action, namely, through collaboration on standards and code, and/or through participating in each other’s governance structures. It is truly exciting to envisage the potential for real impact through supply chain collaboration that will emerge and evolve over the next years.

About the authors

Mikael Lind is world’s first (adjunct) Professor of Maritime Informatics engaged at Chalmers, and Research Institutes of Sweden (RISE). He is an expert contributor at World Economic Forum, Europe’s Digital Transport Logistic Forum (DTLF), and UN/CEFACT. He is co-editor of the first two books on Maritime Informatics, and is co-author of Practical Playbook for Maritime Decarbonisation and co-editor of the book Maritime Decarbonization.

Wolfgang Lehmacher is partner at Anchor Group and advisor at Topan AG. The former director at the World Economic Forum, and CEO Emeritus of GeoPost Intercontinental, is an advisory board member of The Logistics and Supply Chain Management Society, ambassador F&L, advisor GlobalSF and RISE, and founding member of the think tanks Logistikweisen and NEXST.

Kenneth Lind is Senior Researcher at Research Institutes of Sweden (RISE) and has driven several research projects focusing on system architecture and software engineering challenges in the automotive and transport sector. He holds a PhD in software engineering from Chalmers University of Technology and has 20 years of industrial experience as technical leader.

Teemu Manderbacka, Maritime Research Team Leader at VTT and Professor of Practice at Aalto University. He contributes to Safe and Energy Efficient Maritime Transportation through technological innovations. He has strong background in Naval Architecture; hydrodynamics numerical methods, experimental research, and software services to ship owners and operators to improve ship technical performance and energy efficiency.

Jens Lund-Nielsen (IOTA Foundation) is an expert advisor to the UK Parliament, World Economic Forum and multiple corporations. Previous employers include A. P. Moller - Maersk and pwc. Jens is a pioneer in building public-private partnerships to enable better trade for all, including co-founder of the Global Alliance for Trade Facilitation (www.trade facilitation.org) and the Logistics Emergency Teams with World Food Programme.

Eddie Olsson is a senior research engineer at Research Institutes of Sweden (RISE) with almost a decade of experience from developing data distribution and demonstrator platforms supporting the CDM concept.

Serge Schamschula is Head of Ecoystem at Transporeon a Trimble company, Vice Chair in ALICE (Alliance for Logistics Innovation through Collaboration in Europe) as well as Expert Evaluator for the European Commission. He has 25 years of experience in logistics and supply chain systems.

Erick Sirali, Digital Trade Director at TradeMark Africa, leads the delivery of over 50 digital trade projects in 14 African countries in both public and private sectors. Starting as a software developer, he has designed and delivered trade related solutions in health, agriculture, logistics, transport among others for the last 14 years.

Xiao Feng Yin is a senior research scientist of Institute of High Performance Computing, Agency for Science, Technology and Research (A*STAR) of Singapore. He has led various grants and industry projects in the areas of maritime study, logistics and supply chain. He received both his Master and PhD degrees from Nanyang Technological University (NTU), Singapore.