Presentation of a Framework for Implementing Knowledge Management in Supply Chain

Presentation of a Framework for Implementing Knowledge Management in Supply Chain HamedMellatdoust 1, OmidZolfaghari 2, MojtabaMansouri 3, Ali Bahramnezhad 4 1234-MA Students of MBA, Islamic Azad University, (Rasht Branch), Iran Abstract Knowledge management is considered as one of the most important competitive resources for all organizations.many people believe that companies which are able to acquire knowledge rapidly and change it to practical level will be more successful in a competitive market. On the other hand, Interorganizational competition has lost its importance and competition between supply chains for providing the maximum level of value to customers has been accepted. Management of supply chain and strategic operational situation has been assumed in both production and service industries. Management of supply chain may be useful in organizations only if it be able to show itself very well in interaction with the objectives and elements of organization. Supply chain management will increase companies' enthusiasm for cooperation and competition. In present era, knowledge is the most important competitive advantage for organizations. Keywords: Presentation ; Framework ; Implementing ; Knowledge Management; Supply Chain Introduction At the threshold of third millennium, knowledge management is considered as a strategic necessity for institutions, organizations, and service departments; Knowledge management will guarantee long-term advantages for organizations and societies, and will assure them the degree of benefiting from human capitals and intellectual and informational assets. Knowledge management is one of the newfound subjects in management area which has caught scientists attention in the field of organization knowledge and management. The main basis of knowledge management is its implementation and effectiveness. Understanding knowledge management, as a factor which is dominant on organizational actions, is necessary COPY RIGHT 2013 Institute of Interdisciplinary Business Research 1060

for its implementation. In the light of literature reviews, in this article we are going to examine the role of knowledge management in supporting of the supply chain management.traditional supply chains have emphasized on costs and factors such as the flow of materials and pieces, information flow and financial flow. However, in today s world, markets need faster responses than before and management of traditional factors cannot answer to current needs of the chains. In today s world, the key of survival is to have more competitive advantages than your rivals; On the other hand, improvement of performance is a necessary factor for competition. One of the tools of knowledge management is to improve the performance of supply chain. Keeping competitive advantages through establishing strong relationship with employees, customers, suppliers and superior and inferior partners is a challenge for managers. Selecting a proper strategy for knowledge management can be helpful to reach this goal. A supply chain includes all facilities, functions, and activities which are involved in producing and delivering of a product or service from suppliers to customers. This is composed of: planning and managing the level of supply and demand, providing materials, producing and scheduling product or service, storing, controlling stock and distributing, delivering and offering services to customer.supply chain management means to coordinate all operations of a company with suppliers and customers of that company. Each business organization is at least a part of supply chain and many organizations are parts of several supply chain.short-term goal of supply chain is to increase profitability, decrease the amount of stock and time of total cycle. However, its long-term goal is to increase customers' satisfaction, the level of market share and the amount of profit for all organizations which are involved in it; theses include: suppliers, producers of distribution centers and customers. To reach this goal, it is necessary to establish a strict and precise coordination between organizations which are involved in supply chain. Concept of Supply Chain Management Supply chain management is the result of reasonable improvement of logistic management. In the1960s, experts were studying about the internal relationship between storages and transportation. This work resulted into management of the distribution. In order to complete this topic, the concept of logistic was introduced. In fact, logistic was formed by adding structure management, supplies and orders to distribution management.the topic of supply chain management was seriously studied in scientific societies since the early part of 1980s. Many researchers presented a framework and model for it. COPY RIGHT 2013 Institute of Interdisciplinary Business Research 1061

Information Technology Information technology is a combination of telecommunications achievements, methods and approaches for solving problem, and guidance ability which will be done by using computer knowledge. It includes subjects which are related to advanced topics such as computer science and technology, computer designing of implementing information systems and its applications.supply chain management comprises information and materials flow in the chain, simultaneously. The relationship between components is mutual with regard to information flow. Characteristics of Information Flow Approach If interested parties in a chain have proper and precise information, they will make better decision about what they should produce and what they should maintain. They will also be able to determine suitable place and the manner of transportation with regard to requirements of supply chain.information is an important factor in an institution, whether to be vertically or horizontally. The manner of transferring information and sharing them for the purpose of coordination between superior and inferior layers has always been a challenge inside institution. Extensive Coverage Information in a supply chain covers all communications, from suppliers and producers till distributors and their retailers. Information flow includes two different flows of supply and demand. The direction of demand information is from demand side to supply side and will lead to establishment of logistics. Demand information include: customers' order, planning production and supplies and. Supply information is in the same direction with materials flow, and takes the same course from supply side to demand side, whereas in a personal institution information flow is limited to records of bills and internal factors. Supply information include: the list of stores and stocks, information records which exist in stores for the purpose of selling, delivery list and. Information Technology and Its effect on Development of business Strategies Information has an optimal and forward function in all operations of supply chain. Development of information technology has changed the methods which organizations gain competitive advantages through supply chain management. Successful organizations and COPY RIGHT 2013 Institute of Interdisciplinary Business Research 1062

companies have always employed IT for the purpose of developing their business strategies. It has a significant effect on the whole of supply chain. Changing the Manner of Reaching to Concordance in Goods and Logistic Flow Nowadays, with respect to extensive application of internet, the tendency to use products and services has changed the method of information flow and their applications; it is in a way that the border between products has disappeared increasingly. Development of IT has completely changed the style of traditional selling. In fact, by using IT system, the border between products and services has become ambiguous and has reached to continuity. The Role of Information Systems With respect to the fact that information has become an inseparable part of human life, the current era has been entitled as information era. IT and one of its instances, i.e. information systems, have found many applications in different fields such as management of supply chain.if we are going to facilitate information flow and manage it accurately, we need integrated information systems. In structure of supply chain, management duty is to manage the whole network from suppliers to final customers, in order to be able to reach the best total output of the system.supply chain is a system that makes a connection between superior members of supply chain, such as suppliers of raw materials and producers, and its inferior members, i.e. distributors, retailers and final customers. This will be done through flow of materials and information. The purpose of supply chain management is to establish mutual relationship of product and information between different members of supply chain which will be implemented through managerial and operational activities. Therefore, supply chain management has the capability to manage independent organizations as a uniform set, in order to increase integration, and Interorganizational coordination.in comparison to traditional management that engages to the management of all members, supply chain management focuses on management of relations; flexibility and responsibility will be considered with the purpose of reforming existing processes. So, if organizations are willing to fulfill this objective, they should adopt and implement supply chain technology and information systems, and they should try to reduce the cycle of supply chain and uniform their processes.the need to management of information flow along supply chain is not only devoted to rather complicated networks, but also all industries, irrespective of their extensiveness require information systems in supply chain. COPY RIGHT 2013 Institute of Interdisciplinary Business Research 1063

Information Systems Information systems of supply chain are defined as: information system which exists between two or more companies and facilitates information flow and saving them. Meanwhile, increase of customers' demands and their knowledge and insight has led to decrease of products lifetime. It made organizations to consider time as an important element in current business world, to increase the level of offering service to customers and to provide products according to the desire of customers.an increase in the level of customers' demand and their knowledge has led to decrease in life cycle of products. It has made organizations to use time as an important element in their business world, to increase the level of their services and to provide products according to the desire of customers. This has resulted into the participation of many industries and business institutes in supper competitive markets.the importance of information systems is not only restricted to transfer of information, but also it is able to analyze more information with high accuracy, much alternation from more resources, timely modeling and transferring them between the elements of the chain.sharing information is a key element for all supply chain. It leads to coordination and certainty among partners of the chain. Sharing information leads to rapid flow of information, improvement of efficiency and effectiveness of the chain, rapid response to varied needs of customers, increase in internal and external performance of the chain. It also causes that process related to supply chain be implemented more rapidly and with higher flexibility.therefore organization will reach to competitive advantages in long-term period and supply chain will reach a high level of integration due to empowering organizations in offering reliable delivery time and fast introduction of products to markets. This will improve companies' performance to the same proportion. Procedures of Information System Development First procedure: Around 10-15 years ago, transferring information in supply chain was only done through posting and faxing.second procedure: electronic transfer of data can be considered as second era of information systems which have a significant effect on information flow and decrease of the role of user in the process of information communication among customers and suppliers.generally, we can say that electronic transfer of data can have the fallowing advantages: 1-The expense of supplying and processing data will decrease. COPY RIGHT 2013 Institute of Interdisciplinary Business Research 1064

2-Geographical and time distance will disappear. 3-It facilitates activities. 4-It provides a condition to do transactions with more accuracy. 5-It increases added value in the network. Third procedure: Approach of creating uniform systems is inside organizations. These systems are known as resources planning systems of organizations. Planning resources of an organization is not a strategy, but it is a software system that uniforms data existed in an organization and provides them to users in a proper form.fourth procedure: at present, we are confronted with the information system of supply chain in which information flow among members is mutual. Information system of supply chain can provide required information exactly and timely for the members of supply chain.this kind of information systems will apply information available inside an organization, electronic information outside an organization and customers' information in a uniform manner and companies can use them for designing and implementing different strategies. It increases the speed of accountability to customers and flexibility in the whole chain.due to capabilities of information system, producers do not only respond to customers' needs, but also they predict customers' demands. Therefore accountability and sensitivity to variable markets will improve.activities are based on reflective information in physical value chain. In this stage, the philosophy of working with information systems is beyond data processing or information management. In fact, we have information systems for decision-making that provide this possibility for managers to be able to compare their organization with other organizations in supply chain while planning, operating and controlling and then make proper decisions. Value, Supply and Demand Chains Supply chains are sometimes referred to as value chains. It is a word that reflects such concept. As products and services develop by the chain, their value will increase.supply or value chains usually comprise separate business organizations rather than to include one organization.supply sector starts from the beginning of a chain and ends to internal operations of an organization. Demand sector in a chain starts from the point that output of an organization is delivered to a customer immediately and ends to final customer in the chain.demand chain is defined as selling and distributing sectors in a value chain. The length and size of each sector depends on the organization s status in the chain. An organization COPY RIGHT 2013 Institute of Interdisciplinary Business Research 1065

which is closer to the final customer has a shorter demand sector and a longer supply sector. All organizations, irrespective of to their status in the chain, should deal with subjects related to supply and demand.the purpose of supply chain management is to connect all sectors of supply chain in a way that meet the demands of market effectively and throughout the whole chain to the extent which is possible. This requires correspondence between supply and demand in all stages of supply chain.you should notice that except primary suppliers and final customers, organizations are considered both as customer and supplier in a supply chain. The Need to Supply Chain Management In the past, the most organizations were used to manage their supply chain a little. But, they had a tendency to focus on their operations and their immediate suppliers. However, there are some factors which make management of supply chain a favorable affair for business organizations that manage their supply chain activity. These major factors are: a. The necessity to improve operations b. The increase in the level of outsourcing As the level of outsourcing increases, organizations form much volume of an organization or its suppliers. This function is for gaining goods or services that act for producing products or supplying services for customers. It chooses purchase of suppliers, negotiates in contracts, creates coalitions and acts as a connector between suppliers and different internal parts. Purchasing has attained significant importance at supply chain management.so, it is necessary to coordinate planning and implementation between suppliers and all members of their demand sector. Nearness to the market or supply resources or both may be possible. In management, comprehensive quality is referred to as testing, that is to evaluate the current situation of the company and to use it as guidance for the situation that the company wants to posses in future. However, a company should appraise the performance and determine its general objectives based on the whole supply chain not only based on the company itself. A company may determine high objectives for it, so that it can minimize the amount of stock; but, if it is necessary for companies' supplier to have a high level of stock in a way that company can reach to its local objectives irrespective of suppliers' expenses, then high expenses of stocks for a company will be considered as expenses of delivering pieces and the costs of better materials. If a company reaches to its qualitative objectives and ignores its COPY RIGHT 2013 Institute of Interdisciplinary Business Research 1066

plans regarding the quality of suppliers, then producers will be able to deliver products to customers rapidly and fill the stock of the stores through suppliers. Performance Standards It is important to appraise and follow supply chain performance, especially for the reason that several organizations are involved in this chain. For this purpose, we can use different kind of standards. One approach is to use the comprehensive model of supply chain operations that indicates our effort for standardizing appraisal of supply chain performance. A conceptual framework of supply chain management, as it acts nowadays, is resulted from marketing, supporting and production. Supply chain has3 dimensions: Intra-functional coordination Coordination of inter-functional activities Coordination of inter-organizational activities of supply chain There is a distinctive factor among each of these dimensions, and this is the level of control which the manager has over the flow of products in order to reach coordination. There should be an approach for managing the coalition. If we are willing to have a stable coalition, cooperation rewards should be distributed again. New Competition Supply chain management represents a paradigm change that increases company s enthusiasm for concepts of cooperation and competition. Cooperation doesn't seem as an exchangeable process between groups of partners. Now, there is cooperation within the whole supply chain. The basic hypothesis of new competition is that companies won t have lasting competition as they had before. New competition will put global networks in the center of of intelligent companies which have managers who look for actively different interpretations about events and are eager to think differently about their business and to respond to market changes rapidly. Conclusion COPY RIGHT 2013 Institute of Interdisciplinary Business Research 1067

Regarding to the importance of information flow and its role in supply chain we can say that in comparison to personal institutions, supply chain have three specific features. These include: More coverage, more access channels and desirable quality of information. IT enhances distribution, information transfer, and cooperation relationships in two internal and external dimensions. It also improves the efficiency of supply chain and prevents appearance of leather whip effect. COPY RIGHT 2013 Institute of Interdisciplinary Business Research 1068

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