For the built environment sector to fully leverage the opportunities of digitalization, parties need to be able to work effectively together. Information exchange between actors must occur in such a way that data can be received and interpreted correctly by all parties.
What’s needed is interoperability. Simply put, the term refers to the ability of different systems, devices, applications, or products to connect and communicate in a coordinated way, without requiring extra adjustments from the user. Let me give a few examples:
- A very simple value chain: Imagine a scenario where a supplier (X) and a buyer (A) are doing business together, and they decide how to handle product identities and related digital information. For example, the supplier’s internal item numbers, a barcode chosen by the supplier, and an agreed-upon dataset describing the product. They also determine the format of messages (order, delivery notification, invoice, etc.) exchanged between them. As long as they agree with each other, this setup works, and this can also be the case for a company’s internal processes.
- Simple value chain: Suppose a new buyer (B) joins. No issues arise here either, as long as the new buyer accepts the same product identity, barcode, dataset, message types, and formats.
- Less simple value chain: Suppose the new buyer (B) already has another supplier (Y) who uses their own product identity, barcode type, dataset, message types, and formats. Or imagine a new supplier (Z) enters the market (already selling in another country and to an industry segment with different solutions) and wants to sell their products to buyers A and B. Suddenly, the IT systems on both the supplier and buyer sides must handle various identities, barcodes, datasets, message types, and formats. Although there are only five different parties in this system, the costs for IT, data entry, and potentially data interpretation increase.
- Complex value chain: Now, add 1,000 suppliers from different countries, 50 buyers in various nations, more supply chains (for instance, ice cream and mineral water might be sold in hardware stores, while glue and nails are available in grocery stores), certification systems, laws, and regulations. Add in subcontractors and distributors, property owners, and facility management companies, and the challenge quickly becomes monumental and likely very inefficient. The end consumer risks facing high product prices and potentially unreliable data about the product itself (whether it’s an air duct or an entire building). If a product needs to be recalled due to a defect, a complex value chain would make tracing the product a nightmare.
The value chains above can be summarized by the image below, which I borrowed from GS1 System Architecture. The image illustrates how various actors may need to relate to each other over time.
Image source: https://www.gs1.org/standards/gs1-system-architecture-document/current-standard#2-Overview-of-the-GS1-System-Architecture+2-2-Open-value-networks
One enabler for reducing complexity and increasing efficiency, especially from a traceability perspective, is interoperability. By using common standards and interoperable systems for information transfer, construction companies can, among other things, reduce administrative costs and minimize the number of tasks. With interoperable systems, project managers, builders, and clients would be able to gain real-time insights into project status, material consumption, safety reports, and sustainability data. This is particularly important when using Building Information Modeling (BIM), where precise and up-to-date data is necessary to create digital twins that effectively represent the building.
In other words, there are many benefits to achieving interoperability. The advantages you just read about are only a fraction of them.
Would you like to learn more about how GS1 Sweden can support your digitalization journey? We provide a globally interoperable business language that most systems and people can understand and interpret correctly. This global business language lays the foundation for efficient digital information flows throughout the value chain. Contact me via the form below, and I’ll share more about how you can benefit from standards and interoperability.
Author: David Almroth, Head of Expansion, GS1 Sweden
Would you like to learn more about how standards can be used in the construction industry? Please fill out the form below, and I will get back to you shortly.
David Almroth, Head of Expansion, GS1 Sweden