Leveraging knowledge for supply chain excellence


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  • 2 Knowledge is the ability to transform information, experience and learning into effective action. Knowledge is of two types - explicit knowledge - which is easy to codify and document ( data bases, policy manuals, white papers etc.) and tacit knowledge which is informal, hard to catalogue, difficult to document in any detail. ( embedded in individual experience, past memories, and context. It involves personal belief, perspective, values, expertise and intuition.) We can know more than we can tell !! Embedded knowledge is the knowledge in our products and processes - “the way we do things”. It is the intersection of the tacit knowledge and explicit knowledge that creates learning.
  • In fact, we see a kind of evolution of knowledge management in many companies. The evolutionary stage mirrors itself in the investment behaviour of these companies. Into what knowledge activities do companies invest the most? 1. Most companies start by focusing on the knowledge they have and on the content of this knowledge. Here KM is mostly about locating and capturing knowledge. 2. With time, companies more strongly start to focus on new processes that enable the company to share knowledge across units and to create completely new knowledge assets. 3. The knowledge creation part is really the hardest challenge. Some scholars predict that within ten years knowledge creation will be the key factor distinguishing successful companies from less successful ones. Knowledge creation is really about enlarging both the explicit and the tacit part of the organisational knowledge. Knowledge creation should be fostered in order to reduce risk, increase efficiency and boost new innovations, leading to growth.
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  • Key issues 1. What is Knowledge? When we refer to knowledge, most of us mainly tend to think of the codified and documented knowledge like – patents, policy manuals, databases, white papers etc. While this "explicit knowledge” is important, what is even more important and value adding from the perspective of competitive advantage is the "tacit knowledge", which is embedded in the minds of people. This tacit knowledge is intuitive, contextual, linked to experience, past memories and is difficult to codify, document and communicate. It is estimated that this tacit knowledge constitutes between 70 and 80% of all knowledge in an organization and is difficult to identify, quantify and convert into real value, unless we adopt a structured approach to manage our knowledge. Knowledge driven organizations effectively leverage not just the explicit knowledge but also the tacit knowledge. 2. What is Knowledge Management? Sustainable competitive advantage a firm has comes from what it "collectively knows", how efficiently it uses what it knows and how readily it "acquires and uses new knowledge", in short by becoming a Knowledge Driven Organization. Knowledge Management (KM) provides an enabling framework to derive this advantage. It helps institutionalize processes to fully leverage the "collective knowledge" in an organization. Knowledge management (KM) is - "Learning, Sharing and leveraging the collective knowledge of our people”, for performance improvement. KM involves working in collaborative teams to learn, to share experiences, to develop and share best practices. 3. What are the Objectives of KM in HLL Strengthen innovation & Growth Protect functional & operational excellence in the category business unit structure. Capture cross category synergies. When KM becomes "the way we work", it will enhance the capability to deliver - growth, innovation, speed of response, quality of response, faster time to market, strengthen organizational learning, protect functional and operational excellence in a dis-aggregated organizational structure. 4.How to Practice Knowledge Management ? To practice KM we must put in place a few interventions - processes, practices and rituals to facilitate systematic activities for the creation and sharing of knowledge, to improve business performance. A. KM processes : Link people to people in collaborative teams ("excellence teams") to develop and share distilled learnings and best practices, and Link people to information / knowledge repositories at "functional knowledge centers / learning centers"to facilitate learning and re-use of knowledge. B. Information technology can be a great enabler for knowledge sharing. E-groups / (forums) and Intranets are currently being used by some teams in HLL for knowledge sharing. Case studies, stories and lessons learned reported as part of project completion reports are a few of the excellent ways we can capture the 'collective knowledge' for re-use. I C. How should we organize these "Excellence Teams" leverage our collective knowledge for business impact? 1. The team must establish a Charter, in the context of Business priorities and goals. The charter for sales team could include, for example - a. Deliver significant improvement in customer satisfaction. b. Retain our competitive advantage in distribution - both in the urban and rural markets , through - Key account management in urban markets and extending coverage in the rural markets, developing new channels. What should be the role of wholesale for various product categories / market segments? c. Skill upgradation / capability building - ASMs, TSIs as well as RS salesman - Selling skills, Merchandising skills, key account management skills etc. d. Is it desirable to adopt a balanced score card comprising of - sales growth, penetration, customer satisfaction etc.? e. Provide a supportive (Knowledge Sharing) Culture. 2. Agree the matrices to measure results. In the above example some of the matrices could include - RS / Retailer claims - absolute levels and reimbursement time, speed of replacement of damaged stocks, % of despatches to RSs on replinishment basis % of TSI 's time spent with retailers ( not RSs and C&FAs) growth in key accounts , share of market in key accounts, growth in new channels etc. average number of days spent on training for an ASM / TSI / RS salesman. 3. Measure progress against charter 5. Create an environment that is comfortable to the idea of openness, knowledge sharing, risk of failure as well as rewards for success. We must strengthen the knowledge sharing culture by endorsing and supporting appropriate behaviors. Discourage knowledge hoarding and recognize knowledge sharing.
  • “ The Integrated Management of all the linkages and value-adding activities from the supplier’s supplier to the customer’s customer in such a way that enhanced customer value is achieved at lower costs”. Key areas focussed in the traditional view of supply chain were : 1. The distribution network and costs 2. Allocation of products to plants 3. Conversion reliability & flexibility
  • Key Business Processes In Supply Chain: 1. Supplier Management and Sourcing (vendor partnership development, vendor rating/ quality maintenance/ MRP, supply negotiations, materials supply calling-off, materials transport/ vendor complaint handling etc.) 2. Materials management (receiving, storage,internal transport, reject handling etc.) 3. Operations planning (preparation of requirements plan, production plan, production scheduling, manufacturing instruction etc.) 4. Manufacturing 5. Finished product stock management (transport to warehouse, warehouse management, warehouse handling, order picking, dispatch / truck loading etc.) 6. Physical distribution( delivery planning, transport arrangements, delivery documentation, order dispatch, reject / recall procedures, distribution documents handling / checking etc.) 7. Invoicing( money collection, accounting / credit control) customer development( sales planning & forecasting, 8. sales field activities , sales & account management etc.) 9. Consumer development ( business getting - new product development, brand communication - advertising and promotion etc.)
  • Leveraging knowledge for supply chain excellence

    1. 1. Leveraging Knowledge For Supply Chain Excellence K.S.Srinivasa Murty
    2. 2. Structure of the Presentation <ul><li>What is Knowledge Management? </li></ul><ul><li>An over view of Knowledge Processes. </li></ul><ul><li>What does leveraging corporate Learning and Knowledge Management Involve? </li></ul><ul><li>How does KM support supply chain excellence? </li></ul>
    3. 3. <ul><li>Sustainable Competitive Advantage a firm has comes from what it “collectively knows”, how efficiently it uses what it knows and how readily it “acquires and uses new knowledge”. </li></ul><ul><li>Knowledge management provides an enabling framework to derive this advantage. </li></ul>
    4. 4. What Is Knowledge Management ? <ul><li>Develop and put in place an “enabling framework” </li></ul><ul><li>for improving - </li></ul><ul><li>Capturing and locating </li></ul><ul><li>Sharing, and </li></ul><ul><li>Creation of new knowledge </li></ul><ul><li>To strengthen business performance. </li></ul><ul><li>Knowledge Management is focussed heavily on </li></ul><ul><li>Learning and Collaboration </li></ul>
    5. 5. What Is Knowledge? Knowledge is the human interpretation of data / information for potential action Essentially knowledge is people based Tacit Explicit Embedded ( Experience, past memories, hard to catalogue, document) (Formal, codified, data bases, policy manuals, white papers etc.)
    6. 6. Knowledge Processes Focus on new knowledge Focus on existing knowledge Process focus Content focus 1. Locating & Capturing 2. Sharing 3. Creating (innovation)
    7. 7. Knowledge Management Is ... <ul><li>increasing the capacity for effective action </li></ul><ul><li>by </li></ul><ul><li>connecting people to people </li></ul><ul><li>and </li></ul><ul><li>people to information </li></ul>
    8. 8. <ul><li>Capability building - “Raising the floor / raising the ceiling” </li></ul>
    9. 9. What Does Leveraging “Collective Knowledge” Involve? <ul><li>Working in collaborative teams to deliver business excellence </li></ul><ul><li>Developing and sharing “best practices” </li></ul><ul><li>Faster replication of innovations through faster movement of knowledge through the organization / partners in extended supply chain </li></ul><ul><li>Acquisition and sharing of “new knowledge” </li></ul><ul><li>Managing organizational learning . </li></ul>
    10. 10. <ul><li>“ While Knowledge Management is common sense, it is not yet a common practice.” </li></ul><ul><li>Effective management of knowledge assets needs more than an appreciation of its relevance - there is need for appropriate interventions - culture change initiatives, knowledge engineering tools and techniques and Information technology. </li></ul>
    11. 11. Building Blocks For Holistic Knowledge Management Solutions Organisational / cultural Enablers Technology Enablers 30% 20% 50% Knowledge Processes 30% 20% Integration
    12. 12. <ul><li>Key Knowledge Management Processes </li></ul><ul><ul><li>Linking people to people in “cross functional teams” / “communities of practice to share knowledge” </li></ul></ul><ul><ul><li>Linking people to information / knowledge repositories / best practices ( Knowledge centre / Knowledge Portal ) </li></ul></ul>Building Blocks for KM
    13. 13. Knowledge Center (Knowledge Portal) - Repository of functional knowledge -Dissemination of best practices - Upgradation of functional skills -Place to search -Place to post a query Teams to develop content Key projects documented Online courses development <ul><ul><li>Storehouse of functional knowledge </li></ul></ul><ul><ul><li>Distilled learnings in specialty areas </li></ul></ul><ul><ul><li>Focussed functional training </li></ul></ul>Knowledge Hubs HLL function.com List of Experts - HLL and external
    14. 14. Knowledge Sharing culture <ul><li>The most important enabler for leveraging collective knowledge is the Organizational Culture </li></ul>A Culture of Absolute Trust is the Essential Prerequisite for Proactive Knowledge Sharing
    15. 15. Culture change initiatives Establish Knowledge sharing as one of the desired behaviors. Realign incentives and reward program to strengthen knowledge sharing Establish rituals / Annual events to strengthen knowledge sharing - “Team awards”, “Knowledge Fairs” etc. Stress on knowledge related behaviors in Performance Development Planning (PDP)
    16. 16. How does one create The culture ? <ul><li>When Managers say, “I don’t know - Will you please tell me ? </li></ul><ul><li>When you reward and recognize the value of sharing </li></ul><ul><li>knowledge </li></ul><ul><li>When Senior Management ‘ Walk the Talk ‘. When Managers also become good ‘ Mentors ’ </li></ul><ul><li>When Senior Managers adopt young managers as Mentors! </li></ul><ul><li>When failures are treated as essential to learning </li></ul>
    17. 17. <ul><li>The Challenge: </li></ul><ul><ul><li>Reduce costs - mandated cost reductions by cutting budgets (5% / year, adjusted for production) </li></ul></ul><ul><ul><li>Different departments were discovering ways to reduce costs - RAPID (Rapid Action for Process Improvement Deployment) (duplicating efforts!) </li></ul></ul><ul><ul><li>Foster sustainable cost reductions through sharing of cost-cutting best practices </li></ul></ul>Ford Motor Company (Best Practice Replication)
    18. 18. <ul><li>KM Solution: </li></ul><ul><ul><li>Mandated that department managers document their cost-reducing best practices: </li></ul></ul><ul><ul><li>Can include words, sound bites, and images </li></ul></ul><ul><ul><li>Must include manager's contact information </li></ul></ul><ul><ul><li>Includes contact info for associated suppliers (for any needed special tools/materials) </li></ul></ul>Ford Motor Company (Best Practice Replication)
    19. 19. <ul><li>Created &quot;Best Practice Replication&quot; system: </li></ul><ul><ul><li>People enter documented best practices on a website on Ford's Intranet </li></ul></ul><ul><ul><li>A business specialist reviews the practice for suitability and application </li></ul></ul><ul><ul><li>The practice is routed to other departments that might benefit </li></ul></ul>Ford Motor Company (Best Practice Replication)
    20. 20. <ul><ul><li>Recipients are asked about their intention to implement and any expected savings </li></ul></ul><ul><ul><li>Has used some incentives (besides the mandate to reduce cost): </li></ul></ul><ul><ul><ul><li>offers &quot;good Samaritan&quot; awards to valued contributors </li></ul></ul></ul><ul><ul><ul><li>offers &quot;copycat&quot; awards to successful reusers of best practices </li></ul></ul></ul>Ford Motor Company (Best Practice Replication)
    21. 22. <ul><li>Results: </li></ul><ul><ul><li>The Best Practice Replication system has had incredible ROI: </li></ul></ul><ul><ul><ul><li>cost 10 days of an intranet developer's time and is run by 2 business specialists </li></ul></ul></ul><ul><ul><ul><li>is credited with saving $547 million over 3 years - 1996 to ‘98. </li></ul></ul></ul><ul><ul><li>Replication process patented and licensed to Shell </li></ul></ul>Ford Motor Company (Best Practice Replication)
    22. 23. <ul><li>Key success factors: </li></ul><ul><ul><li>KM aligned to strategic objectives - Cost reduction, cycle time reduction and complexity reduction </li></ul></ul><ul><ul><li>Standardized the web based applications (e.g., page can link to an Excel file that anyone can use) </li></ul></ul><ul><ul><li>Pages link to author’s contact info </li></ul></ul><ul><ul><li>Engineers can make heavy use of digital photos to collaborate </li></ul></ul><ul><ul><li>Integrated collaborative working / knowledge sharing into the normal work flow! </li></ul></ul>Ford Motor Company
    23. 24. What Does Leveraging “Collective Knowledge” Involve? <ul><li>Working in collaborative teams to deliver business excellence </li></ul><ul><li>Developing and sharing “best practices” </li></ul><ul><li>Faster replication of innovations through faster movement of knowledge through the organization </li></ul><ul><li>Acquisition and sharing of “new knowledge” </li></ul><ul><li>Managing organizational learning . </li></ul>
    24. 25. What is Supply Chain? <ul><li>A supply chain is a network of facilities and distribution options that perform the functions of procurement of materials, transformation of these into intermediate and finished products and the distribution of finished products to the customers. </li></ul>
    25. 26. The Traditional Vision of Supply Chain Constrained Itself to the Boundaries of an Organization Purchase Production Inventory / Warehousing Transportation SOURCE MAKE MOVE STORE SELL This approach was however inward looking
    26. 27. An Evolved Definition of the Supply Chain Web Emerged in the Last Decade Collaboration and Quick Response ( QR) <ul><li>Collaboration with partners </li></ul><ul><li>Rapid Response </li></ul><ul><li>Information visibility </li></ul><ul><li>Shortened product life cycles </li></ul><ul><li>Time to market (SPEED) </li></ul><ul><li>Product variety proliferation </li></ul>New Responses Key Challenges
    27. 28. A Supply Chain means more than physical flow of goods Physical Flow Fiscal Flow Information Flow Supply chain has 2 critical functions Physical function Market Mediation Function Ensure that the variety/ supplies match what customer wants to buy.
    28. 29. SCM : Key Performance Drivers <ul><li>Vendor Transformation: </li></ul><ul><ul><li>Vendor selection / development and the unique way relations are managed on an ongoing basis - pre-selection audits to establish capabilities and potential synergies , post selection operational reviews, certification ( at different levels , reflecting the strength, depth and maturity of relationships) </li></ul></ul>
    29. 30. SCM : Key Performance Drivers <ul><ul><li>Knowledge sharing with strategic vendors’ participation in new component and product development etc. </li></ul></ul><ul><ul><li>Identify and set targets for cost savings to be achieved by key suppliers through cross corporate teams (supplier & Bharat Forge) / through knowledge sharing. </li></ul></ul>
    30. 31. SCM : Key Performance Drivers <ul><li>Leverage technology to automate transaction oriented , non strategic purchase activity and release time for strategic sourcing. This will improve purchasing efficiency as well as effectiveness. </li></ul><ul><li>You can add greater value to company profitability and still handle much larger value of purchase with out excessive pressure and the job can also be more exciting when pure chasing becomes strategic sourcing! </li></ul>
    31. 32. SCM : Key Performance Drivers <ul><li>Leverage technology ( connectivity with suppliers and key customers ) to manage supplier and customer partnerships. </li></ul><ul><li>Capable 3P service providers can greatly help timely deliveries without excessive inventories. </li></ul>