The Internet Encyclopedia (Volume 3)

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570 VIRTUALENTERPRISES

Service

Suppliers/ Engineering

Subcontractors

Marketing Testing

Product/ProcessProduct/Process

DevelopmentDevelopment

Recycling/

Disposal

Manufacturing

Quality Product/ProcessProduct/ProcessDevelopmentDevelopment Customers

Figure 2: Typical activities in a product development

life cycle.

further compounds the existing complex life-cycle inte-

gration problem (Cecil, 2001).

Potential Benefits of Adopting the VE Model

The major benefits of adopting a VE-oriented model in-

clude (a) the ability to respond rapidly to a newly iden-

tified customer need for a product and (b) cost savings.

A VE framework will allow Company A to partner with

a design specialist (Company B) and a few other organi-

zations to quickly come up with a way to manufacture

a product X. After a product demand diminishes or dis-

appears, these VE partners can disband. When another

market need (such as a new product) is identified, Com-

pany A can form another VE partnership with yet another

diverse group of organizations and become involved in de-

veloping a new product Y. By becoming temporary part-

ners for a product’s life cycle, Company A becomes more

agile in being able to serve customers in today’s chang-

ing global environment. A virtual enterprise-oriented ap-

proach will provide organizations the capability to be ag-

ile in today’s customer-driven global market. The term

“agility” is meant to indicate the ability to keep up with

customers’ changing needs. For example, a cheetah is an

agile animal. When its prey changes direction, the chee-

tah’s agile nature enables it to change direction and still

continue the chase in pursuit. The Internet along with

other technologies is enabling numerous industrial orga-

nizations to become more agile. When companies adopt

a VE-oriented approach coupled with the power and scal-

ability of the Internet, they will be able to form national

and international partnerships to produce low-cost, high-

quality products.

CREATION OF VIRTUAL ENTERPRISES

Problems and Challenges in the

Creation of VEs

The challenges facing VE implementation can be grouped

under technical and cultural. One of the major techni-

cal problems is achieving seamless exchange of informa-

tion as well as the integration of the myriad of activi-

ties involved in designing and building products. With the

ever-increasing use of the Internet by industrial organiza-

tions today to exchange technical and business informa-

tion, more advanced and sophisticated IT-based frame-

works and approaches that will support accomplishment

of complex life-cycle activities seamlessly are under de-

velopment. To improve the productivity of VEs, a variety

of issues, especially those dealing with the role of the In-

ternet as a VE facilitator, need to be addressed. Internet-

based computer frameworks and architectures must be

carefully evaluated with respect to their ability to sup-

port realization of VE goals and objectives. Some of the

criteria can include the following: Using computer frame-

work A, can VE partners quickly respond to customer de-

mands? Does the proposed Internet approach facilitate

seamless exchange of information including engineering,

planning, and other life-cycle data? Can information and

software systems communicate across heterogeneous sys-

tems (such as Windows, Macintosh, and UNIX environ-

ments)? At any given time, are the VE partners aware of

each other’s task accomplishments, their work-in-process

(WIP), and the rate of progress toward achieving their

overall target production?

The cultural problems relate to the ability to trust new

partners, adopt new ways of collaboration, and interact

effectively with team members who have less face-to-face

interaction during collaboration.

Technologies and Frameworks for the

Realization of VEs

The Internet, by far, is the most versatile communication

vehicle that can be used to create and manage VEs. It is

being widely used by business enterprises globally to ex-

change information in all phases of a product’s life cycle.

The Internet can be viewed as “a network of networks”

that is scalable and can connect remote corners of our

world. The two most widely used protocols of the Internet

are the transfer control protocol (TCP)/Internet protocol

(IP) (commonly referred to as TCP/IP) and the hypertext

transfer protocol (HTTP) (which is better known as the

World Wide Web). The TCP/IP was developed nearly 30

years ago and it’s the backbone for most of the computer-

based communications today. Communication via e-mail,

controlled discussion groups on specific topics, and Inter-

net video-based conversations has become commonplace

and is replacing the more traditional and expensive tele-

phone discussions and satellite based video conferencing

as well. Architectures such as CORBA (discussed later in

this chapter) have been developed on protocols such as

TCP/IP. Other developments such as the advent of “In-

ternet2” (which will provide substantially more band-

width and more effective transmission of video graphics

and virtual reality-based images) will continue to emerge

and mature in response to industrial and educational

needs.

Another technology (which has been used widely by a

large number of industry giants including Wal-Mart and

Ford) is “Electronic Data Interchange” (EDI). Partners in-

volved in an EDI transaction can exchange information

from one computer to another directly in a secure auto-

mated manner (Cecil, 1996). With the help of translators

and transmission standards (national and international),

business and technical information including purchase

orders, invoices, quotes, and design documentation can

be exchanged. Also, electronic funds can be exchanged

from one computer to another.