Front-end, Back-end and Integration Issues in Virtual Supply Chain Dynamics Modeling

In this paper we discuss the way in which dynamic modeling can be used to deal with front-end, back-end and integration issues in current high-tech virtual supply chains (SC). In a first part of the paper we review and propose dynamic modeling options to connect customer value to business targets. This is done by explaining how to characterize target market by formalizing what are often informal but deeply held beliefs about what drives their customers' purchase decisions. We explain how dynamic models may help to connect planned investments to expected improvements in the customer's perception of the product critical attributes and thus increase sales, revenue, and market share. With the same effort we can importantly educate our customer demand forecast, and get a much better input for subsequent integrated supply chain planning models. In a second part of the paper we review and discuss the operational and financial effectiveness of existing virtual tools used in supply chain integration. We discuss how dynamic modeling may help to obtain a comprehensive model of supply chain integration. A modeling effort that can be used for the analysis of the effectiveness of various levels of integration, as well as for the assessment of the importance of the sequence in which virtual collaboration tools are adopted in supply chain integration. In a third part of the paper we discuss and explain experiences in modeling different types of supplier contracts to accomplish varying degrees of security and flexibility. We focus our attention on business dynamics based on current best practices in portfolio management, as evidenced by leaders in volatile high-technology businesses.