Virtual Collaboration

Virtual Collaboration (or e-collaboration) refers to the use of digital technologies that enable organizations or individuals to collaboratively plan, design, develop, manage, and research products, services, and innovative IT and EC applications. Although e-collaboration can involve non-commerce applications, the term usually refers to collaborative commerce- collaboration among business partners. An example would be a company that it is collaborating electronically with a vendor that designs a product or a part for the company. Collaborative commerce implies communication, information sharing, and collaborative planning done electronically through tools such as groupware and specially designed EC collaboration tools.

Numerous studies (e.g., line56.com. 2002) suggest that collaboration is a set of relationships with significant improvements in organizations performance. Major benefits cited are cost reduction, increased revenue, and improved customer retention. These benefits are the results of fewer stockouts, less exception-processing, reduced inventory throughout the supply chain, lower material costs, increased sales volume, and increased competitive advantage. According to a survey conducted by Deloitte Consulting and reported in manageradvisor.com (2002), 70 percent of the companies conducting collaborative commerce are showing higher profitability than those who do not.

Of those companies surveyed, 75 percent consider online collaboration, especially linking business processes, to be a top executive priority. These figures, gathered in 2002, are more than 20 percent higher than responses from 2000. Finally, 85 percent of all companies plan to have advanced collaborative commerce initiatives by 2005. Some of the major strategic benefits reported are an increase in process flexibility, faster delivery speed, and improved customer service.

C-commerce activities are usually conducted between and among supply chain partners. For examples, Webcor Builders is using a communication hub to facilitate collaboration.

The Webcor case shows how one company becomes a nucleus firm, or a hub, for collaboration. Such arrangement can be expanded to include all business marketplaces, in which a third-party company is the nucleus firm, creating a place not only for collaboration but also for trade.

Collaborative Networks

Traditionally, collaboration took place among supply chain members, frequently those that were close to each other (e.g., a manufacturer and its distributor, or a distributor and a retailer). Even if more partners are involved, the focus has been on the optimization of information and product flow between existing nodes in the traditional supply chain.

The traditional collaboration resulted in a vertically integrated supply chain. However, as discussed in earlier chapters, IT and Web technologies can fundamentally change the shape of the supply chain, as well as the number of players within it and their individual roles and collaboration patterns. The new supply chain can be a hub, as in webcor case, or even a network. Interaction may occur among several manufacturers and/or distributors, as well as with new players such as software agents that act as aggregators, B2B e-marketplaces, or logistics providers.

The collaborative network can take different shapes depending on the industry, the product (or service), the volume of flow, and more.

There are several other varieties of virtual collaboration, ranging from joint design efforts to forecasting. Collaboration can be done both between and within organizations. Next articles, I will describe examples of virtual.

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