Slicker supply chains, stronger cooperation with trading partners, increased access to valuable corporate information and an ability to exploit untapped potential in the workforce are all being advocated as ways to improve corporate efficiency and performance.
All of these value-added activities are dependent on one thing: the acquisition, storage, delivery and accessibility of useful, accurate, up-to-date data — and this data is normally supplied through some sort of electronic media.
While databases, data warehouses and means of viewing data — from e-mails to spreadsheets or even the World Wide Web — have been around for some time, the most advanced manufacturers have invested in another system for providing the right data to the right person at the right time. It is called knowledge management, or KM.
The system is not new. The first successful implementations probably occurred in the early to mid 1990s. But while companies such as ICI, Rolls-Royce Engines, BAE Systems, Boeing, Ford, General Motors, Jaguar, Unilever, Glaxo Wellcome, BP, IBM and British Gypsum have all benefited from KM, the majority of organisations still do not know how to develop a KM system. Many do not even what it is or how it works.
KM can be defined simply as the amassing of all knowledge relevant to the organisation’s business and storing it electronically in a central location where it is easily available to authorised employees at any time. The benefits are incalculable, and the problems in implementing KM are cultural, rather than technical.
‘Knowledge’, in KM terms, consists of a wide variety of data and information. Standard corporate data, such as financial information — costs of material, labour and overheads; product prices; turnover, and so on — customer contact details, sales volumes, inventory, etc form the bedrock of a KM system. Employee data, such as a person’s position, experience, training and skills, and the hierarchy of a department, is also important.
This ‘hard’ data is easy to find. It is stored already on ledgers, databases or other files somewhere on the corporate system. Another type of hard data — internal and external documentation —can also be gathered easily. For example, speeches made by corporate executives, white papers, contracts, press cuttings, correspondence and so on can all be scanned into the system.
Information on and from competitors can even be included, in the shape of their brochures, white papers, relevant cuttings or conference papers. Data about competitors or the market as a whole can also be obtained by individual employees and keyed in as a word processed document. At this point the information becomes ‘soft’ data.
Soft data comprises all information outside the boundaries of proven fact or hard copy documents, such as magazine articles. Not only does it include data on competitors gleaned, say, by sales staff, but it may also be employees’ knowledge, gained through education, previous employment or other experience; their thoughts and opinions; or conjecture, rumour or gossip generated internally or externally.
Let’s take a hypothetical example at a clothing factory. The fact that polyester combines well with cotton is data, while the information that fashion gurus have declared polycotton the hottest fabric for the autumn collections is knowledge. That tall men, say over 5ft 11in, need an extra two inches on their sleeves is fact. The information that the average man is expected to grow half an inch every year is knowledge. And zip manufacturers might like to know that in teenage fashion, buttons are ‘out’.
Convincing people to share knowledge presents the major hurdle to implementing a successful KM system. An individual’s personal knowledge, expertise and experience becomes his or her main selling point on the job market. Clusters of employees, whether they are in project teams, cells, departments or elsewhere, can become extremely possessive of their information and the power they accrue through it.
Organisations can use a number of methods to persuade people to share knowledge. Glaxo Wellcome was one of the successful ones: the huge advantages gained by scientists in sharing knowledge was sufficient to ensure they took part.
Although Glaxo’s knowledge system affects a number of business areas, research and development has reaped the greatest benefit. In attempts to find the right combination of chemicals to create a drug which will attack a particular disease, Glaxo’s scientists, working in six research sites around the world, began with a million potential compounds.
By sharing information, including previous research work that might have identified, for example, a side effect caused by a particular combination of chemicals, or a low potency in a compound, rending it less effective, Glaxo Wellcome reduced the initial bank of compounds facing R&D project teams to 100,000.
Designers can derive similar benefits from sharing information. If, for example, an engineer knows that a particular hinge will work better in a certain size of car door, that knowledge can save the whole project team time, effort and money spent trying different hinges, allowing the new model to be launched quicker and more cheaply.
Likewise, if an employee in our hypothetical clothing manufacturer knows that a chosen fabric in the plant earmarked for producing a line of ladies’ blouses tears easily, that knowledge could save the company a fortune in wasted material — or even ensure a valued customer is not lost through being let down by a late or damaged order — as long as the employee is motivated enough to suggest either a different fabric or a different piece of machinery be used in production.
One way of helping to persuade individuals to share information is to offer financial incentives to employees identified as contributing to the success of an organisation in this way.
Some organisations give bonuses to project teams that complete their work faster or more efficiently, too. And since shared knowledge contributes to the project’s success, pressure from peers interested in that bonus encourages sharing.
Conversely, some companies have been known to punish or pressurise those who don’t share, for example by ‘naming and shaming’ them on the intranet or notice board, to giving them more onerous tasks. Carrots, however, usually work better than sticks.
When it comes to sharing suppliers’ knowledge, encouragement can be harder, but the rewards greater. Involving suppliers, and customers, in KM goes beyond supply chain integration by incorporating data on parts, components and materials, as well as production schedules and inventory.
If, for example, a supplier is bringing out a cheaper or more robust component and can provide details of it in advance, engineers could design their product around it. In addition, if suppliers share knowledge of their parts and how they work with certain materials or in particular circumstances, it may be possible to substitute a more suitable part by altering the size slightly, or changing the materials used.
A large manufacturing company, such as Ford, could have as many as 1,000 or 1,500 parts in production. If one part is changed, the ripple effect could lead to many, many more changes. The company has to know what effect this will have on its products, its production schedule, its supply chain and logistics. KM can provide that information.
Gathering, managing and storing knowledge can be done in a number of ways. As usual, software vendors have been quick to address KM needs: companies such as KTI, Autonomy, Lotus, IBM, Sopheon, Open Text and Smart Logic all have software packages that help users to establish and maintain KM systems.
However, an off-the-shelf KM package is not essential. Any organisation with a good, comprehensive corporate system based on integration between all modules and all departments can be just as effective, provided there are efficient means of storing and classifying data, scanners to input external documents, and user access to that data is fast, easy and ubiquitous. An intranet is the obvious platform. But a home-grown system requires substantial technical knowledge and skills, making a third party offering extremely attractive.
Whichever technology is chosen, knowledge-enabled companies still face the problem of ensuring all data input into the KM system is accurate, up-to-date, ‘clean’ (which means not duplicated or incomplete) and useful. The easiest way to achieve this is by appointing an individual or team as knowledge leader or leaders.
Ford, Toyota and Boeing are just three manufacturers that have set up a knowledge strategy in the last few years. The knowledge team has to carry out an audit of existing data, ensure that is clean, accurate, up-to-date and useful (for example, there is no point in keeping data on a supplier that has gone out of business or material replaced long ago). The team then has to work out what internal and external data and information will be useful to the company and how to source them.
Incentives and rewards for staff sharing knowledge have to be determined. Recognition in other ways, such as ensuring colleagues know who provided particularly valuable knowledge, helps create a knowledge culture, too.
Developing a KM system and creating a knowledge-led organisation is a major undertaking and not one to be considered lightly. Enthusiasm and encouragement must come from the top. It is not an IT issue, but a business one. But if it all seems like too much hard work, think what a difference the right knowledge can make to an organisation. Would a car manufacturer increase production of estate cars if it knows there is going to be a long-term worldwide petrol shortage or that petrol duty is about to be cut for small cars?
Would a manufacturer of kitchen appliances send samples in red and blue to another country if it knows those colours are unpopular there? And would that zip manufacturer be ready for an influx of orders if it didn’t know that teenagers had decided zips are ‘cool’? Knowledge is, indeed, power.