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2000 Society for Design and Process Science

Printed in the United States of America

VIRTUAL TRANSPORT ENTERPRISE INTEGRATION

Ricardo Chalmeta
Grupo IRIS. Departamento de Informtica.
Universidad Jaume I. Castelln. 12071. ESPAA.

A virtual transport enterprise (VTE) is a temporary alliance of independent transport enterprises


that come together to share resources, skills, and costs, supported by Information and
Communication Technologies, in order to better attend market opportunities. To design an
efficient and flexible VTE that presents the semblance of a single enterprise to the customers, is
a very complex task. There are an extensive set of approaches to help in the co-ordination of the
different objectives during of the design and execution of a single enterprise. However, they do
not provide the specialized tools for the integration of VTEs.
This paper shows a Reference Architecture that is being developing focused on the virtual
intermodal transport enterprise. This Architecture guide (1) in the design of high quality
business process, with an information flow connecting the services in the transport chain and
(2) in the development of an integrated system of management.
The architecture is composed of a methodology, a reference model, a performance measurement
system, an information and communication infrastructure and a set of computer engineering
tools.

1. Introduction
1.1. Virtual Enterprises
A Virtual Enterprise is a temporary alliance of globally distributed independent enterprises that come
together to share resources, skills, and costs, supported by Information and Communication Technologies,
in order to better attend market opportunities and successfully fulfil a responsible corporate strategy
(Bernus, 1997 and Brown, 1994). The Organisational characteristics of a virtual enterprise can be described
as (Weston, 1997).
1.2. Virtual Transport Enterprises
In the global market environment, the majority of the transport companies do not have the financial
and structural capability to afford the cost to operate direct routes with the different origin and destination
points. So, in order to satisfy the customer requirements, local transport enterprises must work together

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through the establishment of co-operative agreements forming what is called Virtual Transport
Enterprises (VTE).
A Virtual Transport Enterprise should be capable of taking full responsibility for a door-to-door
transportation service, on behalf of its customers, and should be capable of defining the optimal solution,
taking advantage of the availability of different modes of transport and finding true added value to
transportation services.
1.3. Virtual Transport Enterprise Integration
One of the future main research and development themes in the improvement of transport activities
is the problem of the virtual transport enterprise integration. Virtual Enterprise Integration is the task of
improving the performance of the whole organization by efficiently managing the interactions among the
participants. An integrated virtual enterprise should be an aware enterprise meaning that changes in the
internal or external environment should as soon as possible be reflected in the objectives and in its
actions; making sure that activities of all the components contribute to the overall objective in a coordinated way.
To design and to manage an efficient and flexible virtual transport company that present the semblance
of a single enterprise to the customers, is a very complex task. It involves different approaches regarding
technology, management and cultural elements. High quality business process in an integrated business
chain requires properly designed operations. In addition, to ensure quality, an integrated system of
management is needed, with all levels of management properly set up for the purposes of managing the
virtual transport enterprise (Chalmeta, 1997b).
To carry out this objective, it is necessary to use methodologies, reference models, information
infrastructures and computer enterprise engineering tools that help in the co-ordination of the different
objectives during of the design and the management of the virtual transport enterprise.
Table 1. Organisational characteristics of a virtual enterprise.
Internal Inherent Values
?? agility and innovation value
?? organic behaviour valued
?? a highly dynamic
information and m aterial
flow
?? cross-partner-company team
working value
?? more open, smaller power
distance
?? employee satisfaction higher
?? employee loyalty lower

External
?? world class though
complementary
competencies
?? customer orientation
?? less stable

Typical Control Structures


?? geared to market need
?? need to support change
?? pro cess as commodity
?? electronic trading
necessary
?? global standards vital
?? system overheads high
?? need for holistic and
changing integration
requirements

1.4. Methods and tools for Enterprise Integration


There are an extensive set of approaches for enterprise engineering as enterprise engineering
methodologies which describe the management processes for enterprise integration as the Purdue Guide
for Master Planning and implementation of integration programs (Williams, 1995), enterprise modelling
languages as OO (Taylor, 1995) or IDEFx (Cam-I, 1981), supporting enterprise tools for the design of
individual business entities and paradigmatic enterprise models for organizational design. All these proposals
can be organized inside what is called Enterprise Reference Architectures. An Enterprise Integration

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Reference Architecture is a framework that provides generic guidelines for developing an integrated
enterprise and is supported by tools, methodologies, modeling languages and a range of compatible products
thus making the entire endeavor feasible, which otherwise is practically impossible in time and costs.
Among the most well known ones are (Fig. 1).
e) Architecture presented in the ESPRIT programs of the
? CIM-OSA (Open Systems Architecture
European Union (number 688, 2422 and 5288), by the AMICE Consortium (Amice, 1991).
? GIM (Grai Integrated Methodology) Architecture derived from the work carried out by several
projects subsidized by the ESPRIT program of the European Union like IMPACS (number 2338) by the
GRAI Laboratory of Bordeaux University (France) (Doumeingts et al., 1992).
? PERA Architecture developed by Purdue University (USA) (Williams, 1993).

PERA

ARIS

(BUSINESS IDENTIFICATION)
MISSION, VISION AND VALUES
ORGANIZATION

CONCEPT
LAYER

DEFINITION
LAYER

ESPECIFICATION
LAYER

MANAGEMENT
POLICIES

PRODUCTION
ENTITY

MANAGEMENT
REQUIREMENTS

PRODUCTION
REQUIREMENTS

MANUFACTUIRNG
NETWORK

TASKS

MANUFACTURING
STRUCTURE

INFORMATION
FUNCTIONAL
NETWORK

INFORMATION
STRUCTURE

HUMAN
STRUCTURE
DATA

CONTROL

GIM

FUNCTION

CIM-OSA

INICIALIZATION
DOMAIN
DEFINITION

PHISICAL
VIEW

FUNCTIONAL
VIEW

DECISIONAL
VIEW

CONSISTENCY CHECK

PHISICAL
VIEW

FUNCTIONAL
VIEW

DECISIONAL
VIEW

USER SPECIFICATIONS

MANUFACTURING
STRUCTURE

ORGANIZATION
STRUCTURE
THECNICAL ESPECIFICATIONS

USER
REQUIREMENTS

INFORMATION
INFORMACION
N
RESOURCES
FUNCTION
DECISION

INFORMATIONAL
VIEW
ANALYSIS
PHASE

INFORMATIONAL
VIEW
DESIGN
PHASE

INFORMATION
STRUCTURE
DETAILED
DESING
PHASE

ANALYSIS

DESIGN

DETAILED
DESIGN
GENERIC

PARTIAL PARTICULAR

IMPLEMENTATION

Fig. 1 Main Reference Architectures (in PERA only part of the life cycle is showed).

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G E RA

EE M

G ener ic E nt er pr ise
R efer ence Ar chitectu re
( identifi es concep ts of
enter pri se integratio n )

em ploys

E ET

E nter pr ise
E ngineer ing Methd ologies
( descr ibes pr ocess of
enter pri se engineer ing )

E nter pr ise E ngineerin g


T ools

E ML
En ter pr ise Modelling
Langu ages (con str ucts for
m odelling hu man r oles,
p ro cesses an d tech nologies )

su pport

E E M u t ilises E MTs to produ ce

EM
E nter pr ise Models
( r ep resen ting the
part icu lar enter pri se )

expressed in

im plem e nt ed in
defin e sem an tics of

a re used to bu ild

E MO
GE C D
G ener ic En ter pr ise
C oncept Definitio ns

PE M

E nt er pr ise Modu les


(im plementable mod ules
or pr oducts, as h uman
pr ofessions, o per ation al
pr ocesses, tech nolo gies;
eg. I T infr ast ructu re)

P ar tial E nterp rise Mo del s


( libr aries of r eusab le
mo dels, reference mod els )

Fig. 2 GERAM components.


Task Force on Architectures for Enterprise Integration (International Federation Automatic Control/
International Federation Information Processing) (Bernus et al., 1996). This project had a first objective
(1991-1993) which consisted of the selection of an architecture that would describe and present all the
necessary activities to establish, carry out and complete an enterprise integration program for any kind of
enterprise.
Due to political factors, it has been impossible for the members of this group to select only one
architecture that could be considered by everybody as the best one
(Williams and Li, 1995). However, thanks to the wide study carried out in this work in the second period
of three years of the project (1994-1996) the requirements and components, which such a reference
architecture has to fulfil in order to be considered complete, have been defined. These requirements and
components are synthesized in GERAM (Generalized Enterprise Reference Architecture and Methodology,
see Fig. 2) and are being studied by the ISO (International Standard Organization) Working group TC184/
SC5/WG1. Based on this, any kind of proposal for an enterprise integration reference architecture can
be evaluated under these criteria to get ISO and IFAC certification.
2. ARDIN Project
Although the earlier architectures have many good points, all these architectures can be improved, as
they have not completely generated the necessary methodologies, modelling techniques and adequate
execution tools for the different kinds of enterprises (Pantakar, 1995). In addition, new methods enabling

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the integration of virtual enterprises must be developed and their use must be popularized through examples
and application experiences.
In this context, the IRIS Group, of the University Jaume I of Castelln, Spain has been working in the
ARDIN research project since 1994. The objective is to develop and validate a step forward in the state
of the art of the Reference Architectures for Enterprise Integration. The work plan has been:
Synthesizes the existing (and in our opinion) complementary approaches, in only one architecture.
? To improve the result architecture incorporating new techniques, methods, models and templates.
? To validate its usability and application, carry out real enterprise integration projects, mostly in the
small and medium-sized enterprises of different sectors.
? To organize knowledge and experience obtained in our own architecture called ARDIN.
? To develop particular architectures and specialised tools focus in the necessities of every type of
enterprise activity.
?

3. VITE Architecture
One of this particular architectures, called VITE, has been focused in the problem of virtual transport
enterprise integration (see Fig. 3). Following the GERAM recommendations, VITE architecture is
composed by:
? A Methodology that describes the whole life cycle of a virtual transport enterprise, including the
design transactions among the potential transport partners as a part of the strategic management activity.
? A set of Reference Models, which allows the representation of dynamic relationships in the whole
virtual transport chain, including the management system, the operational business process and the external
constrains.
? A Performance Measurement Systems to help in the analysis, decision-making and control of the
transport virtual organization.
? Computer engineering tools to solve specialised problems of the transport business.
? A model of an Information Management Infrastructure to support all the Virtual Transport Enterprise
activities.

INPUTS

OUTPUTS
GERA
Generic Enterprise
Reference Architecture

Theories & Methods for


Enterprise Integration
Benchmarking & Companies
Processes Analysis
Management &
Technology approaches

Methodology for the development


of a Virtual Transport Enterprise

VITE
ARCHITECTURE

Generic Enterprise Models

Reference Model of a
Virtual Transport Enterprise
Information Management &
Communication Infrastructure
Performance Measurement
System

International/Regional/National
Trade relations

Computer Engineering Tools

Fig. 3 VITE Components.


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Table 2. Phases of the virtual transport enterprise life cycle.


STEPS

Design and
Implementation

ACTIVITIES
Search for partners
Tender formation
Negotiation / agreements
Contract awarding and
management
VTE strategy
Partners strategy
definition
of
the
Business
Processes
design of the Business Processes
design
of
the
Integrated
Management System
virtual
transport
enterprise
implementation program
new objectives of the company or
new requirements of the business
processes
??
??
??
??

Creation/Configuration

??
??
??
??
??
??

Execution and continuous ??


improvement

SUB-ACTIVITIES
?? definition of the virtual
transport enterprise
?? mission, vision and values
?? objectives and strategies
?? general policies
?? decision, resources, function
and information design
?? evaluation of the dynamic
behavior
?? information and
communication
infrastructure
?? performance
measurement
?? change management
?? actions plans

3.1. VITE Methodology


The overall methodology is a sequence of steps that describe the life cycle and the life history of a
virtual transport company. These steps can be organized in three phases: Creation/Configuration; Virtual
Transport Enterprise Design and Implementation; and execution and continuos improvement.

3.1.1. Creation/Configuration
This step corresponds to the definition, selection and delineation of the virtual transport enterprise and
the definition of the strategic objectives. Although part of the transportation network will remain relatively
stable, non-strategic nodes are dynamically added/removed according to the current/future business
opportunities and the current/future state of each business process. The creation/configuration phase
uses tools for partners search, and for decision support to help the negotiation process and all the dynamics
associated to the joining/leaving of enterprises.
A model of these steps has been developed, representing the information and communication flows
indispensable for the design of a multi-party transport chain, including the negotiations procedures.

3.1.2. Virtual Transport Enterprise Design and Implementation


Within the step by step methodology for the development of an integrated virtual transport enterprise,
the second step is called Virtual Transport Enterprise Design and Implementation. It corresponds to:

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? the definition of the business processes that allow to satisfy the Virtual Transport Enterprise
strategy objectives. The objectives to be accomplished are represented by means of qualitative and
quantitative attributes of the processes, and without referencing the decisions or the design and
implementation options.
? the design of the business process to carry out the activities of the transport business chain (with
an integrated material and information flow connecting the services in the value chain) and the design of
an integrated management system for the purposes of managing the virtual transport enterprise. The
study of the dynamic behavior of every business process is necessary in order to analyse the temporal
evolution and to check if its performance matches the suggested objectives. To study its performance it
is necessary to use a specific tool capable of simulating its dynamic behavior.
? Virtual transport enterprise implementation programme. Once the different business processes
and the integrated management system have been designed the next step is to implement the virtual
transport enterprise.

3.1.3. Execution and Continuous Improvement


The life cycle paradigm proposed for a virtual transport enterprise establishes a cyclical process of
continuous improvement (Kelada, 1996). Once the strategy and the business processes have been designed
and implemented, during the execution phase, their behavior has to be continuously analysed, in order to
determine if it is satisfactory. If not, the processes must be redesigned or the initial objectives changed if
the business is not capable to achieve them.
In this way, it is not only assured that the business processes are coherent with the strategy (they are
redesigned to match all the objectives), but the strategy itself or the partners composition is also redesigned
again depending on the performance the enterprise is able to reach. So, the changes size is variable. It
can correspond to the punctual modification inside a process or to define a new strategy that can affect
all business processes and structures.
3.2. VITE Reference Models
The complexity in the Design Process of a Transport Virtual Enterprise, whose design decisions are
taken by different groups with different background and objectives, requires the use of models that
allows one to understand, analyze and evaluate the impact of the decisions on the system performance
before its construction (Petri, 1992).
So, the success of virtual transport enterprise integration as a whole very much depends on the ability
to make high quality reusable models available for management and technical personnel. These models
(different depending on the life cycle phase) must exhibit the most important enterprise properties, such
as self similarity, agility, the ability to be implemented as a global virtual transport enterprise, etc. The
existence of such models allow a drag-and-drop enterprise modeling approach to be used by business
end-users (top level management and technical personnel). Depending on the phase inside the life cycle
of the virtual enterprise integration activity these models may be used for:
?
?
?
?

Communication of design decisions among involved parties;


Decision support (e.g. for the analysis of current operation to identify the need for change);
Education and training of personnel, and in general explicit representation of company knowledge;
Model-driven control of processes (e.g. establishment of workflow based processes).

At the moment we have a reference model of the processes map of a virtual transport enterprise that
describes how the processes should be using the best working practises and how the roles of the human
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resources should be. This model has been built from a benchmarking of different transport companies
and similar processes from companies of other sectors.
Figure 4 shows a graphical representation of the internal process map of a transport enterprise and
the external processes due to their relations with other transport enterprises. The big arrows show the
nine macro-processes: order management of freight outputs (this macro-process is showed at microprocess level too), order management of freight inputs, marketing, administration, information systems
management, human resources management, quality and coordination with the management system of
the virtual transport enterprise.
Each macro-process is divided into micro-processes, activities, tasks, and so on until getting down to
the lowest level, that is, the event produced by a human action or a machine. Every task of the model has
inputs, outputs, controls and resources. In addition, figure 4 can be improved by colouring the activities
carried out by personnel in the same department with the same colour. In this way, the figure represents
the horizontal view of the enterprise by means of the processes and the vertical view by means of the
departments.
This model has served to implant the working processes and to develop the information system in a
Spanish virtual transport enterprise composed by 55 small and medium size transport enterprises.
In order to develop the Reference Model of the Virtual Transport Enterprise different modeling
languages has been used. In a first approximation, IDEF0 and GRAI nets has been used to represent, in
a high level, the different activities and decisions inside the different business process. Then, an objectoriented reference model using UML has been developed, in order to describe in more detail the virtual
transport enterprise business processes (Chalmeta, 1997a).

PROCESS
ORDERS
DOCUMENTATION
FREIGTH
MANIPULATION
T
OR
SP
AN
TR

INTERNAL FLOW OF INFORMATION


CONTRACTION OF
COMPLEMENTARY
FLEET

FLOW OF INFORMATION TO OTHER ENTRPRISES

Fig. 4 Processes map of a transport enterprise.

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3.3. VITE Performance Measurement System (PMS)


Performance measurement systems are a powerful tool for improvement if used along with enterprise
integration. It is necessary to prescribe, suggest and assist in the design and management decisionmaking phases.
The performance measurement system help to translate the virtual transport enterprise mission and
strategies into a set of interrelated indicators for the different decision levels. This set of indicators can be
employed as the foundation of an integrated and iterative strategic management system. It enables a
virtual transport enterprise to;
?
?
?
?
?

Clarify and update strategy..


Communicate strategy throughout the company..
Align unit and individual goals with the virtual transport enterprise strategy..
Link objectives to long-term targets and annual budgets.
Conduct periodic performance reviews to learn about and improve strategy..

In virtual transport organisations, performance measurement system has to cross the functional
boundaries of regional and national partners in order to represent the whole virtual transport enterprise.
Figure 5 show the methodology followed in order to develop the performance measurement system for
virtual transport enterprises.

3.4. VITE Information Management and Communication Infrastructure


The virtual transportation enterprise integration, identifies specific co-operative information management,
communication infrastructure and functionality co-ordination requirements. For instance, the independence
and autonomy of the transportation companies that join the virtual transport enterprise require strong
support for security of information transmission, support for private/sharable information and an appropriate
tool (e.g. workflow management) to support the co-ordination of the common VITE tasks.
ABC

DEFINE VIRTUAL
TRANSPORT
ENTERPRISE
MISSION AND
VALUES

IDENTIFY AND DEFINE VIRTUAL


TRANSPORT ENTERPRISE STRATEGIC
OBJECTIVES

TRANSLATE STRATEGY TO
ENTERPRISES, DEPARTMENTS,
PROCESSES AND ACTIVITIES

STRATEGIC
PROBLEMS

EUROPEAN
QUALITY MODEL

VALIDATE INDICATORS

SELECT CAUSE
INDICATORS
CORPORATION

SELECT EFFECT
INDICATORS
CORPORATION

SELECT CAUSE
INDICATORS FOR
ENTERPRISES,
DEPARTMENTS,
PROCESSES AND
ACTIVITIES

SELECT EFFECT
INDICATORS FOR
ENTERPRISES,
DEPARTMENTS,
PROCESSES AND
ACTIVITIES

ESTABLISH
CAUSE-EFFECT
RELATIONSHIPS.

SIMULATION

DATABASE

QUALITY
INDICATORS

STRATEGIC FEEDBACK
(REVIEWS).

BUDGET
ACTION PLANS

SET GOALS
(SHORT-TERM).
BENCHMARKING

Fig. 5 Performance measurement.

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A model of an Information Management Infrastructure to support all the Virtual Transport Enterprise
activities has been developed. This model consider:
? The development of a strong interoperable platform and necessary mechanisms to support the
secured and authorised sharing and exchange of VTE information among the transportation sites.
? The identification of the functions (workflow) necessary to fully support both the co-ordination of
local tasks at each transportation site, and the proper functions of each site within the VTE.
? The development of a suitable communication infrastructure as the means to support the secure
and reliable data transmission among VTE sites.

3.5. VITE set of computer engineering tools


Specific computer engineering tools have to be develop to help in the integration of a virtual transport
enterprise. Inside the VITE architecture, we have developed a computer tool for the route planning and
management. This tool allow to define and to select the suitable route inside the virtual transport enterprise,
considering different views as the cost, the time, the quality, the resources, the transport modes, etc.

4. Industrial Relevance
To evaluate the importance of the transport sector, it can be said that it is one of the major economic
sectors in the World scenario. It employs 8 million people in Europe, corresponding to about 4% of total
EU employment and 15 million of people in North-America. In addition, it directly affects the final costs
of goods and products.
The market structure in transport companies is characterized by a high degree of competition, with a
low degree of production differentiation, mainly based on the costs, and low degree of concentration.
However, quality became to be another competitive factor due to the changes in the geopolitical and
economic scenario, like the creation of the single market in Europe or North-America and the elimination
of frontiers.
So, in order to achieve socio-economic and environmental sustainability, the efficient and balanced
use of existing capacities throughout the World transport system has become a key challenge. However,
managers of transport enterprises and the consulting firms that assist them, have to face the limited
scope and utility of the present methods to design, to plan and to manage in an integrated and efficient
way the virtual transport enterprises. In this context, VITE architecture represents a step forward in the
state of the art.
At the moment, the following architecture has been applied to CAVE logistics, a Spanish virtual
transport enterprise composed by 55 small and medium size companies. This direct benefits has been
obtained:

Lead-time reduction: 30%


Cost reduction: 25%
Productivity increase: 30%
Human satisfaction: 20%
New customers: 80%

No Quality cost reduction: 20%

?
?
?
?

5. Conclusions
This paper has shown a Reference Architecture for virtual transport enterprise (VITE) that act as a
guide during the integrated development of a Virtual Transport Enterprise. The Architecture is composed

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of five subsystems: a methodology that describe the life cycle of the virtual transport enterprise, a reference
model that represent the different views of the virtual transport enterprise (business process, management
system, etc.), a performance measurement system to support management decision making, an information
management and communication infrastructure to co-ordinate the activities and a set of computer
engineering tools.
Such Architecture allow an efficient and flexible virtual transport enterprise that presents the semblance
of a single enterprise to the customers, whereas in actual fact the enterprise is an alliance of partners for
the purpose of a business mission.
The Architecture offer guidance (1) in the design of high quality business process in an integrated
transport chain with the properly definition of the suitable operations (with an integrated material and
information flow connecting the services in the value chain) and (2) in the development of an integrated
system of management, with all levels of management properly set up for the purposes of managing the
virtual transport enterprise.

6. Acknowledgements
The ARDIN project has being founded by Cicyt, Bancaja and different enterprises.

7. References
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