Open vs. Closed Supply Chain Technology: The Dangers of Vendor Lock-In

Editor’s Note: This is part one of a two-part series detailing the importance of open and interoperable supply chain solutions.

Supply chains are comprised of a multitude of interconnected parts working together to achieve a simple goal: create a product and deliver it to the consumer. If the very nature of supply chains requires interoperability, it stands to reason then that the technology used to improve supply chain efficiency must follow the same approach.

Supply chain technology needs to solve a problem, deliver tangible value that can be measured, and be able to connect and interact with other technologies to have a “sum greater than its parts” effect. To achieve this, it must be “open” meaning it freely supports and encourages integrations with other technologies, services, and platforms. An open platform is endlessly extensible thanks accessible and documented APIs, allowing:

  1. Businesses to easily connect third-party solutions to their existing platforms
  2. Individual teams to customize their workflows and extend the platform functionalities as needed

Since our inception, project44 has embodied and championed this approach. Any company can claim they take an API-first approach, but it’s another thing to actually do it. In fact, for many years, project44 took and API-only approach – we didn’t even offer a UI for the first five years of our company history. Eventually, with the growth of the visibility market and customers buying into visibility as a “first-class citizen” we created our first UI and in the fall of last year, launched Movement, the best user experience on market today.

While our platform, Movement, offers more robust capabilities than simply using our Movement APIs, it’s not our required approach. Some of our customers have certain teams using the Movement UI and other teams accessing visibility data via API in other systems of record like a TMS, ERP, or Order Management System. Other customers start by just using our APIs to integrate quickly and get ROI quickly. All new products that we deliver are available either in Movement or via our Movement APIs. We believe in giving our customers choice – the freedom to operate in the way that makes the most sense for their business and allowing our technology platform to enhance and improve their operations rather than outright change them.

Interoperability is the Name of the Game

For supply chains, interoperability is the name of the game. Yet more and more vendors today offer closed platforms that lock in customers to make them more dependent on their products, services, and technology. The “one throat to choke” model can be appealing in a fragmented and often confusing logistics tech landscape, but the dangers of this approach are very real.

Limited flexibility and innovation

Vendor lock-in limits a company’s ability to adapt to changing business needs and market dynamics. It hampers an organization’s ability to integrate new technologies, upgrade systems, or adopt innovative solutions. Businesses may find themselves tied to outdated or inefficient systems, limiting their ability to move quickly and remain competitive.

Dependency on a single source

Relying on a single vendor creates a single point of failure. If any one vendor experiences disruptions, service outages, or financial difficulties, their customers have to bear the brunt of that pain.

Limited control and customization

Vendor lock-in often means limited control over critical aspects of the supply chain. Businesses may not have access to the underlying technology to customize the software to meet their specific requirements or existing business processes. This can hinder process optimization, limit scalability, and impede the ability to respond to the fast-changing supply chain ecosystem.

Data security and compliance risks

Entrusting sensitive data and information with a single vendor raises data security and compliance risks. Compliance with evolving regulations, such as data privacy laws – critical considering the global nature of supply chains – becomes more complex when tied to a specific vendor’s technology stack, exposing businesses to legal and reputational risks.

Higher costs

Vendors often have more control over pricing, upgrades, or additional features, leading to reduced negotiating power for the end customer. This results in higher costs for services, additional fees, and ballooning costs around any feature customization. These fees can eat into profitability in a time when the bottom line is everything. Additionally, platforms that lack integrations and open APIs make the costs of switching even higher when the time does come to migrate.

Increasing Your Supply Chain Resiliency

Business looking to increase their supply chain efficiency and resiliency, and to solve the underlying issues their supply chains face, must focus on creating a diverse and flexible supply chain ecosystem that promotes interoperability, connectivity, openness – and perhaps above all – the ability to choose and switch between vendors and technology based on their business requirements and fast-changing economic conditions.

Now that we’ve explained the dangers of being locked in with a single (or even a handful) of logistics technology vendors, in part two of this series, we’ll highlight the benefits an open approach provides.