Knowledge Management in Capital Goods Companies

1. Knowledge Managementin Capital Goods Companies Dr. Christian Hicks University of Newcastle upon Tyne

2. Capital Goods Companies • Products and processes usually complex • Customised to meet individual customer requirements • Engineered-to-order • Low volume, “lumpy”, erratic demand

3. Classification of ETO Companies • Product / project focus • “Normal” / “Radical” design • Established / ad-hoc business processes

4. ETO Processes • Physical / non-physical. • Multistage - tendering, contract execution, operations, maintenance. • All processes complex, interrelated and knowledge based. • Processes dynamic and often reconfigured. • General shift towards the outsourcing of physical activities.

5. Methodology • Analysis of business processes using Structured Systems Analysis and Design Methodology. • Classification of knowledge • Identification of KM issues

6. Knowledge Classification • Knowledge processing - generation, transfer, utilisation, identification, capture / retrieval, format, codification, assurance • Domains - internal/ external, technical area, focus • The part of the organisation’s performance affected by the knowledge management activity • Formality - time and location dependency, MIS

7. Case Study • Design and contract company - no physical processes • Product orientated company • Mainly “normal” designs but some “radical” design activities • Established processes

8. Tendering • Key process that had a large impact on project success / failure • 75-80% of costs and delivery commitments made at the tendering stage • Involves conceptual design and definition of major components and systems and suppliers. • Includes performance and technical specifications, delivery schedules, price and commercial terms. • Tendering normally carried out within severe time constraints with sparse knowledge and high uncertainty.

9. Tendering • Requires a detailed knowledge of • Customers / market / operations • Design / manufacturing / suppliers • Product / systems / subsystems • Costs / lead-times / capabilities / capacities • Tacit knowledge, previous experience and company culture are key.

10. Specific Conclusions • Poor sharing of knowledge and information between multistage processes. • No system for selecting ITTs worthy of response. • Key knowledge of manufacture and operations gained prior to D&C strategy. Problem as older staff leave. • Significant risk associated with supplier selection at the tendering stage. • Poor reuse of knowledge across contracts.

11. General Conclusions • ETO companies are complex and dynamic organisations • Interactions between wide range of processes that may be separated by a time lag. • Formal processes have been modelled. • Current research is focused upon identifying, classifying and documenting routines • Objective is to identify improved KMA’s. The performance of the associated business processes will be compared.