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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.

Factory operations have been modeled for years to understand the relationship between the different design and policy factors and the performance measures of interest. The increasing awareness of the need to manage factories as a link in the supply chain places a corresponding requirement for an enhanced approach for factory modeling. This paper describes the modeling of a computer assembly factory for supply chain integration by including aspects of inbound and outbound logistics and relevant business processes. Lessons are drawn based on the experience.