Virtual Integration

Description:

Virtual Integration involves linking different applications, databases, and locally and globally distributed systems in such a way that they work together seamlessly and are easily accessible from a user's perspective. It is the integration through the whole value chain made up of loose affiliations of companies, organised as a network, where physical assets are replaced by information.

Enablers:

• ever more demanding customer requirements: not only concerned with reduced costs and shorter lead times, but also increasingly focused on requirements for product and service offerings tailored to an individual customer’s requirements.
  
• ever increasing competition: not only because of easier market entry, enabling new entrants to steal significant market share at the expense of unresponsive existing suppliers, but also because e-business now gives opportunities for customers and suppliers to bypass traditional supply chain structures.
  
• ever increasing volumes and velocity of information: the requirement to gather, process and act on massively increasing volumes of information in a rapid and intelligent manner.
  
• Fast development of Internet and the Worldwide Web techonology: The Internet has provided the universal pipeline for distributing information anywhere. The Worldwide Web has provided a new universal browser that allows information to be displayed on any client platform. The Internet and the web, enabled by global standards for protocols and application development languages, have provided a new universal architecture that simplifies the distribution of information.
• Network Bandwidth
  
• Business Process Reengineering

Inhibitors:

• External Barriers: most organisations currently exist as islands of information. More often than not, information is used as a tactical competitive weapon against suppliers, with the result that the whole supply chain operates at a sub-optimal level of efficiency.
• Internal Barriers:
  • Cultural Resistance: Despite all the work on business process re-engineering during the last ten years, most companies continue to be organised in functional silos.It is still all too common for functions to be measured against a set of stand-alone performance metrics that encourage adversarial behaviour across the internal functional boundaries.
  • Lagacy Systems: On the technological sight, different functional units maintain a mix of platform environments:both package and legacy applications. Many also operate embedded process control applications that are incapable of integration with higher level transactional processing systems.

Paradigms:

Through virtual integration, people/companies are no longer restrained to stay/come to in one physical place to do business: the corporate department can be dispersed anywhere in the world as long as it is best for fulfilling its duties; Institutions from different part of the world(suppliers and customers) work seemlessly as a whole to carry out huge tasks too large, too complicated for the capability of either side; Information scattered around the world is readily available in diversed viewpoints for different users of the integrated system. It allows company to exploit the new channels and leverage increased geographic access better than their existing competition and the new market entrants. The key to success is now about efficient management not only of the physical flows but also the information flows.

An example of this paradigm is what has happened in the automotive sector. Today the vision for most automotive vehicle manufacturers is to become virtual companies, owning only the brand and the customer. The design, system development, product sourcing, logistics, and even final assembly can all be outsourced to supply chain partners. Increasingly the goal is to replace physical assets with information in such a way that every member of this extended supply chain benefits. This forces the move from an environment of ‘hard wired integration’, where relationships are arms-length and adversarial, even across functional boundaries within the organisation, to an environment based on 'negotiated sourcing', where non-core activities are outsourced and collaborative partnerships are the norm.

Experts:

Dell Corp.

Web Resources:

http://www.paconsulting.com/news/by_pa/2000/by_pa_20000321.htm
http://portal.cetim.org/file/1/68/KatzySchuh-1999-The_virtual_enterprise.pdf