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 usually complex • Customised to meet individual customer requirements • Engineered-to-order • Low volume demand

3. Competitive Factors • Product performance • Cost of ownership • Level of customisation • Capital cost • Delivery • Financing terms

4. Business Activities • Tendering • Design • Manufacture • Assembly • Construction • Commissioning • Increasing interaction between processes, as concurrent engineering aims to minimise lead-times • Require feedback of operational experience to design and tendering

5. Characteristics • Business processes, design and manufacturing systems are all complex, interacting and dynamic. • Capital goods companies have increasingly shifted towards design and project management as manufacturing is increasingly outsourced. • Knowledge base and knowledge management activities are major factors influencing success.

6. Tendering • Preliminary development of conceptual design. • Definition of major components and systems. • Delivery, price, cost and performance commitments made. • Success depends upon understanding customer requirements, translating them into specifications and integrating components and subsystems into products. • Need to meet commercial, delivery and regulatory needs. • Customer requirements include explicit and tacit components.

7. Company Structure • ETO companies are dynamic, often changing internal structure to match external requirements • Strategic alliances / joint ventures • Transitory supply chain relationships • Staff turnover / contract labour • Knowledge transfer / innovation through supply chains • Product model evolves as contract progresses. Problems with incomplete / partial information.

8. Knowledge Management Practices • Required to capture and reuse knowledge gained from previous contracts. • Standard subsystems result in lower costs and are less uncertain than development subsystems. • Knowledge is shared between processes which are often separated by significant time delays and organisational boundaries. • Competitiveness may require controlled and secure access to knowledge.

9. Research • Objective is to identify new or improved knowledge management activities which will yield benefits. • Some companies have established processes, whereas others develop them as required on a project basis. • Knowledge workers operate within defined business processes and informal routines • Business processes and routines established through observation of processes and routines. • Formal methods used for mapping business processes (SSADM/IDEF)

10. Routines • Identification of drivers and actors • People / system driven • Identification / dissemination of internal / external knowledge

11. 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

12. Case Studies • Product development • Manufacturing efficiency improvement • Tendering processes • Design of business processes

13. Product Development • Design team habitually re-specified components and systems for new orders • Led to excessive costs and lead-times • Business processes were mapped and links between tendering, design and manufacturing were made explicit. • Some personal routines were formalised and included with formal processes. • This lead to increased standardisation, reduced costs and lead-times.

14. 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.