The Real Virtual Factory

Upton, David (1996) The Real Virtual Factory. Harvard Business Review, 74 (4). pp. 123-133.

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By now, the monolithic factory was supposed to have given way to the virtual factory: a community linked by an electronic network that would enable numerous partners to operate as one. But for most companies, that promise has been elusive. The traditional technologies--electronic data interchange, proprietary groupware, and wide-area networks--are proving inadequate. Traditional systems cannot meet the three basic requirements of a large scale virtual factory. First, an Internet work must be able to accommodate members whose IT sophistication varies enormously. Second, it must,while maintaining tight security, cope with partners in both transient and long-term relationships. Finally, it must provide a high level of functionality, including letting partners operate programs on one another's computers. The confluence of several trends, however, now makes it possible to build a more flexible and cost-effective manufacturing community. These are the emergence of widely accepted and open computing standards, ever cheaper computing power, increasingly abundant bandwidth, the development of essentially unbreakable computer security, and accumulated expertise. McDonnell Douglas Aerospace and a spin-off named AeroTech have created a real virtual factory. AeroTech acts as an information broker for the community. It signs up new partners, tracks network memberships, oversees security, and serves as a converter that permits partners with different formats to communicate. A flexible, low-cost network, it is a model for a new era in manufacturing. In this new era, those that choose to go it alone or that cling to closed, proprietary systems will find it tough to survive.

Item Type: Article
Keywords: Business enterprises; Computer networks; Factory management; Organizational structure; Virtual corporations
Subject(s): Operations management
Centre: Faculty of Operations Management
Date Deposited: 14 Mar 2012 16:17
Last Modified: 23 Oct 2015 14:06

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