Virtual Integration Core Competencies Business Process Outsourcing Virtual Integration Customer Intimacy Internet Power Modern ICT-powered Value Chain

 

 

Vertical vs. Virtual Integration

 

Virtual Integration: Action Areas

❶  Integrate into customers' operations. To increase customer value-added and differentiate yourself from your competitors, integrate yourself into your customers operations. The more of your customers' work you undertake, the harder it is to find the line that separates you from them.

Create Customer Value: 10 Matsushita Lessons

Value Innovation: Yin-Yang Strategies Download PowerPoint presentation, pdf e-book

❷  Use Internet to transform the processes that link you with your customers, suppliers and other alliances and work intimately with them to reduce distinctions from them.

❸  Converge your core competences and outsourcing. With virtual integration, flawless coordination of outsourced processes, such as product design or coaching, can be achieved so that operations of different companies are intertwined and cannot exist independently.

 

How To Create Greater Value Online

Internet Business and Revenue Models

What Is Virtual Integration?

Virtual integration is a new form of value chain management. Under such a system, the links of the value chain are brought together by informal arrangements among suppliers and customers. Shipments of the components that your firm needs can be easily arranged through the Internet or a networked computer system. The same type of arrangement allows you to fully serve your customers in ordering, services, or any other needs.

Why Virtual Integration?

Today the vision for many 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 organization, to an environment based on ‘negotiated sourcing’, where non-core activities are outsourced and collaborative partnerships are the norm, writes Jeremy Hammant in the article "From vertical integration to virtual integration".

Virtual Integration vs. Vertical Integration

Vertical integration is history, the future will be about virtual organizations operating within virtual supply chains.

Virtual integration, as opposed to traditional vertical "contractor-subcontractor" integration, represents the decomposition of the traditional company.

Virtual integration is characterized by culturally different value-added relationships between manufacturers and suppliers.

 In the new world of virtual integration, no matter who signs the check, all the people are working together for a common cause. Vertical integration performs, virtual integration innovates.

Integrating e-Business

Benefits of e-Business

Business processes must not only incorporate timely company information – for improved customer relationship management, supply chain management, and beyond, they must also be kept up-to-date with fast-changing business needs. E-business facilitating these processes is the way most business soon will be transacted. Whether or not you ever plan to sell products or services over the Web, your most important customer or supplier may one day insist upon using Web for all transaction.

The Tree of Online Success

The fastest growing companies are moving aggressively to bring e-business into all their operations. They align their systems with their fast-changing business priorities and use these systems strategically, for growth.

In addition, successful businesses are employing information technology to gather and interpret data about their ultimate customers, including demographics, trends, and buying behavior... More

IT Leader: New Roles of a CIO

Case Studies Dell Inc.

When Dell Inc. first began using the Internet to expand their business, the company had three basic objectives:

❶  to make it easier to do business with Dell,

❷  to reduce the cost of doing business with Dell, and

❸  to enhance their customer relationships... More

    

 

 

 

"You've got to think about 'big things' while you are doing small things, so that all the small things go in the right direction."
~ Alvin Toffler