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Virtual Supply Chain Overview, Essay Example

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Words: 676

Essay

A virtual supply chain is a supply chain that is taking advantage of the wealth of information and processing capabilities that the technological advances in computing, accessibility to information and process improvement opportunities.  The virtual supply chain takes advantage of not only the physical network of the supply chain but also leverages the information layer of the supply chain.  The virtual supply chain allows a greater granularity of command and control in an ever increasingly complicated global market.  The traditional linear supply chain would have a very difficult time managing multiple vendors across the globe while also forcing focus on quality, timeliness and integration (Hamel, 2007).  With a virtual supply chain the information is presented to all the parties involved ranging from the sourcing agents to the vendors and back to the customer.  The virtual supply chain leverages information to create areas of opportunity to drive out cost and to focus on quality.  The main function of the virtual supply chain is to enable the vendors to provide the parts or products on time and within specification.  It does this by placing the interaction between the suppliers and the sourcing agents onto a web-based solution that allows key data points to be pulled from the system as opposed to being pushed from one end of the supply chain to the other.

Advantages and Disadvantages

With any system there are advantages and disadvantages that must be weighed to ensure implementing a virtual supply chain would provide the solutions needed by the parent company.  The virtual supply offers a core supply chain system that is based on flexibility and scalability based on the needs of a complex logistical supply chain.  The focus on complexity and allowing the system to validate data while also presenting a clear picture the supplier is a bright spot regarding the advantages of virtual supply chains.  The web-based model of virtual supply chains also allows for easy implementation and adoption among the parties involved in the supply chain.  This implementation revolves around driving the requirements in the system, setting up the users and ensuring a web-based portal is available.  This real-time updates of requirements and demand also creates an environment for collaboration and concerted efforts to address issues and drive out cost from the entire supply chain.

The disadvantages are very similar to that of a linear supply chain that is trying to leverage global integration into the supply chain.  While a web-based portal that is available 24 hours a day for seven days a week does not provide the inherent ability for the supplier to be able to adequately utilize the system.  There are barriers in communication, time zones and culture that would need to be addressed prior to any implementation.  There is also a focus on training that would take resources from the business in the beginning but would be required to get the virtual supply chain operationalized.

Reshaping Business

Globalization and extending the focus on how and when parts or products are purchased is a main focus area for businesses.  This is specifically true for businesses trying to enter new markets or trying to optimize their current relationship with the foreign vendors.  The virtual supply chain is providing the tools necessary to take those relationships to the next level and move from parts supplier relationship to a collaborative team effort to reduce cost, increase quality and provide the product to market when it is needed (Town, 2005).  The main point of collaboration may not be to necessarily drive all of the cost out of the logistics of the supply chain but there are also other ways the virtual supply chain is moving the market.  By allowing information to flow freely and to precisely describe the demand, due dates, shipping times, specifications and other key data the suppliers can lessen the time to market and allow products to create a competitive advantage by entering the market first and capturing that market share.

Works Cited

Hamel, G. The future of management. Harvard Business Press. 2007. Web.

Town, K. The virtual supply chain the ultimate supply chain management strategy. 2005. Web. http://www.webpronews.com/the-virtual-supply-chain-the-ultimate-supply-chain-management-strategy-2005-07

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