Supervisor: Robin von Haartman Examiner: Dr. Lars Bengtsson
FACULTY OF ENGINEERING AND SUSTAINABLE DEVELOPMENT
Knowledge management in supply chain The case of a Chinese 4PL company
Yunfeng Gao October, 2011
Master’s Thesis in Logistics and Innovation Management
1
Abstract
Knowledge management is seen to be an efficient way to enhance the enterprise competitiveness. It has been doing research in many areas, such as theoretical research, car manufactory, multi-nation enterprise, and so on. But in the same time, it is hard to find some cases or analysis about how knowledge management can be applied to supply chain management, neither in Chinese 4PL Company project operation.
Meanwhile, along with the rapid development of economic, remarkable changes have been taken place in Chinese market. As one of the most potential economic organization, Chinese market attracted many international enterprises to get in. In order to facilitate their business in the Chinese market, many multi-nation business platforms are operating by different companies. Besides, Tempus Group is one of the top-ten logistics company in China and doing the forth part logistics service. So during their 4PL platform operation, different information and knowledge would exist inside the organization and be operated by this supply chain service company.
So in this paper, the focus will be put on the knowledge management performance in a Chinese 4PL supply chain company project. The project is selected by in order to achieve the overall aim of this study, to illustrate how knowledge management can be applied in supply chain management. And as it is an important feature to succeed the Tempus project, knowledge management in the project was analysis and discussed on its importance, its impacts, and its performance.
The study shows the Chinese 4PL company used knowledge management on their 4PL-platform project to control the information flow, to efficient the response to customers, and to develop the their knowledge network level with their customers.
Therefore it is a case of how to apply knowledge management in supply chain. It was found out a clear and correct knowledge category would help to succeed the knowledge management in supply chain project. And also this is a case of showing the impacts of knowledge management in a collaborative project, such as the knowledge exists, knowledge transferring, and knowledge sharing and so on. It was also found out the willing of share information is an important factor to succeed the collaborative project, because it would push the information flow in supply chain working faster and then makes the organization have quicker response. And also, this research has its limitation because of it is only based on a specific case by a Chinese 4PL company project.
Key words: knowledge management in supply chain, Chinese 4PL supply chain
Service Company, Tempus Group project.
2
Acknowledgement
This research is a master thesis which is doing for the final graduate for the master program of Logistics and innovation management at the Gavle University in Sweden, and it is done by using relevant literatures review and empirical study in Tempus Group.
I would like to say thank you very much here to all the people who was helping me during my master study.
Lars Bengtsson is the examiner of my master thesis and helps me improve the final version of this paper. And his Guidance from the lecturers has given me a lot of inspirations.
Robin Von Haartman is my supervisor during my master thesis progress and inspiring me all the time by providing suggestions, idea and feedback.
Anson Lee was my manager in Tempus group logistics department, and also the one who was training my business skill in the project. He is an important person in this research to help me finish the data collection and analysis.
Alice Yao is one of the major connect person in DB schenker, Shenzhen. She was one of the important people during the project, and helped me finish the data collection and analysis during the research on this thesis.
I also want to say thank you again to all my good friends during the master study in Sweden, you know who you are.
Last but not the least, thank you and love you very much to my family.
Yunfeng Gao
3
Content
Abstract ... 1
Acknowledgement ... 2
Content... 3
1. Introduction ... 4
1.1 Background ... 4
1.2 Research focus ... 5
2．Purpose ... 6
3. Literature review ... 7
3.1 introductions ... 7
3.2 methods for the literature review ... 7
3.3 Introduction of knowledge management ... 7
3.4 The meaning of knowledge management inside the supply chain ... 9
3.4.1 The knowledge inside the supply chain ... 9
3.4.2 The knowledge management inside supply chain ... 10
3.5 Hot topics of knowledge management in supply chain. ... 11
3.5.1 Knowledge learning in supply chain ... 11
3.5.2 Knowledge share and transfer in supply chain ... 12
3.5.3 Absorptive capacity of the company in supply chain ... 13
3.6 The realization of knowledge management in supply chain ... 13
3.6.1 The framework of knowledge management in supply chain ... 14
3.6.2 Knowledge management system in supply chain. ... 14
3.7 Knowledge management and the supply chain performance ... 16
3.8 Conclusion. ... 17
3.9 Need for empirical study ... 18
4. Methodology ... 19
4.1 Introduction ... 19
4.2 Research strategy and data collection ... 19
4.3 Reliability and validity ... 20
4.4 Limitations ... 21
5. Findings ... 22
5.1 Backgrounds ... 22
5.2 Tempus “Chengdu Wine festival” project ... 23
5.2.1 Chengdu wine festival ... 23
5.2.3 Project executing in Tempus “Chengdu Wine festival” project ... 25
5.2.4 Project operation of Tempus “Chengdu Wine festival” project ... 26
5.3 conclusion of the CWF project ... 26
6. Analysis and discussions... 27
7. Conclusion ... 33
8. References... 38
Appendixes ... 41
4
1. Introduction
1.1 Background
As details on knowledge management are discussed in recent sections, knowledge management is realized that it is not only handle the knowledge or information, but also acting an important role to enhance the business marketing capacity or even the organization competitiveness. And in the same time, discussion about supply chain management is always trying to enhance the organization competitiveness by put influence on the economic approaches and the behavioral approaches to the supply chain. (e.g., Batenburg and Rutten, 2003; Belzowski and Flynn, 2003;
Menzer and Kahn, 1995) So, how would it look like if the knowledge management be applied into the supply chain?
Besides, like Lonsdale and Cox (2000) stated, with rapid development of economic, core competence in business area are no longer only focus inside a company, but also focus on the collaborative partner or even the whole supply chain organization. (Lonsdale, and Cox, 2000) As many companies try different ways to succeed their supply chain management by focusing on different management methods, some companies would use collaborative project and cooperation to develop their business project in order to have a better marketing capacity on their business. So, during a collaborative project, what are the impacts of knowledge management in supply chain?
Moreover, during the discussion about knowledge management in supply chain, some interesting aspects in supply chain management come up. Such as Hoecht and Trott (1999) mentioned, in each part of the whole cooperation in supply chain, absorptive capacity will push them to learn from their partner because of they need have to develop their business competence to win the market competition. On the other hand, this capacity would also lead to lost by its draw backs, like the wrong information absorb. (e.g., Hoecht and Trott, 1999; Hoecht and Trott, 2006) So, like in this situation, what should a company be aware of if they were implementing the knowledge management in supply chain?
So as it mentioned above, many different research were doing at the following areas, such as knowledge management, supply chain management, collaborative management, and so on. But when the problem comes to knowledge management in supply chain, it becomes hard to find the relevant cases. So this empirical gap becomes the original motivate of this research. In case to contribute a case project to the future study, the overall aim of this case study will be put focus on how knowledge management can be applied to supply chain by using a Chinese 4PL company project to analysis.
The theoretical framework would be combination by explored the relevant theoretical research.
And empirical study part will use a case from Tempus Group, to analysis and answer the research questions.
5
1.2 Research focus
As many authors mentioned in lately, supply chain management is a unite management organization and it should not be separated. Such as marketing concept, a market orientation, marketing of relationship, and even the ultimate consumer’s perspective are all the important part of supply chain management. (e.e., soonhong and mentzer, 2000; svensson, 2003) So that means when a 4PL applying knowledge management in supply chain, the knowledge management will affect each part of the whole supply chain organization.
So, based on the theoretical foundation of knowledge management, this paper will explore the knowledge management in theoretical area first. And then, this paper will use a case by Tempus group, which is one of the top ten 4PL company in China.
6
2．Purpose
The original motivation and purpose of this paper is how knowledge management can be applied to supply chain in the Chinese 4PL company project.
The following four research questions are in focus, in order to offer a case research reference to relevant study;
RQ 1, Why is knowledge management important for collaborative product development and Supply chain management?
RQ 2, when a 4PL company implements projects, what are the key points of using knowledge management?
RQ 3, How may a collaborative project be improved by using the knowledge management?
RQ 4, what should a Chinese 4PL company be aware of when they implementing knowledge management?
And in order to have a better understanding of knowledge management in supply chain and also in order to answer the research questions, it is necessary to explore the following questions in relevant theoretical researches and answer them in the theoretical framework part in this paper.
1, what is knowledge management in supply chain?
2, what are the lately theoretical research of knowledge management in supply chain mainly concern about?
3, what are the details of those latest developments on knowledge management in supply chain which were discussed by lately authors?
And then in the empirical research part will come out a case of a project from Tempus group. The aim of the empirical part firstly will use the theoretical framework from chapter three to illustrate what the performance of the knowledge management in the case is, and how knowledge management affects the supply chain company’s project. So in the analysis chapter, the discussion will be carried out by using the relevant articles and empirical study. In order to achieve the research questions, it is necessary to map the supply chain knowledge in the Tempus project first, and then to illustrate the impact performance of supply chain knowledge in the project. In the end, to discuss how knowledge management was applied to supply chain management in the project by Tempus.
The next chapter will be the literature review of this study, and then is the methodology which describes the empirical study.
7
3. Literature review
3.1 introductions
Firstly, referring to the main aim of this paper, this part will concentrate on the background of the knowledge management. Because of in order to have a better understanding in knowledge management, it is necessary to explain what factors are included in the knowledge management and how it is defined in theoretical framework. The brief and details description of the knowledge management will help to analysis the findings and research questions.
And then in the sub-section parts will present the hot topics of knowledge management. Hot topics are collected by exploring the relevant articles and journals. The main concentration is to discuss and describe how academic circles research on these topics lately. Late on the sub-sections will illustrate how to realize the knowledge management and how it gets research by the theoretical literatures. All these details will help to analysis the research questions.
The need for empirical research will be also stated in the end of this part.
3.2 methods for the literature review
In this literature review, relevant literature sources are used to review and analyzing, for example, journal articles and book. Those journal articles and books are mostly relevant to supply chain management, collaborative product development and knowledge management. The databases of this paper are included Science direct, Google science.
So, key words as “supply chain management”, “knowledge management” are used to search the books and articles.
Next part will present the introduction of knowledge management.
3.3 Introduction of knowledge management
Based on the previous chapters, with the rapid development of the economic, the knowledge management becomes the key point to develop the business competitiveness of enterprise to keep going in the competitive market. As the global market and the information technology development, the competition in the market becomes more struggle than before. So enterprises need more cooperation to absorb new knowledge to increase their innovation capability and
8
business competitiveness to win the market competition. As the previous and upcoming part describe, if a company tries to develop their new knowledge and innovation process by their own, they will take higher cost and risk than to absorb it from outside. So, developed the knowledge management is a good way to keep enterprise standing in a better competence position in the market. (e.g., Hoecht and Trott, 1999; Hoecht and Trott, 2006)
In the same time, supply chain has been seen as an efficient way to create value and absorb innovation knowledge, so the discussion about how to develop the absorptive capacity inside the company and how to make a better knowledge management becomes a hot topic lately. Such as Hall R (1998) analysis two intangible resources inside the supply chain which are based on the supported by UK government, and then present the management conclusion in the knowledge management and absorptive capacity area. (Hall R, 1998) Crone M (2001) discussed the knowledge transfers in the supply chain of North Ireland multination company. He presents the analysis of how the obstruction exists and stops the transfers, and also offers the solutions about how to realize the knowledge management and absorptive capacity development. (Crone, 2001) Toyota built up the JIT produce system to efficient its operation and make it becomes the famous car-produce system in its industrial. In order to satisfy suppliers and clients, knowledge sharing mechanisms are built in TOYOTA’s supply chain to share both explicit and implicit knowledge resources. TOYOTA enlarged their absorptive capability by this network leaning system and successful in the market competition. (Jerrey D & Nile H, 2004)
Like many researchers have presented lately, the research of knowledge management in supply chain are concentrated on the following questions,
the forms and the basic theoretical framework of knowledge management, (Chinho L, 2002;
Done A, 2002; Melissa A, 1996; Smirnov A,2000; Belzowski M, 2003; Buzon L, 2003)
the mutual learning inside the supply chain, (Peter D, 1999; Spekman E, 2002; Collins R, 2002, Hult M, 2003; Bessant J, 2003; Peterson C, 2002)
the knowledge sharing and transfer, (Ki-Chan K, 2002; Shaw C, 2003; Wagner M, 2005; Batenburg R, 2003; Roper S, 2003)
the knowledge absorptive capacity of supply chain company, (Cohen M, 1990; Chanvarasuth P, 2003; Malhotra A, 2005)
how to realize the knowledge absorptive capacity, (Vries J, 2000; Mahesh R, 2005; Wu J, 2001;
Ambrus E, 2003; Chandra C, 2003; Lau W, 2005)
the relationship between knowledge absorptive capacity and the effect from supply chain, (Lau W, 2005; Glisby M, 2005; Crone M, 2001; Kidd J, 2033)
All these research are based on the theoretical study and case study, and then to analysis the effect to the supply chain. So the upcoming part will make further and details description in these areas.
9
3.4 The meaning of knowledge management inside the supply chain
The knowledge management of a supply chain company is not only exists in the company from inside, but also exists from outside. That means the knowledge management would affect both the supply chain company and its partner. And this characteristic leads to more elements to affect the supply chain management, such as culture conflict, professional knowledge, enterprise boundary and so on. So a better understand of knowledge management inside the supply chain would leads to a better analysis.
3.4.1 The knowledge inside the supply chain
In Oxford dictionary, Knowledge is defined as a set which combined data, rule, process, and operation. (Oxford dictionaries, 2011) As it comes from practice and experience of people, the connotation of knowledge as been seen as higher when it is in organization than it is in personal.
So as the same, organization knowledge inside the supply chain it concluding the knowledge of an own company and the knowledge between the companies. So the knowledge inside different part of supply chain have complex environmental and it would affect each other. This is the reason why it is necessary to explore the lately research in order to follow the overall aim of this study. (Lin, 2002)
As Lin (2002) presented, based on the communicating activities, there are two different types of knowledge inside the supply chain, the formal architecture knowledge and the informal architecture knowledge, and they could get defined in the unique environment. The formal architecture knowledge includes the information in the website, business information, documents, and etc. the informal includes e-mail, messages in online chatting, coordinate process and etc. The formal architecture knowledge is explicit and easy to be formulated. And it often shows by the EDI, FTP or website during the cooperation in the supply chain. The informal architecture knowledge is opposite, they are implicit and not easy to be formulated, and it related to the specific environment. The informal architecture knowledge sometime will implant into a process or a person. During the cooperation inside the supply chain, it more often show by the e-mail, telephone meeting, or a meeting. In his opinion, the explicit knowledge is the key point to success cooperation in the supply chain. (Lin, 2002)
Many others authors also did the relevant research, such as Hall R (1998) states, there are four types of knowledge inside the supply chain; they are integrated knowledge, position knowledge, functional knowledge and the culture knowledge. (Hall R, 1998) Done A (2002) also did the same research in explicit knowledge inside supply chain, and he separated it into architecture knowledge and process knowledge. Melissa A separated the knowledge inside the supply chain
10
by the way they are spreading, public way and the personal way. (Done A, 2002)
So, as many authors defined the knowledge inside the supply chain, they mostly pointed out the supply chain knowledge category related to the environment. So when defining the supply chain knowledge should put more focus on the supply chain environment. And a clear category of knowledge management in supply chaincan helps improve the knowledge management in supply chain.
3.4.2 The knowledge management inside supply chain
There is no standard define of the knowledge management in supply chain. But basically, the knowledge management in supply chains treated as a process. This process is operated by all the nodes of the supply chain in order to make full use of the knowledge, both the company’s own knowledge and the knowledge between the cooperation companies. (e.g, Smirnov A, 2000; Lin, 2002, Shawn C, 2003)
Like Smirnov A. (2000) stated, the aim of knowledge management in supply chains to push the knowledge transfer and share, let the knowledge inside the supply chain become transparent among companies, suppliers, and the customers. And the knowledge management in supply chains also used to make the knowledge level of each part become equal, to let the benefits and risks be shared by every part. (Smirnov A, 2000) In the opinion of Shawn C (2003), the supply chain knowledge exist in the different part of the supply chain, each part has own knowledge. So in the knowledge management in supply chain, we should integrate all the knowledge and consider it as one. So the knowledge management in supply chains a process by taking integration and use from each part of the organization in order to make a bigger influence and efficient management way to the whole organization. (Shawn C, 2003) Lin (2002) separated the knowledge inside the supply chain in to seven different parts by the standard of their value. They are design, pre-sale, sale, produce, distribute, service and technology. In the different part, people put focus on different knowledge and value. So when it comes to the knowledge management in supply chain, it needs a clear and correct category in order to use different management in different situation. (Lin, 2002)
So basically, knowledge management in supply chains a process operated by all the parts inside the supply chain. And then, all the operators use the management to create, share, absorb and use the supply chain knowledge in order to efficient the supply chain management.
11
3.5 Hot topics of knowledge management in supply chain.
As it introduced in the purpose and 3.4 Introduction of knowledge management in supply chain, this part will put focus on describe the detail features of knowledge management in supply chainhot topics by using the integrated theoretical sources from the relevant articles and journals.
These features will be helpful for the analysis afterwards. And it is also necessary to describe it for reach the overall aim of this paper that present how knowledge management can be applied to supply chain management in a case.
3.5.1 Knowledge learning in supply chain
The knowledge learning in supply chain is discussed by the following authors and it means two or more than two companies participate in a learning process together to learn from each other and develop the knowledge.
Love G (1999) mentioned the mutual learning between the enterprises in supply chain be effected by the relationship of them, and it also improving the relationship in the same time. He also do research on the continuous improvement in manufacturing and brings out the knowledge capacity is value for the supply chain development, which would help enterprises built a long term stable relationship and enlarge their core competence. (Love G, 1999)
In Spekman E (2002) opinion the learning capacity is a key point of the successful for Supply Chain Company. He pointed out the learning chain is a mutual learning network which exists in supply chain and it combined by all the companies. All the companies inside the supply chain would absorb new knowledge by cooperated with other companies and share their knowledge to others in the same time. This mutual learning process is unique and hard to simulate, it would also deliver value to each parts to create new competence. He also pointed out that the mutual learning is related to the customers satisfaction level and it does not has a clearly relation with the cost. (Spekman E, 2002)
Collins R (2002) did the research in the knowledge learning behavior of the companies in supply chain, he stated the knowledge flow in supply chain is different from finance flow and logistics flow. It is not only influence single process of supply chain and create the value of accumulation, but also influence more parts of supply chain and create more value than the accumulation. He also says the companies will create a value point when they do the mutual learning, and this value point is the feature of how companies learning from each other. (Collins R, 2002)
Hult M (2003) offered a model of how companies do the mutual learning process after research
12
on a Global TOP 500 transportation company. He assumed there are four features affecting the supply chain; they are Team, System, Learning and Memory. His conclusion of the research states that the learning process is important point to make the supply chain management become efficient. (Hult M, 2003)
Bessant J (2003) said mutual learning in supply chain is an efficient way to share knowledge and spread the experience after he did the research in six different industrial in UK. (Bessant J, 2003)
3.5.2 Knowledge share and transfer in supply chain
Before companies do the mutual learning to absorb the knowledge from outside, an important requirement is the knowledge share and transfer in supply chain. Flexible and smooth transfer can succeed the high level knowledge share and transfer, otherwise it would become a barrier to do the knowledge share and transfer.
Knowledge share and transfer in supply chain is the spreading and exchange process among all the nodal points of supply chain. After absorbing and developing, the consistency of companies’
knowledge would be developed.
Ki-Chan K (2002) said the knowledge sharing is the foundation of the stable long term cooperation by doing a research on a car manufacturing company, and pointed out that the E-Supply chain design is a efficient way to realize the knowledge absorb and share. The key point of realize the knowledge share network is the attitude and behavior of the companies. (Ki-Chan K, 2002)
Shawn C (2003) did an analysis to a car manufacturing company and mentioned that the major part of the knowledge share should be explicit knowledge, which including explicit technology and process. And it also has some implicit knowledge, such as the knowledge understanding and staff’s skill and so on. (Shawn C, 2003)
Wagner M (2005) collected different types of data from 182 companies’ knowledge sharing activities. After his analysis and research, he said the frequency of their communication affecting the knowledge share level, and the implicit level of knowledge affecting the satisfaction of the companies. (Wagner M, 2005)
Due to the business process of Supply chain companies has closely relation with its partners, so the knowledge of them has a clearly complementation. And this is also an important feature of their knowledge share level.
Roper S (2003) did a research in the knowledge share in 18 multi-national companies and their suppliers, and then he pointed out how complementation is important to the knowledge sharing, and in the conclusion he also pointed out that the complement level between multi-national
13
companies and their suppliers; no clear evidence to identify the relationship between knowledge complementation and knowledge cooperation. (Roper S, 2003)
So as it mentioned above, the positive attitude to share the knowledge is more important than the ability of the knowledge sharing.
3.5.3 Absorptive capacity of the company in supply chain
Both sharing and transferring are the key features for knowledge management, cause the realization of absorptive capacity is based on the flexible and smooth knowledge transferring. In 1990, Cohen M (1990) brought out the concept of company absorptive capacity, and defined it as a capacity of evaluate, absorb and use the knowledge from outside the company for succeed its business aims. And this absorptive capacity is not only the summation of all the absorptive capacity in staffs, but also the absorptive capacity of knowledge is used and spread in different departments. Due to the knowledge and information from outside the company is becoming much more important to a company than before, so a supply chain company need to develop a stronger absorptive capacity to absorb, identify and use this knowledge and information. (Cohen M, 1999)
Chanvarasuth P (2003) defined absorptive capacity as a capacity of company to use and absorb information and knowledge from its partners. This absorptive capacity is related to the company’s knowledge level and instruction; it is also a forecast to its innovation capacity. The deficiency of absorptive capacity is the reason of the stagnation of knowledge sharing and transferring. (Chanvarasuth P, 2003)
In Malhotra A (2005) opinion, after the knowledge absorbed process, how to use is more important for a company. A standardization of enterprise culture, the encouragement of absorptive capacity and a smooth and flexible way to share and transfer knowledge and information, these would let the knowledge share happen in a supply chain. (Malhotra A, 2005)
So as it mentioned above, it is commonly and widely believes that the knowledge absorptive capacity of a supply chain company is a key feature for the knowledge sharing and transferring in supply chain. The level of absorptive capacity would affect the capacity of company to get knowledge from outside the organization, and then it would also affect its core competence and the innovative capacity.
3.6 The realization of knowledge management in supply chain
As man authors discussed lately, the aim of the knowledge management in supply chainis to
14
improve the innovative capacity of a company and also efficient the way how company handle the knowledge and information. The knowledge management in supply chaincan also integrate and optimize the knowledge level of the organization, enlarge the scope of knowledge and then stronger the business core competence of supply chain. So how knowledge management can be applied to supply chain management it needs a reliable theoretical framework and a scientific knowledge management system.(e.g, Vries J, 2000; Mashesh R, 2005; Lin, 2002)
3.6.1 The framework of knowledge management in supply chain
Among the multi-national enterprise, most of them have applied knowledge management to the supply chain management already, such as IBM, TOYOTA, DELL and so on. And based on these multi-national enterprises experience, some authors as below do research in this area tried to explore the framework of knowledge management.
Relied on the information technology, Vries J (2000) used a case study in to build a knowledge management framework in a hybrid supply chain. This framework used a competence environment of a supply chain company as the feature, present how importance are the three types of knowledge to realize the knowledge management in supply chain. They are: the relative knowledge, operational knowledge and functional knowledge. He also pointed out the companies in the supply chain upstream are hard to get the relative knowledge and they have to get this knowledge from the partners in downstream. In the same time, downstream companies need their partners in upstream to offer the functional and operational knowledge. (Vries J, 2000)
Mahesh R (2005) built an operation framework of knowledge management under by the analysis of analytic-network-process (ANP). After the analysis by ANP, he presented the relationship between the factors of knowledge management and the drive factors of supply chain. In his opinion, the relative factors act as an important role in design and build up a knowledge management system. So when an organization needs to build up a system, they should base on the requirement of the organization and design it from technology and process to adapt and satisfy the flexible level of the supply chain. (Mahesh R, 2005)
Both Vries J (2000) and Mahesh R (2005) do research on the framework of knowledge management, but in the case they need the management happen in a given environment. So their frameworks do not have the universality.
3.6.2 Knowledge management system in supply chain.
This knowledge management system is built for the knowledge management between
15
enterprises and it is based on the information technology and the knowledge management system in the nodal parts of supply chain. It is an integrated system of management method, the knowledge integration and strategy synergy, and it also act as a platform to realize the knowledge management in supply chain. Many multi-national enterprises did the exploration to build up their knowledge management system. In the same time, many researches are also focus on this area.(e.g, Wu J, 2001; Ambrus E, 2003; Lin 2002)
Lin (2002) presented a four levels architecture of knowledge management in supply chain, which is separated into infrastructure level, interlayer support level, instrumentation level and knowledge level, like Fig.1. He also said the function of knowledge management in supply chaininclude knowledge inventory, data exchange, information communicates, process cooperates and knowledge spread.
Fig.3.1 Knowledge management system architecture in collaborative supply chain (Lin, 2002)
Wu J (2001) presented how to solve the knowledge management problems in multiple agents knowledge management in supply chainsystem, and summed up the different multiple agents knowledge management in supply chainsystems. (Wu J, 2001)
Ambrus E (2003) described the utilization in knowledge management in supply chainsystem and discusses the utilization of the knowledge management in supply chainsystem in an intensive business environment. He said due to the demand of the business environment and the technology strength of knowledge management in supply chainsystem, there is a huge potential in utilization of the system.
16
Lin (2002), Wu (2001) and Ambrus (2003) they all do the research from the overall angle of supply chain, and put focus on the knowledge management in supply chainsystem.
On the other hand, Chandra C (2003) did the knowledge management in supply chainsystem research on the consumer-focused product design. Lau W (2005) did the knowledge management in supply chainsystem research on the design of the supply chain purchase knowledge management system.
As it presented above, the research in this area mostly were putting focus on the theoretical part which happened in a specific industrial area. There is not that much 4PL case could be found.
3.7 Knowledge management and the supply chain performance
Many authors were doing research on a specific case or a specific industry first, and then to understand the relationship between knowledge management and supply chain performance. As they presented how knowledge management can be applied to supply chain management in the Chinese 4PL company project, they point out some problems to let people be aware, and it is also useful for the overall aim of this paper and it could be mirrored to the upcoming chapter.
Ki-Chan K (2002) pointed out that the knowledge sharing in supply chain can reduce the cost of purchasing and transaction, decrease the bullwhip effect and lower the inventory level, lead to the benefit of R&D and collaborative development, stronger the flexible level of supply chain, and increase the capacity of satisfy customers. (Ki-Chan K, 2002)
Shaw (2003) pointed out that if a company want to succeed their supply chain management, they has to have knowledge which is different from the one exists in the sharing supply chain.
Knowledge management in supply chainis a new way to control and manage supply chain, and it can lead the core competence of supply chain become stronger. The supply chain performance will be rapid developed by the integrated management with supply chain management and knowledge management. (Shaw, 2003)
Batenburg R (2003) used a Dutch company case study to analysis the key features of succeed the innovation process, and then he said that trust between collaborative production companies is the key point to succeed the innovation management. (Batenburg R, 2003)
Glisby M (2005) introduced a Danish company case in how they open the Japanese market by their efficient knowledge management in supply chain. The company shared their stratagem and knowledge to their suppliers, and this process made their supply chain knowledge share level become higher and more efficient than before. (Glisby M, 2005)
.
17
In the business area, the multi-national enterprises like TOYOTA, DELL and some others, they also work hard to realize the relationship between knowledge management and supply chain.
In TOYOTA, they built up the knowledge management in supply chainsharing system by Purchase Department and OMCD (operation management consult department), and is formed by supplier association, consult group, and learning group. This knowledge sharing mechanism operating by the spread the explicit knowledge in theme meeting and spread the implicit knowledge in personal communication, and it make the supply chain knowledge sharing level of TOYOTA become efficient and develop the core competence of Toyota. Because of the strong knowledge sharing mechanism, suppliers of Toyota believe they are part of the Toyota supply chain and bring up their self-driving motivation. So this supply chain knowledge sharing system make the supply chain performance level get better. In Dell, they believe the collaborative process need a strong and stable cooperation from their suppliers, so they not only spread their direct selling thought to their customers, but also make their suppliers realize this cooperation. So in the supply chain of Dell, their knowledge sharing system working tight and efficient, and make the supply chain performance working well in order forecasting, quality develop, pricing and inventory.(Jeffrey D, 2004)
3.8 Conclusion.
As it mentioned above, in the academic area, many researchers have been doing in the knowledge management in supply chainlately, especially in the hot topics like how to realize the management, how to transfer and share the knowledge, the absorptive capacity and so on. (e.g, Peter D, 1999; Ki-chan K, 2002; Cohen, 1990) As the lately research presented, some multi-national enterprises and large size company has applied the knowledge management to supply chain management already. (Jeffrey D, 2004) From the cases we can see that the knowledge management in supply chain is a good way to efficient the supply chain management, it can support the innovative process to supply chain company and also can enlarge the business core competence of company. But how would it performance when it comes to a Chinese supply chain service company? So it is necessary to explore more cases which are relating to the knowledge management in supply chain, to offer the relevant case features for the future research.
But on the other hand, the research also mentioned that the knowledge management in supply still in a basic level. They are mostly realize that the knowledge management in supply chain is not be used widely and it is hard to find many case references to analysis. Both research and practice in this area is not that much. So sometimes the performance of the knowledge management research has to be done in a given environment. (e.g, Lin, 2002; Mahesh R, 2005;
Vries J)
So how knowledge management can be applied to supply chain in a Chinese 4PL case should be put more attention in the future study. The necessary would be presented in the next
18 sub-section.
3.9 Need for empirical study
First of all, as it is mentioned before, the overall aim of this paper is to do the research on how knowledge management can be applied to supply chain management in a Chinese 4PL company project. Because many researches were done in the academic circle of knowledge management, but when it comes to the empirical area it becomes hard to find the relevant cases in 4PL Company. So this research will use a Chinese 4PL company to analysis and answer the research questions.
So based on the overall aim of this case study, the case study will be carried out by using a supply chain company project to illustrate how knowledge management can be applied to supply chain in a Chinese 4PL company.
19
4. Methodology
4.1 Introduction
As the research objectives and the research questions mentioned previously, the following questions have been answered;
RQ 1, Why is knowledge management important for collaborative product development and Supply chain management?
RQ 2, when a 4PL company implements projects, what are the key points of using knowledge management?
RQ 3, How may a collaborative project be improved by using the knowledge management?
RQ 4, what should a Chinese 4PL company be aware of when they implementing knowledge management?
All of these questions will be research by reviewing and analyzing the relevant books, journals, and articles. They have been explained in the earlier section.
And later, in order to reach the original motivate of this thesis, an empirical study will be bring out to illustrate how the supply chain knowledge performance in the project in order to answer how knowledge management can be applied to supply chain management in a 4PL company project.
When it comes to the Tempus project, data and opinion will be collected from the peoples who involved in the case. Those data and opinion would help to perform the case.
4.2 Research strategy and data collection
As it mentioned above in 3.2 methods for the literature review, in order to explain the research questions and explore the related academic sources, a literature review was carry out to identify and introduce the knowledge management in supply chain.
And when comes to empirical research, this is done by using a project from a Chinese 4pl supply chain company. Because of the case company is supply chain service company and doing its forth part supply chain service, so during its business, they handled a lot of information and knowledge from their upstream and downstream partners. So this supply chain service company is suitable for the research area and the project case could be analysis from the knowledge management in supply chain focus. Further more details will be described in the later chapters. And then, the empirical study will be analysis and discuss by using the knowledge management in supply chain which is presented in the chapter 3.
20
As Yin (2009, pp. 4-5) states, a good way to investigate a process or performance is using the case study which its organization is related to the research focus. He also explained more about the investigation in the further discussion. So in this paper, using the case study is not only can investigate the case process or performance of the case, but also can analysis and discuss the research focus at the same time. We can relate the knowledge management in supply chain to the project in order to answer the research focus. So in this paper, a case study is an efficient and reliable way to do the research on the knowledge management in supply chain. (Yin, 2009)
The data collection is done by using internet communicate applications to interview the relevant people who involved in to the project. Interviews to relevant people by using internet communicate applications were performing irregularly scheduled from May, 2011 to Aug, 2011.
The applications are SKYPE, QQ, MSN. The relevant peoples will be introduced following.
Anson Lee was the manager in Tempus group logistics department and the logistics leader in the TDC Group during the project. He is an important person in this research to help me finish the data collection and analysis. He also helped me to collect data from his colleagues by spreading the questions to his colleagues and then summarize it. Further details about the case will be presented in chapter 5.
Alice Yao is one of the major connect person in DB Shenker, Shenzhen. She was one of the important people during the project, and helped me finish the data collection and analysis during the research on this thesis. She also helped me to collect data from his colleagues by spreading the questions to his colleagues and then summarize it. Further details about the case will be also presented in chapter 5.
When the data come to this paper, it would be directly used after integrated from Anson and Alice. The questions have been asked can be found in the last part of this thesis.
4.3 Reliability and validity
As it mentioned in 4.2 research strategy and data collection, the data and comments in this research are came from stuffs who involved in the project. In the same time, due to the threats to the reliability of this research including The error of subject and participant, The bias of subject and participant, The error of observer, and The bias from the observer, (Saunders et al., 2009) so all the threats mentioned above would reduce the reliability of this research. But on the other hand, as Yin (2009) stated that the construct validity, internal validity, external validity, and reliability are the design tests for a qualitative study. So in this paper, the constructive validity is achieved by asking general and specific questions in the irregular interview and all the questions are related to the project and this study. The internal validity is achieved by using the comparability interview questions. The external validity is achieved by doing interview with two stuffs from different interests company in the project. Anson is from Tempus Group, which is a 4PL company and putting focus on integrated the companies on the supply chain. Alice is from DB Schenker, which is doing its main business on succeed the shipping and logistics. So the
21
interview questions and results will have a better reliability. And then, the reliability is achieved by using the structured interview questions and a result of a past project.
4.4 Limitations
The limitation in this research is the data and opinions are come from the interview with the peoples who involved to the project. This would lead to a personal opinion effecting the research conclusion. On the other hand, due to the companies do not want to spread their business information, they required to make the exactly data invisible in this research paper. This would affect the analysis and conclusion parts.
The other limitation of this paper is the reliability of the research consequence. Due to this is a master thesis, so it is not enough time to make all the reaches become perfect. Even there is a hard working have been put during the research, but this paper still have potential to improve. So as these reasons, the reliability of this paper would not be totally perfect.
And then, a non-disclosure agreement was signed during the interview, so some sensitive information is not allowed to show in this paper. And also some further details about the project is required to be deleted from this research. So this non-disclosure agreement would also lead to the case description becomes not as perfect as it could.
22
5. Findings
In this chapter of findings, the empirical research will be illustrated to describe the situations. The original need for this chapter is for present a case to the empirical study, and let it to be analysis by using the knowledge management in supply chain mentioned in chapter 3. And then in the last, offer a new case reference of how knowledge management can be applied to supply chain management in a Chinese 4PL Project.
As it mentioned before, a non-disclosure agreement has set up to avoid the business information spread. So the detail data and the further information will not be presented, but in the same time, a brief description will be illustrated by using the information and data from the person who involved into the case and it will be reliable and enough for the further discussion of knowledge management in supply chain.
Meanwhile, the data from relevant people will be integrated and directly use in the case description and analysis.
In the following sub-sections, a case from Tempus Group will be presented and in the later chapter will analysis and discuss the case in the area of knowledge management in supply chain.
5.1 Backgrounds
As it shown on the website http://www.sztpl.com.cn/Simplified/main.asp, Shenzhen Tempus Group was founded in 1998, its holdings brand “Tempus " as the Shenzhen well-known brand, the Group has a Tempus Logistics Co., Ltd., Shenzhen Tempus of international ticketing, Ltd. and other five subsidiaries. (Tempus Group, 2011)
Tempus 's stake in the logistics supply chain and logistics core business, is well-known professional supply chain and logistics service providers, to provide logistics and supply chain services for DHL, Starbucks, Giorgio Gori, XO International, Polgat and many other world-renowned enterprises, continuously awarded as "China's logistics hundred enterprises",
"China's Private 500", "China's most competitive logistics enterprises in 50", "Top 100 Enterprises in Guangdong Province" and "100 service sector in Guangdong Province", "best good faith demonstration enterprise in Guangdong Province", "Shenzhen Enterprise 100", "a leading private backbone enterprise of Shenzhen", "key logistics enterprises in Shenzhen City," "enjoyment of the Shenzhen Municipal Government to facilitate the through train service large enterprises",
"Shenzhen City logistics enterprises in good faith ", and many other honors. Now it is the executive director of the Chinese Federation of Logistics and Purchasing unit of China's export processing zones, bonded member unit of Shenzhen Logistics Association, vice president of unit.
23
And comes to the major service of Tempus, it is a well –known forth part logistics Service Company, it provides an integrated logistics service to their clients. The major function of Tempus is:
1, international purchasing, marketing executing 2, inland purchasing, distribution executing
3, international order executing 4, international logistics service 5, inland logistics service
So, the main service purpose of Tempus group is provide integrated forth part logistics service to both supplier and purchaser and promote their business, so that let suppliers and purchases put focus on their core business and do the outsourcing part to Tempus, meanwhile, Tempus can also develop their own business by helping suppliers and purchases.
Like Anson introduced, most of the project operated and hold by Tempus are like a forth part supply chain platform operating. Tempus will build up a platform to involve partners in a supply chain and let them share their knowledge, discuss the potential collaborative project, and so on.
Tempus would push companies in a supply chain to cooperate and do some project to improve business together. And during each project, different type of knowledge and information would be transferred to every part in order to operate the project efficient and successful.
So as the introduction by Anson, the project of this supply chain company will be suitable for the purpose, and also do research in this leader company in china can bring out a good case study to the companies in this area or future research in this area.
The next section will introduce a project operated by Tempus, to described the details of it and then use it to be analysis.
5.2 Tempus “Chengdu Wine festival” project
5.2.1 Chengdu wine festival
Chengdu is the provincial capital of Sichuan Province and is also an important city in the west-south of China. The city will hold a wine festival in order to spread the culture of wine and push the business happened. This wine festival happens in March per annum. During the festival, around million peoples will attend the festival and thousands of supplier, buyer and purchaser will go there and find some opportunities to develop their own business.
As a forth part logistics service provider, Chengdu Wine festival is suitable for Tempus’ core business. Tempus can integrate its partners in the wine supply chain by holding and building a platform for them, to attempt the festival together and then succeed the profits of every part. So, the manager office decided to attend in this festival in 2010 and opened a project named “CWF”
24
(Chengdu wine festival), goal to open an exhibition in Chengdu and then integrate all of their suppliers, purchasers, and potential customers and then facilitate them develop their business.
Different part can join the project exhibition in different way, for example, suppliers can rent the exhibition position to introduce their products, and retailers can have a platform to communicate with the wine holder directly, logistics companies can help both sides to succeed the business.
The project was set up and it had three phases. From Jan. 2009 to Oct. 2009 is the first phase which is called Project Preparation. From Nov., 2009 to Apr., 2010 is the second phase which is called Project Executing. After May 2010 is the last phase which is call Project Operation
5.2.2 Project Preparation of Tempus “Tempus “Chengdu Wine festival” project”
From Jan. 2009 to Oct. 2009 is the first phase, main job of this phase is marketing, make enough propagandize to their customers and use commercial advertisement to attract potential customers, selecting the place to open an exhibition and ready to executing the preparation of the exhibition. As Anson described, “Tempus was in a condition of knowledge absorptive to prepare project, because they were integrating all the knowledge and information from upstream and downstream.” So, Tempus in this moment had three important partners to cooperate with, they are DB Schenker, Hongkong Wine Association, and Customers.
First, Tempus had to learn from Customers and Hongkong Wine association to know the knowledge of wine; it could help Tempus do a better job in marketing. So, for examples, in the September of 2009, Tempus hold a wine taste party in Futian bonded area zone and invited guests from their customers, cooperate partners and press; from Jan 2009 to Oct 2009, Tempus invited professional staff from Hongkong wine association to give lessons to Tempus’ staff and DB’s staff, to make the related businessmen had a higher understanding in this area; built up the Wine Festival Department to handle the information of this project by using information manage system, and so on.
The CWF project is supported by the Tempus group. In the spirit of cut down the cost and promote the business as much as they can, Tempus had five principles and actions as below to handle the project,
1, all centers should try their best to show all the details about the exhibition to their customers, let their customers have enough preparation to do a good performance in the exhibition.
2, all centers should have a good connection with customers, know what they want to have and what they are looking for, and then prepare it in each centers’ daily work.
3, Due to discuss details about the exhibition, Tempus set a meeting in every Monday before the festival start in Chengdu. And keep the “low cost and high influence” these two important points in mind to handling the problem they were facing. All centers should exchange the information and take good care of the information flow smooth.
4, in case of ensure supplier’s goods can get to exhibition place in time, related centre should keep follow the international logistics shipping action. Customer service centre have to hand in
25
the newest report or require by customers as soon as possible.
5, because of tempus have around 500 different types of major customers, so they have various required and demand from them. So that, Tempus set up a manage distribution group, which the major members are from manager office, and then it will decide which centre should handle the problem from customers. Besides, Tempus set up another group named project-following group.
Its group members were from Tempus logistics ltd.co and the major function was on duty and solving all of the problems from clients.
Last but not the least; Tempus cooperated with DB Schenker, which is as known as one of the biggest third part logistics company, to operate the global shipping and logistics service. And a project group was set up by Tempus and DB named TDC, Tempus-DB Cooperation Group, in case to make the cooperation more efficient and easier to communicate. The group was acting an important role in the whole project and the members of this project group were from all the related companies. Members in this TDC group they could have a meeting, collect information, and bring out requirement, at whenever they need.
.
5.2.3 Project executing in Tempus “Chengdu Wine festival” project
From Nov., 2009 to Apr., 2010 is the second phase; main aim of this phase was helping supplier to shipping their goods from foreign country to China and inventory their goods in bonded warehouse or inland, handling hotel and journey of the supplier and purchaser, executing the exhibition in Chengdu, and developing business. As many cases in international trading in china, go though the custom is an important process to succeed the business. Many containers get stuck in the custom and it would lead to the delay of the contract or even ruin the business due to the goods go bad. So in this moment the information exchange is the most important process to ensure the wine can go though the custom without any obstruction. And the multi-companies group mentioned before, TDC group, acting an important role in the moment, it operated the information of goods, shipping, and trading exchange as quick as they can to be on guard to any risk happened.
In case of enlarge Tempus’ influence by using the government’s influence; Tempus exhibition was starting with the same day as the official festival at 11st, Mar, 2009, and the exhibition place will placed at Chengdu Regal Master hotel. Tempus had 36 positions, which are belongs to 36 different wine suppliers from all over the world. The major job of Tempus during the festival was helping their suppliers to present their stuffs to the purchasers from inland China and promote their business. The TDC group was affecting the project by using their cross boundaries knowledge and information. The group members can help purchasers get many types information in the same time, such as wine knowledge, logistics information, or business suggestions. The TDC group also acted a leader in the activities by Tempus, like employed part
26
time staffs to have quick lessons to study the project information and then spread it to potential customers, or let them help the operation staffs.
During the festival project, Tempus received around 500 orders from the purchaser and suppliers, and also got more orders after the exhibition.
5.2.4 Project operation of Tempus “Chengdu Wine festival” project
After the great performance in the exhibition, the main aim of Tempus was executing the business which had been done during the exhibition, got feedback from the exhibition and had a good connection with both supplier and purchaser.
Since Tempus went back to Shenzhen, They set up a group named feedback collecting group which the main job was cooperating with TDC group and collect the feedback and suggestions from suppliers and purchaser, and then integrated them to make a report to manager office. In the same time, operation centre was responding to the order and handling the shipping, customer center was responding to the order by handling the contract between suppliers and purchasers, and so on. Each centre was running their own function to support the whole supply chain service to their customers.
5.3 conclusion of the CWF project
The logistics cost is around 500,000 RMB (1 RMB is almost equal to 1 kr ), involved international shipping, custom fees, inventory and inland shipping, etc. and the payment for hotel is around 2,000,000 RMB. And others cost like human resource, customers relationship, and so on is unpredictable.
But when comes to the income, from the feedback report of manager office, Tempus had covered the cost and earned money from this project.
Due to the highly contribution to the project, the TDC group was reward by the Tempus group.
And the knowledge transfer mechanism get raised its value to Tempus’ future project.
The long term goal of Tempus from the feedback report was Tempus will keep focus on the fourth part integrated logistics service and make a platform for supplier and purchaser, becoming an important part of international business as a hub, and turn into a innovation company with an efficient business model.
27
6. Analysis and discussions
As it mentioned above, the research questions in this paper are
RQ 1, Why is knowledge management important for collaborative product development and Supply chain management?
RQ 2, when a 4PL company implements projects, what are the key points of using knowledge management?
RQ 3, How may a collaborative project be improved by using the knowledge management?
RQ 4, what should a Chinese 4PL company be aware of when they implementing knowledge management?
So in this chapter the analysis and discussion will be carried out by using the relevant articles and empirical study which are presented in the previous parts. In order to achieve the research questions, it is necessary to map the supply chain knowledge in the Tempus project first, and then to illustrate the impact performance of supply chain knowledge in the project. In the end, to discuss how knowledge management was applied to supply chain management in the project by Tempus.
During the case analysis, the relevant features of the knowledge management in supply chain would be used to discuss and analysis the case. And then bring out the conclusion of this case.
6.1 Map the supply chain knowledge in the Tempus project
Lin (2002) said the knowledge in supply chain related to their specific environment and when they are in the communicating situation they can be separated into formal type and informal type. (Lin, 2002) In the CEF project, the formal type knowledge is the information in the webpage, the official document of order and respond, and the data people used to communicate. The formal type knowledge is the explicit knowledge in the project, they are the key points to succeed the project because they were operating the project and standing for the official. The informal knowledge in the project be seen as an implicit knowledge, it spreading by person to person, or in a specific situation when peoples working in it. Like the cooperation process between different groups, “they are not easy to be formula and public it and more experience-driving, because some of those knowledge would become personal skill so that it will not get in to the public area in the organization.” word by Anson Lee, the logistics department manager of Tempus Group.
28
And when we talk about the classification of supply chain knowledge in this project, a category by Hall R (1998) can be mirrored to classify the knowledge.
1, Integrated Knowledge; it is the supply chain knowledge which is related to the law and finance of the collaborative companies in the project, like copyright, patent, trademark, contract, data system and so on.
2, positional knowledge; it is the supply chain knowledge which is not related to the law or entity of the collaborative companies in the project, like company prestige of all the involved companies, the network between Tempus and its partners, the organization chart of Tempus and so on.
3, functional knowledge; it is the supply chain knowledge which is related to skill in both personal and organization of the collaborative companies in the project, such as the skill of wine retailers from China inland, the skill of the forth-part logistics operation by Tempus, and so on.
4, culture knowledge; it is the supply chain knowledge which is related to the behavior and understanding of the collaborative companies in the project, such as the way of wine suppliers doing business, the business culture of eastern and western, the reaction of customers order, the team work of the TDC group and so on. (Hall R, 1998)
This category can help us to have a clear classification of the supply chain knowledge inside the Tempus project so it is important to make understand the supply chain knowledge inside the Tempus CWF project. And in this case, peoples who involved to the case agree with the environment of the Tempus project is an open organization, and the organization was trying to push business and involve more company in it all the time. So the knowledge inside this project was moving and operating all the time to affect the project performance. This will be more explained in the 6.2 the performance of supply chain knowledge in the tempus project.
And all the knowledge mentioned above, they are not only the simple knowledge exist in the Tempus project, and they are also act as important data to analysis the knowledge management in supply chain in the CEF project. As it presented in the chapter of 3.5.1, these different types of knowledge are an important feature to affect the knowledge management in supply chain performance, so it is necessary to explain how they were existing in the project.
6.2The impact performance of supply chain knowledge in the Tempus project
As it was presented in the findings part, Tempus is a fourth part logistics company and focus on its supply chain business. In their supply chain business of the CWF project, different types of knowledge were existing in the project from start to the end, such as the positional knowledge, functional knowledge, culture knowledge, integrated knowledge and so on. They all influenced the progress and organization level of the project. So in this section, more focus would be put on the following sub-section area to analysis and discuss the performance of supply chain knowledge in this project.
6.2.1 The supply chain knowledge learning in Tempus project.
The knowledge learning in this project means two different companies who were involved into the project learning from each other in both the explicit and implicit way.
