Novel supply chain concepts and optimization of virtual enterprises to reduce cost, increase productivity and boost competitiveness

Abstract

Global competition and increasingly complex networks of supply chains require new production philosophies, novel supply chain paradigms (Lean, Agile and Hybrid ones) and new organization and cooperation forms of companies in order to reduce cost, increase productivity and boost competitiveness. Therefore, members of an Agile supply chain form a virtual enterprise (VE) network, which stands for temporary cooperation of VE members (final assemblers, suppliers, service providers) in which the members share their skills, human and equipment resources as well as waste for more efficient operation. The goal of this study is VE optimization, which means forming optimum combinations of potential chain members. This innovative and original approach involves developing an optimization method and defining objective functions (total cost, total lead time) and design constraints (production and service capacities, inventories and members flexibility) for optimum formation of VEs. The focus of VE optimization is to manufacture and deliver final products to customers in the most time- and cost-effective manner, with the total cost and total lead time of the supply chain being minimized during the optimization. Unique optimization software has been developed based on this method. It can can be widely used for optimizing micro- and macro regional virtual networks.