D2.2 Specification of Business Innovation Reference

Co-funded by the European Commission, contract n FP7-ICT-285746

D2.2 Specification of business innovation reference frameworks (in the context of the VEMF)

Andrea Rossi (ATOS), Benjamin Knoke (BIBA), Nesat Efendioglu,

Robert Woitsch (BOC)



Project Acronym : BIVEE

Grant Agreement n. : FP7-ICT-285746

IST Project Number : 285746

Project Title : Business Innovation in Virtual Enterprise Environments

Project Duration 36 months

Website : www.bivee.eu

Document type Deliverable

Document version : Final

Submission Date : 07/09/2012

Dissemination Level : Public

Author(s) : Andrea Rossi (ATOS), Benjamin Knoke (BIBA), Nesat Efendioglu, Robert Woitsch (BOC)

File Name : D2.2 Specification of business innovation reference.pdf

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Specification of business innovation reference frameworks (in the context of the VEMF)

CHANGE HISTORY

Version Date Status Author (Partner) Description

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EXECUTIVE SUMMARY

This deliverable describes the BIVEE theoretical approach towards innovation activities and a common production management, introducing three main reference frameworks: one as guidance for innovation projects with respect to different areas of innovation, a second one explaining the specifications of the Virtual Enterprise and structuring production processes, and a third one for measuring innovation and improvement activities. The overall BIVEE framework is therefore designed in the context of and for the Virtual Enterprise Environment.

The objective of this task; T2.2, is to provide theoretical guidance for the WP3 and WP4 that require a clear directive to build and validate the Mission Control Room and Virtual Innovation Factory. This deliverable elicits therefore functional specifications for WP3 and WP4, specifications that will be acquired in the design deliverables of such work packages. It is as well relevant to note that this deliverable has been produced in alignment with the BIVEE end users and the deliverables of WP7, constantly collecting their feedback and practical vision.

This deliverable introduces an important theoretical framework, the VEMF, necessary to setup the Virtual Enterprise and the spaces that form its environment. In each space the production processes are respectively described in an attempt to define the structures and patterns.

Another relevant framework, the BIRF, is then introduced and defines the difference between the individual areas of innovation. It maps a set of input/output templates to refer to, when handling different types of innovation. Moreover, it introduces the concept of the four waves of innovation and provides a reference framework for innovation projects.

Finally a Monitoring Framework is created, in order to elicit specific KPIs for both the production and innovation. Also in this case, this elicitation occurred with the pragmatically view and help of the BIVEE end users.

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TABLE OF CONTENTS

CHANGE HISTORY ......................................................................................................................... 4

EXECUTIVE SUMMARY ................................................................................................................... 5

1 INTRODUCTION TO THE BIVEE FRAMEWORK ................................................................................... 8

1.1 Differentiation between Innovation and Improvement ................................................... 8

1.2 Main Activities within the BIVEE Framework ................................................................... 9

1.3 Content and Relations of the Sub-Frameworks .............................................................. 11

1.4 Overview on the Innovation-Part of the BIVEE Framework ............................................ 11

1.5 Overview on the Production-Part of the BIVEE Framework............................................ 13

1.6 The Knowledge Circle between BIS and VPS .................................................................. 14

2 VIRTUAL ENTERPRISE MODELLING FRAMEWORK (VEMF) ................................................................ 15

2.1 VEMF: The Virtual Enterprise Framework (VEF) ............................................................. 15

2.1.1 The Value Reference Model ................................................................................... 15

2.1.2 Processes of the Plan and Govern Section of the VRM............................................ 16

2.1.3 Applying the VRM to Compile the Virtual Enterprise Reference Framework (VEF) .. 17

2.2 VEMF: Modelling Framework for Production Processes ................................................. 19

2.2.1 Supply Chain Operations Reference-Model ............................................................ 19

2.2.2 Value Production Space Methodology based on the Waterfall Model .................... 20

2.2.3 Production Processes within the Virtual Enterprise ................................................ 22

2.3 Handling of Improvement Processes in Virtual Enterprises ............................................ 29

3 THE BUSINESS INNOVATION REFERENCE FRAMEWORK (BIRF) .......................................................... 30

3.1 BIRF: Reference Framework for Innovation Projects ...................................................... 30

3.1.1 Innovation Waves & Innovation Gates ................................................................... 30

3.1.2 Innovation Activities within the Virtual Enterprise .................................................. 31

3.2 BIRF: Templates for Input/Output-Mapping of Innovation Types ................................... 36

3.2.1 Different Areas to Categorize Innovation ............................................................... 37

3.2.2 Structure of the Input/Output Templates of the BIRF ............................................. 37

3.3 Innovation Documents & Patterns ................................................................................ 38

4 THE MONITORING FRAMEWORK (MF) ......................................................................................... 40

4.1 Applying KPIs to Manage Innovation and Production .................................................... 40

4.1.1 Structure of the Monitoring Framework ................................................................. 40

4.1.2 Common Business Objectives for KPIs .................................................................... 40

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5 IMPLICATIONS FOR THE MRC AND THE VIF ................................................................................... 42

5.1 The Mission Control Room (MCR).................................................................................. 42

5.2 The Virtual Innovation Factory ...................................................................................... 43

6 CONCLUSION ........................................................................................................................... 45

7 REFERENCES ............................................................................................................................ 46

8 ANNEXES ................................................................................................................................ 47

1. Tables of the Virtual Enterprise Modelling Framework (VEMF) ................................... 47

1.1. Tables of the Virtual Enterprise Framework (VEF) ................................................ 47

1.2. Table for Modelling the Production Processes ..................................................... 48

2. Tables of the Business Innovation Reference Framework (BIRF) ................................. 49

2.1. BIRF: Reference-Tables for Innovation Activities .................................................. 49

3. Tables of the Monitoring Framework (MF) ................................................................. 56

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1 INTRODUCTION TO THE BIVEE FRAMEWORK

This deliverable aims to introduce & describe the theoretical BIVEE Framework as a whole and its three sub-frameworks by which is composed: the Business Innovation Reference Framework (BIRF), the Virtual Enterprise Modelling Framework (VEMF) and the Monitoring Framework (MF). The BIVEE framework does not have the pretence to be universal, but it has been created within the scope and according to the goals of the project. In many areas and aspects, the BIVEE framework does not want to re-invent the wheel on a theoretical level, but uses and adapts well know scientific theories and models (e.g. SCOR, VRM, the Waterfall Model). It is innovating in the aspects that are relevant to the project, which are mostly related with the Virtual Enterprise.

Any Virtual Enterprise is defined as a goal oriented organization that aims to provide solutions to a single project or business opportunity. Particularly, it is a temporary organization that gathers its potential from the possibility of forming a well suited consortium [1]. We believe that Virtual Enterprises should develop dynamic capabilities that can enable an enterprise to achieve competitive advantage when collaborating with external partners [2], [3].

In this deliverable and more specifically in this introductory first section, using the dynamic capability framework for Virtual Enterprise Environments, we will shed light on the innovation and improvement activities trying to define elements that distinguish the former from the latter: We will as well introduce new concepts (e.g. improvement phases: innovation waves, document-base innovation cycle) for these innovation and improvement activities and the relative spaces that the BIVEE project defines in the context of a Virtual Enterprise. To our knowledge, Virtual Enterprise Environments have not been connected to strong theoretical frameworks, showing the lack of theoretical relevance and empirical dissonance. So this deliverable is a first attempt towards linking theoretical frameworks to Virtual Enterprises and factories. In doing so, the BIVEE project introduces innovative business concepts, structures and patterns that might be relevant for the way manufacturing enterprises will innovate in the coming years.

1.1 Differentiation between Innovation and Improvement

The differentiation between the Value Production Space (VPS) and the Business Innovation Space (BIS) is one of the key distinguishing elements of the BIVEE project. While ideas for improvement are mainly created and elaborated in the VPS, pure or radical innovations emerge from the BIS. For the construction of the framework and to understand the actions within these two spaces, it is therefore necessary to briefly distinct, for now on a theoretical level, between improvement and innovation.

The innovation-term has already been defined within deliverable 2.1 in sub-chapter 2.2, but a sharp distinction to improvement is still missing. Although much research work has been done in this area, no dominant definition exists that differs between innovation and improvement. Improvement is often considered a similar activity to innovation, but with a less significant change [4]. However, these terms are often mixed, as some authors use other models, and differ between incremental and radical/disruptive innovation [5] or even use the term of incremental improvement innovations [6].

While innovation is often described as an idea, practice, or object that is in some way perceived as new [7], an improvement is described as a less significant change of already

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existing elements [4]. In order to create a sharper definition that allows proper differentiation between innovation and improvement, the difference between invention and innovation can be utilized. The innovation term addresses the whole process of successfully delivering an idea to the market. With its elaboration towards marketability, an idea becomes an invention. With the markets acceptance the invention then becomes an innovation (Figure 1).

Figure 1: Overview on the relations between ideas, inventions and innovations

With market performance as criteria to differ between innovation and invention, this metric can as well applied to define the significance of an innovation. If a change is expected to create a market advantage that forces competitors to compensate, it can be considered an innovation. A less significant change that is expected to have a positive impact, but can be ignored by competitors shall be considered an improvement. The expected market performance hereby represents the opinion of the developer. These expectations have to be considered in order to classify an improvement or innovation project already at the idea level.

1.2 Main Activities within the BIVEE Framework

The differentiation between the BIS and the VPS results in two different views on the collaborative business. The BIVEE framework differs between improvement processes that mainly appear within the VPS and innovation projects emerging from the BIS. The flow of these activities is sketched in Figure 2.

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Figure 2: Overview on the main activities within the BIVEE framework

Detailed information on the framework and its relations to both of the spaces will be given in the next chapters. The structure and central role of the PIKR as database for information related to the collaborative innovation projects is described within deliverable 5.1 in sub-chapter 1.3.

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1.3 Content and Relations of the Sub-Frameworks

The BIVEE Framework is composed by three sub-frameworks. Their contents are summarized in Figure 3. The construction of the BIVEE Framework is based on the Virtual Enterprise Modelling Framework (VEMF). It contains the Virtual Enterprise Framework (VEF) for the general setup of the Virtual Enterprise, and defines its production processes by providing a modelling framework for the general structure for the operative business

Second part of the BIVEE framework is the Business Innovation Reference Framework (BIRF). It is called a reference, as it does not enforces a strict structure, but a guiding reference to innovation projects, because the latter usually does not progress in defined ways, especially during the early stages of idea creation. Additional to a reference of operational activities, the BIRF adds specific characteristics of each area of innovation by defining templates for the area specific input and output mapping related to each activity.

Another extension is provided by the Monitoring Framework (MF), which adds metrics that are aligned to business goals. These metrics are Key Performance Indicators that either address the production (P-KPIs) or refer to innovation activities (I-KPIs).

Figure 3: General contents of the sub-frameworks

1.4 Overview on the Innovation-Part of the BIVEE Framework

The treatment of innovation projects by the BIVEE Framework is focussed in the Business Innovation Reference Framework (BIRF). This relationship is visualized in Figure 4.

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Figure 4: Overview on the innovation-part of the BIVEE Framework

This interaction is based on two elements of the BIRF and the innovation part of the Monitoring Framework (MF), which aim to provide a reference for innovation activities.

The BIRF contains innovation activities that are structured in four waves. These waves

are Creativity, Prototyping, Feasibility and Engineering, and will be described in section

3.1.1 of this deliverable. Within these waves, the feedback from the VEMF is accessed

via the Knowledge Exchange Interface.

The BIRF also distinguishes between the different areas of innovation. Process,

Product, Technology and Service Innovations are differentiated. Therefore it provides

input and output templates that are linked to the VEEs innovation activities in each

area. This part of the BIRF is described in chapter 3.2 of this deliverable.

The Monitoring Framework (MF) adds the metrics for the management of the

innovation activities of the VEE. To allow the management of innovation projects, a set

of Innovation-KPIs (I-KPIs) is applied. Each KPI is aligned to a certain business objective.

The description of the MF and the business objectives can be found in chapter 4 of this

deliverable.

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1.5 Overview on the Production-Part of the BIVEE Framework

The impact of the BIVEE Framework on the production space is shown in Figure 5. Its sub-frameworks are aligned similar to those for innovation activities. It consists of the Virtual Enterprise Modelling Framework (VEMF) and the production part of the Monitoring Framework (MF):

The VEMF contains a set of common production processes that are aligned to four

different phases. These four phases are Plan, Source, Build and Deliver. A description is

given in section 2.2 of this deliverable. The VEMF also contains the Knowledge

Exchange Interface to provide feedback to the BIRF that can be applied in the

innovation management

The Monitoring Framework (MF) contains the metrics for the management of the

production processes of the VEE. The Mission Control Room (MCR) manages the

improvement processes with a set of Production-KPIs (P-KPIs). The MF is described in

chapter 4 of this deliverable.

Figure 5: Overview on the Production-Part of the BIVEE Framework

A more detailed description of the sub-frameworks and their content will be provided in the following sections, starting with the Virtual Enterprise Framework (VEF), as part of the VEMF. The VEF assists in the setup of the Virtual Enterprise. This is followed by the definition of production processes aligned to phases, as second part of the VEMF. The BIRF then provides input and output templates for the different areas of innovation and a guidance reference for structuring innovation projects, by defining the waves of innovation and a set of reference activities. Finally sets of Production- and Innovation-KPIs are added with the Monitoring Framework.

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1.6 The Knowledge Circle between BIS and VPS

The Knowledge Circle establishes the knowledge exchange interface between the Business Innovation Space and the Value Production Space and also describes the iteratively advancing knowledge as enabler of ideas. It is based on the SECI-model by Nonaka [8], [9], as described in previous deliverable 2.1 The process from Combination, Internalization, Socialization, and Externalization is carried out in both spaces, as described in Figure 6. The Exchange Dialogue is based on the modification by Dalkir [10].

Figure 6: The Knowledge Circle between BIS and VPS

While aiming to describe the main mechanics, the knowledge circle is not meant to be a deterministic model. Situations can occur during its operation, when some steps may be missed out. E.g. when an innovation plan is directly perceived as not applicable, the Internalization and Socialization inside the Value Production Space may be skipped out, and feedback could be exchanged directly.

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2 VIRTUAL ENTERPRISE MODELLING FRAMEWORK (VEMF)

The VEMF describes the structure of the VE and its production. Therefore it is comprised of the VEF to setup the VE and a reference model of production processes to provide the structure of the business within the production space, forming this part of the environment. The content of the VEMF is described in this chapter.

2.1 VEMF: The Virtual Enterprise Framework (VEF)

Prior to the VPS and the BIS, the Virtual Enterprise has to be set up. The collaborating partners need to agree on the structure of their processes and to establish common policies and business objectives. Due to its orientation towards the general management of value chains, the setup part of the Value Reference Model (VRM)1 can also be applied on non-linear networks like Virtual Enterprise Environments (VEEs). The application is described in this section.

2.1.1 The Value Reference Model

The Value Reference Model (VRM) is an open source dictionary developed by the Value Chain Group. The structure of the VRM model supports and enables corporations to integrate their four critical domains: Enterprise Management, Product Development, Supply Chain Integration and Customer Relationship Management, using one reference model to support the vision of an integrated value chain. Key elements of the standard process VRM dictionary include inputs/outputs, metrics and best practices. As in Figure 7 processes described by VRM differentiate in three hierarchical levels.

Figure 7: VRM Process Map

1 http://www.value-chain.org/value-reference-model/

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Govern: This level is composed of decision based processes that identify and enable a value chain by establishing the rules, policies and procedures to control the implementation of Plan and Execute Processes.

Plan: This level is composed of processes which meets the current strategic objectives to current resources, and produces decisions on activities to reach organizational goals.

Execute: This level is composed of processes that concern with transformation of work and material to product or services meet to customer requirements. The processes in Execute level operate within the limits of management criteria and parameters defined by the processes in Plan level.

2.1.2 Processes of the Plan and Govern Section of the VRM

As stated in the previous section, the VRM is separated into three level 1 groups of processes (plan, govern and execute) that represent the different management levels of the collaborative business. For the setup of the Virtual Enterprise, the processes concerning the value chain setup of the plan and govern sections are relevant (Figure 8, first line). The other elements and processes of the execute section are replaced by the content of the BIRF and the production model of the VEMF, which provide structure for the operative business.

Figure 8: Overview on the plan and govern sections of the VRM

The governing processes have to be executed to setup the value chain. They intend to structure the general strategy, vision, goals & objectives of the collaboration. The governing processes are structured into four level 2 categories:

Govern Value Chain aims to define the strategy and vision along with the common

policies. This frames the decision guidelines and rules for the collaborative business.

Govern Product Development contains the initial processes for common development

processes. The key components are the process design, governing of resources,

network structure and the development life cycle.

Govern Supply Chain is intended to manage the fulfilment process of the networks

needs. This process group focuses on supplying common production activities.

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Govern Customer Relations groups processes that aim to structure the links of the

network with external markets.

Each of these 4 governing categories contains ten level 3 processes that define the actions needed to initially setup a value chain.

Unlike the strategic orientation of the govern section, the planning processes address a rather tactical level. These continuing processes intend to balance the strategic goals of the network with its current asset status. The planning processes are structured into four level 2 categories:

Plan Value Chain aims to aggregate the value chains resources to meet the strategic

goals of the collaborative business.

Plan Product Development ensures to fulfil the needs of resources concerning the

product development processes.

Plan Supply Chain is a continuous process to meet the demanded resources on the

supply chain.

Plan Customer Relations balances the sales resources with its requirements.

Each of these four planning categories contains four level 3 processes that define the actions within each category.

2.1.3 Applying the VRM to Compile the Virtual Enterprise Reference Framework (VEF)

The VRM represents a reference framework that provides a guideline for the management of value chains. As value chains can be characterized as a specific type of network, some elements apply to Virtual Enterprises as well. Especially the govern section that is describing the setup of the value chain can be used to support the Virtual Enterprise setup.

Figure 9: The Govern Value Chain section of the VRM

The section Govern Value Chain of the VRM resembles the setup phase of a value chain that defines a common strategy and vision as well as necessary policies concerning all common fields of action. This set of processes has to be executed by the initiating partners of a Virtual Enterprise as well. The policies and the prioritisation of business objectives that are defined here are necessary for further progressing. Based on this section, the Govern Virtual Enterprise section of the VEF can be created (Figure 10).

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Figure 10: The Govern Virtual Enterprise section of the VEF

This section contains the core processes that are to be executed by an initial VE consortium in order to define the rules and objectives as well as the policies regarding all important areas of business. This part defines the definition and prioritization of business objectives (GVE01) that are important within the Monitoring Framework (MF) as well as policies that impact the exchanged information within the Business Innovation Reference Framework (BIRF).

The definition of the network structure is a reoccurring process, as the need of resources and competencies may change during operation. Within the VRM, this part is resembled by the Plan Value Chain section (Figure 11).

Figure 11: The Plan Value Chain section of the VRM

This plan section is implemented into the VEF with the Plan Virtual Enterprise section, as displayed in Figure 12. It resembles the process of matching the Virtual Enterprises resources to its needs by gathering the requirements, assessing and aligning resources and the creation of a business plan. The planning processes are executed whenever the needs of the Virtual Enterprises change. This mapping is checked and used within activities of both spaces.

Figure 12: The Plan Virtual Enterprise section of the VEF

These govern and plan sections represent the Virtual Enterprise Framework. Other parts of the VRM are either not practical or covered by other parts of the BIVEE Framework. The VEMF and the BIRF are aligned to the operational level and replace the execute section of the VRM. These frameworks are described in the following subchapters.

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2.2 VEMF: Modelling Framework for Production Processes

Value Production Spaces, that have heterogeneous structure, a large variety of stakeholders, represent distributed reality of Virtual Enterprises, as written in the description of work. Within the BIVEE project, the Value Production Space Reference Framework aims to guide ICT supported definition, administration, customization and evaluation of its heterogeneous and distributed environment.

ICT supported management approaches need a methodology to be introduced, used and continuously improved.

There are two validated and accepted frameworks by industry with a supply chain management context; the Supply Chain Operations Reference-model (SCOR) and the Value Reference Model (VRM, as described in sub-chapter 2.1.1). Before defining/creating the Value Production Space Reference Framework, it would be useful to take a glance at the defined reference business processes within SCOR and VRM, respectively. Afterwards, with the guidance of investigation on SCOR and VRM, appropriate reference processes are described.

2.2.1 Supply Chain Operations Reference-Model

SCC announces, that The SCOR-model has been developed to describe the business activities associated with all phases of satisfying a customers demand [11].

Supply chain operations reference (SCOR), a product of Supply Chain Council (SCC) is a process reference that proposes standard guidelines for supply chains management2. SCOR tries to encompass in a common view all activities associated with the supply chain, from demand to order fulfilment, and their respective flows and interactions. In order to cover the wider scope of value chain, recent expansions have been proposed for product design (DCOR), customer interaction (CCOR) and market modelling (MCOR) [12].

The framework is built around two basic sets: a standard library for modelling supply chain processes, which allows companies to set up environments for collaboration and process alignment, and a set of standardized semantically-defined metrics, which allows supply chain managers to quantify and benchmark processes and thus to drive supply chain management strategies.

SCOR integrates elements of business process management for the application domain of supply chain management, covering a scope that starts with the supplier's supplier and ends with the customer's customer. SCOR contains five primary management processes as depicted in Figure 13 ; (1) Plan, (2) source, (3) make, (4) deliver and (5) Return. SCOR has three process levels within his scope; (1) Top level, which defines the scope and content for the supply chain operations, (2) configuration level, where companies chose their process configurations for their supply chains, (3) process element level, which defines process elements, process element information inputs, and outputs, process performance metrics, best practices, where applicable, system capabilities required to support best practices, systems/tools. SCOR makes aware that there are higher/lower process levels, where companies implement specific supply-chain management practices, but these level are out of scope of SCOR. Mentioned five primary

2 www.supply-chain.org

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management processes are described briefly with staying loyal to SCOR version 10.0 by the Supply Chain Council.

Figure 13: SCORE Process Map

Plan: This stage concerns with developing plans to operate supply chain. This process describes aggregation and prioritization of requirements, inventory and capacity planning, projection of appropriate resources to meet requirements of supply chain for long time period.

Source: This process concerns with scheduling of deliveries, reception of goods and services, authorization payment for materials and other purchases.

Make: This process concerns with conversion of materials or creation of the content of services. It is starting with requests for materials- linking to Source Process- and ending with product release linking to Deliver Process.

Deliver: This process concerns with the creation, maintenance and fulfilment of customer orders, scheduling order delivery, packing and shipment and invoicing customer.

Return: This process concerns with reverse flow of goods. The return process is composed of identification of the need to return, the disposition decision making, the scheduling of the return and the shipment and receipt of the returned goods.

2.2.2 Value Production Space Methodology based on the Waterfall Model

The SCOR and VRM refer to methodologies that introduce and apply supply chain and production processes. Based on the Business Process Management System Paradigm an iterative waterfall model has been applied for IT-supported management approaches that introduce five processes and enable an continuous improvement.

A mapping of the introduced Business Process Management System Paradigm with SCOR and VRM show that a mapping is possible and the introduction of the phase Evaluation is useful in the context of BIVEE.

Hence the BMPS paradigm is applied in the context of Supply Chain Management and Production Processes.

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As in Figure 14 depicted, the life cycle proposed by Business Process Management Systems paradigm composed of following five processes;

Strategic Decision Process: In this decision process, based on the global competition, the requirements of customers, stockholders, workforce, suppliers as well as economic, technological, social, legal, and political environments, key performance objectives of virtual enterprise are defined, design decisions, like business models, business Strategy map are created. Moreover regarding to information gathered by Evaluation Process, strategic decisions taken before are revised.

In the context of VPS the strategic decision processes are concerned with market analysis, network setup and network policies.

Design Process: According to strategic decisions taken in Strategic Decision Process, products and services are designed, detailed business processes, the organizational structure and the IT services within virtual enterprise are constructed or defined. Furthermore regarding to information gathered by Evaluation Process, decisions about re-designing of virtual enterprise, re-engineering of business processes, of the organizational structure and of IT services as well as of products and services are taken.

In the context of VPS the design process are the plan phase.

Resource Allocation Process: After in previous phase detailed business processes are designed, organizational structure and IT services are defined in this phase allocation of material and immaterial as well as personal resources, also IT related issues are considered.

In the context of VPS the allocation processes can be compared to the source phase.

Execution Process: In this phase execution of the business processes in real time and location takes place. This phase observes the results of the set indicators at run time, these results are the main inputs for Evaluation Process.

In the context of VPS the execution process can be compared with the build and deliver phase.

Performance Evaluation Process: This phase aims to monitor and analyze gained input in the execution phase in qualitative and quantitative manner to generate input for the Strategic Decision and Design Process.

In the context of the VPS the performance evaluation process can be compared with the evaluation and assessment of KPIs. Hence measurement campaigns typically fall in this phase.

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Figure 14: Business Process Management Systems Paradigm

2.2.3 Production Processes within the Virtual Enterprise

The VEMF encompasses in a common view all activities associated with a supply chain and moves Value Production Spaces toward the goals of Virtual Enterprise. The VEMF takes guidance of the BPSM Paradigm, defining its processes with their inputs and outputs, as well as relation among them in four process levels with following common values of SCOR and VRM.

Plan: In this process level as inputs, requirements results of the global competition, the requirements of customers, stockholders, workforce, suppliers as well as economic, technological, social, legal, and political environments are taken and as outputs, key performance objectives of virtual enterprise are defined, design decisions, like business models, business Strategy map are created. Furthermore according to strategic decisions, products and services are designed, detailed production processes, appropriated resources meeting production processes for each Production Unit (PU) in VPS in virtual enterprise are defined.

Source: After products, services are designed and production processes are defined, appropriate resources are defined in this phase allocation, providing, deliveries and logistic works of resources are considered.

Build: As products and services are designed, production processes are defined and appropriated resources are provided. In this process level, conversions of materials and of immaterial into product or creation of the content of services with execution of production process that occur in each PU take place.

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Deliver: This process level concerns order management, pricing and product configuration through managing orders, invoicing and credits, to customer-specific packing, labelling and shipping.

An overview on these phases and processes along with a short description for quick referencing is given in the annex in Table 4. A deeper description for each process follows in the next section.

Figure 15: VEMF - Overview on the Plan-Phase

VPS-P01 Sales Trend Analysis

Results of a market analysis show demand for productions. Market knowledge is generate by different market research activities. Typically the market knowledge is implicitly available by the assessment of experts that are familiar with the market. In order to externalise market knowledge, BIVEE defines the market report that covers aspects like market coverage ratio, segment growth rate or the market capitalisation. As BIVEE focus on innovation indicators on New Product Success Rates, number of first to market, budget for new concept and known technologies of the market player, number of market trails, number of new markets and first to market products are relevant chapters for the market report and analysing the innovation and improvement characteristics of the market.

These Business processes are domain specific, weakly structured and knowledge intensive.

Document-oriented output is the market report.

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VPS-P02 Order Evaluation

An order may initiate a production process it therefore needs to be evaluated, if enough production capacities are available to fulfil the requested level of quality. First the necessary competence to evaluate the order has to be identified. Currently used capacities and potentially available capacities are evaluated. Policies how to deal with current production are applied by considering the market player of the new order, the market player of current production, the failure rate and the re-processing of orders. Risk management in terms of blocking bottle-neck capacities such as but not limited to knowledge, special machines or special skills, are performed.

These Business processes are domain specific, weakly structured and knowledge intensive.

Document-oriented outputs are the Order description, Resource Requirements, Costs Analysis, and Required Production Capacity.

VPS-P03 Product Definition

This process resembles a deeper analysis of the order and the matching of products from the portfolio to fulfil it. Based on the results of the Order Evaluation a concrete order is then balanced into the production plan. Hence a detailed analysis of given documents is performed.

These Business processed are domain specific, well-structured and aligned with the documents from the order evaluation.

Document-oriented output are the Order description, Product description, Resource Requirements, Costs Analysis, Required Production Capacity in more detail.

VPS-P04 Network Setup

Creation of a network to fulfil production demands raised by the current order and expected future orders. Order description and available competences are used to identify competence and resource gaps that need to be filled with network partners. Partner portfolio is information of possible partners with their competences, capacities and history of previous business relationships. The network setup is therefore a knowledge intensive process with the goal to provide all required capacities for the order keeping the risk of the organisation to a minimum and to keep the network manageable. Experts are required to keep the network as big as necessary in terms of risks and as small as possible in terms of efficiency.

These Business process are domain specific divided in (a) well-structure processes for non risky networks setups and (b) weakly structure processes for risky network setups that are typically performed by experts. Important issue is the component routing describing the production process logistics.

Network-structure is the information about the members and organisation of the VEE under the network policy.

Document-oriented result is the competence availability of the network and the component routing for the order.

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Figure 16: VEMF - Overview on the Source-Phase

VPS-S01 Stock Analysis

Analysis of individual stocks for purchase management is typically a well-structured. The created network structure document is used to analyse available stock and compare to demanded material.

These Business processes are domain-specific and well-structured.

Document-oriented result are material requirements.

VPS-S02 Supplier Selection

This includes the selection of suppliers for raw materials by applying the compliance policy to fulfil the business plan, which both have been defined when executing the processes of the VEF.

These Business processes are domain-specific and well-structured. They rely on previously made experiences with suppliers and the supplier database.

Document-oriented output is the supplier selection that defines the actual supplier selection for each resource along with the contract details and contact information.

VPS-S03 Purchase Management

This process contains the allocation of resources for production by using the material requirements of the previous phase. Purchase Management is a highly sensible process and hence typically very well structured and formalised, by selecting the suppliers and purchasing the material. Depending on the amount there are typically different procedures from freely selection of supplier to strictly rule-based selection procedures. Depending on the network and its level of interaction from loosely cooperating entities till tightly coupled entities there may be supplier databases with special negotiated contracts and conditions.

These Business processes are domain-specific and well structured including formal parts.

Document-oriented output is the purchase routing that defines the responsibility within the network.

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VPS-S04 Component Storage

Storage of allocated resources is cost-intensive and hence the business processes to allocate required resources to different storages considers several optimization strategies to keep costs low.

Processes for component storage consider therefore an initial setup of component routing between different partners as well as a sequence of optimization steps to distribute best the component storage.

These Business processes are domain-specific and well structured including formal parts.

Document-oriented output is the storage plan.

Figure 17: VEMF - Overview on the Build-Phase

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VPS-B01 Component Manufacturing

The manufacturing of components is a production process that is aligned with the technology required for the production. According to the production standards and the agreed process policy, the production machines are configured and raw material is transformed into components according the logistics schedule.

These Business Processes are technology-specific, well structured and in most cases formalised to the necessary extend to be machine interpretable.

Document-oriented results are measures that are used as virtualisation instrument to digitalise physical component production to be observed in the digital environment of BIVEE.

VPS-B02 Finishing

Final post-processing of the production are required to finish the production.

Depending on the product specification and the process policies post-processing is performed.

These Business Processes strongly depend on the nature of the finishing process and hence range from weakly structure processes in case senior engineers are finishing the product by hand till well structure processes in case post-processing can be performed in a similar way than the production process itself.

Document-oriented results are measures that are used as virtualisation instruments to digitalise physical product finishing to be observed in the digital environment of BIVEE.

VPS-B03 Production Assembly

Assembly of components are production processes on a higher aggregation including logistics of the parts. Similar to component production the production assembly is performed.

These Business processes are technology-specific, well-structured and in most cases formalised to the necessary extend to be machine interpretable.

Document-oriented results are measures that are used as virtualisation instruments to digitalise physical production assembly to be observed in the digital environment of BIVEE.

VPS-B04 Quality Control

Quality checks of manufactured goods can range from person-driven checks of critical characteristics; grab samples to well structured sequences of criteria checks.

Depending on the product specification, the nature of the product and technology used for production the quality control strongly varies in its nature.

Person-driven and hence human intelligent driven - checks are weakly structure and knowledge intensive. Therefore such quality controls are used in high-end or high-risks products or in combination with grab samples.

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With respect to the required product functionality and characteristics, well structures checks including humans as intelligent sensors and not as interpreters of the control sequence itself are typically aimed for standardised and repeatable quality controls.

These Business processes are therefore ranging depending on the quality control method applied from weakly structure processes till formal structure processes that are performed automatically.

Document-oriented results are quality control reports as well as measures that are used as virtualisation instruments to digitalise physical assessments into the digital environment of BIVEE.

Figure 18: VEMF - Overview on the Deliver-Phase

VPS-D01 Packing

Packaging and preparing for delivery is performed in a similar way like the production process. Depending on the nature, size and characteristics of the product, the packing is manually or automatically. Depending on the branding and nature of the product, the packing has different tasks from protecting and enabling to move the product till part of the brand itself.

These Business processes are typically well-structured and partly formal to the extent necessary to be interpreted by machines.

VPS-D02 Order Preparation

The task of the Order Preparation process is to comissionate the packaged goods that are to be delivered according to an individual order. Within this process these packages are put on a common transportation tray and prepared for the following shipping process.

These Business processes are technology-specific and well structured. They depend on the size and weight of the manufactured good along with the chosen way of transportation.

VPS-D03 Shipping

Carrier selection and shipping of manufactured goods depend on the nature of the products, the size, the location from source and target. Shipping can range from one carrier typically car to a sequence of different carriers including planes, ships, railway, cars or special transport vehicles.

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Depending on the carrier the processes range from simple selection and shipping order to complex arrangements and preparation of documents.

These Business processes therefore range from well structured processes up to weakly structure and knowledge intensive processes.

Document-oriented output is in most cases measures as virtualisation instrument to enable result observation of this phase in a digital environment like BIVEE.

VPS-D04 Delivery

Final release and delivery of manufactured goods is mainly performed by the different carriers and follow therefore the rules and processes of that carrier.

These Business processes are typically well structure but rarely formal.

Document-oriented results are delivery acknowledgements as well as measures as virtualisation instruments to enable observation of the delivery in the digital environment such as BIVEE.

2.3 Handling of Improvement Processes in Virtual Enterprises

Innovation is the central focus of the BIVEE project. As explained within section 1.1 of this deliverable, distinguishing between improvement and innovation is possible by the expected impact of these endeavours. Although they appear to be similar, each one requires a specified set of activities. While the BIVEE project focuses on Innovation activities in VEEs, improvement processes have a rather minor role. A considerable high number of models and methods have been developed within the area of production/process improvement, mostly in the area of quality management, such as Kaizen [14] or the PDCA-Cycle (Plan, Do, Check, Act) [15].

While improvement is defined by its expected less significant impact, the changes made to the production are rather small, because putting high effort in something with an expected minor impact is fairly impractical. Due to the nature of these changes, the tools for improvement like the PDCA-Cycle can be applied to the production within VEEs as well. This becomes possible on a local level, when the changes are in line with the agreed business rules, plan and compliances that are defined within the processes of the Virtual Enterprise Framework (VEF).

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3 THE BUSINESS INNOVATION REFERENCE FRAMEWORK (BIRF)

The Business Innovation Reference Framework (BIRF) focuses on the innovation projects that are developed within the Virtual Enterprise. As the structure of such endeavours usually varies, and the creativity-based creation of new ideas is not to be put into a strictly enforced structure, the BIRF is intended to be merely a guiding reference to support these activities. It is therefore entitled a reference framework. Second part is the treatment of different areas of innovation. This chapter is structured in a brief summary of the waves, along with a description of the reference activities, along with the input/output templates for their mapping related to each area of innovation, concluding with a description of the BIVEE innovation documents and patterns. The structured content is listed in the annex (chapter 2).

3.1 BIRF: Reference Framework for Innovation Projects

At this point, the BIRF aims to provide an overall theoretical structure and an overview of the main pillars and components that, we figure, describe the actions within the Virtual Innovation Factory (VIF). As already briefly explained in D2.1, the BIVEE project imagine the innovation activities to be divided into four waves instead of the more classical and linear phases; here in D2.2 we also describe what each wave contains and how we imagine they should work in shaping the innovation cycle.

Each wave would contain a certain number of activities to be carried out in order for a wave to be completed. Each activity would as well contain a set of documents to be filled in order to each activity to be completed. Each document would contain certain KPI indicators to be firstly set by the Virtual Enterprise and then met in order for the document to be considered completed in a satisfactory way for the given idea that is progressively shaping into a project.

What fuels the Innovation Space are, in fact, ideas that are generated in the contest of the Virtual Enterprise, and then pushed into the 4 waves looking for adjustments, business sense, practical and economic feasibility and finally to be described in a way that can be streamlined into the production line, that is to say in the Production Space.

In the following sections we describe more in details the above mentioned concepts of the Business Innovation Space: innovation waves & gates, innovation activities and innovation documents sets.

3.1.1 Innovation Waves & Innovation Gates

The BIVEE approach with respect to innovation tries to find a compromise between guidance and freedom; since the latter is the natural nurturing ground for innovation but in absence of the former we could encounter endless loops that are very risky in a business context. So, in order to give for some guidance to the innovation space, the BIRF is organized into four main waves:

Creativity Wave. This wave starts with an innovation idea or a problem to be solved,

providing a first sketchy idea to be developed and put into the business context of the

virtual enterprise undertaking it

Feasibility Wave. This second wave provides & clarifies with elements and information

in order to justify in economical and operational terms the actual undertaking & the

further development of the original idea

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Prototyping Wave. This wave puts into concrete actions the previous collected

information and elements producing a first implementation of the initial idea in the

form of a prototype.

Engineering Wave. In this wave the original idea transformed into a prototype is

attentively analysed to generate production & engineering plans.

Figure 19: The four main waves of innovation within the BIS

The four waves can be represented as in figure 8 above. The innovation waves are not in strict sequence, they are partially overlapped and they develop in cycles. We can assume that for example during the Prototyping Wave there may be a problem that requires a focused activity to look back into the Creativity Wave. A goal-decomposition approach is therefore extensively adopted in the BIRF, so there may be activities in each wave that proceed faster and can lead to partial prototyping while other activities that are still in the Feasibility Wave. This approach gives more flexibility and freedom to the BIS. On the other hand, what guarantees a certain order, is the concept of gates, or innovation gates. At a given point of a wave each project could set its own gate from which the activities of next wave could start to activate. Given the nature of the waves, the gates are not then a fixed point but they can differ from project to project. On the other hand, the gates assure the continuous work and flowing of the BIS, not allowing the innovation cycle to be paralyzed at a certain point.

To give a quite simple example, the Virtual Enterprise Andromeda, will require for its project Alpha, two activities at Gate 1 to be completed in the Creativity Wave in order to start the Feasibility Wave, 3 activities at Gate 2 in the Feasibility Wave in order to start the Prototyping Wave and 4 activities at Gate 3, in order to start the Engineering Wave and finally 2 activities in order to pass gate 4. Project Beta, led by Virtual Enterprise Galaxy, prefers instead to have 4 activities in the Creativity Wave at gate 1, 2 activities at Gate 2, 3 activities at gate 3 and still 2 activities at gate 4.

Once again, this should ensure flexibility in the innovation cycle for each innovation project and for each Virtual Enterprise that is created ad hoc for that defined project, but, at the same time, should ensure the flowing of cycle itself.

The fourth gate is always the one that once completed would pass information and specifications of the project to the Virtual Production Space.

3.1.2 Innovation Activities within the Virtual Enterprise

In this section we take a closer look to the innovation activities that make up each innovation wave. We imagine that each wave should be composed by the activities as described in the following section and listed in Table 5.

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The numerical order here does not imply a fixed sequence of the activities even though we have sketched it as quite in logical order. For instance, the idea & solution generation does require iterative steps with the idea & solution analysis. These iterations are based on the outcome of the LABORANOVA3 project that focussed on the early stage of innovation.

Figure 20: The Fuzzy Front-End to Innovation

As shown in Figure 20, places a phase of knowledge exploration, which is resembled by the Knowledge Circle (see sub-chapter 1.6), before an ideation phase with cycling idea creation/evaluation and solution creation/evaluation activities.

The structure of the Creativity Wave also reflects results of the MIRROR-project4. The Integrated Model of Creative Problem Solving and Reflective Learning developed in this project is displayed in Figure 21.

Figure 21: Integrated Model of Creative Problem Solving and Reflective Learning

In general, the order and appearance of these activities can change for each innovation project and the sequence can be changed following the specificity of these innovation projects. And if, at a given point of the cycle, the obtained results are not satisfactory based on the indicators set, the cycle can re-work the idea in the previous wave changing some variables and conditions.

3 http://www.laboranova.com/

4 http://www.mirror-project.eu/

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Figure 22: BIRF - Overview on the Creativity-Wave

BIS-C01 Idea & Solution Generation

This initial activity generates an idea or many ideas and solution in the context of the Virtual Enterprise. In this first phase many inputs can arrive from many different sources, inside the VE, within or outside the Business Ecosystem. The ideas and solutions are here collected, organized, classified following criteria previously set by the VE or for single innovation project. The idea generation phase can also be stimulated via competitions or challenges towards specific business/innovation objectives of the VE.

BIS-C02 Idea & Solution Analysis

Among the many idea previously classified, one or a set of ideas may be then selected and more deeply analyzed, re-worked, better shaped with further contributions of different stakeholders. During this activity we expect groups of different actors (with different expertise) contributing and discussing around the presented ideas, maybe group them in order to come up with the best and most viable idea/ideas in order to progress in the innovation cycle

BIS-C03 Initial Market Analysis

In this activity a first market analysis and an initial estimation of the target market are carried out; the objective is the construction of a real business case around the selected innovative idea/s; this business case should as well aligned with the strategic objectives of the VE.

BIS-C04 Final Solution Assessment

We figure this final activity of the first wave as a decisional one where a final analysis of the documents produced so far is conducted in order to take a decision of which solution or groups of solutions are worthy to proceed to further feasibility studies and analysis. The decision could also include the sending back of certain solutions to previous activity for further development. Some guidelines on how to tackle the next wave for the exploitation of the solution should also be present as a final report of this wave thus allowing a smooth passage through the first gate of the innovation cycle.

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Figure 23: BIRF - Overview on the Feasibility-Wave

BIS-F01 Resource Analysis

In this activity we envisage an analysis and matching of the available and needed resources within the VE to the idea selected in the previous wave; this implies a new structuring of the VE to face the activities of this wave; the set-up of the VE and the team/s working on the selected idea should take place in this first activity as well as the set up of the working groups (or sub projects) engaged in the study of the feasibility of the selected idea.

BIS-F02 Feasibility Study

This activity mainly concerns the creation of a document studying the feasibility of the selected idea. The feasibility study should include at least two main parts: technical & market feasibility These can be done and delivered by different working groups composed by different people with different set of skills. The progress of this report should be monitored already by a set of predefined KPI or KPM. The result of the feasibility study is to create a first proof of concept of the product/service/process in order to be evaluated in the following activity.

BIS-F03 Proof of Concept

This activity is a decisional one meaning that it concerns the approval or rejection of the proof of concept created in the Feasibility Study activity. The decision by the Innovation/Management team is as well supported by a monitoring of KPI-KPM previously set. Based on the decision adopted, the innovation cycle should then precede either in the preparation of the next wave passing the second gate or allow a revision of the steps undertaken so far in case of rejection. In the latter case, the decision makers/evaluators should identify the weaknesses of the selected idea and the activity and/or wave where the selected idea should be sent back for improvements/refinements. If no refinement can be identified, the idea is stored in the BIS for another point in time and for future idea recycling.

Figure 24: BIRF - Overview on the Prototyping-Wave

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BIS-P01 Resource Allocation

This is initial activity of the Prototyping wave sees a new allocation of resources within the VE to deliver the prototype design of the selected idea. New roles are set up and new resources searched and later allocated if not already present within the VE. New KPIs are as well set for this new wave and each activity it comprehends. When assembled, the team is as well searching for components and materials suppliers in order to finalize the prototype. The new calendar schedule and a new GANTT chart should be in place for this new wave.

BIS-P02 Design Prototype

This activity encompasses the actual designing of the prototype by the assigned team. The KPIs for this activity are monitored to assure the correct design creation and the completion of all the required documents. After the design is completed the assigned team for the realization of the prototype comes into action and deliver the prototype according to the design previously received and according to the KPIs assigned.

BIS-P04 Validate Prototype

A validation of the prototype is the carried out during this final activity of the prototyping wave choosing an actor/s chosen outside the design and realization team previously set up. The validation occurs against the KPIs previously agreed and if feedback for improvement is suggested, the realization team comes back in action and deliver the improvement suggested by the validation team. After the final consultation with the validation team, another decision is expected in this activity regarding the passing to the next wave in the innovation cycle. As always, if the overall result of the wave is not considered in line with the KPIs expected, the management can decide to send back the idea (now prototype) to a previous activity or to a previous wave.

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Figure 25: BIRF - Overview on the Engineering-Wave

BIS-E01 Acquire Resources

Once again in this initial activity of a new wave there is a new allocation of resources within the VE compatible with the competencies required for the final engineering wave. If necessary, new competences and suppliers are acquired via search within the VE.

BIS-E02 Build and Optimize

The KPIs for this wave are set and matched with HR & Suppliers via a document of requirements compiled by the engineering team. A sample of the production is built, launched and optimized by the engineering team according to the production needs. A cost analysis is as well created in order to be in line with production standards.

BIS-E03 Launch Planning

A correct monitoring of the KPIs of the previous activity should then lead to this preparation activity where all documents of requirements for the production space are prepared and set for the final release of the new solution.

BIS-E04 Release

Final decision regarding the end of the engineering wave is here expected with possible final optimization of the documents for the production space.

3.2 BIRF: Templates for Input/Output-Mapping of Innovation Types

This chapter describes the templates to map the input/outputs of each innovation activities that are related to certain areas of innovation. Therefore this section starts with a brief description of the underlying model and describes the structure of this part of the BIRF.

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3.2.1 Different Areas to Categorize Innovation

The intention of this part of the Business Innovation Reference Framework (BIRF) is to include the differences between certain types of innovation into the BIVEE framework. Therefore it differs between four areas of innovation. As described within deliverable 2.1, these areas are based on the approach of Systematic Business Innovation by Kotelnikov [13], as shown in Figure 26.

Figure 26: Key areas of the BIRF derived from the systematic approach by Kotelnikov [13]

Regarding the more technical view of the BIVEE project, the BIRF will address only the four areas of product, process, service, and technology innovation. The reference framework for the activities has been designed to be valid concerning all four areas of innovation. The differences between these areas are characterized mainly by the information that is processed within these activities and is resembled by the input/output mapping of this sub-framework.

3.2.2 Structure of the Input/Output Templates of the BIRF

The input/output-mapping does not intend to define certain documents. Instead the BIRF aims to define templates that resemble the content of documents and can be used as guidance, when handling the different types of innovation. While the documents within a VEE are defined, the BIRF is intended to serve their creation to ensure all necessary information within the innovation and improvement activities has been taken into consideration.

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Figure 27: BIRF: Areas for Input/Output Mapping

The first part of the BIRF contains a set of activities that is defined within it. These activities process information that either applies for all areas of innovation and improvement or is characteristic for only few or a single area. The assignment of these information objects defines the structure of the BIRF (Figure 27).

Regarding the technology innovation, the BIRF does not provide defined content. This difference to the others areas is caused by the special characteristics of this area. As stated within deliverable 2.1, a technology innovation is not impacting a market on its own, but is usually developed closely linked to a product, service or technology innovation. Because of this enabling role to other areas, a technology innovation or improvement should be treated similar to the area that it is connected to. The tables containing the content of the BIRF are attached in the annex (chapter 2).

3.3 Innovation Documents & Patterns

The BIVEE approach is document-based. As previously explained a specific Innovation Project needs to walk through the waves and its activities before entering the VPS. It does so by producing a number of documents for each wave and more specifically for each activity of each wave. For each activity and for each wave we can therefore define a set of documents (or Strategic Innovation Pattern) that needs to be followed and completed in order to start the following activity and/or the following wave. A Strategic Innovation Pattern (SIP) is represented by a subset of document templates, selected from the BIS Framework. The SIP represents a guidance trace, not mandatory, that can be flexibly modified as the innovation project proceeds and new needs / issues arise.

The innovation documents can be accomplished in any possible sequence, as long as some precedence constraints are satisfied (e.g., cost analysis cannot be performed before knowing the composition of a product.) as set by the SIP. Each document has quality check criteria associated, to be used (together with the Phase specific criteria) in checking if a phase has been accomplished.

The document templates selected in the SIP are then progressively instantiated, while the Innovation Project proceeds. Please note that the sequencing is quite flexible and new documents could be added if needed. Furthermore, it is possible to move forward and backward across phases, but at the given moment each phase should be accomplished

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according to the defined criteria (local to each selected doc and global to each phase) and certified by an assessment document.

The PIKR will store document templates for each wave. An innovation Project will use such templates to produce (by freely using the preferred approaches) a number of documents (variable in cardinality and length) and is concluded by an assessment report.

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4 THE MONITORING FRAMEWORK (MF)

This chapter contains the Monitoring Framework that aims to make the innovation activities and production processes manageable. Therefore, two sets of KPIs have been developed in order to monitor the business within the BIS and the VPS. As stated within deliverable 2.1, these KPIs are aligned to a set of business objectives that have been developed according to the VRM and in close cooperation with the end users of the BIVEE project. The KPIs for the BIS and the VPS are listed in the annex within chapter 3.

4.1 Applying KPIs to Manage Innovation and Production

As stated within deliverable 2.1, the KPIs have been selected as tool to monitor and measure the business within both spaces. They can be described as a set of variables that represent current business aspects. Each KPI has a value that requires action if it exceeds a certain range. These KPIs are the core part of the Monitoring Framework (MF) that is described in the following.

4.1.1 Structure of the Monitoring Framework

The KPIs differ between the two spaces of the BIVEE Framework. The Innovation-KPIs (I-KPIs) apply for the management of innovation projects and the Production-KPIs (P-KPIs) address the production processes of the VEE. Within the structure of the BIRF and the VEMF, the KPIs are aligned to the activities taking part within. Each I-KPI is assigned to a wave, a certain activity, business objective, name, unit of measurement and a brief description about its content. Each of the P-KPIs is assigned a phase, process, business objective, name, unit of measurement and short description. The business objectives are described in the next subchapter.

4.1.2 Common Business Objectives for KPIs

The KPIs of both spaces are aligned to a common set of eight business objectives. These objectives have been developed out of the VRM and in close cooperation with the end users of the BIVEE project. These business objectives are listed in Table 1 and described in this section.

Table 1: Business Objectives of the Monitoring Framework

Name Description

Reliability The objective of constantly achieving operative goals

Velocity The objective of fast reaction and short cycle times

Adaptability The objective of being able to adapt to varying external or internal demands

Cost Orientation The objective of operating on minimal costs

Asset Orientation The objective of generating tangible and intangible profit

Innovative Potential The objective of successfully carrying new ideas to the market

Customer Orientation The objective of satisfying customers

Network Orientation The objective of a maximal efficient network

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Reliability describes the ability of the network to constantly achieve its operative

goals. It has a reversed relationship with the error rate of the outcome of the

measured activities.

Velocity aims at a low duration of the measured activities. The cycle time of each

activity is a typical KPI that can always be measured and describes the time needed

between the start and the end of an activity.

Adaptability is the ability of the VEE to react to varying demands that arise from

external or internal reasons. This can be for instance an increased demand for a higher

production rate or quality within a certain time frame.

Cost Orientation comprises the KPIs that measure the negative financial dimension of

expenses. A lower cost in the production grants a higher profit and leads to a higher

business success.

Asset Orientation contains KPIs that measure the positive financial dimension of goods

or other resources that cycle within an activity. E.g. the value of a production machine

resembles an asset that is stored within the production area.

Innovative Potential is the ability of a VEE to create ideas and to successfully lead

them into the market. This includes a certain level of creativity as well as successful

innovation management to reach for the market.

Customer Orientation groups all measurements that are connected to the satisfaction

of the customers. Typical KPIs are the ratio of customer complaints or the support

costs.

Network Orientation describes the objective of an optimal collaboration within the

VEE. This includes typical measurements like the response or reaction time of the

corresponding partners.

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5 IMPLICATIONS FOR THE MRC AND THE VIF

Since this deliverable aims to provide the grounding theoretical floor for the Virtual Innovation Factory and Mission Control Room, this section resumes the specifications that have been elicited throughout the previous sections of this deliverable.

5.1 The Mission Control Room (MCR)

Requirement Specification of MCR is based on four inputs: (a) user requirements considered in WP7 (b) conceptual thinking paradigm considered in WP2 and 3, (c) technology considered in WP 6 and (d) market needs considered in WP3 with respect to MCR.

This section therefore focuses on the Virtual Enterprise Modelling Framework in particular on the Value Production Space Reference Framework, which has to be supported by the MCR.

There are four processes required in setting up MCR (1) Design of the VPS Process, (2) Execution processes of the Plan, Source, Build and Deliver Phases in the VPS, (3) Monitoring processes to observe the KPIs and (4) Intelligent reflection processes to derive iterative improvements.

The following requirements have been derived from the VPS framework:

(1) The design phase has to support the VE planning, building and governance. Following

the philosophy of IT-supported management approaches, the approach to plan, build

and govern a VE will be supported with concept models including relevant

functionality.

(2) The execution phase requires business processes on different levels. Reflecting the

aforementioned business processes of the VPS, MCR deals with strategic processes,

weakly structure processes, well structure processes and formalised processes. Hence

processes are either interpreted and performed by human experts, by machines or in a

hybrid manner. IT-supported management approach from MCR hence required to

proved appropriate concept models for each business process and relevant interfaces

to different execution environments.

(3) Business processes are used in different ways (i) as guidelines to check if agreed and

quality assured network policies are adhered, (ii) as training environment to document

and define each activity, responsibility and role, (iii) as testing environment in order to

perform a preparatory test run of a newly created VE and finally (iv) as a resulting

document itself when constructing logistics, component compilation, stock keeping or

shipment. MCR hence provides concept models and functionality to perform such

tasks during the execution phases.

(4) KPIs are seen as virtualisation instruments in order to enable the monitoring of

physical production in a digital environment such as BIVEE. Hence MCR enables KPIs to

be defined, connected to concrete measures and continuously updated in order to

present a monitoring cockpit.

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(5) Reflection processes are intelligent activities of experts and responsible managers that

is supported by MCR in providing a set of reports with different viewpoints. Feedback

mechanisms such as known from mobile apps or Web 2.0 are tools to enable

knowledge harvesting from that reflection processes.

These MCR requirements are only a high level list of topics that are further analysed and described in D3.1 Sate of the Art Mission Control Room specification.

MCR as all BIVEE components belongs to the digital environment; hence interfaces to the real executive environment of the end users are required to export the MCR content which are concept models into the physical environment as well as virtualising the physical environment back into the digital environment of MCR.

Flexible interfaces supporting human and machine interaction are therefore essential for the MCR.

For detailed discussion MCR, please refer to D3.1 State of the Art and Mission Control Room specification.

5.2 The Virtual Innovation Factory

The Virtual Innovation Factory should derive its design, planned for deliverable D4.1, basically from 3 main inputs coming from different deliverables: the BIRF, as explained in this deliverable; the end-user requirements as described in deliverables 6.11 and the validation cases as outlined in D7.11.

In this last deliverable D7.11 two scenarios are described for the validation cases, one describes the situation AS-IS of the innovation & improvement activities of the both BIVEE end users (AIDIMA & LOCCIONI); the other describes the same validation use case but in a scenario TO-BE using the BIVEE platform and in particular the MCR and VIF applications. It is important to remark that this TO-BE scenario has been developed in synchrony and synergy with this deliverable D2.2 and therefore it is bound to change (and be more precise) when the actual development of the applications will be finalized.

Given this, the further implication that comes out of this deliverable concerning the structure of Business Innovation Space and its expected development of the Virtual Innovation Factory are the following:

1) The Virtual Innovation Factory will be build upon 4 main building blocks defined in this

deliverable as innovation waves; on a development level this implies a functional block

that will be able to manage the flow of activities between the waves and inside them.

We envisage this as the real core element of the VIF be able to give the user maximum

flexibility in order to customized the innovation cycle as closer as possible to the ever-

changing business needs.

2) The document based structure of each activity of each wave implies a variety of

formats yet to be defined. What we know at this stage is that each document should

then be inserted by the user or a group of user into the system in order to proceed

into the innovation cycle. This implies a system of checks for completeness and an

order of prioritizing of the documents. Mandatory Patterns among documents are

expected to be set and possibly change in due course.

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3) Different roles and different actors are involved in each wave. Actually this is a

characterization given by the VE environment: each wave is expected to have a

previous search and building of team form different sources. This implies at the level

of development another central component that manages the user roles &

permissions for each wave.

4) KPI are used in order to monitor completeness of document realization in each activity

of each wave but as well to monitor qualitative & quantities indicators regarding the

progress & profitability of each idea as it moves through innovation cycle.

5) In order for the document to be semantically annotated, and therefore semantically

searched form inside BIVEE sources or outside them, a connection between the PIKR

and the VIF should be planned and delivered; also a connection between the VIF and

MCR is envisaged since the is a flux of information described in this deliverable,

between the last wave of the VIF and first phase of the MCR.

Resuming, these are the very high level specifications and requirements captured form this deliverable. The deliverable that willl take tare of the design of the VIF (D4.1) will as well incorporate requirements coming from the State of the Art in innovation management platforms and from the end user requirement document D7.11.

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Deliverable D2.2


6 CONCLUSION

This deliverable focuses on the development of the BIVEE Framework, aiming to enable distributed innovation processes in Virtual Enterprise Environments. To meet this task, the BIVEE Framework is comprised of three main parts, each to accomplish certain tasks:

The Virtual Enterprise Modelling Framework (VEMF) is aimed at the setup of the

Virtual Enterprise itself, and the structure of its production processes. Therefore, it is

divided into two sub-sections:

o The Virtual Enterprise Framework (VEF) provides a set of activities to setup the

Virtual Enterprise. This includes tasks to define a common vision, strategy,

policies, and rules, to develop a common business plan and to agree on certain

business objectives along with their prioritization.

o Moreover, the VEMF defines and structures the common production

processes. Therefore, the four phases of the SCOR-model have been adapted:

Plan, Source, Build, and Deliver. The aligned processes have been defined with

respect to the SCOR-model, the VRM and in tight cooperation with the BIVEE

end-users.

The Business Innovation Reference Framewo