Knowledge Management in Capital Goods Companies

Dr. Christian Hicks University of Newcastle upon Tyne

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Capital Goods Companies

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

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

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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
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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.

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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.
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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.

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

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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

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

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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.

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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.
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