A virtual supply chain is the computer science replica of your physical supply chain so that you and your partners get a complete picture of your supply chain in a real-time environment.
The virtual environment
A Virtual Supply Chain contains the technology designed for flexibility, complexity and speed in the management of a network of suppliers, manufacturers, distributors and warehousing.
Apart from that, the Internet infrastructure makes it possible to perform checks on inventory levels, order status as well as expected product delivery times. Problems are identified and addressed in real time to minimize production downtime. Ultimately, customer satisfaction comes first.
Another advantage of the virtual chain is the possibility to reduce the time to market. As soon as the first information becomes available at the beginning of the supply chain, short production schedules, punctual transportation timing and just-in-time stock ensure the product is produced as quickly as possible. In addition, the lower inventory levels provide better returns in the supply chain. A virtual supply chain that connects the networks of all parties is inevitable to increase profitability, reduce costs and give the customer the optimal buying experience.
Companies are increasingly developing towards virtual organizations. Physical assets are no longer leading, but information and knowledge. Design, production, logistics and even final assembly can be outsourced more and more. Organizations are increasingly focusing on their Brand and their connection with the customer. From a hardwired organization to a virtual informal organization where employees are spread worldwide.
This means that the traditional organization is increasingly divided into specific competences that can be outsourced. This allows Brand Organizations to focus more on ‘buying’ relationships than actually owning a supply chain. This puts the customer at the center of attention because, thanks to Cloud information exchange, all parties have real-time insight into the customer’s needs and wishes. Depending on that demand, the Brand Organization purchases specific competencies. Because all parties are directly linked to the final customer demand, these parties have a direct interest in achieving optimum performance. Tiers can no longer hide in the vertical chain.
In this virtual supply chain, this also means that business processes must be Agile more than ever. The changes in the market are immediately communicated to the various participating companies that jointly create the ‘product’.
The extent to which an organization breaks down into different segments depends on the sector, but also on economy of scale. Where segmentation can promote the autonomy and optimization of the segment, an underlying basic structure under the virtual supply chain can be opportune to realize best practices and economies of scale.
Digital value chain.
The heart of the virtual supply chain is information. Manufacturers must have just as much knowledge of the end customer in order to be able to respond promptly to changes in demand. Supply chain and Marketing functions should work closely together so that the CRM information is translated into SCM information in real time.
All this requires great flexibility from companies, but also from their partners with whom strategic partnerships are entered into. Not only in the execution of supply chain activities but when it comes to product development and risk sharing. Open innovation in which all chain parties are linked is the key to flexible developments and a short time to market.
For management, this means that they will focus less on the performance of processes, but more on the development of their talent in the organization. In particular, data and ICT knowledge is becoming increasingly important, for example through Cloud applications, apps use and robotization. Retraining and smart hiring of required competencies is necessary to keep the organization competitive. This also changes the position of the manager. From process manager to knowledge manager.
The new developments in the field of technological developments are already forcing companies to think about new business models, taking into account that their life time is getting shorter and shorter. Large stable supply chain will disappear and make way for segmented virtual chains that are extremely dynamic. Incorporating flexibility, both vertically and horizontally, into the organization is an absolute precondition.