Knowledge Management is Key to Success for Automotive Suppliers
11 March 1999
Knowledge Management is Key to Success for Automotive Suppliers In the New Millennium
Arthur Andersen Automotive Forum Reveals Importance of Managing Information
DETROIT, March 10 -- The information age is introducing a new
set of challenges and great opportunities to the automotive supplier industry,
according to the findings of a forum of auto suppliers and manufacturers
announced today by Arthur Andersen LLP. Forces such as information overload,
globalization, mergers and acquisitions, increasing competition, changing
customer and consumer needs, and product and information technology innovation
are increasing the complexity of decisions that need to be made. Therefore,
automotive suppliers require an infrastructure rich with information and
knowledge to make confident and timely business decisions, which results in
improved operational efficiency and better innovation.
Arthur Andersen's Automotive Best Practices Forums, representing
professionals from more than 50 automotive suppliers and vehicle
manufacturers, meet three times a year to promote knowledge sharing on best
practices and critical business issues to improve the business performance of
suppliers and OEMs.
This forum on Knowledge Management surveyed 27 automotive suppliers and
two vehicle manufacturers to determine successful knowledge management
practices. The Forum's findings are summarized in three key points: 1)
Knowledge management areas requiring the most improvement in the supplier
organizations are culture, technology and measurement; 2) Knowledge gaps are
emerging as suppliers' responsibilities increase; and, 3) Suppliers believe
improving knowledge management can lead to measurable benefits in improving
lead times, relationships with customers, and increased operational
efficiency.
Randy Miller, Automotive Business Consulting Partner at Arthur Andersen,
said: "Knowledge management has been something of a 'buzz-word' in the
industry. Most supplier companies in the automotive industry are in the early
stages of determining the level of investment and effort they should make in
knowledge management. The suppliers want to understand what business benefit
they'll achieve. The Forum results indicate suppliers believe improving how
knowledge is created and shared will improve their business performance, but
that they currently have less formalized practices in place to achieve the
types of value that they're seeking."
Suzanne Livernois, experienced manager of the Automotive Business
Consulting unit, said, "The key for automotive suppliers is to develop
processes for creating, capturing and sharing the types of knowledge they need
to operate their businesses. Each supplier's knowledge needs will be
different based on their corporate strategy -- whether their aim is to be a
low-cost producer or first to market with innovative products. In either
case, suppliers need to establish a formal process that enables them to
leverage the collective 'know-how' of the company -- including everything from
capturing the tacit knowledge residing in the mind of a retiring employee --
to the development of an intuitive system for organizing and searching for
information. The goal is to enable suppliers to quickly find the information
to make timely, confident business decisions."
Arthur Andersen's Knowledge Management Forum identified the important
elements to implementing knowledge solutions: 1) A company's culture toward
learning, innovation and knowledge sharing; 2) Effective measurement systems
to quantify the return on knowledge investments; 3) The technology available
within a company to communicate, as well as systems to collect, store, and
disseminate information; 4) The leadership strategy and how a company uses its
knowledge assets to reinforce core competencies; and, 5) The process a company
uses to identify the information it needs, and the manner in which it
collects, adapts, and transfers that information. The forum results indicated
that the biggest improvement needs lie in two areas: creating a culture in
the organization that supports knowledge sharing; and, integrating and linking
information systems to optimize knowledge sharing.
The survey also reveals that as Tier 1 suppliers are assuming increased
responsibility as systems integrators, there is a need for new and improved
types of knowledge to plan and operate their businesses, particularly in the
areas of product warranty, vehicle integration, consumer needs and usage, and
the regulatory environment. Until recently, most knowledge in these areas has
been the primary responsibility of OEMs.
Suppliers indicated that their most creative product and process ideas
originate from more inwardly focused departments -- R&D, engineering and
manufacturing -- rather than the outwardly focused departments of sales,
marketing and purchasing. This suggests that there is a need to capture and
share the creative knowledge created in the manufacturing departments and
indicates that suppliers should consider including more non-traditional
departments in the idea generation process.
Previous topics of Arthur Andersen's Automotive Best Practices Forums have
included Integrated Strategic Planning, World Class Quoting, Mutual OEM and
Supplier Cost Reduction, Product Development Upfront Planning & Target
Setting, and Program Management.
Arthur Andersen has been a leader in transferring knowledge within the
automotive industry for 19 years. Arthur Andersen published the first
automotive industry "Delphi Study" in 1979. During the 1980s, Arthur Andersen
was the first organization to introduce Toyota's Just-in-Time Production
System practices to companies in North America.
Arthur Andersen LLP is a global, multidisciplinary professional services
organization that provides clients with the knowledge to improve performance
in management, business processes, operations, information technology, finance
and change navigation -- so that its clients can grow and profit. Arthur
Andersen was founded in 1913 and currently has 61,542 employees in 382
locations in 81 countries.