Virtual Enterprises

TermiKnowledge - Supply Chain, Procurement and Inventory Terminologies
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Virtual Enterprises are becoming the norm of small to medium-sized business ventures. A virtual enterprise is basically a short-term alliance of enterprises that come together usually to share specialized skills or core capabilities in order to leverage on market opportunities, and whose collaboration is aided by virtual network infrastructures. In contrast to traditional companies that engage in long-term relationships with vendors that require substantial investments from the enterprise, Virtual Enterprises operate much more cost-effectively, thanks to a considerable leveraging of automation technologies.

Virtual enterprise models in the manufacturing and supply chain realm are very different from one another, but both still utilize methods that allow them to optimize capacity, output, waste, labor and cost-effectiveness, thanks to their unique approaches. The differences in manufacturing and supply chain efficiency lie primarily in how manufacturing units and factories function, their internal structures and staffing, as well as the manner in which products are manufactured. This is why companies like Xoft, Clear Channel, Cisco, Microsoft and others have formed a virtual joint venture alliance to apply the benefits of automated manufacturing to improve supply chain performance. Through such joint ventures, they share the resource of each company's expertise as well as its network infrastructure, allowing each entity to gain access to increased efficiencies.

Manufacturing is not the only aspect of manufacturing that makes use of temporary procedures. Supply chain also makes use of temporary methods to increase efficiency in the distribution process. While traditional vendors tend to focus on "short-term" applications, manufacturing Virtual Enterprises can leverage temporary processes in various forms, such as prototype making, heavy and light testing, ingredient-assignment or ingredient-preparation procedures. Both are necessary in the manufacturing process because these supply chain methods can greatly increase production throughput, allowing for increased production at a lower cost. This is why manufacturing Virtual Enterprises is becoming so critical to the competitiveness of the global economy.

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