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