Upgrading effectiveness in VEs

Due to the rapid evolution of information technology, supply chain integration is nowadays easier than in the past. Moreover, the need for economic efficiency leads suppliers and customers to closely co-operate in pursuit of, what seems to be the holy grail of modern supply chain management, end to end optimization. The core objective of this chapter is the provision of a decision framework for enterprise formations organized as collaborative clusters, which is a sophisticated form of a virtual enterprise network. This framework, based on the ANP-BOCR model, takes into account clusters’ special characteristics the most important of which is that the supply chain entities do have a clear picture of strategies, policies, needs, strengths and weaknesses of one another. The whole approach is illustrated through a parapharmaceutical cluster case study which reveals that “common” knowledge and risks are very important in an environment where entities are sometimes partners and sometimes competitors.

Managing Supply Chain Risks

This chapter takes an exploratory look at the use of formal network measures to further understanding of the sources of extended enterprise or supply chain risk. It attempts to show that network measures can provide additional insight to ‘uncover’ sources of risk that could remain hidden using ‘traditional’ measures alone. More specifically, network measures of criticality, centrality, redundancy, distance and topology are combined with traditional measures of criticality, organisational slack, global sourcing and outsourcing to develop a more complete understanding on the determinants of the impact and/or probability of supply chain disruption. The measures identified provide researchers and managers with a wide-ranging framework for risk identification.

Flexible Supply Chains

Organizations that remain flexible take advantage of new opportunities, explore new ways of working and resolve unanticipated consequences. When the focus is on integrating company strategies and operations in the same supply chain, flexibility is unarguably a very promising concept but at the same time, a concept very hard to implement, a cumbersome process with numerous uncertainties and risks along the way. In this chapter, a conceptual strategic framework for increasing value chain flexibility is proposed. This framework addresses issues such as the company’s own strategy towards the supply chain partners, the organization strategy, the logistics approach, the market strategy, the production strategy and finally innovation. To support the validity of our proposed framework, an empirical study is presented followed by the conclusions propagated by this study and a description of future research prospects.

Aligning Product Design with the Supply Chain

The continued rise in global sourcing and manufacturing has significantly extended supply chains for many companies and has added to their complexity, often implying business fragmentation and virtualization, and thus increase supply chain risk. At the same time, there is now a growing realization that the supply chain ‘begins on the drawing board’; meaning that design decisions can dramatically impact the risk profile of the business. Historically, most organizations have been functional in their structure with responsibility for each stage in the value chain, including design being separate from the other. In today’s challenging markets these ‘silo’ type structures have been found wanting as typically they are not capable of rapid response to fast-changing requirements. This paper is focused on the need to bring design into the heart of supply chain management to achieve a more responsive - and hence competitive - organization. Thus, the primary purpose of this paper is to propose that one of the ways to achieve a more responsive and resilient enterprise is by better aligning product design with the supply chain and hence developing a concurrent design strategy. The recommendations suggest ways in which managers and key decision makers can adopt a more ‘design centric’ approach to their supply chain, which has been shown to enhance the resilience and responsiveness of a firm.

A Theoretical Framework for a Simulation-Based Analysis of Supply Chain Risk Management

Supply chain management under uncertainty and risk has become the target of extensive research. A review of the corresponding literature indicates mainly theoretical approaches, which attempt to provide solutions to certain problems. In this chapter, a theoretical framework of supply chain risks analysis is proposed. Within this framework, studied risks are determined by possible disruptions that affect supply chain ability to function normally. Thus, supply chain performance parameters are taken as a basis for a risk measurement system. Correspondingly, supply chain reliability parameters and performance fluctuations are studied in order to manage risks. A possible implementation of the proposed framework is discussed through the presentation of a simulation example. Still, the evaluation of the proposed framework’s practical application remains an item of the future research agenda. The ultimate objective of the research presented in this chapter is the elaboration of a software solution for supply chain modelling and risk evaluation.

Knowledge Assets in Virtual Enterprises

Virtual enterprises (VEs) are business models characterised by the aggregation of co-operating firms that share a common goal such as a business opportunity or a project. In these structures, knowledge can be seen as a primary asset. There is a subdivision of cognitive tasks among specialised companies, which exchange knowledge much before they even exchange goods or money. Assuming a knowledge-based view of VEs, implies the necessity to define appropriate methods to manage knowledge exchanges and the associated risks. The aim of this chapter is to explore the nature of knowledge flows in a VE and study the connected managerial issues to point out the different knowledge-related risk factors and to discuss the challenges posed by their successful management. To provide a practical example, the chapter also illustrates the findings of a real-life case-study.

A Conceptual Framework for Risk and Vulnerability in Virtual Enterprise Networks

Is managing risk in Virtual Enterprise Networks different from managing risk in supply chains? It is not unusual for firms in a supply chain to come together and act as a Virtual Enterprise Network (VEN) and the supply chains of today’s globalized and outsourced business environment exhibit many VEN-like features. Looking at VEN risk management from the perspective of supply chain risk management, current ideas on VENs will serve as a base onto which ideas on supply chain risk will be transposed. Many concepts related to supply chain risk will be explored and related to their possible VEN counterparts: risk, vulnerability, robustness, flexibility, resilience and business continuity. Conceptual in its approach and drawing from other areas of research, this chapter introduces four distinct groups of VENS, namely Constrained, Directed, Limited and Free VEN, and concludes that VEN risk management can and should learn from supply chain risk management.

Risk Assessment in Virtual Enterprise Networks

In today’s business environment, supply chains involve a number of autonomous organizations. Agility, effectiveness and efficiency of these supply chains can be achieved by forming virtual enterprise networks. The nature of supply chain processes with inter-organizational activities, involving different enterprises in a virtual enterprise network, increases the need for control in a well-designed and structured manner. Internal Audit activities and controls can help virtual organizations to improve and operate in a more efficient manner. This chapter proposes a methodological approach for the design of the Internal Audit function for risk assessment and control identification of inter-organizational supply chain processes, using business process modelling techniques and an internal audit–oriented enterprise modelling tool. A case study in the auditing of the supply chain processes in a virtual enterprise network demonstrates the application of the suggested methodology and tool.

Managing the Risk of Knowledge Transfer in Outsourcing Organizations

The rhetoric of outsourcing as well as the importance of organizational knowledge have both been popular issues thoroughly examined in contemporary business literature. Still, combinatory studies on the effects of outsourcing, positive or negative, on the creation and maintenance of organizational knowledge and the related risks and consequences of outsourcing, remain scarce. Given the popularity of both fields of organizational analysis we consider the lacking of combinatory studies as striking. In this paper, we present the findings drawn on a multiple case study analysis of four medium size pharmaceutical companies, all of them having implemented outsourcing strategies. The chapter attempts a categorization of risk sources during the outsourcing initiative, proposes mitigating actions and organizes the findings of the research on the case companies by proposing a model of ‘vicious cycle’ suggesting that outsourcing, if not managed successfully, eventually leads to the addiction of the organization to ‘buy’ expertise and knowledge in spite of knowledge acquisition. While we identify the conflicting strategies and rhetoric, we also attempt to come up with a set of guidelines, which could help organizations avoid the knowledge negative side effects of outsourcing.

Modeling and Simulating Disruptions and other Crisis Events in Virtual Enterprise Networks

Simulation is not only a powerful decision-making aid for supply chain managers but also a powerful research tool for theory building and testing. In addition to incorporating stochastic situations, simulation also enhances decision making by offering the flexibility to understand system behavior when cost parameters and policies are changed in a timely, cost-effective, and non-disruptive manner. The purpose of this chapter is to illustrate an approach toward modeling disruptions, risks and other crisis events in virtual enterprise networks. It provides several illustrations from published literature, presents a framework for managers and researchers to better apply and gain from the strength of simulation modeling, identifies several common pitfalls to avoid during the process, and compiles extensive references for readers who want to further their knowledge in this specific area.