PARTNER SELECTION FOR VIRTUAL ORGANIZATION

Supporting the Moderator in Business Networks

Heiko Thimm, Kathrin Thimm

Institute for Business Information Systems

University of Applied Sciences Kiel, Sokratesplatz 2, D-24149 Kiel, Germany

Karsten Boye Rasmussen

Department of Marketing and Management

University of Southern Denmark, Campusvej 55, DK-5230 Odense, Demark

Keywords: Business Process, Company Network, Collaborative Business, Collaboration Platform, Company Selection,

Cross-Company Collaboration, Moderator, Network-Actor, Partner Selection, Orchestration, Production

Network, Small or Medium Sized Enterprise, SME, Virtual Organization.

Abstract: More and more companies improve their sustainability by belonging to company networks. When a specific

inquiry is directed towards the company network required is a selection of companies that partner- up in a

mixture of supplementing or even overlapping companies to form a virtual organization. The selection of

partners is a challenging task for the network moderator and poor results - producing less value for the

participating selected companies - as well as unintelligible results - that confuse the companies - can

jeopardize the network. Therefore, we outline a web-based solution where the information technology

supports the moderator by providing not only an optimized solution of the selected companies but also

makes the management process transparent and traceable thus building a firmer future ground for the

network.

1 INTRODUCTION

The concept of the virtual corporation evolved

about 15 years ago (Davidow & Malone, 1992). The

virtuality is launched from company networks in

which companies come together to jointly act on the

market in a well coordinated manner by (after a

selection process) forming a suitable virtual

organization. The concepts of networking and

collaboration have been promoted as an (or the)

approach to deal with the present business

challenges especially for small and medium sized

enterprises (SMEs). Parts of the hypothesis and

theory behind this recommendation of collaboration

are based on the theory and analysis of successful

industrial clusters (Porter, 1998). Interestingly the

vehicle for stronger global awareness goes hand in

hand with regional collaboration. More recent

research on virtual organizations includes the

ECOLEAD Project (Camarinha-Matos &

Afsarmanesh, 2006) which is targeted at new

frameworks, methodologies, and tools for the

present and also the future networking practice.

Among others the preliminary results of ECOLEAD

include the concept of virtual organization breeding

environment as a sort of basic-level collaborative

environment. This environment is being especially

prepared to enable fast virtual organization creation

processes so that companies may quickly get

engaged in collaboration processes to meet business

opportunities.

For the coordination of such collaborative business

processes in company networks an authority has

been suggested (Harbilas et al., 2002 and Pereira-

Klen & Klen, 2005) which we refer to as (network)

moderator. The special task for the moderator is to

perform the orchestration task or the selection of

companies for building a virtual organization. The

moderator thus determines what particular subset of

companies of the network is best suited for handling

a received inquiry. This is a somewhat complicated

119

Thimm H., Thimm K. and Boye Rasmussen K. (2008).

PARTNER SELECTION FOR VIRTUAL ORGANIZATION - Supporting the Moderator in Business Networks.

In Proceedings of the Tenth International Conference on Enterprise Information Systems - SAIC, pages 119-126

DOI: 10.5220/0001696701190126

 SciTePress

task as there are several constraints involved that are

directly expressed by the requestor in the inquiry

such as a price limit or a delivery deadline for a

certain product. Furthermore, less obvious extra

constraints that require deep insights into the current

economical situation as well as the collaboration

history of the network are to be considered. Due to

these constraints and also because of the fact that the

product and service offerings of the network

members may overlap, moderators are in need of

reliable and documentable support for the

orchestration task. The selection of companies can

be further complicated as the central descriptive

attributes of network members might not be limited

to existing products and offerings but also have

resources as competences and capabilities describing

the potential of the company, and furthermore

include an outspoken strategy of developing, adding,

and exploiting these potentials.

The eBusCo.net (Electronic Business in Company

Networks) research project includes investigations

into comprehensive IT support for moderators of

company networks with a focus on the partner

selection. We intend to integrate this service into

available and forthcoming collaboration platforms

for company networks. Furthermore, the project also

includes an empirical survey with focus on ICT

readiness and networking maturity amongst SME

companies in the production industry of the KERN

region of Northern Germany and the region of

Southern Denmark. Some more practical insights for

company networks are gained by observations in

two existing company networks and with the active

involvement of two regional business development

agencies.

This paper presents results of our work on the

support service for the partner selection or

orchestration task of moderators for given inquiries

coming to the company network. The service gives

the moderator the opportunity to apply dynamically

individual optimization criteria from a list of

predefined criteria. The service will use these

criteria to compute the most suitable set ("best fit")

of network members under a comprehensive

evaluation of the resources in the companies as well

as the current economical status and the

collaboration history of the network. The service is

expected to outperform even experienced

moderators because handling many simultaneous

constraints is a very complicated intellectual task.

Furthermore, the service is designed to bring more

consistency, transparency, and traceability regarding

the decision making involved in the orchestration

task. It may also serve as an analysis tool to support

the supervision of a company network.

In this article this first introductory section is

followed by a section presenting the context of the

moderator for inquiry handling in an existing

company network. The third section introduces the

object model and the building blocks for the support

service for network moderators. A system

architecture and implementation details for a first

prototype of this service are presented in section

four. Section five discusses related work while some

concluding remarks are given in section six.

2 THE CONTEXT OF

MODERATION IN AN

EXISTING COMPANY

NETWORK

In the eBusCo.net project we have made some

observations from existing company networks in the

process of development of the support service. In the

German region we have focused on the

Produktionsnetzwerk Neumünster (Production

network) where around 30 production companies

have participated for more than six years. The rather

long time period is an indication of the success of

the network and part of the success of is believed to

be caused by the fact that the network is moderated.

Having a moderating person can be regarded as a

structural fact but it cannot be disregarded that

personal competences also bears evidence to the

success of the business network. In this case the

moderator function is filled by a well integrated and

accepted person with a large background in

production processes and technologies but also in

business management. Among the moderator

responsibilities to the production network we focus

in this article exclusively on the decision process for

selecting the most appropriate set of companies. Our

observations and discussions with the moderator and

members of the Produktionsnetzwerk Neumünster

and also other companies concerning the inquiry

handling process are summarized in the graphical

illustration of the process steps given in Figure 1.

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Figure 1: Moderator-based inquiry handling.

An external inquiry is received (1) by the moderator

in the network. The inquiry has the form of a

potential customer order. If the inquiry refers to a

product of the company network’s standard product

offering, then a description is already available for

the moderator of the required collaborative

production process in the form of a historically

stored and retrievable description of the process. If

the request has more innovative elements the

moderator must create a corresponding new process

description. The process description then acts as the

object for the moderator's decomposition of the

request corresponding order components.

As a concrete illustrating example we assume a

company network that has specialized on passenger

seats for planes, ships, trains, and busses. In our

example the company network has received a

request for quotation from a shipyard asking for an

offer for 400 passenger seats with an integrated

infotainment system. Assume that a corresponding

process description for the production of the

requested seats within the network will be used to

specify the following six order components:

provision of metal seat frames,

provision of seat upholsteries

provision of circuit systems

provision of monitors

provision of harnesses

final assembly of seats.

These order components constitutes a specification

of the requirements (2). As the example shows, these

requirements refer to needed product parts and

production steps. Further requirements can specify

constraints concerning the network companies in the

form of preferences from the inquiring company as

to participating companies. In our example, the

inquiring shipyard might have explicitly asked that

the seat frames should be produced by a specific

company of the network. There can also be

constrains in the form of collaboration preferences

among the network companies.

Given the requirements and constraints for the

needed set of companies, the moderator orchestrates

a corresponding set of network members (3). This

orchestration activity consists of the selection of a

set of network members based on their company

products, and services and their company profile in

general. Steps two and three may be repeated several

times until the moderator is satisfied with the set

being orchestrated. Next, the selected members are

contacted by the moderator in order to coordinate (4)

their particular assignment and further details of the

collaborative fulfilment process and also the

response of the company network to the inquiring

company. This may require for the moderator to

again repeat steps two to four until all open issues

are solved and a consensus exists regarding the

response to the inquiring company. The moderator

then generates a corresponding response (e.g. offer

to a Request for Quotation) which is next delivered

(5) to the inquiring company.

The above description is based upon our

observations from the Produktionsnetzwerk

Neumünster. However, we find that an IT-based

support services may be very useful in general for

the inquiry management process in networks. In

particular, we see a strong need to support the

orchestration task for a number of reasons. First of

all, finding the most-suited set may easily over-

challenge a human moderator due to a large number

of different set alternatives based upon the big

number of participating companies in the network.

Secondly, often the members of a company network

offer not only complementing but often also

overlapping offerings. Thirdly, there is an aspect of

fairness as it is expected that business is to be

somewhat evenly distributed over all network

members. Furthermore, proper IT support may

reduce the influence of human factors on the

orchestration outcome and is expected to bring better

consistency of orchestration decisions over time,

better traceability of these decisions, and also

provide analytical possibilities for the general

management of the company network.

Require-

ments &

constraints

Company

Response

Company

Network

Set of Net-

work Mem-

ers

Moderator

Inquiry

ece

ves

2. specifies/ re-specifies

3.orchestrates/

re-orchestrates

Members

4. coordi-

nates

members

and their

offerings

process

descrip-

tions

PARTNER SELECTION FOR VIRTUAL ORGANIZATION - Supporting the Moderator in Business Networks

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Figure 2: Support service for network moderators - Object model.

3 CLASSES AND CONSTRAINS

IN THE ORCHESTRATION

SERVICE

The previous section motivated the support service

for moderators of company networks with focus on

the task of orchestration. Now we present some

major considerations for the design of the support

service for orchestration. The central classes and

relations of such a service are described through an

object model (Figure 2) based upon the

diagrammatic notation of the Object Modelling

Technique (Rumbaugh, 1998).

The class Network Offering represents the offering

of the company network to the Inquiry arising from

the market. The Network Offering is established

through collaboration of network members in the

production. The class Production Process models

these collaborative processes where the different

parts are modelled by the class Offering representing

both, physical products (or product parts) and

production services.

The “part-of” association reflects that the offered

products and services themselves may be composed

of Offerings. The class Company has attributes

describing the general data about the companies,

whereas the competencies, technical abilities

(capability), and offering of the companies are

modelled by separate classes. These classes are

together framed as Company Network Directory

(CND) in Figure 2.

The classes of CND capture relative static data.

However, the remaining classes of Figure 2 refer to

dynamic data that relates directly to the inquiry

handling activities of the network moderator. The

classes at the right border of Figure 2 capture data

that the moderator will have to prepare for each

inquiry. The class Collaboration Request Profile

holds administrative data about an orchestration

problem to be solved for a given inquiry. The class

Request Element represents and relates to the

products and production services (Offering). The

class Collaboration Constraint represents the set

constraints shown in Table 1.

Table 1: Collaboration Constraints (CC) for the set

orchestration task.

CC Explanation

INCLUDE Specifies a member of the network that

has to be included in the set.

EXCLUDE Specifies a member of the network that

has to be ignored for the set.

MUTUAL

EXCLUDE

Specifies a pair of members of the

company network that must not be

considered together for the set.

The “part-of” association between class

Collaboration Request Profile and class Request

Element reflects that a Collaboration Request Profile

may be composed of many Request Elements.

Likewise, the “part-of” association between

Company Network Directory

Specified by moderator

Computed by service

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Collaboration Request Profile and Collaboration

Constraint reflects that a Collaboration Request

Profile may involve many constraints.

The Network Actor Set and Orchestration Item (two

classes in the middle of Figure 2) represent the

orchestration result generated by a support service

for a given Collaboration Request Profile. The class

Network Actor Set captures administrative data

about the total orchestration result. The class

Orchestration Item describes an assignment of a

single company from the network to a Request

Element. As a Collaboration Request Profile may

consist of many Request Elements, a Network Actor

Set may consist of many Orchestration Items. This is

expressed by the “part-of” association between class

Network Actor Set and class Orchestration Item.

The example scenario of a company network

specialized on passenger seats introduced in Section

2, the assumed Request for Quotation for 400

passenger seats may be mapped into a Collaboration

Request Profile as given in Figure 3 below (here

presented as a sketched XML document).

Figure 3: Request Elements.

Similarly the Figure 4 shows a Network Actor Set

that might have been orchestrated for this sample

Collaboration Request Profile.

The orchestration task service will take as input a

Collaboration Request Profile and as output compute

the several possible Network Actors Sets under

consideration of the information in the Company

Network Directory. However, as the number of

alternatives will tend to be high it can easily lead to

a situation of information overload. Furthermore, the

computation of these alternatives will in itself be a

problem of magnitude due to a combinatorial

explosion. Therefore our research is also geared

towards a smarter orchestration service that will be

capable of considering optimization criteria for the

orchestration task and use these criteria to compute a

short ranked list of Network Actor Sets. This

ranking will reflect the “goodness of fit” of a

Network Actor Set with respect to given

optimization criteria. Through this approach, we

believe that the natural way moderators deal with the

orchestration task is imitated to a large degree.

Figure 4: Sample Network Actor Set.

There are several examples of optimization criteria

for the orchestration task specified in Table 2 and

many more could be given. The General Criteria

refer to key properties of single network members

that typically drive collaboration decisions in

company networks while the Collaboration-oriented

Criteria address aspects of the company network as

a whole that drive the collaboration decisions.

It should be noted, that the two examples for

collaboration-oriented criteria given above can work

in opposite directions as the company that has had

only a small profit share normally also will not have

a large amount of collaboration experience. This

exemplifies that the moderator has to be careful in

choosing from the list of optimization criteria for a

given inquiry. Through standard optimization

techniques one may compute the targeted short

ranked list of Network Actor Sets under

consideration of the chosen optimization criteria. At

the current stage of our research, we are

experimenting with a heuristic optimization scheme

(Thimm, 2007).

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Table 2: Optimization criteria for orchestration.

Optimization

Criterion

Explanation

General Criteria

Distance Preference is given to network

members that are closest to a given

location.

Price Preference is given to companies

that offer the lowest price for the

product and service, respectively.

Experience Preference is given to companies

with largest amount of experience

in supplying the specified Request

Elements.

Product

Quality

Preference is given to companies

that are assessed as high-quality

product suppliers.

Service

Quality

Preference is given to network

members that are assessed as high-

quality service suppliers.

Resource

Availability

Preference is given to companies

with largest amounts of unused

production resources.

Economic

Power

Preference is given to companies

with strongest economic power

Collaboration-Oriented Criteria

Collaboration

Experience

Preference is given to companies

with largest amounts of

collaboration experience.

Network-

Business

Benefit

Preference is given to companies to

which the network delivered the

smallest total amounts of profit

shares so far.

4 PROTOTYPE OF THE

SUPPORT SERVICE

A first standalone prototype of our proposed support

service for network moderators are currently being

implementing. Figure 5 shows the general layout for

the prototype for which we apply the typical

technologies for web-based multi-tier software

architectures. That is, the prototype offers a web

browser-based front end that communicates over the

HTTP protocol with the application that runs on a

web application server.

The Collaboration Proposal Generator presents the

central component that computes Network Actor

Sets (NAS). We use the XML approach as presented

in Section 3 for a standardized data exchange

between the front-end and the application server.

The prototype is implemented based on the Java

programming language and further Java

technologies such as JSP, JSF, and JPA.

Figure 5: System architecture of prototype.

The database is logically divided into the three main

repositories shown in Figure 5. The Company

Network Directory (CND) corresponds to the CND

of our object model described in Section 3. In this

repository the companies are described in terms of

their product and service offerings and also their

competencies and technical abilities. The Set

Proposals Repository contains recorded Collabora-

tion Request Proposals and Network Actor Sets

resulting from interactive sessions of the moderator.

Data about performed collaborative processes and

business transactions that has earlier occurred in the

network are administered in the Collaboration

History.

In Figure 6 we present the prototype GUI for the

moderator. The choices (e.g. for products and

services) in the selection boxes are dynamically

populated from queries to the database. The upper

window part contains GUI elements to describe a

Collaboration Request Profile. The Request

Elements may be specified by selecting

corresponding products and production services

from the given product list and production services

list. Collaboration constraints may be edited through

usual GUI elements for condition editing known

from other software packages. In the middle part of

the user interface the optimization criteria may be

selected from a given set of check boxes. Given this

input the generated Network Actor Sets are

presented in the lower part of the main window. The

two lists contain the proposed component products

and production services with correspondingly

assigned companies. The list box with title

“Products Assigned” contains the component

products with corresponding suppliers. The list box

with title “Production Services Assigned” contains

Collaboration Proposal Generator

Moderator GUI

Collaboration

History

Set Proposals

Repository

Company Network

Directory (CND)

CRP & optimization

criteria

AS &

lanations

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Figure 6: Moderator GUI of prototype.

the proposed production services also with

associated supplier names.

5 DISCUSSION OF RELATED

WORK

The work here draws from other research and

concepts that have been developed for collaborative

order management in business networks (e.g.

Gizanis, 2006 and Fleisch & Österle, 2000). The

difference between these proposals and our work is

that we especially consider that complex products

may be jointly produced by several companies

together in possibly many collaboration alternatives.

We particular strive at a means that will enable

moderators to find the best alternative among all

possible choices based on explicit knowledge about

the companies and products. Such explicit

knowledge is not available in typical cooperative

order management environments. With respect to the

research area that is especially dedicated to IT

support for virtual organizations our proposed

support service is especially related to the virtual

organization creation framework developed in the

ECOLEAD project (Camarinha-Matos et al., 2005).

According to this framework the virtual creation

process consists of seven main steps. It appears that

the considerations for the first four steps (i.e. 1.

identification and characterization of collaboration

opportunity, 2. rough VO planning, 3. partners

search and selection, 4. Negotiation) are reflected in

our approach as well, whereas the remaining steps

(5. detailed VO planning, 6. contracting, 7. VO

launching) are outside of our current scope. The idea

to assess potential partners with respect to different

types of selection criteria can also be found in the

ECOLEAD project. However, to our knowledge still

so far missing is a description of how these ideas

may be combined to a corresponding support service

for VO planners. Such a corresponding solution for a

support service targeting the orchestration task in

company networks for example is presented in

(Jarimo & Salo, 2007). Often mathematical methods

are employed in these solutions (Schweinberger,

2002 and Bittencourt & Rabelo, 2005).

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6 FUTURE WORK AND

CONCLUSIONS

A great deal of work still lies ahead in determining

correct and fruitful concepts for the description of

both offerings as well as the potentials of companies.

We will draw upon other researchers working with

ontologies and ontology construction especially

within eBusiness (Missikoff & Taglino, 2003).

Furthermore, the transformation of an incoming

inquiry by deconstruction or modularization

(Baldwin & Clark, 2000) into a production process

has not been the focus of our current version but

further support of the moderator will be welcome in

that area too.

The responsibilities of moderators of company

networks may include the inquiry management

process and, therefore, also the determination of the

best possible set of network actors to handle a given

inquiry. These actors are to be selected from the set

of all members of the company network. This task

may impose a complex orchestration problem on the

moderator for which we seek to develop a flexible

and powerful IT based support service. We address

this objective by an adaptable optimization approach

where moderators may choose optimization criteria

from a given list of predefined choices. The

optimization criteria given in this article only present

an initial proposal. We expect that many more useful

criteria can be found and integrated in our solution

which will be part of our future work. Integrating

additional optimization criteria may require to extent

our system architecture by further data repositories.

For example, an optimization that takes the

availability of production resources within the

network into account will require a further data

repository. In this repository the utilization profiles

of the companies’ production resources and

production scheduling information, respectively,

need to be available.

Before we will extend the set of available

optimization criteria, we will verify our service by

simulation experiments and through further tests

with real moderators of company networks.

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