Case study in a North American company: implementation of knowledge management in the international commercialization of lumber

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1 Case study in a North American company: implementation of knowledge management in the international commercialization of lumber Prof. Mestrando Thompson Copperfield von Agner (CEFET- PR CESCAGE) Prof. Dr. Carlos Cezar Stadler (CEFET - PR) Prof. Dr. Luiz Alberto Pilatti (CEFET - PR) Abstract This article seeks to demonstrate the need of implementing Knowledge Management in small North American companies that market plantation pine lumber. The need for this was observed due to the difficulty found by the new employees in the learning and accomplishment of their activities, because the organization didn't possess support material that demonstrated the processes flow. The objectives of this work were to determine factors that hindered the implementation and to diagnose the barriers that existed for this. Then to elaborate methods to overcome the barriers. The methodology used was the case study; it was used to assign the several stages of the processes that involve the commercialization of Brazilian plantation pine in the North American market and to propose necessary methods for the use of the Knowledge Management in the organization. Words key: Knowledge Management - International Commercialization, Lumber Industries. 1. Introduction The implementation of a Knowledge Management System in companies that work with the international commercialization of plantation pine wood would be of great benefit for them due to the lack of explicit material this type of activity. With markets that are more demanding each day, organizations need to be in a constant process of innovation, such as technological innovation, modernization innovation and development of administrative models. Davenport and Prusak (1998) affirm that the organizations of greater success are those where Knowledge Management is part of the activities of all members. Thurow (1997) explains that the most innovative companies are the ones that drop the functional barriers and create a web among invention, project, production, sales, logistics and services, allowing the decisions to be made in the lower levels of the organization. Choo (1995) affirms that the companies that stay active in the global market have knowledge as being one of their main strategic resources. Leonard (1998) demonstrates that companies with larger innovation capacity are those that demonstrate a larger capacity to generate and to manage knowledge. This case study was accomplished in a small North American organization, which markets reforested wood, with the headquarter office in the city of Seattle. In its initial phase of constitution it was conceived as a family business, something that is characteristic in this type of organization in the United States. The initial objective of the members of the organization was the commercialization wood only in the domestic market of North America, the volume of commercialization was enough for all the involved members, not having the need to hire a ENEGEP 2004 ABEPRO 5043

2 larger number of professionals. The family members involved accomplished all of the necessary procedures for the organization to thrive in that market conjuncture. With the years, the organization observed two factors that motivated it to pass from a family business, which only marketed inside the North American north territory, to a larger level structure, where it could meet the new needs of the market and stay commercially active. The first factor observed, by the members of the organization, was an increase in the consumption of wood products for residential finishing, such as doors, baseboards, finishing frames, window components among other good, this was motivated by the growth of the home building market, the second factor was the intensification in the protection of natural forests in North American, that were becoming scarce, due to the lack planning and control. Due to these factors the organization noticed the need to acquire wood out of the North American territory. The option was to acquire wood from countries such as New Zealand, Chile, Argentina, Russia and Brazil, and other great world producers. In consequence, there was the need to enlarge the staff of professionals capable of accomplishing these new tasks, and by this way occurred the entrance of new members in the organization. This study observed the difficulties that existed in the training process, because the organization didn't possess support material that was explicit for existing operational processes. In the course of time, these factors were observed by other lumber trading companies, generating the need to enlarge the processes of knowledge of the procedures used in international negotiation that still were not fully understood, and that by the end of the process of data collecting for this case study still stayed in the its most on the tacit side. The study had the objectives of collecting factors that hindered the implementation of the learning process by the new members of the team and to diagnose the barriers that impeded in the accomplishment of the process; by this way it was possible to elaborated methods to overcome such difficulties and to demonstrate the need of a Knowledge Management System. In the gathering of the characteristics of the studied organization it was observed that the members possessed on average of 21 years of experience in the lumber business, and that they were holders of a deep knowledge regarding the processes that constitute this business, such as: market, transports, logistics and quality, among others. It was also observed, that this knowledge was almost in its totality acquired through tacit processes and that little was acquired by explicit means. The tacit process in acquisition of business procedures knowledge is very common among small and medium organizations of this type of activity. This form of knowledge acquisition is one of the main and more outstanding barriers for the creation of a Knowledge Management System it this type of activity. Nonaka and Takeuchi (1997) explain knowledge as being largely tacit, that it is something highly individual, something intrinsic to ones values, experiences and the individuals' ideals. The studied organization has been in the lumber market for 25 years and has a team of eight people that is formed by salespersons, buyers (some located in Brazil and others in Russia) and support personal. The main activity of the organization is the commercialization of information regarding semi finished plantation pine lumber, being that the great majority is originated in Brazilian and Russian reforestations and a small amount originating from Alaska. Due to the communication technologies the buying team possesses flexibility to be in remote areas making commercial transactions and, still, to establish immediate contact with the headquarters in Seattle, providing the crossing of supply and demand information and producing this way knowledge. This technological advantage maintains the team always updated, what generates larger efficiency and makes possible grater advantages in the transactions done. ENEGEP 2004 ABEPRO 5044

3 2. Information gathering With the study accomplished in the organization, it was observed that one of the main factors for the none sharing of knowledge, in an explicit way, is the fear that others out side of the organization will to come to know the organizations individual processes of doing business, and by this way, the organization may lose its competitive advantages. It was also observed that the company was leading its way in becoming a knowledge organization, because it works basically in the transformation of data supplied by market indicators and customers, converting it then in to information that is marketed to customers and, also, to competitors. It was verified that the form used in conversion of knowledge is that of socialization, this happens due to the fact of there being very little explicit material on the very peculiar forms in the international commercialization of plantation pine. Almost all the knowledge is passed in a tacit way through imitation, practice or of sharing experiences and the need of explicit material is needed. Another factor that hindered the implantation of a Knowledge Information System in the studied organization, was also observed, it is the resistance to changes. It was verified, through reports that the same factor happens in other companies of the same type business. A great majority of companies hire professionals that already worked in these functions in other organizations, and by this way making it difficult to change the patterns of sharing the acquired knowledge with the new employees that don t have previous experience in this type of business. With this evidence, it was possible to reaffirm the individuals natural tendency in resisting to changes. The new employees faced great reluctance on behalf of the most experienced employees the sharing of knowledge and by this way maintaining the barrier that hindered the learning process. It was possible to verify that the employees with greater experience tend to conserve the same work patterns and the same mentality, and few are willing to accept the changes that occur in the modification processes. The collected data demonstrated that the organization didn't possess process that captured knowledge; many times the newest members were not motivated to work productively due to the lack of explicit material that they needed to aid them in the accomplishment of the activities. The creative process was largely obstructed by the form how the system was managed and in other times by the resistance to innovation. 3. Passing to a Knowledge Management model After all the observations, it was suggested the implantation of a pilot project, demonstrating the benefits that would appear if such administration process was implemented, as suggested by Levett and Guenov (2000) for the automotive industry, an initial analysis was accomplished observing the following topics in the organization: 1. Motivation (are the employees motivated to work productively); 2. Capture of knowledge (the ability to capture important knowledge); 3. Knowledge storage (the usefulness of the knowledge stored for the solution of new problems); 4. Training (the effectiveness of the mechanisms of employ training); 5. Transfer of knowledge (the effectiveness of sharing important knowledge); 6. Creative thought (the employs ability in creating new solutions); 7. Identification of knowledge (the effectiveness of identifying knowledge); ENEGEP 2004 ABEPRO 5045

4 8. Access to knowledge (the effective access to important knowledge). These eight points were fundamental in the elaboration of the scope that was used to measure the possibility for the implementation of knowledge management inside the organization. The use of these observations was valuable for the elaboration and suggestion of the implantation process. It would be valuable for this organization type that the information followed the spiral of the knowledge proposed by Nonaka and Takeuchi (1997) as observed in the illustration 01. Tacit Dia logue Explicit Ta c it Socia liza tion Externa lization Fie ld Build ing Linking Explicit Knowledge Explicit Interna liza tion Combina tion Source: (Adapted from Nonaka and Takeuchi 1997) Learning by doing Illustration 01 - Spiral of knowledge adapted from Nonaka and Takeuchi The knowledge process does not happen due to the fact that this type of market is extremely small and controlled by companies that do not desire the popularization of this knowledge, as it was informed by some of the organization leaders. Observing the work flow of the involved management processes, it was noted that the organization is in a phase of information management. The organization would have a larger advantage if it uses a Knowledge Management System, as the system suggested by KPMG. The suggestions of KPMG, motivate innovations, creating new ideas and stimulating the cognitive power. Those suggestions turn possible: the capturing of the individuals' knowledge, it them would become available for anyone at any hour and place; the simplification of the reuse of know-how and experience, being them tacit or explicit; motivated cooperation, sharing, learning and the improvement in decision making. The suggestions provide the organizations buyers and salespersons the possibility to access information in a faster and precise way, because by this way they would possess a larger knowledge base. Vasconcelos (2000) identifies three fundamental stages in the processes of knowledge management: ENEGEP 2004 ABEPRO 5046

5 1) acquisition and creation of knowledge: in this phase is included all of the knowledge that the organization acquires and the knowledge that is developed by it; 2) sharing of knowledge: it requests an atmosphere where the trust prevails among the members, being this the slowest stage of the process, it demands that the members meet regularly and that communication exists (a crucial factor); 3) registration of the knowledge: this phase turns accessible to who needs to use the knowledge, providing an acceleration of the innovation processes. It was suggested to the organization the following outline for the implantation of a Knowledge Management System: - Justification: - Competition factors; - Competitive advantage; - Objective: - Increase of the margin of competitive advantage over the competitors; - Process of Implantation: - Establish the responsible; - Sowing the culture of Knowledge Management; - Documentation; - Knowledge Management tool selection; - Expected results: - Sharing of knowledge; - Larger agility in decision making; - Competitive advantages; - Profitability. 4. Conclusion Knowledge Management being a process that gathers and publishes knowledge in the organizations, it was observed that the implementation would be a task of low complexity for the studied organization, because the number of involved people is small and a focalization in the objectives would be a task easy to reach and to maintaining. Based on the knowledge of the work patterns of the competitors, the organization would have great competitive advantage with the implantation of such administrative system. However, the largest factor of complexity was seen in the understanding and compromising process by the members of the organization, so that these members act in a participative manner in the implantation of this administrative methodology. For the implementation of the process it would be necessary the sharing and the conversion of the tacit knowledge in explicit, and this would take the organization at a higher level in the market and by this way it would position the organization in a much more comfortable situation when facing the competitors. This elevation in the organization could expand their market share. ENEGEP 2004 ABEPRO 5047

6 The marketed products are totally intangible, because they only work with information. The data supplied by the lumber market indicators and suppliers are transformed in information that passes on to be marketed for North American customers. The manufacturers of raw products and semi raw products, which need to sell and to buy material, can gain with this information and by this way count an always agile market for commercialization. Having these statements, the organizations can look in to the implementation of new administrative models that can insert knowledge management in their activities and by this way promote a better presence in the market. Though, even with the presented advantages, the organization did not desire the adopting the methodology of Knowledge Management. The organization alleged that the process would generate internal conflicts, and the possibility of information leaking to the competitors. It was also alleged that this process could cause problems in the routine transactions of the organization due to the fact of the cultural change needed. 5. References CHOO, C.W. (2002) - Information Management for the Intelligent Organization: The Art of Scanning the Environment. Information Today Inc. 3a ed. Medford, New Jersey. DAVENPORT, THOMAS; PRUSAK, LAURENCE. (1998) - Conhecimento empresarial: como as organizações gerenciam o seu capital intelectual. Campus. Rio de Janeiro. KPMG INTERNATIONAL (2004) acesso em 03 de Abril de LEONARD, D. (1998) - Nascentes do saber criando e sustentando as fontes de inovação. Fundação Getúlio Vargas. Rio de Janeiro. LEVETT, GAVIN P. e GUENOV, MARIN D. (2000) A methodology for knowlege managment implementation Journal of Knowledge Managment Vol. 4 número p NONAKA, I.; TAKEUCHI, H. (1997) Criação de conhecimento na empresa. Campus Rio de Janeiro. ROBERTSON, SCOTT (2002) A tale of two knowledge-sharing systems Jornal of Knowledge Managment Vol. 6 Número 3, p THUROW, L. C. (1997) O futuro do capitalismo; como as forças econômicas de hoje moldam o mundo de amanhã. Rocco. Rio de Janeiro. VASCONCELOS, M. C. R. L. (2000) Cooperação Universidade Empresa na Pós Graduação: Contribuição para a Aprendizagem, a Gestão do Conhecimento e a Inovação na Indústria Mineira. Escola de Ciência da Informação da UFMG. Belo Horizonte. ENEGEP 2004 ABEPRO 5048

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