The Internet Encyclopedia (Volume 3)

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Virtual EnterprisesVirtual Enterprises

J. Cecil,New Mexico State University

Introduction 567

Concept of a Virtual Enterprise 567

Characteristics of a Virtual Enterprise 568

Types of VEs 569

Importance of the Emerging VE Model and

the Role of the Internet 569

Potential Benefits of Adopting the VE Model 570

Creation of Virtual Enterprises 570

Problems and Challenges in the Creation of VEs 570

Technologies and Frameworks for the

Realization of VEs 570

Computer Architectures and Technologies That

Support the Realization of VEs 571

Industry and University Initiatives Related to

Internet-Based VEs 575

Activities and Phases in the Creation of

Internet-Based VEs 576

Conclusion 577

Glossary 577

Cross References 577

References 578

INTRODUCTION

A flexible manufacturing facility in a remote lo-

cation is in full operation. Machines are busy

producing parts, automated robots are helping to

assemble them into finished products, and con-

veyor systems are transporting them to a pack-

ing and shipping bay. Above the din of the metal

cutting operations and assembly activities, a hu-

man manager can be seen in the background. Re-

quired design information is routinely collected

from distributed customers in different parts of

the globe and used by process planning know-

how software (migrating from another computer

located in a neighboring country) to help identify

the manufacturing steps involved, then detailed

machine instructions are generated by software

from yet another partner’s computer located in

a neighboring state. From time to time, a resi-

dent control computer flashes a signal informing

the human manager of the parts being assembled

and other work in progress including those being

packed and shipped.

This scenario provides a snapshot of the future of manu-

facturing in this country and throughout the world. With

remarkable advances in information technology, com-

puter networks (especially the Internet), and manufactur-

ing integration, the achievement of a truly global man-

ufacturing enterprise seems to be within reach. Smaller

and mid-sized enterprise in remote parts of the world will

increasingly become part of this revolution by forming

partnerships with larger organizations. The notion of such

“virtual” partnerships, in which distributed organizations

form “virtual teams” and develop products for a changing

customer-driven market forms the basis of virtual enter-

prises (VE).

This chapter provides an overview of the concepts,

techniques, technologies, and issues that need to be un-

derstood, adopted, and studied in the quest to realize a

truly virtual enterprise-oriented approach to product de-

velopment. The underlying theme is the role of the In-

ternet in the design and realization of such virtual enter-

prises. Some of the challenges and hurdles, which may

be encountered by industrial organizations during imple-

mentation, are also delineated in this chapter. Other sec-

tions of the chapter include discussions of some of the

Internet-based, computer-based frameworks for VE real-

ization, modeling, and communication techniques for VE

collaboration and a summary of various industry and uni-

versity projects related to this subject area.

Concept of a Virtual Enterprise

Today, the concept of a virtual enterprise is being widely

heralded as a collaborative partnership for the future as it

holds distinct advantages and benefits for organizations

worldwide. Formally, “a VE can be described as a consor-

tium of industrial organizations, which come together to

form temporary partnerships to respond quickly to chang-

ing customer demand” (NIIIP, 2002). In a VE, the partner

organizations are geographically distributed, possess di-

verse skills and resources, and collaborate virtually to pro-

duce a final product (Figure 1). In a traditional (non-VE)

enterprise, the team members are co-located physically in

one specific site and usually belong to the same organiza-

tion.

In this decade and beyond, it is predicted that growing

product complexity and resultant diverse skill require-

ments underscore the need for organizations to work

together as a VE. More importantly, such a collaborative

framework will enable the harnessing of remote and far-

flung manufacturing facilities (and resources) and create

new opportunities for these remotely located organiza-

tions who can becomes partners and pillars of the Ameri-

can and international industrial base. Small and medium-

sized “mom and pop” operations with specialized capabil-

ities can link with the industrial mega-giants or with other

similar-sized enterprises to produce a diverse mix of prod-

ucts beginning to typify the evolving global market. For

this reason and several others, American and other inter-

national industrial organizations have shown keen inter-

est in virtual enterprise-related principles and practices.

567