When I write about supply chains, I think readers naturally envision product and/or material supply chains. In a physical supply chain, raw materials are processed or refined and made into other things that have to be moved from here to there. This all naturally involves trucks, air and ocean freight, warehouses, assemblies and inventory – in other words, a focus on moving and making things.
Unfortunately, this traditional view excludes a huge percentage of professionals and companies because ‘knowledge workers’ (in service firms or otherwise) tune out discussions of the physical supply chain. The same can be said along industry lines, since companies in the insurance/finance, professional services, and IT industries (among others) don’t make things. According to a recent TechZone 360 article about the future of work, there are 60 million knowledge workers in the United States. Don’t we want them to participate in conversations about how to optimize the total value output of the supply chain?
The fact of the matter is, these professionals and industries do have a supply chain – the knowledge supply chain. It may not transform physical raw materials into complex goods available for sale, but it is no less of a progression, and given the size and growth of non-manufacturing industries, they clearly create immense value.
In this post, I’ll take some of the traditional ‘physical’ elements of supply chain management and apply them to the knowledge supply chain.
‘Raw Material’ Management
While production supply chains process, combine, and assemble materials, knowledge work requires the transformation of ‘raw’ talent along an experience continuum. All of these individuals build their careers through training and education, but experience is the greatest differentiator in a knowledge supply chain. The best qualified professionals with the most desirable expertise are elevated to positions with improved job opportunities and benefits – within and between companies. This process creates constant upward pressure as individuals are groomed (or refined) for increasingly sophisticated projects with higher margins, just like the most complex products in the physical supply chain command the highest price. In fact, larger organizations create their own internal supply chain by maintaining enough top-level talent to secure strategic, profitable engagements and then staffing them with a blend of talent, including less experienced team members who are being trained to prepare for future strategic roles.
Continuity and Inventory Management
The primary reason for the ‘deep bench’ approach described above is avoiding disruption, a concern shared by physical and knowledge supply chains. Qualified individuals can be every bit as difficult to source and retain as physical materials, and the lead time required for their discovery and training may result in delays in the delivery of the desired ‘product’.
Fortunately for the managers of knowledge supply chains, they have a double opportunity to ensure continuity. The first is a proactive talent management strategy tied to the objectives and growth plan of the enterprise. The second draws on the lessons of physical inventory management to centralize knowledge and intellectual property and make it accessible throughout the company on an ongoing basis. This allows it to be scaled and to transcend turnover and attrition.
As with physical products, knowledge managers must carefully track the progression of intelligence. For instance, which has greater value given the circumstances at hand: well-tested legacy experience (FIFO) or the most current approaches applied (LIFO). Chances are, there is an optimal blend of old and new knowledge that will generate the greatest sustained ROI. Companies must be aware of the investments made in each and ensure that client engagements cover not only the immediate costs of delivery but also the evolution and preservation of that unique knowledge over time.
Multi-tier Quality Assurance
If there is anything procurement and supply chain managers struggle to gain visibility into and control over, it is the quality of the work taking place multiple tiers into their supply chain. In the physical chain, quality is managed through carefully developed specifications and regular inspections – not to mention predetermined fault tolerance levels. In the knowledge chain, quality is a question of veracity. Does the experience of individuals justify their assignment to current efforts? If they are relying upon resources such as primary research or third party data, what effort is made to ensure accuracy and applicability?
Traceability is also important to quality assurance in the knowledge supply chain. Rather than using RFID tags to track goods as they move through the distribution network, knowledge-based products must carefully differentiate between the company’s IP and the insights of others that are being referred to. Just as counterfeiting is a risk for physical supply chains, false or deliberately deceptive intelligence can destroy a knowledge supply chain.
As an increasing number of individuals, industries, and companies focus on knowledge work rather than manufacturing, applying traditional supply chain management practices will become a competitive differentiator. Understanding the traditional learnings associated with materials management, continuity, and quality will give knowledge supply chains the same advantage over their competition as the best managed physical supply chains.
Header photo: Creativa Images