Academic journal article International Journal of Management

A Multiple-Agent Joint Procurement Process Model for Virtual Organizations: A Simulation Study

Academic journal article International Journal of Management

A Multiple-Agent Joint Procurement Process Model for Virtual Organizations: A Simulation Study

Article excerpt

Technological changes have brought about significant changes in society, including the 'creation' of virtual counterparts to real life events and processes, including whole organizations and enterprise that exist in cyberspace rather than the physical world. Many real-life organizations have utilized the principles and practices that form the basis of such virtual enterprises and organizations, to become more competitive than their rivals in the same industry. The present paper indicates how this can be done for an important aspect of organizational functioning, the procurement of products or services with other organizations from multiple agents. It develops a virtual organization model based on a simulation of the key components and procedures involved in executing this function; a joint procurement model agents. The case which is simulated is that of leisure farms in Taiwan joining together to get the 'best deal' from a number of providers or agents. It is argued that the simulation suggests how enterprises should conduct the bidding that lies at the heart of the procurement process to their advantage. Other uses of the joint procurement model developed in this paper are also suggested.

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1. Introduction

The internet and information technology have fundamentally changed human society though altering the way in which information is obtained, used, stored and disseminated. The results have not only made the processes involved more convenience and rapid but also lead to the emergence of new ideas, models and methods that challenge almost traditional ways of doing these things. One of most outstanding results is the "virtualization" brought about information technology including the internet, including the creation of whole organizations and enterprises that exist in cyberspace rather than the real world as it is commonly understood. Despite the 'existence' of virtual enterprises and organizations for some time, very little research has been done described as virtual, rather done on how they can help real firms or businesses become more effective, and efficient, on how the latter can best use the ideas embodied in virtual organizations or enterprises. Within this framework, the present study examines, through a simulation exercise, how businesses or firms should together deal with multiple agents through whom they procure the products or services they need, to maximizing the benefits generated.

Literature Review

In light of the vigorous development of agent technology in recent years, the research used its theory and methods to investigate the joint procurement of services or products from a number of agents. The following are the core concepts used in the research.

Virtual Organization

Virtual organizations or virtual enterprises are temporary alliances of independent commercial or business organizations whose aims are to enhance or improve the 'standards' of their acquisition, use and distribution of electronic information [1][2]. The alliance might be a value chain in which the member business organizations contribute their core capabilities, realize their share of resources, and the information and knowledge at different levels of the value chain; the alliance could be a "enterprise clusters" or take other forms [3] [4].

The existence of virtual organizations is an objective fact and many corporations have successfully taken advantage of 'virtual organization' to gain competitive edges. Among them, Nike is a typical example. By exploiting the idea of virtual organization, an enterprise may develop faster and perform better than others of the same type at the same time. Without the adoption of the idea of a virtual organization, many businesses will lose out, continuing along their traditional ways, missing the opportunities for improvement offered by turning part of themselves into virtual organizations. Such businesses will find it difficult, or even impossible to catch up to or go beyond those enterprises that have a competitive edge because of their adoption of virtual organization ideas [5] [6]. …

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