The role and attributes of manufacturing companies in virtual supply chains

• Published date: 08 August 2016
• DOI: https://doi.org/10.1108/IJLM-12-2013-0162
• Pages: 511-532
• Date: 08 August 2016
• Author: Artur Swierczek,Danuta Kisperska-Moron
• Subject Matter: Management science & operations,Logistics

The role and attributes of

manufacturing companies in

virtual supply chains

Artur Swierczek and Danuta Kisperska-Moron

Department of Business Logistics, University of Economics, Katowice, Poland

Abstract

Purpose –The purpose of this paper is to identify the role and main attributes of manufacturing

companies which operate in virtual supply chains.

Design/methodology/approach –In order to identify the role and main attributes of manufacturing

companies enabling to operate in a virtual supply chain, a three-step statistical analysis was

employed, namely exploratory factor analysis, hierarchical cluster analysis and non-hierarchical

clustering technique.

Findings –The findings show that virtual supply chain operations would not be supported by

manufacturing companies offering highly customized products achieved by a unit production,

developed in details and engineered to order. On the contrary, the large manufacturing companies of

virtual supply chains report a high level of flexibility stemming from a wide scope of more

standardized products offered to the market. The conducted study show that better ability of

manufacturers supporting virtual supply chains is not industry specific.

Research limitations/implications –The list of investigated attributes is not complete, and other

characteristics of manufacturers in virtual supply chains should be identified. Another important

shortcoming of the study is its quantitative character and generalization of the findings. Each “virtual”

environment in supply chains may be unique and some of the compared characteristics may differ

significantly. Therefore, the aforementioned attributes should be considered separately with a

conscious focus on the environmental context. The quantitative study may be greatly enhanced by

applying the case study approach, showing detailed solutions and practices, and thus making the

study more valuable from the theoretical and managerial standpoints.

Practical implications –The conducted study showed that better ability of manufacturers to

support virtual supply chains is not industry specific, since the branch of electronic products and

electrical equipment and components was represented by an equal share of manufacturers, both in

non-virtual and virtual clusters. Furthermore, in order to operate in virtual supply chains, managers

should pay attention to the structure and range of products delivered to the market. The managers

should also be aware that apart from considering cost and efficiency, operating in a virtual supply

chain environment also requires quality of products and processes in order to manufacture and deliver

a superior value for the customers.

Originality/value –Having recognized major groups of indicators demonstrating the level of ability

of manufacturing companies to operate in a virtual supply chain, the attributes of three clusters

of manufacturers possessing different bunch of features, significant for virtual supply chains,

have been distinguished.

Keywords Customer requirements, Supply chain management, Value chain

Paper type Research paper

Introduction

Although virtual supply chain has become one of the symbols of the new economic and

social order, it still remains one of the least understood and most discussed concepts

(Soni and Kodali, 2011). Virtual supply chains may be called “imaginary structures,”The International Journal of

Logistics Management

Vol. 27 No. 2, 2016

pp. 511-532

©Emerald Group Publis hing Limited

0957-4093

DOI 10.1108/IJLM-12-2013-0162

Received 1 September 2012

Revised 7 July 2013

29 December 2013

12 August 2014

16 March 2015

8 May 2015

Accepted 18 August 2015

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/0957-4093.htm

The first author acknowledges the financial assistance for this study provided by the National

Science Centre as a research project no. DEC-2012/05/E/HS4/01598.

511

Companies in

virtual supply

chains

held together by trust, synergies between partners, contract and information

technology (Hedberg et al., 1994), and frequently identified with e-business, computer

communication and digital products. Virtual supply chains are “production and

distribution systems utilizing a formal physical network structure, and operating

through a network of separate organizations”(Chandrashekar and Schary, 1999).

They are characterized by networks of internal and external relations that constantly

change. In this vein, virtual supply chains demonstrate specific capabilities when

required, and overcome time and space barriers (Wang and Chan, 2010).

From the evolutional perspective, arrangements in virtual supply chains illustrate a

shift from conventional vertical relationships toward the so-called “quasi-vertical

structures”(van Hoek, 2001a). Unlike in conventional arrangements, mainly resulting

from vertical integration, the focus on core competencies and outsourcing,

quasi-vertical relationships puts an emphasis on increased independence of supply

chain links (Lee et al., 2010). Phelan and Griffiths (2002) argue that partners in virtual

supply chains remain autonomous entities, but their planning and operations are

characterized by a high degree of ICT integration. Graham and Hardaker (2000) give

the example of Philips Petroleum, which circulates product movement trends and

forecasts with pipeline partners. In this case, the “marketspace”involves the company,

its partners and its customers, and provides opportunities for developing

communication interactions, including real customer demand data.

ICT integration may include the myriad upstream and downstream supply chain

links, whose relationships are enhanced by hardware and software systems.

For instance, J.C. Penny shares packing, shipping, inventory and product movement

with suppliers (Graham and Hardaker, 2000). This provides that quasi-vertical

relationships in virtual supply chains require standardization of operating procedure s.

Moreover, virtual supply chains have rather modular than integrated structures.

Baldwin and Clark (1997) advocate the formation of a modular structure of virtual

supply chains by building complex products or processes from smaller subsystems,

which can be designed independently and efficiently operate as a whole. There is a

significant effect of modular product design on virtual supply chains, specifically in

high tech, garment and automotive industries. Fine (1998) describes an exemplary

producer of personal computers with a wide range of selection for each module block,

such as microprocessors, hard disk drives, random access memories, etc. On the other

hand, van Hoek (1998) gives an example of modular assembly system in a virtual

supply chain producing Smart, a joint-project of Mercedes-Benz and SMH (Swatch ).

Chandrashekar and Schary (1999) maintain that virtual supply chains have to be

modular in function, as they span on many various links performing diverse activities

dispersed around the globe. The modular structure of virtual supply chains should be

reinforced by an extensive use of communication technology (Lorchirachoonkul and

Mo, 2010; Burn and Ash, 2005; Kim et al., 2012; Chang et al., 2014). Hewlett-Packard

provides a very good example of a virtual supply chain using the corporate portal in

order to communicate with its employees, suppliers and customers. The po rtal enables

the supply chain to build and configure its products according to customers’orders.

The importance and supportive role of corporate portal as a communication platform is

particularly well visible in virtual supply chains, where the irregularity of business

transactions and the increasing complexity of supply chain relationships are

on the agenda.

The partners in virtual supply chains may vary from one market opportunity to

another, providing ultimate flexibility of choice and deployment of links. In other

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