Collaborative networked organizations – Concepts and practice in manufacturing enterprises

Computers & Industrial Engineering 57 (2009) 46–60

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Collaborative networked organizations – Concepts and practice in manufacturing enterprises Luis M. Camarinha-Matos a,*, Hamideh Afsarmanesh b, Nathalie Galeano c, Arturo Molina c a

New University of Lisbon, Quinta da Torre, 2829-516 Monte Caparica, Portugal University of Amsterdam, The Netherlands c Tecnologico de Monterrey, Monterrey, Mexico b

a r t i c l e

i n f o

Article history: Available online 7 December 2008 Keywords: Collaborative networked organizations Manufacturing enterprises Virtual organizations Virtual enterprises Classification of collaborative networks

a b s t r a c t Participation in networks has nowadays become very important for any organization that strives to achieve a differentiated competitive advantage, especially if the company is small or medium sized. Collaboration is a key issue to rapidly answer market demands in a manufacturing company, through sharing competencies and resources. The collaborative networked organizations (CNO) area focuses on this type of organizational models that use ICT for supporting the development of collaborative business opportunities. This paper describes the key concepts related to CNOs, provides a high level classification of collaborative networks, and presents some application cases in the manufacturing industry. Finally a holistic research initiative addressing key challenges in the area is presented and a discussion of the CNO paradigm contribution to the challenges faced by manufacturing systems is made. Ó 2008 Elsevier Ltd. All rights reserved.

1. Introduction A new competitive environment for manufacturing and service industries has been developing during the last years, which is forcing a change in the way manufacturing enterprises are managed. To be successful in a turbulent and very competitive climate, manufacturing enterprises of 2020 will require significantly improved competencies in terms of new business models, business strategies, governance principles, processes and technological capabilities. The definition and development of these competencies (Ermilova & Afsarmanesh, 2006; Harzallah & Vernadat, 2002) represents a challenge for manufacturing companies. Manufacturing enterprises capable of responding rapidly to changing/uncertain demands, demand for customized products, and fierce international competition, have competitive advantages in the new global economy. Operating new competitive firms is becoming more difficult as product variety increases, product’s complexity and quality demands augment, product’s life cycles reduce, and revenue margins decrease. The very notion of product has changed, giving pace to the notion of extended product under which, besides the physical product itself, associated services and knowledge become very important. In addition, the capital costs of manufacturing technologies are extremely high. These factors impose high productivity levels for labor and manufacturing facilities, a high level of agility, and the use of new strategies to expand * Corresponding author. Tel.: +351 212948517; fax: +351 212941253. E-mail address: [email protected] (L.M. Camarinha-Matos). 0360-8352/$ - see front matter Ó 2008 Elsevier Ltd. All rights reserved. doi:10.1016/j.cie.2008.11.024

the production capabilities beyond the enterprise borders through the use of new collaboration models. Six grand challenges for manufacturers, representing gaps in existing practices, were identified some years ago in an exercise to establish a vision for manufacturing in 2020 (National Research Council, 1998) which are still relevant and important: 1. Achieve concurrency in (all) operations. 2. Integrate human and technical resources to enhance workforce performance and satisfaction. 3. ‘‘Instantaneously” transform information gathered from a vast array of diverse sources into useful knowledge for making effective decisions. 4. Reduce production waste and product environmental impact to ‘‘near zero”. 5. Reconfigure manufacturing enterprises rapidly in response to changing needs and opportunities. 6. Develop innovative manufacturing processes and products with a focus on decreasing dimensional scale. These challenges require new organizational structures, new business models, theories, processes, and technologies that allow companies to face dynamic changes in all their operations. Small and medium size enterprises (SMEs), which typically have limited skills and resources, need to join efforts with others in order to overcome their limitations through collaboration. On the other hand, the capability to form temporary and goal-driven associations brings the potential of dynamically adjusting to the needs.

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In this context, dynamic inter-organizational models, distributed business process management, integration, and coordination still remain as challenging issues due to their knowledge intensive nature, including hard problems such as dealing with semantic unification, and the need for sound negotiation mechanisms between each company and its business partners. Recent advances in the information and communication technologies (ICT) that support the concept of collaborative networks have allowed manufacturing enterprises to move from highly data-driven environments to more cooperative information/knowledge-driven environments. Enterprise knowledge sharing (know-how), adoption of common best practices, and open source/web-based applications are enablers to achieve both the concept of integrated enterprise and the implementation of collaborative networked enterprises for manufacturing industry. In this paper the concept of collaborative networked organizations is addressed, characterizing its life cycle and key characteristics. Several case studies are analyzed in order to discuss how these new kinds of organizations face the identified challenges for the next generation manufacturing systems.

Many more examples can be found in different sectors. For instance, we can think of networks of insurance companies, networks of governmental institutions, networks of academic institutions forming virtual institutes for joint delivery of advanced courses, networks of entities involved in disaster rescuing, networks of care centers, healthcare institutions, and family relatives involved in elderly care, etc. With the development of new collaborative tools supported by Internet and a better understanding of the mechanisms of collaborative networks, new organizational forms are naturally emerging. And yet all these cases have a number of characteristics in common (Camarinha-Matos & Afsarmanesh, 2006a):

2. Key concepts of collaborative networked organizations

Therefore, the term collaborative network, or more specifically collaborative networked organization (CNO) when we think of more organized collaboration processes, is often used as a generic term to represent all these particular cases.

2.1. Examples of manifestations In today’s industry, collaborative networks manifest in a large variety of forms. Moving from the classical supply chains format, characterized by relatively stable networks with well defined roles and requiring only minimal coordination and information exchange, more dynamic structures are emerging in industry. Some of these organizational forms are goal-oriented, i.e. focused on a single project or business opportunity, such as the case of virtual enterprises (VE) (Camarinha-Matos, Afsarmanesh, & Ollus, 2005). The same concept can be applied to other contexts, e.g. government and service sectors, leading to a more general term, the virtual organizations (VO). A VE/VO is often a temporary organization that ‘‘gathers” its potential from the possibility of (rapidly) forming consortia well suited (in terms of competencies and resources) to each business opportunity. Other emerging collaborative networks are formed by human professionals that may collaborate in virtual communities and form virtual teams to address specific problems, such as collaborative concurrent engineering or development of a consultancy project. Another case of collaborative network is the collaborative virtual laboratory (VL) (Garita, Afsarmanesh, Unal, & Hertzberger, 2003). Here a virtual experimental environment is provided for scientists and engineers to perform their experiments, enabling a group of researchers located in different geographical regions to work together, sharing resources (such as expensive lab equipments) and results. In this case, in addition to the network of involved organizations (e.g. research centers or research units of enterprises), there is an overlapping network of people. In a research activity most collaboration acts are in fact conducted by researchers that have a high degree of autonomy. Therefore, in this example, it becomes evident the necessity of tools to support human collaboration – advanced groupware tools. A typical VL involves scientific equipments connected to a network, large-scale simulations, visualization, data reduction and data summarization capabilities, application-specific databases, collaboration tools, e.g. teleconferencing, federated data exchange, chat, shared electronicwhiteboard, notepad, etc., application-dependent software tools and interfaces, safe communications, and large network bandwidth. A similar situation can happen in a virtual enterprise when engineering teams formed by engineers of different enterprises (virtual teams) collaborate on some engineering problem.

Networks composed of a variety of entities – organizations and people – which are largely autonomous, geographically distributed, and heterogeneous in terms of their operating environment, culture, social capital and goals. Participants collaborate to (better) achieve common or compatible goals. The interactions among participants are supported by computer networks.

2.2. Collaboration and related concepts Although there is a general intuitive notion of what collaboration is about, this concept is often confused with cooperation. For many people the two terms are indistinguishable and yet it is important to understand what is involved at the different levels of interaction among organizations in order to better support and manage them. The ambiguities reach a higher level when other related terms are considered such as networking, communication, and coordination (Denise, 1999; Himmelman, 2001). Although each one of these concepts is an important component of collaboration, they are not of equal value and neither one is equivalent to another. In an attempt to clarify various concepts, the following working definitions are proposed (Camarinha-Matos & Afsarmanesh, 2006a):  Networking – involves basically communication and information exchange for mutual benefit. A simple example of networking is the case in which a group of entities share information about their experience with the use of a specific tool. They can all benefit from the information made available/shared, but there is not necessarily any common goal or structure influencing the form and timing of individual contributions, and therefore there is no common generation of value. Although there is value in networking, its creation is not explicitly put as a common goal. Nevertheless other authors might use a more comprehensive notion of networking.  Coordinated networking – in addition to communication and information exchange, it involves aligning/altering activities so that more efficient results are achieved. Coordination, that is the act of working harmoniously in a concerted way, is one of the basic building blocks of collaboration. An example of coordinated activities happens when it is beneficial that a number of autonomous entities share some information and adjust the timing of, for example, their lobbying activities for a new subject, in order to maximize their impact. Nevertheless each entity might have a different goal and use its own resources and methods of impact creation; values are mostly created at individual level.

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 Cooperation – involves not only communication, information exchange, and adjustments of activities, but also resources sharing for achieving compatible goals. Cooperation is achieved by division of some labor (not extensive) among participants. In this case the aggregated value is the result of the addition of individual ‘‘components” of value generated by the various participants in a quasi-independent manner. A traditional supply chain based on client-supplier relationships and pre-defined roles in the value chain, is an example of a cooperative process among its constituents. Each participant performs its part of the job, in a quasi-independent manner (although coordinated with others). There exists however, a common plan, which in most cases is not defined jointly but rather designed by a single entity, and that requires some low-level of co-working, at least at the points in time when one partner’s results are delivered to the next partner. And yet their goals are compatible in the sense that their results can be added or composed in a value chain leading to the end-product or service.  Collaboration – is a more demanding process in which entities share information, resources and responsibilities to jointly plan, implement, and evaluate a program of activities to achieve a common goal and therefore jointly generating value. This concept is derived from the Latin collaborare meaning ‘‘to work together” and can be seen as a process of shared creation; thus a process through which a group of entities enhance the capabilities of each other. It implies sharing risks, resources, responsibilities, losses and rewards, which if desired by the group can also give to an outside observer the image of a joint identity. Collaboration involves mutual engagement of participants to solve a problem together, which implies mutual trust and thus takes time, effort, and dedication. The individual contributions to the value creation are much more difficult to determine here. A collaboration process happens for instance in concurrent engineering, when a team of experts jointly develop a new product. From this example it can be noticed that although some coordination is needed, collaboration, due to its joint creation facet, might also involve seeking divergent insights and spontaneity, and not simply a structured harmony.

Coordinated Networking Cooperation Collaboration Networking

Interaction maturity level

Each of the above concepts constitutes a ‘‘building block” for the next definition. Coordination extends networking; cooperation ex-

tends coordination; and collaboration extends cooperation (Fig. 1). Hence, according to this perspective, collaboration contains everything that the other concepts have. As we move along from networking to collaboration, we increase the amounts of common goal-oriented risk taking, commitment, and resources that participants must invest into the joint endeavor. In the rest of this paper we focus on collaborative networks which subsume all other forms. To better understand collaboration it is also useful to put it in contrast with competition. Competition has been seen as one of the most successful basic mechanisms in the struggle for survival, namely in case of scarce resources. It is interesting to note that even Economics is defined as the study of ‘‘the efficient allocation of scarce resources among competing uses”, and Politics is understood as ‘‘the relations between special interest groups competing for limited resources” (Kangas, 2005). In fact, the formation of cooperation and collaboration alliances has emerged to allow more efficient competition against other entities or groups. This is typically what leads SMEs to join efforts in order to survive in turbulent markets. Also in Nature we find natural alliances that compete with others for survival – the species (Kangas, 2005). The stronger the threat is the higher is the internal cohesion and sense of group identity. But even inside a friendly group we often find the interplay between collaboration and competition. Internal competition happens as the means to gain more power, status, or material resources. On the other hand, if we consider the creative facet of collaboration – creating together – we can also find the interplay among the two concepts. In fact innovation very often results from healthy confrontation of different ideas and perspectives. A fruitful collaboration space shall allow for some degree of divergence. Often enough creativity is resulted from challenges to the current directions, norms, or assumptions. It is however fundamental that such divergences do not undermine the basic foundations of the group cohesiveness, such as trust, fairness, and sharing. Finding the right balance between collaboration and internal competition in order to not only efficiently react to external threats or opportunities but also to excel individual capabilities and breed innovation is a major challenge for the definition of the governance policies, working/sharing principles, and supporting tools and infrastructures for collaborative networks.

Communication & Information exchange

Complementarity of goals Aligning activities

Joint goals Joint identities Compatibility of goals Working together Individual identities (Creating togethger) Working apart Joint responsibility

Communication & Information exchange

Complementarity of goals Aligning activities

Compatibility of goals Individual identities Working apart (with some coordination)

Communication & Information exchange

Complementarity of goals (aligning activities for mutual benefit)

Communication & Information exchange

Integration level Fig. 1. Interaction maturity levels (Camarinha-Matos & Afsarmanesh, 2008).

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2.3. Classes of collaborative networks

below. In goal-oriented networks, the first case of CNOs labeled as Continuous-production driven in Fig. 2, includes those networks that have a long-term duration and remain relatively stable during that duration, with a clear definition of members’ roles along the value chain. Typical examples include:

Given the large diversity of manifestations of collaborative networks in different application domains, often using different terminologies, it is important to elaborate taxonomy of the various organizational forms and provide a (informal) definition or description of the terms used. The following categories and corresponding descriptions result from many discussions and interactions with a large community of researchers in various international projects (Camarinha-Matos & Afsarmanesh, 2005, 2006a, 2008).

 Category 2: Supply chains – a stable long-term network of enterprises each having clear roles in the manufacturing value chain, covering all steps from initial product design and the procurement of raw materials, through production, shipping, distribution, and warehousing until a finished product is delivered to a customer. The level of stability of these organizations is being challenged, leading to dynamic supply chains where, for instance, the participants can change more often.  Category 3: Virtual government or collaborative e-government – an alliance of governmental organizations (e.g. city hall, tax office, cadastre office, and civil infrastructures office) that combine their services through the use of computer networks to provide integrated services to the citizen through a common front-end.

 Category 1: A collaborative network (CN) is a network consisting of a variety of entities (e.g. organizations and people) that are largely autonomous, geographically distributed, and heterogeneous in terms of their operating environment, culture, social capital and goals, but that collaborate to better achieve common or compatible goals, thus jointly generating value, and whose interactions are supported by computer network. Although not all, most forms of collaborative networks imply some kind of organization over the activities of their constituents, identifying roles for the participants, and some governance rules. Therefore, these can be called manifestations of collaborative networked organizations (CNOs) (Fig. 2). Other more spontaneous forms of collaboration in networks can also be foreseen. For instance, various ad-hoc collaboration processes can take place in virtual communities, namely those that are not business-oriented – e.g. individual citizens contributions in case of a natural disaster, or simple gathering of individuals for a social cause. These are cases where people or organizations may volunteer to collaborate hoping to improve a general aim, with no pre-plan and/or structure on participants’ roles and how their activities should proceed. Among the CNOs, some networks are goal-oriented in which intense collaboration (towards a common goal) is practiced among their partners, as opposed to longer term strategic alliances described below, where in fact not collaboration but cooperation is practiced among their members. Goal-oriented networks can themselves be either driven by continuous production/service provision activities, or driven by the aim of grasping a single (collaboration) opportunity, as described

Virtual Team (VT)

Virtual Enterprise (VE)

Enterprises

Other organizations

Virtual Organization (VO)

Extended Enterprise (EE) People

Organizations Fig. 3. Single-opportunity CN.

Organizational level

Collaborative Network

Collaborative Networked Organization

CNO Purpose Manifestations of CNOs

The second case of CNOs within the goal-oriented networks are labeled as grasping-opportunity driven CNOs in Fig. 3, and are dynamically formed to answer a specific collaboration opportunity and will dissolve once their mission is accomplished. Examples in Figs. 2 and 3 include (Camarinha-Matos & Afsarmanesh, 2006a, 2008):

Ad-hoc Collaboration

Long-term strategic network

Goal-oriented network

Continuous production driven net

Grasping opportunity driven net

Professional Virtual Community

VO Breeding Environment

facilitates

Industry cluster

Collaborative virtual lab

Industrial district

Virtual team

Virtual organization Extended enterprise

Disaster rescue net

Dynamic VO

facilitates

Business ecosystem

Virtual enterprise Fig. 2. Examples of collaborative networks.

Dynamic supply chain

Virtual government

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 Category 4: Virtual enterprise (VE) – represents a temporary alliance of enterprises that come together to share skills or core competencies and resources in order to better respond to business opportunities, and whose cooperation is supported by computer networks.  Category 5: Virtual Organization (VO) – represents a concept similar to a virtual enterprise, comprising a set of (legally) independent organizations that share resources and skills to achieve its mission/goal, but that is not limited to an alliance of for profit enterprises. A virtual enterprise is therefore, a particular case of virtual organization.  Category 5.1: Dynamic Virtual Organization – typically refers to a VO that is established in a short time to respond to a competitive market opportunity, and has a short life cycle, dissolving when the short-term purpose of the VO is accomplished  Category 6: Extended Enterprise (EE) – represents a concept typically applied to an organization in which a dominant enterprise ‘‘extends” its boundaries to all or some of its suppliers. An extended enterprise can be seen as a particular case of a virtual enterprise.  Category 7: Virtual team (VT) – is similar to a VE but formed by humans, not organizations. A virtual team is a temporary group of professionals that work together towards a common goal such as realizing a consultancy job, a joint project, etc., and that use computer networks as their main interaction environment. The term ‘‘virtual” in the above organizations comes from the fact that these networks act or appear to act as a single entity, thanks to their organized communication and coordination mechanisms enabled by computer networks, although they are (usually) not a single legal entity, they may not have a physical headquarter, and are typically geographically distributed. Besides the Goal-oriented networks, another class of CNOs is the long-term strategic alliances (see Fig. 4) aimed at offering the conditions and environment to support rapid and fluid configuration of collaborative networks, when opportunities arise. VO breeding environments (Afsarmanesh & Camarinha-Matos, 2005; Camarinha-Matos & Afsarmanesh, 2006a), and professional virtual communities exemplify this kind of networks.  Category 8: VO Breeding environment (VBE) – represents an association of organizations and their related supporting institutions, adhering to a base long-term cooperation agreement, and adoption of common operating principles and infrastructures, with the main goal of increasing their preparedness towards rapid configuration of temporary alliances for collaboration in potential virtual organizations. Namely, when a business opportunity is identified by one member (acting as a broker), a subset of VBE organizations can be selected to form a VE/VO.

Multi area

VBE Disaster rescue networks

Business ecosystem

Virtual lab networks

Single area

Industry district

No

Industry cluster

Fo Regional

it rof r-p

Global

Fig. 4. Long-term strategic alliances.

n

t of i -pr

Earlier cases of VBEs were mostly operating on a regional basis, e.g. industry clusters, industry districts, and business ecosystem. Besides the production/services focus, a large number of more recent VBEs focus in new areas, e.g. science and virtual laboratories, crises management. Some examples of VBEs thus include:

s Industry cluster – is one of the earliest forms of VO breeding environments, consisting of a group of companies, typically located in the same geographic region and operating in a common business sector, that keep some ‘‘binds” with each other in order to increase their general competitiveness in the larger area. These binds may include sharing some buyer–supplier relationships, common technologies and tools, common buyers, distribution channels or common labor pools, all contributing to some form of cooperation or collaboration when business opportunities arise. Earlier forms of clusters did not require a strong ICT infrastructure but more and more collaboration resorts to such support. s Industrial district – is a term mostly used in Italy that represents a concept quite similar to an industry cluster. It can be focused on one single sector or cover a number of sectors in a given region. Besides enterprises, other institutions such as local development agencies, academic and research institutions, etc., may play and active role in this VBE. s Business ecosystems are inspired by the mechanisms of the biological ecosystems, representing networks that try to preserve local specificities, tradition, and culture, and frequently benefit from (local) government incentives. A business ecosystem, also sometimes called digital ecosystem, is similar to a cluster or industry district, although it is not limited to one sector but rather tends to cover the key sectors within the geographical region. In most aspects business ecosystems simply represents a renaming of the industrial district concept. Namely, differences are subtle and can perhaps be found only in a clearer emphasis on the involvement of a diversity of their actors – the living forces of a region – in addition to companies, and a more intense use of advanced ICT tools to support collaboration. The ICT support is ‘‘freeing” these VBEs from the boundaries of a geographical region.  Category 9: (Collaborative) virtual laboratory (VL) networks – represent the alliance of autonomous research organizations, each having their own resources (equipments, tools, data and information related to their past experiments, etc.), enabling their researchers, located in different geographically-spread centers to be recognized and considered for taking part in potential opportunity-based problem-solving collaborations (forming then a kind of hybrid VO/VT for each problem-solving). During a problem-solving collaboration process, it is typical that some expensive lab equipments owned by one or more organizations is made available for (remote) use/access by the other collaboration partners, which is one distinctive feature of this VBE.  Category 10: Disaster rescue networks – a strategic alliance of governmental and non-governmental organizations specialized in rescue operations in case of disasters it is another recent form of VBE aimed at facilitating a rapid and wellcoordinated response in case of a disaster. This VBE could have local/regional coverage or a global geographic span. VBE is thus the more recent term that was coined to cover these cases and clearly extends their scope to both regional and global coverage, single and multi-specialty sector, and for-profit/ non-profit organizations (Afsarmanesh & Camarinha-Matos, 2005). Complementary views and coverage of these organizational forms are shown in Fig. 4. Certainly other examples of CNOs are emerging but only the most currently found are mentioned.

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A similar long-term organization is Metamorphosis

 Category 11: Professional virtual community is a long-term alliance of professional individuals that provides an environment to facilitate the agile and fluid formation of virtual teams (VTs), similar to what VBE aims to provide for the VOs. One example could be an association of free-lancer knowledge workers (e.g. engineers, consultants). When a business opportunity is acquired (e.g. a design project or consultation activity), similarly to the VO creation, a temporary coalition of experts – a Virtual Team (VT) – can be rapidly formed according to the specific needs of that business opportunity. Benefiting from the acquired experience with the mentioned cases of collaborative networks and the recent developments in ICT, new collaborative organizational forms are emerging. One example is the so-called ‘‘grid manufacturing” or ‘‘disperse manufacturing”. This organizational form is basically characterized by A joint pool of resources. Separation of ownership from management – joint (centralized?) management. The need for continuous awareness of capacities, status, etc. The need for proper business models (how to pay the owners). Specialized scheduling policies and access rights management. In terms of the taxonomy introduced in Fig. 2, it is still unclear how to classify this structure. It can be seen as a continuous production network or as a VBE. Similar difficulty can be found in other emerging collaborative forms (e.g. customers’ involvement in networks, collaborative innovation networks). However, due to the early stages of their development, it is necessary to wait before a better characterization can be made and building a more comprehensive typology is attempted. Simultaneously at the shop-floor level a convergent phenomenon is observed. More and more manufacturing systems are composed of autonomous (progressively more intelligent) components/resources, interconnected by computer networks (a truly ubiquitous computing and sensing environment) forming ‘‘coalitions” that need to be easily re-configured as driven by the needs of flexibility and agility. The traditional paradigm of control systems is giving pace to other mechanisms (e.g. coordination, negotiation, fuzzy reasoning, contracting) that are characteristic of collaborative networks, as seen in innovative proposals for advanced manufacturing systems architectures (Barata & Camarinha-Matos, 2003; Eberts & Nof, 1993). Therefore, the new discipline of collaborative networks, as proposed in (Camarinha-Matos & Afsarmanesh, 2005) provides a uniform paradigm to address such complex and highly dynamic systems. 2.4. Life cycle Given the dynamic and often temporary nature of CNOs, it is important to understand their life cycle (Camarinha-Matos & Afsarmanesh, 2008) in order to better analyze and support them. At a macroscopic level the following main stages can be considered (Fig. 5): Creation: stage when the CNO is started; it can be divided into two phases, namely (i) initiation and recruiting, dealing with the strategic planning and initial incubation of the CNO and (ii) foundation, dealing with the constitution and start up. Operation: the ‘‘normal” phase of the CNO existence.

Creation Initiation

Foundation

Operation

OR

Dissolution Evolution

Fig. 5. CNO life cycle.

Evolution: when small changes in membership, roles, or daily operating principles happen. Dissolution: when the CNO ceases to exist, or Metamorphosis: when major change in objectives, principles, and membership take place, leading to a new form of organization. A grasping-opportunity type of CNO such as a VO will typically dissolve after accomplishing its goal. In the case of a long-term alliance such as a VBE, considering its valuable bag of assets (e.g. acquired knowledge, lessons learned, resources, and processes) gradually collected during its operation, its dissolution is a very unusual situation. Instead, it is much more probable that this CNO goes through another stage, that we call the metamorphosis stage, where it can evolve by changing its form and purpose. Therefore, the life cycle model shown in Fig. 5 extends previous models that were typically focused on the other four stages. 3. Issues on collaborative value creation What will my organization benefit, if embarking in a collaborative network? Will the benefits compensate for the extra overhead, loosing some control, and even taking the risks that collaboration implies? These are main questions that many small and medium enterprise (SME) managers ask when the issue of collaboration is brought up. In fact, effective collaboration involves considerable preparation costs/time, in addition to the operational overheads and risks, which represent barriers to the rapid formation of dynamic coalitions in response to business opportunities. As a basic rule, in order to support rapid formation of collaborative networks, e.g. a VO, it is necessary that potential partners are ready in advance and prepared to participate in such collaboration. This preparedness includes compliance with a common interoperable infrastructure, adoption of common operating rules, and common collaboration agreement, among others. Any collaboration also requires a base level of trust among the organizations. Therefore, the concept of VO breeding environment, as introduced above, has emerged to provide the necessary context for the effective creation of dynamic virtual organizations. The main aims for an organization’s participation in a VBE would include the acquisition of: Agility for opportunity-based VO creation; effective common ICT infrastructure establishment; mechanisms and guidelines for VO creation; general guidelines for collaboration; and increase chances of VO involvement. There are several other reasons that can motivate an enterprise to join a VBE as illustrated in Table 1 which is based on empirical data collected from various existing VBEs (Camarinha-Matos & Afsarmanesh, 2006a). These factors affect mainly the VBE creation phase or the phase of joining an existing VBE. But another relevant question is ‘‘What keeps the current VBE members happy and loyal to the VBE?” The initial attracting factors are not exactly the same that keep members happy in the long run! A company might have been attracted

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Table 1 Examples of (empirical) reasons to join a VBE. Market-related reasons          

    

Increase activities/profit Coping with market turbulence Increase chances of survival More chances to compete with larger companies Lobbying and market influence (branding/marketing) Easier access to loans Cheaper group insurance Better negotiation power (e.g. joint purchasing) Prestige, reputation, reference Access/explore new market/ product (e.g. multidisciplinary sector) Expand geographical coverage Increase potential for innovation Economy of scale Develop branding Achieve (global) diversity

Organizational reasons  Management of competencies and resources  Approaches to build trust  Improve potential of risk taking  Support members through necessary reorganization  Learning and training  Shared bag of assets (e.g. shared tools, lessons learned, legal information, sample contracts)  Organize success stories and joint advertisement  Help in attaining clear focus/developing core competencies  Sharing costs of branding/marketing

by the opportunity of getting access to new knowledge but after a while, once this objective has been achieved, different reasons are necessary to keep it involved in the VBE. Therefore, Table 2, resulting from a brainstorming exercise organized by the ECOLEAD project (Camarinha-Matos, Afsarmanesh, & Ollus, 2008) and involving a large group of experts, illustrates some of the potential reasons and motivating factors for the long-term sustainability of the VBE. These factors have to be taken into account during the operation and evolution stages of the VBE life cycle. Although some of these reasons are common to Table 1, there is a clear focus here on the profit/direct benefits originated through the VBE. Naturally the participation in a VBE does not only bring benefits. Collaboration also adds ‘‘overheads” and brings its own risks. Therefore a number of other barriers to the participation in a VBE have been identified when interviewing running VBEs (Alfaro Saiz, Rodriguez, & Ortiz, 2005). Assuming that the benefits are potentially higher than the risks/costs, a challenge here is the identification and development of remedy measures to overcome these fears (see examples in Table 3). These measures need to be considered both during the creation phase (e.g. set-up of governance principles and performance indicators selection) and during the operation phase (e.g. support mechanisms and tools for benefit analysis and distribution, trust worthiness assessment, supervision rules, etc.). These are only some empiric examples collected from the interaction with several existing networks (Camarinha-Matos et al., 2008). As the number and variety of collaborative networks Table 2 Reasons to stay as a VBE member. Motivation to stay  Profit from collaborative businesses  Benefiting from the existing infrastructure  Better marketing possibilities (fairs, cheaper admission costs, better publicity/ visibility (better location),. . .)  Better strategic position through the VBE  Easy access to complementary skills  Explore new market/new product (multi-disciplinary-sector), expand geographical coverage  Potential for innovation  Continue profiting from the opportunities only available through the VBE  Fight against a common enemy  Better negotiation power  Portfolio of success stories and advertising  Existence of a schema of incentives for collaboration

increases, it is important to further and more systematically elaborate on these elements. Another relevant issue is the creation of a system of incentives to motivate participants to pro-actively engage in collaborative value creation. Complementarily, fairness and the crucial issue of properly determining the individual participant’s share are important; namely to identify both its contributions towards, as well as benefits from, collaboration in the network. These are the other major issues for which transparent governance principles, whenever possible supported by objective indicators, are needed. In fact it is frequently mentioned that the lack of objective measurements, clearly showing the benefits of collaboration, is an obstacle for a wider acceptance of these new organizational forms. Generally, it is difficult to prove the advantages of (dynamic) collaborative networks in contrast to more traditional organizational forms in terms of improved performance. Being able to measure the global performance of a collaborative network, as well as the individual performance of each of its members, could represent an important boosting element for the wide acceptance of the paradigm. However performance indicators tailored to CNOs are not yet available (Alfaro Saiz et al., 2005; Kolakovic, 2003). A performance measurement depends on the premises of the measurement system used. Collaborative networks challenge the premises of the methods developed in the past (Folan & Browne, 2005), therefore the applicability of existing measurement systems in this area is questionable. First it is necessary to take into account that performance, and related generated values, can be seen from different points of view, e.g. from the individual participant perspective, from the network coordination perspective, and from the surrounding environment/society perspective. Understanding and making the nature of collaboration benefits explicit, is also an important way to ensure that every member of the network understands the measurements in the same way (same ‘‘perception of value”). This is also a requirement for goals alignment in order to facilitate the coherence of members’ goals with the measurements. The actual meaning of a benefit depends on the underlying value system that is used in each context. It is commonly accepted that the behavior of an individual, society, or business ecosystem is determined by its value system. It is also intuitively understood that the values considered in a business-oriented collaborative network are different from those in a non-profit context (e.g. disaster rescue network). In fact the business/economy oriented school tends to look at a value system in terms of the activity links between a company and its suppliers and customers, putting the emphasis on how much (monetary value), a product or service is worth to someone. On the other hand, the socio-psychological school considers a value system as the ordering and prioritization of a set of values that an actor or a society of actors holds. The two perspectives are not necessarily incompatible, but more research is needed in order to develop a general (abstract) theory of value systems that can then be instantiated to different application contexts. In general, the structure of a value system, and therefore the drivers of the CNO behavior, might include multiple variables/ aspects. Simultaneously other elements that may determine the behavior of the network and its members include scheme of incentives, the existing level of trust, code of ethics, culture of collaboration, and collaboration agreements. As a very preliminary step towards a theory of value systems and characterization of collaboration benefits, a number of indicators have been suggested in (Camarinha-Matos & Abreu, 2005). In this work the benefits received by a participant include both the benefits resulted directly from the activities performed by this participant and the benefits to this participant resulted by the activities performed by the other participants (external benefits). By combining base concepts from

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4.1. Case 1: IECOS

Table 3 Reasons to fear being a VBE member. Fear  Return on time/cost investment – fear of not having ROI

 Loosing decision making power – a collaboration side-effect  Trust and intellectual property rights problems

 Fear of partner selection by a virtual system

 Required high commitment level

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Possible remedy Proactive opportunity brokerage in the market/society Building success stories Elaborate better value system models Creating flexibility in decision making Transparent rules/regulations Different levels of membership Mechanisms to establish trust/forecast trustworthiness Enhance trust in VBE establishment itself – transparent rules/regulations Definition of incentives and sanctions Enforcement of the defined rules to be a ‘‘good citizen” in VBE Neutral transparent definition of selection process Assistance tools but decisions made by humans Different levels of membership

the transactions cost theory, social networks analysis, and game theory, a number of indicators is proposed (see summary in Table 4). When combined with for instance a graphical representation, these indicators can provide the collaborative network participants a more objective view of their global and individual performance. Although some experiments were carried out with real data from both a business-oriented network and a social-oriented network, much more research is needed in this area. Furthermore, in practice, collecting the base data from an operational network is rather a difficult task, often overlooked by researchers, and which requires the development of new approaches and supporting infrastructures. 4. CNOs applied to the manufacturing industry Several cases have been studied that validate and demonstrate the applicability of the CNO concepts especially in the manufacturing industry. The following sections give a brief introduction to eight case studies of CNOS (mostly VBEs) from different regions of the world. Two summary tables present the main characteristics of each CNO: main entities, industry sector, number of members, region, main business process, governance structure and ICT tools are detailed. At the end of this section, main conclusions and lessons learned about these cases are depicted.

IECOS S.A de C.V (Integration Engineering and Construction Systems), is a brokerage company, created at CIDYT (Center of Design in Innovation and Technology) of Monterrey Tech, Mexico, with the primary aim to demonstrate how a broker company for a network of enterprises could be designed, developed and operated (Flores & Molina, 2000; Molina & Flores, 1999). In 2000, IECOS initiated operations working as a broker, being its main aim to search and exploit business opportunities together with Mexican SMEs forming a VBE. IECOS is focused on innovation technology projects through the integration of capabilities and competencies of its allies and partners, guarantying customer satisfaction and cost reduction through an efficient partnership management and effective integration of core competencies of Latin–American Industry. IECOS has performed several projects using the VO model; main projects are related to the manufacturing of maintenance tooling for the aerospace industry, manufacturing of standard parts for capital goods equipment, and design and production of medical devices. 4.2. Case 2: Virtuelle Fabrik Virtuelle Fabrik (or Virtual Factory, VF) is a VBE of industrial SME’s that provides a full range of industrial services and production to the customers in the metal–mechanics sector. The network enables the SME’s to act in collaboration with other SME’s the same way as with large manufacturing companies. Main industry sectors that VF attends are: automotive industry, aircraft and space industry, medical and environmental technologies, paper and glass industry, process plants, electronic, special machines, automation and robotics. Virtuelle Fabrik started operations in 1995 with initial support of the University of St. Gallen and the Swiss Commission for Technology and Innovation; the financial support was from the Swiss CIM (computer integrated manufacturing) action program (1997–1998). At the end of the two year project, the network developed its own dynamics in a way that it was functioning independently and profitably (Plüss & Huber, 2005). Nowadays three main levels compose the Virtuelle Fabrik network: VF in the Swiss Euregio Bodensee region (the founding members), the VF in the Baden-Wurtemberg Germany region, and Virtuelle Fabrik AG, which was founded in 2001 as project management and sales specialized entity for the whole VF network. The Virtual Factory offers all necessary structures and aids for the fast structuring of business systems in its network. The ‘‘backbone” of VF is a coordinated

Table 4 Examples of indicators of benefits in collaborative networks. Social contribution benefits – sum of benefits contributed by an actor ai to its partners as a result of its performance in the collaboration process External benefits – sum of benefits received by an actor ai as a result of the activity of the other actors involved in the collaboration process Total individual benefits – sum of external benefits plus self-benefits of an actor ai Individual generated benefits – sum of social contributed benefits plus self-benefits of actor ai Total received benefits – sum of external benefits achieved by a set of actors Total contributed benefits – sum of social contributed benefits generated by a set of actors Total network benefits – sum of benefits achieved by a set of actors in a specific collaboration process or over a period of time Progress ratio – a macro indicator that represents the variation of the global benefits over a period of time Social capital – density of the network benefits relation Cooperative development ratio – measures the progress of cooperation benefits for a set of actors over a period of time Individual contribution index – normalized contribution of an actor to the collaborative network Apparent individual contribution index – based on the number of contribution links (i.e. the out degree of the actor in the graph representing the cooperation benefits), this index gives an apparent and simple to compute measure of the involvement of an actor in the collaboration process Individual external benefits index (IBI) – normalized external benefits received by an actor, expressing the popularity or prestige of the actor Apparent individual benefits index – indicator based on the number of received contribution links (i.e. the in degree of the actor in the graph). Like IBI, this index also expresses the popularity or prestige of the actor Reciprocity index (RI) – balance between credit (sum of benefits contributed by an actor ai to all its partners (or one specific partner)) and debit (sum of benefits received by an actor ai as a result of the performance of all actors (or one specific partner) involved in the cooperation process). RI < 0 – selfish behavior, RI = 0 – null balance and RI > 0 – altruist behavior

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organization and information infrastructure (Webcorp); which is an obligatory standard for all participants. 4.3. Case 3: Virfebras VIRFEBRAS is a VBE that resulted of a research project coordinated by the University of Caxias do Sul (UCS), and the partnership among twelve mold and die makers, a Brazilian agency for supporting SMEs (SEBRAERS), and the State of Rio Grande do Sul government (Galelli, Costa, Graciolli, Vallejos, & Luciano, 2001; Vargas & Wolf, 2006). It was created in 1998 as an initiative to overcome turbulent, dynamic and uncertain market environments in this sector, in addition to an increasing establishment of foreign companies in the mold and die sector of the Brazilian automotive sector. The creation of VIRFEBRAS was a strategy defined by its members to satisfy some main market demands: short delivery time, low costs, high quality standards, new technological developments, qualified personnel, and ‘‘one-of-a-kind” production system. In Virfebras each VBE member can act as broker bringing business opportunities. The enterprise that brings an opportunity is the coordinator of its development. When a business opportunity is detected, it is announced to the interested enterprises and the best tender is selected to participate in the focused virtual enterprise. 4.4. Case 4: VEN – virtual enterprises network VEN was launched by Yorkshire Forward in 2004 and jointly funded by the European Union. VEN aims to change the way SMEs (small and medium enterprises) compete for major contracts by allowing companies within specific sectors to negotiate and trade as a single entity to win major contracts. It also provides access to the region’s internationally regarded research institutes and universities, which spend more than twice the national average on R&D. VEN is currently working in six sectors in the Yorkshire and Humber region covering manufacturing, digital industries, healthcare and bioscience, food and drink, chemicals and construction (Löh, Katzy, Booth, Faughy, & Thompson, 2003). VEN works in partnership with member organizations across many product and service market sectors, mapping their core competencies for further matching with VEN customers’ opportunities. VEN has representatives (brokers) working across the globe to identify new opportunities for its members and wants to be able to help its members securing new and sustainable business through the VEN information and collaboration networks. When a new opportunity is found a contract is made and a VE is created from the VEN membership to deliver that contract; the virtual enterprise exists during the life of the contract and then disbands. 4.5. Case 5: Supply Network Shannon (SNS) Supply Network Shannon (SNS) is an open, sector-focused network of engineering and electronics sub-supply companies located in the Shannon region, Ireland, launched in January 1999 (Heavey, Byrne, Liston, & Byrne, 2006). SNS is an industry-led initiative aimed at: representing, promoting, developing and connecting together the participating companies. Supply Network Shannon benefits all engineering and electronics sub-supply companies in the region, regardless of size or activity and aims at helping to reinforce the regions’ position as a world class source of sub-supply products and services. SNS provides a framework for companies to collaborate in joint marketing, training, development, and collaborative quotation development for participation in virtual enterprises. As such, SNS currently operates as a regional VBE with individual members currently creating sub-networks on a global scale.

4.6. Case 6: Torino Wireless The Torino Wireless cluster, created in December 2001, brings together the most relevant ICT players in the Piedmont area in Italy in a shared system of values, strategies, and actions in order to increase the competitiveness of the territory, through strong integration of research and development (R&D), entrepreneurship and venture capital (www.torinowireless.it). The cluster activities are coordinated by the Torino Wireless Foundation (created in December 2002), which defines the strategic lines of the cluster and coordinates its activities, guaranteeing coherence and integration of the ICT development policies of the territory. Torino Wireless seeks to foster the development of a center of excellence in R&D and higher education, with, among other things, a particular focus on intellectual property, and promotion of enterprise acceleration in order to create new start-ups and spin-offs and supporting the growth of innovative SMEs, and assuring financial support for enterprises, by stimulating private and public investments. 4.7. Case 7: CeBeNetwork CeBeNetwork was founded in 1996 establishing a network that provides the aeronautical industry with engineering services, where Airbus is the main customer. CeBeNetwork comprises more than 30 companies, mainly SME’s (Galeano et al., 2008). Other customers from industries with similar demands are served like automotive, shipbuilding or wind energy. CeBeNetwork has interdisciplinary teams in the fields of aero-dynamics, computer aided engineering, systems engineering, as well as process and technology management and software development which are focused on integrated services in the process of product development. Primarily involved in the development of custom-made solutions and innovative process designs are the specialist divisions for engineering services and technology-support. CeBeNetwork itself is the leader of this VBE and acts both as a broker and as a member. As a 1st Tier supplier, it represents the interface to the customer and is the only company in the collaborative network which has got a valid frame contract. When a VO should be formed, the role of the leader is taken; activities such as: partners search and selection, agreements, management and coordination of the VO are developed by CeBeNetwork. Main objectives of CeBeNetwork are efficient management of VOs in order to be competitive, remain in the market and become one of the key suppliers in the future. 4.8. Case 8: Swiss MicroTech Swiss MicroTech (SMT) is a regional collaborative network created in 2001 by SMEs of the mechanical subcontracting sector to address together new markets and develop new products which are beyond their own possibilities if they would stay alone. MicroTech is a platform supported by the Swiss Group for Mechanical Industry (GIM-CH), the Department of Economic Affairs of the State of Vaud and the Development Economy of Western Switzerland (DEWS). Swiss MicroTech offers services to a wide range of industries, particularly telecommunications, computer systems, medical devices, precision machinery and, specially, fine watchmaking. Within SMT, VO’s are always realized by companies, SMT is an association, and as such it is not able to run real businesses. In 2005, the creation of DecoCHina, representing an extension of the VBE to China, appears as a strategic measure to deal with price competition and the emerging Chinese market. DecoCHina is thus an international VBE combining two regional networks: SMT in Europe and a new parent Chinese network in the Guangdong Province.

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L.M. Camarinha-Matos et al. / Computers & Industrial Engineering 57 (2009) 46–60 Table 5 General summary table of analyzed CNO cases. CNO (VBE) case IECOS

Virtuelle Fabrik

Virfebras

Main entities Virtual enterprise broker Virtual industry clusters Virtual enterprises Broker Breeding environment Virtual enterprise

VE breeding environment VE VE coordinator (defined according to each VE)

Industry sector

Size (# members)

Region

Main business process

Governance structure

Manufacturing – Metal–mechanic – Medical products

30 Manufacturing companies

Monterrey, Mexico

– Search and select business opportunities – Project planning – Project execution – Customer follow-up

General director that manages two main groups: engineering Group and brokerage Group

Manufacturing Design, engineering Metal–mechanic Plastics

90 Companies

Switzerland and Germany

Manufacturing: Mold and dies

12 Companies

VEN Associate members, Accredited members Professional community members Lead integrators Broker

Manufacturing Digital industries and Healthcare bioscience Food and drink Chemicals Construction

Caxias do Sul, Brazil

250 Enterprises

Yorkshire, UK

Supply Network Shannon

Business network (VBE) formed by:company members, development agencies, universities

Engineering and electronics subsupply companies

25 Members (mainly SMEs)

Shannon region of Ireland

Torino Wireless

VBE network formed by: national and local authorities, social partners, enterprises, universities and financial institutions

ICT (wireless, software, multimedia, technologies, microelectric and optical devices, wire-line technologies)

47 Members

Turin and Piedmont, Italy

CeBeNetwork

Company membersBroker (CeBeNetwork itself)

IT market, engineering sciences and software development – Main customer: aeronautical industry

30 Partners

Company members education and research centers, technological parks and specialized consulting centers

Watch-making and in other microtechnology applications

Seven enterprises companies

Swiss MicroTech

Network development Order processing Marketing and sales Training and further training Finance and controlling Training and education Technology set-up Market strategy Benchmarking Identification of shareable resources Organizational structure Operation Member-related processes (business health check, workshops, forums, risk management) Information processes (quotation, exports, getting a product to market, partnering) Broker processes (broker registration and approval, opportunities registration and assessment) VENabledTM processes (ICT that support the virtual factory operation, and the marketplace)VENproTM processes (VEN bid supporting processes and systems) Two core activities: training and promotion (marketing and quotation).Three main areas of activities: Supply chain management (SCM) Technical issues relevant to engineering and electrical manufacturers ICT usage R&D Enterprise acceleration (creation of new entrepreneurship and development of SMEs) Financial support (stimulating private and public investment) IPR valorization and technology transfer Communication and media relations

Germany Cooperation management and brokerage services (which includes coordination and management of VOs) Project and quality management On-site support

Switzerland and China

Support for set-up a business in Switzerland Marketing and promotion (workshops, forums, exhibitions) Job search Research and training News postingTechnological development

Five working parties (formed by representatives of each company)executive committee (formed by five members and headed by a chairman). Directory board composed by a president, a vice-president and a financial responsible.Statute and ethical rules are also defined.

Advisory board as the final accountable body, with the power to hire and fire service providers to the VEN and sanction or dismiss VEN members.

Steering committee (nine members and two development agencies) four sub-committees: marketing, environment, training and projects

Torino wireless foundation (Administrative Committee, President, Vice-President, Reviewers College, Ordinary Assembly)

CeBeNetwork group formed by companies: CeBeNetwork engineering and IT CeBeNetwork services CeBeNetwork France CeBeNetwork UK Werucon automation GmbH An association with: Steering committee President General assembly

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4.9. Summary of characteristics of the analyzed cases Following tables synthesize the results found in the cases analyzed in terms of their main entities, the industrial sector, size, region, main business process, governance structure (see Table 5) and ICT tools used (see Table 6). 4.10. General aspects about the analyzed cases Presented CNO cases, mostly VBE examples, illustrate the state of applicability of the collaborative network concepts in manufacturing industries. Some general conclusions that can be drawn from these cases regarding the main considered characteristics are  Main entities involved in VBEs are usually SMEs; brokers, integrators, and sub-networks of companies appear in some cases. Support institutions that support and enhance the performance of the network are also part of VBEs, such as: universities, regional development agencies, financial and governmental institutions.

Table 6 ICT tools used in the studied CNO cases. CNO (VBE) case IECOS

Virtuelle Fabrik

VIRFEBRAS

VEN

Supply Network Shannon Torino Wireless network

CeBeNetwork

Swiss MicroTech

Operation Web site/portal Automatic diagnosis methodology (for evaluating members) Internal management system (Peñaranda, Galeano, Romero, Mejía, & Molina, 2006) Administrative system (based on excel sheets) Web site/portal Webcorp (internal order management system) (Katzy & Ma, 2002) International portal VF2VF (for posting customer demands) (Huber & Plüss, 2003) Web site/portal Virfebras information system (VIS), with two modules (Lima, Vallejos, & Varvakis, 2004): Marketing information (public online information and order tracking) VEs operation information (only for members) Web site/portal VEN main tools: Opportunity management Virtual factory building process: VENabledTM and VENproTM Advanced competency profiling CRM modules e-marketplace ERP and MRP interface Knowledge management Networking forums Access to legal/financial resources Currently SNS have no common ICT infrastructure in place. Simple web site Internet portal with functionalities for: Searching companies members and viewing their profiles Seeing company news (news can be posted by members) Promoting networking events Members’ area (publication of profiles, news and products launches, press review, access to specialized information) This network doesn’t use a specific ICT tool. Standard office tools are used. Web site Web site Search engine (for partners search and technical information) Job search News and events posting

 Different levels of members could also be defined in a VBE, as in the case of VEN, which defines ‘‘accredited members” after succeeding an evaluation/accreditation process. When this process is not a rule in the VBE, the profile and competencies definition of the members becomes an important issue.  Although the definition of a single industry sector for a VBE is not a common practice, members usually belong to complementary sectors, or to the same product/service supply chain. Vertical and horizontal chain integration can be characteristics that could be found in different VBEs.  Most of the members, in the analyzed VBEs, belong to the same geographic region. Those VBEs are focused on the competitive improvement of a specific region or industry sector in a geographical area (regional ecosystem). This could be explained by the programs of incentives that local support institutions may offer to SMEs in a specific country or region. Nevertheless the case of Virtuelle Fabrik and Swiss MicroTech are the exception. For Swiss MicroTech to include Chinese companies in the network is a business strategy aimed at overcoming actual market trends. CeBeNetwork is also extending its membership to other countries.  Main common business processes that the studied VBEs have: s Processes that support the network creation and enhancement, such as: partners profiling, partners’ accreditation, training and education. s Processes that support the creation and management of VEs/ VOs, such as: marketing and commercialization tasks, business opportunities identification and assessment, brokerage services, partners’ search, quotation and negotiation support, project and quality management, support for export processes, customer follow-up. s Innovation and technology processes: research and technological development support, entrepreneurship programs, and intellectual property rights (IPR) services. s ICT processes, the ones related to the offering of services through ICT tools and usually internet-based applications. s Complementary processes such as: financial support, specialized training, collaboration tools, job search and news posting.  Governance structure of the VBE may depend on its formal constitutions and the possibilities offered by the governing legal framework; industrial associations and specific coordination companies are the most common structures.  The use of ICT tools supporting the operation of VBEs depend on each case. Some cases use specific software and own-developed platforms supporting VO operation, such as VF, VEN and Virfebras; while other VBEs have early tools that support basic management operations. This point shows an opportunity area for ICT developers.

5. Discussion – CNOs and manufacturing challenges How can CNOs contribute to achieve the challenges identified for the visionary manufacturing 2020? Challenge 1: Achieve concurrency in all operations. ‘‘Concurrency” means that planning, development, and implementation activities will be done in parallel or in partial overlap, rather than sequentially. Using the VBE and VO models, the conceptualization, design, and production of products and services could be as concurrent as possible, due to the integration of different enterprises’ core competencies in collaborative networks. This will reduce time-to-market, encourage innovation, and improve quality for new products, services and technologies developed in the networks. Virtuelle fabrik and IECOS are examples of net-

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works that integrate the engineering, design, and manufacturing tasks in parallel using the core competences of their members. Challenge 2: Integrate human and technical resources to enhance workforce performance and satisfaction. CNO models are aimed to integrate human and technical resources. To meet market demands, all members of the CNO, including people, are expected to react quickly when a customer requirement appears; this flexibility is achieved by the integration of competencies, adoption of common business practices, and the use of ICT tools (such as the VO creation and operation tools mentioned in Table 7). The collaboration process carried out in CNOs, together with the use of ICT support the following issues that help to overcome this challenge:  Effective communications at all levels of an organization, especially with customers, suppliers, and partners.  Adaptation to the changing needs of the market, due to the rapid configuration of VOs.  Rapid learning throughout the enterprises, achieving rapid assimilation of new technologies.  Adoption of a systems approach, due to the engagement of the partners that participate in CNOs which implies mutual trust, common goal-oriented risk taking, commitment, and resources sharing.  ICT tools used in VEN are an example of the human and technical resources integration in the brokerage and VO management process (see Table 6). Challenge 3: ‘‘Instantaneously” transform information gathered from a vast array of diverse sources into useful knowledge for making effective decisions. Manufacturers involved in a CNO can be distributed worldwide to meet customer demands; this means that the use of fast, accurate and high quality communications is a must. ICT tools that support transparent, plug and play and standard communications are the base for CNO operation. Ontology based systems, trust management tools, inheritance management systems, partners’ search and suggestion, negoti-

ation wizard, VO modeling tools, decision support systems, knowledge management systems, and monitoring systems for VBEs and VOs are examples of ICT services (see Table 7 in Section 6) that capture and store data and information and transform them into useful knowledge for CNOs. CeBeNetwork is an example that integrates companies in different countries, using engineering tools for analysis and modeling in the aeronautics industry. Challenge 4: Reduce production waste and product environmental impact to ‘‘near zero”. Although not necessarily all CNOs are pursuing the decrease of the environmental impact and waste control, several are dealing with this issue. Cooperation, proactive task, teamwork, and global partnering, together with governments, academia, allied and competitive manufacturing/engineering enterprises, and communities, combined with proper systems of incentives, will allow CNOs to reach such environmental goals. Challenge 5: Reconfigure manufacturing enterprises rapidly in response to changing needs and opportunities. The goal-oriented dynamic coalitions in CNOs are established and dissolved quickly to meet the challenges of increased access to (and demands of) rapidly changing markets, and expected advances in ICT. The VBE concept offers the needed conditions for rapid formation of new consortia well suited to each business opportunity. Several examples of reconfiguration of manufacturing enterprises can be found during the VO creation process in all VBE cases presented. Challenge 6: Develop innovative manufacturing processes and products with a focus on decreasing dimensional scale. CNOs of manufacturing enterprises have the ability to create and produce new products rapidly to meet the high expectations and constantly changing demands of customers. The involvement of SMEs in a collaborative environment such as a VBE creates the necessary critical mass and association of competencies and experiences that lead to the emergence of a culture of innovation. The involvement of customers in these networks also

Table 7 ICT tools that support the VBE/VO life cycle summary (according to the ECOLEAD project results). Life cycle stage

ICT tools/services for the VBE

ICT tools/services for the VO

Creation

VBE management system, including the following tools/services for VBE configuration cycle:  Business rules uploading  Ontology uploading and adaptation  Trust model adaptation  Initial members registration VBE management system, including the following tools/services for VBE operation cycle:  Registration of members  Members roles, rights and responsibility management  Member rewarding  VO creation tools (see next column)  Registration of VOs  VO performance registry  Profiling and competency management  Ontology view and evolution  Trust management  Bag of assets management  Decision support management VBE management system, including the following tools/services for VBE evolution/metamorphosis cycle:  New domain parameterization  Members roles, rights and responsibility reassignment  Ontology evolution  Trust model evolution

Service associated to the VBE management system to allow VO creation, including:  Collaborative opportunity identification;  CO characterization and VO rough planning;  Partners’ search and suggestion;  Negotiation wizard VO management system, including the following tools/services for VO operation cycle:  VO modeller  Supporting indicators definition  Distributed indicators information collector and integrator  Decision support system  Monitoring system  Etc.

Operation

Evolution/ metamorphosis

Dissolution

VBE management system, including the following tools/services for VBE dissolution:  Members roles, rights and responsibility reassignment  VBE inheritance management

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VO management system, including the following tools/services for VO evolution/metamorphosis cycle:  VO modeller  Partners’ search and suggestion, negotiation wizard  Decision support system  Distributed indicator information collector and integrator  VO inheritance management VO management system, including the following tools/services for VO dissolution:  VO consortium dissolution management  VO inheritance management

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opens new opportunities for co-innovation. The development of innovative processes that would enable the manufacturing of new products, such as in the case of Swiss MicroTech, overcome this challenge.

6. Pursuing a holistic approach A large number of research projects are carried out worldwide and, as illustrated by the given examples, a growing number of practical cases on different forms of collaborative networks are being reported. This trend has so far led to an extensive amount of empirical base knowledge that now needs to be leveraged. In addition to the identification of many required components, tools, and the base infrastructure functionalities, awareness is being built and partially studied regarding the fundamental configuration and operational rules, as well as the behavioral patterns that emerge. It is urgent to consolidate and synthesize the existing knowledge, setting a sound foundation for the future research and development in this area. In this context, the ECOLEAD integrated project (Camarinha-Matos et al., 2008) was launched in 2004 as a 4-year initiative, involving 28 industrial and academic organizations from 15 countries of Europe and Latin America. This project’s vision is that in ten years, in response to fast changing market conditions, most enterprises and specially the SMEs will be part of some sustainable collaborative networks that will act as breeding environments for the formation of dynamic virtual organizations. The fundamental assumption in this project is that a substantial increase in materializing networked collaborative business ecosystems requires a comprehensive holistic approach. Given the complexity of the area and the multiple inter-dependencies among the involved business entities, social actors, and technologic approaches, the substantial breakthrough cannot be achieved with only incremental innovation in isolated areas. Therefore, the project addresses three most fundamental and inter-related focus areas – constituting pillars – as the basis for dynamic and sustainable networked organizations including: VO breeding environments (VBE), dynamic virtual organizations, and professional virtual communities (PVC) and virtual teams. As the main focus of work, the VBE pillar addresses the characterization of these networks, namely in terms of structure, life cycle, competencies, working and sharing principles, value systems and metrics, the governance principles and trust building processes, the VBE management, and VO creation, including negotiation and contracting. The dynamic VO area is mainly focused on the VO management and governance approaches, performance measurement, and VO inheritance. PVC addresses the characterization of human-based professional communities in terms of the socio–economic context, governance principles, social and legal implications, value systems, metrics and business models, as well as the support platform for collaborative problem-solving. Interactions and synergies among these three entities, namely in terms of business models, value creation and corresponding metrics, are a major issue of integration. An effective and rapid creation of virtual organizations requires pre-existence of a suitable virtual organization breeding environment (VBE) (Afsarmanesh & Camarinha-Matos, 2005). Furthermore, agile/fluid creation of virtual organizations within the VBE requires the existence of VBE management system, to support the necessary functionalities and automated/semi-automated activities and processes, such as the management of partners’ competencies, assessment of specific trustworthiness of suggested partners, etc. At each stage of VBE life cycle, the VBE stakeholders perform different activities related to the VBE. For example, at the VBE creation stage, a VBE administrator must register all founding members, at the operation phase a VO planner needs to access the

partners’ competencies to match with the opportunities in the market, etc. These activities and others must be supported and facilitated by the VBE management system. Table 7 lists the main services and functionalities for a VBE management system in each of the life cycle stages. Similar to the VBE, the VO life cycle needs tools that support each business process. In the VO creation phase the main functionalities should supports the agile creation of VO, including the identification and characterization of the collaboration opportunity, the consortia formation and the definition of the VO plan, governance principles, negotiation, and contracts and agreements establishment. In the VO management the tools used are aimed to support the organization, allocation and coordination of resources and their activities as well as their inter-organizational dependencies to achieve the objectives of the VO. Table 7 also presents a summary list of these tools. The prototype implementations of these tools were first assessed by 10 end-user networks (VBEs and PVCs) and were then installed in field demonstration prototypes supporting comprehensive real business scenarios developed by those networks (Camarinha-Matos et al., 2008). Effective implantation of any form of collaborative network depends on the existence of an ICT infrastructure. Therefore, in addition to specific services to support the three pillars mentioned above, a generic horizontal infrastructure for collaboration is also developed by ECOLEAD following service oriented architecture (Rabelo, 2008). Sustainable development of collaborative networked organizations needs to be supported by stronger fundamental research leading to the establishment of Collaborative Networks as a new scientific discipline. Ad-hoc approaches and poor understanding of the behavior of the collaborative structures and processes mainly characterize the past developments in the area of collaborative networked organizations. The project includes the establishment of a sound theoretical foundation, and a reference model, as a pre-condition for the next generation of CNOs. A contribution in this direction is the ARCON modeling framework (CamarinhaMatos & Afsarmanesh, 2006b, 2008) (Fig. 6), offering a 3-dimensional approach to model collaborative networks, including: (1) the CNO life cycle dimension (with creation, operation, evolution/ metamorphosis, and dissolution), (2) the CNO environmental perspectives dimension, including the Endogenous Elements (the CNO viewed from ‘‘inside”), and the Exogenous Interactions (the interactions between the CNO and the surrounding environment), and (3) the CNO modeling intent dimension (with general-concepts, specific-modeling, and implementation modeling). For the Endogenous Elements perspective four sub-dimensions are considered: (i) Structural dimension, including the structure/ composition of the constituting elements of the CNO, namely its participants and their relationships, as well as the roles performed by those elements, and any other compositional characteristics of the network such as its typology, etc.; (ii) Componential dimension, including individual tangible/intangible elements in the CNO, e.g. different resources such as the human elements, software and hardware resources, as well as information and knowledge; (iii) Functional dimension, including ‘‘base functions/operations” running/supported at the network, and time-sequenced flows of executable operations (e.g. processes) related to different phases of the CNO’s life cycle; and (iv) Behavioral dimension, comprising the principles, policies, and governance rules that either drive or constrain the behavior of the CNO and its members over time. For the Exogenous Interactions perspective also four subdimensions are considered: (i) Market dimension, including issues related to both the interactions with ‘‘customers”, representing potential beneficiaries, and ‘‘competitors”; (ii) Support dimension, including issues related to support services provided by the third

59

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Environment characteristics - Endogenous Elements - Exogenous Interactions

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Life cycle stages

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e.g.

e.g.

e.g.

e.g.

-Participants

- Devices

-Prescriptive behavior

-Relationships

- ICT

-Fundamental Processes

-Roles

-Human res.

-Background processes

-Obligatory behavior

-Relationships

-Procedures

- Trust

-Information/ knowledge res.

-Constraints & conditions

- Info flow

-Ontology res.

-Methodologies & approaches

-Contracts & agreements

- Control

-Profile / Competency data

- Setup, operation, evolution, inheritance, etc

-Incentives

...

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Endogenous Elements

l in

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Implementation Modeling

E2. Componential

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E4. Behavioral

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L4. Metamorphosis / Dissolution

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Surrounding environment

Exogenous Interactions

L2. Operation

CNO L1. Creation

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e.g.

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Mo

de

Specific Modeling -Network identity -Mission -References -Profile -Strategy

-Interaction parties -Customers

e.g. - Network identity -Social nature -Interaction parties -Certification -Logistics -Insurance -Registries -Financial -Coaching -Training

e.g.

e.g.

-Network identity

-Network identity

-Legal status

-Attracting & recruiting strategy

-Values

-Interaction parties

-Interaction parties

-Governmental organizations

-Business org.s

-Associations

-Public institutions

-Interest groups

-Competitors

-Other

Exogenous Interactions I1.Market

I2. Support

I3. Societal

I4. Constituency

Outside view

Fig. 6. ARCON modeling framework for collaborative networks.

party institutions (outside of the CNO); (iii) Societal dimension, focused on issues related to interactions between the CNO and the society in general; and (iv) Constituency dimension, related to the interaction with the universe of potential new members of the CNO, i.e. the interactions with those organizations that are not part of the CNO but that the CNO might be interested in attracting them. Although borrowing some elements from previous works on enterprise modeling such as Zachman framework, CIM-OSA, GERAM, etc., ARCON is intended to facilitate a better understanding of collaborative networks and provide a more systematic basis for the design and analysis of new CNOs. A first comprehensive reference model for collaborative networks applying ARCON framework was developed by the ECOLEAD project (Camarinha-Matos & Afsarmanesh, 2008).

manufacturing companies, and particularly SMEs, face current market challenges. Nevertheless most of the past R&D initiatives have addressed only partial aspects, failing to properly understand and support the various business entities and their inter-relationships in complex and fast evolving business ecosystems. The ECOLEAD project pursued a more holistic approach considering both long-term and temporary organizations as well as networks of organizations and networks of people.

7. Conclusions

References

Collaborative networks are commonly recognized in society as a very important instrument for survival of organizations in a period of turbulent socio–economic changes. A growing number of varied CN forms are emerging as a result of the advances in ICT, the market and societal needs, and the progress achieved in a large number of international projects. Of particular relevance is the development of ‘‘breeding environments” as an effective approach to facilitate the rapid formation of temporary partnerships (virtual enterprises/virtual organizations, virtual teams). The analysis of a significant number of existing VBEs in different parts of the world already provides a good insight on the successful practices as well as current limitations of these organizational structures. The combination of long-term and short-term/goal-oriented network structures represents an important contribution to help

Acknowledgements This work was supported in part by the ECOLEAD project funded by the European Commission. The authors thank the valuable contributions of their partners in the consortium.

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