How To Create Greater
What Is Virtual
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
Why Virtual Integration?
Today the vision for
many manufacturers is to become virtual companies, owning only the
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.
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
is history, the future will be about virtual organizations operating within
Virtual integration, as opposed to traditional
vertical "contractor-subcontractor" integration, represents the
decomposition of the traditional company.
Virtual integration is
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.
Benefits of e-Business
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
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
New Roles of a CIO
When Dell Inc. first began
Internet to expand their business, the company had three basic
to make it easier to
do business with Dell,
❷ to reduce the cost of doing business with
to enhance their