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Rapid product/process realization and enterprise integration have been identified among the major imperatives for enabling the next generation manufacturing paradigm. This paper proposes a virtual factory modeling approach to support these imperatives. A virtual factory is defined as an integrated simulation model of major subsystems in a factory that considers the factory as a whole and provides an advanced decision support capability. It seeks to go beyond the typical modeling of one sub‐system at a time, such as the manufacturing model, the business process model and/or the communication network model developed individually and in isolation. A basic virtual factory model of a semi‐conductor backend factory has been developed for concept demonstration. Application examples are used to demonstrate the integration between business processes and manufacturing system performance. Future work will move further towards the development of the complete virtual factory and its industry applications.

It has become a matter of survival that many companies improve their supply chain efficiency. This presents an opportunity for simulation. However, there are many challenges that must be overcome for simulation to be a contributor to play an effective role. Four contributors discuss the opportunities that they see for simulation to play a meaningful role in the area of supply chain management.