Virtual enterprises-building blocks for dynamic e-business

Dynamic e-business, as envisioned by several industry analysts and corporate leaders, involves the rapid teaming of companies with both familiar and new business partners in pursuit of specific market opportunities. For realizing this new generation business model, the ability to form, operate, and disband virtual enterprises will be the single-most important requirement. These short-lived, opportunity-based organizations leverage the individual capabilities of several member companies to form virtual enterprises that have resources equivalent to a traditional vertically integrated corporation. Before successfully applying this business model, however, several issues need to be resolved, such as building trust and a collaborative attitude amongst member companies, developing the e-commerce infrastructure for handling engineered-to-order products and services, building optimal coalitions for the job, etc. This paper discusses our experiences in developing a web-based infrastructure for creating, operating, and eventually dissolving virtual enterprises. The primary operators of this infrastructure will be market makers offering custom products and services in various industries as well as corporations involved in bringing new products to the market.

1. Introduction

The last few years have seen rapid growth in business-to-business (B2B) e-commerce models - e-stores, e-procurement portals, and e-marketplaces to buy and sell various products and services from catalogs. Most industry analysts, however, believe that the simple transaction-based business model will have to be augmented with higher value-add services if these e-marketplaces are to remain competitive¹. Today, some e-marketplaces are transitioning into e-hubs that intend to support an end-to-end supply-chain spanning multiple enterprises for improving information and decision flow in order to optimize the performance of the extended enterprise. Production-oriented industries such as those involved in discrete and continuous manufacturing should benefit from this shift through better customer response, lower inventory costs, etc.