Management support for globally operating virtual organizations: the case of KLM Distribution

In search for new organizational forms that incorporate the appropriate level of flexibility to offer a high variety of products and services, while keeping costs and lead times low, the virtual organization has emerged. The capabilities of information and communication technology (ICT) enable the virtual organization to link and coordinate a wide variety of globally dispersed business partners. The virtual organization in action is difficult to manage. We introduce a management support tool, called Modular Network Design (MND). MND supports managers of a virtual organization in four steps: determination and analysis of customer requirements; tracking of possibilities to satisfy customer requirements; allocation of production tasks among network partners; and ongoing assessment and adjustment of activities and allocation procedures. The applicability of MND, and the evaluation of ICT use, is illustrated with a case study at KLM Distribution, the center of a globally operating virtual organization. This business unit of KLM Royal Dutch Airlines distributes worldwide aircraft spare-parts for KLM and its partners and customers. The case study describes how MND supports the management of the virtual organization and contributes to better planning of individual, customized transport orders.