The Supply Chain — Reimagined

What the early vision­ar­ies failed to see was that the sup­ply chains are too com­plex for a sin­gle com­pa­ny to be able to inte­grate them all into a sin­gle cen­tral cloud enti­ty. No com­pa­ny can for­mu­late the stan­dards for all the oth­ers — and cer­tain­ly not in a sec­tor as inter­na­tion­al as the auto­mo­tive indus­try. More­over, there are good rea­sons for com­pa­nies not to entrust their most impor­tant asset, name­ly their data, to a sin­gle actor. It makes far more sense for each indi­vid­ual owner to retain con­trol of its data and to exchange only the spe­cif­ic infor­ma­tion need­ed for a given appli­ca­tion. “Every­one involved first had to grasp the con­cept,” says Sturm. “We all had to real­ize that coop­er­a­tion is the bet­ter way for­ward. Togeth­er, we have to move beyond the notion of indi­vid­ual ‘ego sys­tems’ and devel­op an over­ar­ch­ing ecosystem.”

Col­lab­o­ra­tion was what was need­ed, as well as tech­ni­cal solu­tions that could allay the fears of the part­ners. For exam­ple, the fear of expo­sure, also and espe­cial­ly to one’s com­peti­tors. The prin­ci­ples of Gaia‑X formed mile­stones along the road to the auto­mo­tive industry’s shared ecosys­tem. These laid the ground­work for the launch of Catena‑X by a hand­ful of com­pa­nies in 2021. “It was noth­ing less than a par­a­digm shift,” observes Sturm. The part­ners joined forces to devel­op every­thing right from the start, from for­mu­lat­ing the task — what do we want to achieve togeth­er? — to design­ing the solu­tions. “This shared pre­c­om­pet­i­tive basis laid a solid foun­da­tion of trust.”

Because the data from each com­pa­ny have to remain under that company’s con­trol, they are only “mutu­al­ly acces­si­ble in con­text-sen­si­tive ways,” as Sturm explains. The key com­po­nent of the new data space is a tech­nol­o­gy known as eclipse data­space con­nec­tor (EDC), which has both a con­trol plane and a data plane. On the con­trol plane, par­tic­i­pat­ing com­pa­nies nego­ti­ate which sup­ply chain data are need­ed for a spe­cif­ic use case. On the data plane, the sys­tem then dis­plays the spec­i­fied data — and only those data. The cru­cial fea­ture of the sys­tem is that the sup­ply chain mem­bers enter into con­trac­tu­al rela­tions with other mem­bers regard­ing that spe­cif­ic data set, which elim­i­nates poten­tial ‘ mis­use of infor­ma­tion right from the start. Catena‑X uses a “one up and one down” prin­ci­ple in its data chain. That means each par­tic­i­pant sees only its imme­di­ate sup­pli­ers and cus­tomers, but no fur­ther com­pa­nies either upstream or down­stream. Data are only exchanged direct­ly between com­pa­nies, with­out a cen­tral intermediary.

Catena‑X’s approach is designed to inte­grate a large num­ber of com­pa­nies of dif­fer­ent sizes. “As such, it’s not a Ger­man or even a Euro­pean net­work,” says Sturm. “The Euro­pean auto­mo­tive indus­try can only be suc­cess­ful on a glob­al basis — and that means the over­all stan­dards have to be applic­a­ble every­where in the world.” But the ini­tia­tors were not just think­ing about the big fish. Right from the start, they want­ed to include small and medi­um-sized enter­pris­es (SMEs) as well. “That’s essen­tial, because SMEs make up a major­i­ty of the sup­ply chain — you can’t do with­out them if you want Catena‑X to be successful.”

What, then, is the best way to encour­age SMEs to join in? Pres­sure is not the way to go, accord­ing to Sturm. Instead, he says, these com­pa­nies need to rec­og­nize the added value Catena‑X has to offer. At the same time, the network’s appli­ca­tions should work on a “plug-and-play” prin­ci­ple to the extent pos­si­ble. In con­trast to the big play­ers, after all, small­er com­pa­nies often do not have their own IT experts who can carry out com­plex sys­tem inte­gra­tion projects. “That means we need low-thresh­old offers with the fewest pos­si­ble acces­si­bil­i­ty hur­dles, because oth­er­wise we won’t man­age to get these com­pa­nies on board.”

Part of the ben­e­fit for SMEs lies in the appli­ca­tions Catena‑X makes avail­able. For instance, it can opti­mize and stream­line data man­age­ment sys­tems for busi­ness part­ners. Small enter­pris­es, too, are inter­est­ed in sup­pli­er queries. If Catena‑X suc­ceeds in becom­ing a uni­ver­sal instru­ment that bal­ances capac­i­ties in sup­ply chains and lets man­u­fac­tur­ers coor­di­nate their needs with sup­pli­ers, this will rep­re­sent an addi­tion­al major incen­tive for all par­ties to work togeth­er. Yet anoth­er ben­e­fit is the inter­op­er­abil­i­ty of the appli­ca­tions. Regard­less of which sup­pli­er or which open-source appli­ca­tion is used, the appli­ca­tions them­selves are com­pat­i­ble because of the uni­form seman­tics and cal­cu­la­tion meth­ods defined by the Catena‑X standards.

For its part, ZF nei­ther can nor wants to do with­out the small sup­pli­ers in Catena‑X. “We want to achieve cli­mate neu­tral­i­ty by 2040 at the lat­est,“ says Sturm. “The speed at which we can com­mit to this tar­get, and also demon­strate and doc­u­ment it, will depend in part on our data chains.” And SMEs are inte­gral parts of these data chains. As Sturm explains, too many com­pa­nies are already los­ing too much time pre­cise­ly when it comes to aggre­gat­ing their data. How­ev­er, “If com­pa­nies suc­ceed in gath­er­ing the req­ui­site data faster, they’ll have more time to ana­lyze these data and ulti­mate­ly also take steps to elim­i­nate prob­lems or to enhance process­es and make them more economical.”

Catena‑X would exceed all other sys­tems in its abil­i­ty to accel­er­ate the exchange of data mul­ti­ple times over. But ZF expects far more than that from Catena‑X. This can be seen in the extent to which it is already using the consortium’s apps — name­ly in seven of the ten use cases: for sus­tain­abil­i­ty, sup­ply chain mat­ters, data com­pi­la­tion for cir­cu­lar economies, demand and capac­i­ty man­age­ment, busi­ness part­ner data man­age­ment, and the exchange of qual­i­ty data. And final­ly, Sturm and his col­leagues are using Catena‑X data to gen­er­ate dig­i­tal twins. The idea here is that vehi­cle use pat­terns are expect­ed to enable pre­ven­tive main­te­nance and repair.

Despite the wide range of appli­ca­tions already avail­able, the part­ners are work­ing tire­less­ly to expand the areas of appli­ca­tion, and to extend them to other indus­tries with sim­i­lar approach­es, for exam­ple in the form of Manufacturing‑X in the pro­duc­tion indus­try. Sturm expects that con­nect­ing Catena‑X with other indus­tries will open up “undreamt-of busi­ness pos­si­bil­i­ties” in the future. He sees an espe­cial­ly high level of poten­tial in inte­grat­ing infra­struc­ture, mobil­i­ty, ener­gy, and safe­ty with­in the con­text of smart-city con­cepts, for exam­ple. “Many areas of life are merg­ing ever more with each other,” he notes. “If we can use data-space tech­nol­o­gy to inter­con­nect the under­ly­ing data in con­text-sen­si­tive ways, we’ll be able to devel­op entire­ly new busi­ness models.“

That being said, Göller and his team have accom­plished a lot in a short peri­od of time. Under his direc­tion, the first Euro­pean Catena‑X hub out­side Ger­many was found­ed in France. It wasn’t easy to win over the French, says Göller. Their ini­tial skep­ti­cism revolved around two points: first, how will com­pa­nies retain com­plete con­trol over their data at all times; and sec­ond, how will exist­ing French struc­tures com­bine with those of Catena‑X.

Regard­ing data con­trol, Göller first held many dis­cus­sions in Paris on stan­dard def­i­n­i­tions. His French col­leagues were also inter­est­ed in the use of blockchain tech­nol­o­gy and how to inte­grate exist­ing mate­r­i­al track­ing appli­ca­tions. Göller and his team repeat­ed­ly empha­sized the advan­tages of a decen­tral­ized data space and the prin­ci­ple of con­text-based access rights. “Those were the fac­tors that ulti­mate­ly con­vinced our col­leagues to join the shared project,” he says. Göller also sat­is­fied his French coun­ter­parts on the topic of con­nec­tions with exist­ing struc­tures. “Our idea is pre­cise­ly to cre­ate com­pat­i­ble inter­faces for exist­ing net­works, and to build our net­work on this basis,” he explains. “Catena‑X is the net­work of networks.”

“We start by talk­ing with the club of the will­ing”: this is Göller’s method and his term for those who are already open to the idea. In France, the first large part­ner to join the “club” was Stel­lan­tis with brands such as Peu­geot and Cit­roën, but also Opel, Fiat, and Chrysler. Valeo, an impor­tant sup­pli­er that is also active inter­na­tion­al­ly, joined short­ly there­after. The two com­pa­nies are mem­bers of Galia, a major French auto­mo­tive asso­ci­a­tion head­quar­tered in Boulogne-Bil­lan­court. With Stel­lan­tis and Valeo as inter­me­di­aries, Göller had mul­ti­ple meet­ings with Galia rep­re­sen­ta­tives in Paris. “The result we came up with sat­is­fied every­one and gen­er­at­ed vis­i­ble syn­er­gies,” reports Göller. It also brought a new Catena‑X mem­ber, name­ly Renault. Today a Renault rep­re­sen­ta­tive is active in Catena‑X as an elect­ed mem­ber of the board.

The inter­na­tion­al­iza­tion team is pur­su­ing a sim­i­lar, albeit not iden­ti­cal, course for impor­tant auto­mo­tive mar­kets in Asia. The focus is on Japan and China. Göller and a num­ber of Catena‑X expert mem­bers vis­it­ed Shang­hai and Bei­jing in mid-2023, where they spoke with rep­re­sen­ta­tives from eight auto­mo­tive asso­ci­a­tions and orga­ni­za­tions with­in just four days. Most of their con­tacts came from superbly net­worked col­leagues at Volk­swa­gen China, but the strong pres­ence of the Ger­man Cham­ber of Com­merce and Indus­try (IHK) and the Ger­man Cham­ber of Indus­try Abroad (AHK) also opened doors in the Mid­dle King­dom. Nev­er­the­less, Göller’s “Ger­man ideas” are also met with skep­ti­cism here too. “We keep hav­ing to explain that Catena‑X can only be suc­cess­ful on a glob­al scale, and that all Ger­many did was get it started.”

At the same time, those Euro­pean val­ues under­ly­ing Catena‑X are often a strong point in the network’s favor. “The data-sov­er­eign­ty prin­ci­ple is a strong argu­ment for non-Euro­peans as well,” Göller observes. It shouldn’t come as a sur­prise that the export-ori­ent­ed Chi­nese com­pa­nies are espe­cial­ly open to Catena‑X. After all, they too have to meet the legal require­ments that already apply in Ger­many and will be Europe-wide as of 2024. “Many of our con­tacts quick­ly real­ized that Catena‑X can help them here.” These con­tacts are the ones cur­rent­ly engaged in the most active talks with the inter­na­tion­al­iza­tion team. An alliance of the will­ing is expect­ed to form in China soon too, with mem­ber com­pa­nies such as Siemens, BMW, SAP, Huawei, and T‑Systems.

In Japan the team is a step fur­ther along. Inter­me­di­aries here includ­ed col­leagues from the Ger­man soft­ware com­pa­ny SAP, which itself was one of the orig­i­nal Catena‑X mem­bers. Inspired by Catena‑X, the Japan­ese have been work­ing on their own sup­ply chain net­work known as Oura­nos — and con­se­quent­ly already think­ing of future col­lab­o­ra­tion with the Euro­peans. Here, too, the guid­ing prin­ci­ple is that of a “net­work of net­works.” The only thing that counts is enabling data to flow smooth­ly from sup­pli­ers in Ger­many to OEMs in Japan, and the other way around. “Whether the net­work is later called ‘Catena‑X,’ ‘Oura­nos,’ or ‘Let’s Share Data, Inc.’ doesn’t mat­ter to us.”

Expe­ri­ence gained by Volk­swa­gen is help­ing put Catena‑X into prac­tice. The world’s largest car­mak­er began build­ing its own suc­cess­ful inter­nal dig­i­tal pro­duc­tion plat­form back in 2019. Its first step was to con­nect more than 100 sites with each other on a dig­i­tal pro­duc­tion plat­form (DPP). But deter­min­ing end-to-end PCFs, or prod­uct car­bon foot­prints, for its vehi­cles using a sin­gle indus­try-wide stan­dard would have required the Group to con­nect with addi­tion­al part­ners well beyond its own sup­pli­er net­work. “We were forced to real­ize the project was a lit­tle too big even for Volk­swa­gen,” admits Göller.

Volkswagen’s experts con­tributed their knowl­edge as one of the first mem­bers of the asso­ci­a­tion and also of the con­sor­tium. Togeth­er, with­in the cir­cle of 28 part­ners, they devel­oped the project’s ini­tial soft­ware on an open-source basis. “That was when we real­ly got excit­ed about the big pic­ture of Catena‑X,” recalls Göller.

No one in the Group has regret­ted tak­ing that step. The progress made in just two years by the Catena‑X part­ners has taken the wind from the sails of ini­tial skep­tics. Numer­ous apps are already avail­able that can con­sid­er­ably enhance sup­ply chain man­age­ment, meet report­ing require­ments, and mit­i­gate dam­age in future crises. With ever more users pro­vid­ing the data need­ed by the apps, Catena‑X is becom­ing ever more valu­able to its com­mu­ni­ty. In light of these rapid devel­op­ments, Göller is cer­tain that “Catena‑X will soon be able to iden­ti­fy facts and con­texts that we even can’t even imag­ine today.”

The dig­i­tal­iza­tion expert was espe­cial­ly inter­est­ed in two top­ics right from the start: the new plat­form should cover the entire auto­mo­tive value chain, and it should be based on the key cri­te­ri­on of inter­op­er­abil­i­ty. The cen­tral­i­ty of these two points reflects the spe­cial sig­nif­i­cance BASF has for the auto­mo­tive indus­try and beyond. The glob­al­ly active chem­i­cal com­pa­ny occu­pies var­i­ous posi­tions in the auto­mo­tive sup­ply chain. It is a tier 1 sup­pli­er, name­ly of top-level mod­ules and sys­tems, for prod­ucts such as coat­ings. For bat­tery chem­i­cals and syn­thet­ic mate­ri­als, it is posi­tioned fur­ther down the value chain in the auto­mo­tive sup­ply sec­tor, at tiers 2 to 5. The goal, of course, is to incor­po­rate all of these points along the chain into the new data space.

Sim­i­lar con­sid­er­a­tions are lead­ing Woll­ny to place a greater empha­sis on inter­op­er­abil­i­ty. “Because we’re active in many dif­fer­ent indus­tries, we want to be able to move data back and forth between dif­fer­ent plat­forms,” he explains. The data there­fore have to be com­pat­i­ble with other sys­tems’ stan­dards. That is pre­cise­ly the point of interoperability.

One fac­tor that fos­ters inter­op­er­abil­i­ty is the exam­ple Catena‑X is set­ting to an increas­ing degree for coun­ter­parts in relat­ed branch­es of indus­try. As Woll­ny observes in describ­ing the devel­op­ment, “Catena‑X is already serv­ing as a type of blue­print for other decen­tral­ized data ecosys­tems.” Its lead­ing role is based in part on the shared approach taken early on by a num­ber of auto­mo­tive com­pa­nies — and sure­ly also on finan­cial back­ing from the Ger­man Min­istry for Eco­nom­ic Affairs and Cli­mate Action. As Woll­ny explains, “Catena‑X gives Ger­many a new, scal­able, future-ori­ent­ed tech­nol­o­gy that will become ever more rel­e­vant both nation­al­ly and inter­na­tion­al­ly in an increas­ing num­ber of sec­tors.” The Manufacturing‑X and Health‑X data spaces, which have also been devel­oped in Ger­many, are already uti­liz­ing prin­ci­ples devel­oped by Woll­ny and his col­leagues from the consortium.

Anoth­er ben­e­fit of Catena‑X is the enor­mous speed at which its oper­a­tors are achiev­ing their goals and inter­im tar­gets. “More than 1,000 employ­ees at 28 com­pa­nies are work­ing on it togeth­er in agile ways,” says Woll­ny. That admit­ted­ly requires an enor­mous amount of coor­di­na­tion. Yet the mutu­al trust aris­ing from joint efforts by what are actu­al­ly com­peti­tors has helped mas­ter many a chal­lenge. The first pro­to­type was ready soon­er than antic­i­pat­ed. Assum­ing the upcom­ing “go live” is suc­cess­ful, signs will then point to expan­sion — “inter­na­tion­al­ly as well as nation­al­ly with greater recruit­ment of small­er and medi­um-sized companies.”

Although Catena‑X has already made aston­ish­ing progress on Euro­pean and other inter­na­tion­al lev­els, Woll­ny expects the chal­lenge of increas­ing accep­tance among small­er and medi­um-sized enter­pris­es (SMEs) to con­tin­ue. “We’re attend­ing many events and trade fairs and hold­ing a lot of indi­vid­ual talks these days, but the value chain still has gaps that we want to close,” he says. How­ev­er, ever more deci­sion-mak­ers are real­iz­ing the advan­tages of no longer need­ing to draw their data from dif­fer­ent plat­forms with dif­fer­ent stan­dards but instead being able to access it from a sin­gle space with a uni­form standard.

Woll­ny him­self has high­er aims for Catena‑X. BASF is espe­cial­ly inter­est­ed in sus­tain­abil­i­ty and prod­uct car­bon foot­prints (PCFs). “We’re look­ing at the entire cir­cu­lar econ­o­my here,” he says, “start­ing with the raw mate­r­i­al pro­duc­ers on one end of the chain and going all the way to recy­cling com­pa­nies at the other.” When the data are gath­ered and ana­lyzed, the idea is to share them with the mar­ket and cus­tomers. BASF is already work­ing on a good solu­tion here.

Woll­ny is espe­cial­ly proud of the Bat­tery Pass­port, an app whose devel­op­ment BASF has guid­ed with part­ners from Catena‑X. Once users down­load and inte­grate it into their sys­tems, they can see the chem­i­cal com­po­si­tion of bat­ter­ies at a glance. The app can also show bat­tery sta­tus. As Woll­ny notes, “The data are all the more impor­tant toward the end of bat­tery life cycles when recy­clers have to deter­mine whether they can be reused or reprocessed.” Thanks to Woll­ny and his con­sor­tium, a check of the Bat­tery Pass­port will soon be all that is needed.