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SMEs would benefit more from 'virtual factories'

Inter-company cooperation creates enormous opportunities for small and medium-sized enterprises (SMEs) to achieve success in the market, according to new research. A study of over 1,600 German manufacturing companies was conducted by the Fraunhofer institute for systems and I...

Inter-company cooperation creates enormous opportunities for small and medium-sized enterprises (SMEs) to achieve success in the market, according to new research. A study of over 1,600 German manufacturing companies was conducted by the Fraunhofer institute for systems and Innovation research ISI, Karlsruhe, on innovation in production. It found that while almost half of all companies work together with others, only a small number of companies rely on networks including several partners or even on so-called 'virtual factories'. A 'virtual factory' uses advanced technologies for inter-company networking, including standardized data exchange with customers and suppliers. According to this definition, only three per cent of companies begin to approach this model. The researchers found that networks present both small and medium-sized companies with enormous economic potentials. According to the results, companies providing entire systems in cooperation with others in flexible networks attain an average value added of 87,000 euro per employee and a 15 per cent annual revenue growth compared to 76,000 Euro per employee value and 12 per cent growth in non-co-operating companies. In order to raise awareness about the benefits of inter-company cooperation, the Fraunhofer ISI had joined the Institut für Fabrikanlagen und Logistik (Institute of Production Systems and Logistics) at the University of Hanover, the weekly magazine Wirtschaftswoche, the industry journal Industriemanagement and the Pleyma Unternehmensnetzwerke GmbH in conducting the competition to find 'The Best Cooperation 2002 - Producing Successfully'. The competition is supported by the German Federal Ministry of Research and education and more details an be found at the website below.