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 organisations 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 KMAs. The
  performance of the associated business processes
  will be compared.