Knowledge Management Activities and the Partnership in Supply Chain Performance

Jun-zhi chiu12 Cheng-Jen Hung3

1.2.GraduateSchool of Management,I-ShouUniversity

Department of Distribution Management, KaoFongCollege

3 Yuh-Ing Junior College of Health Care & Management

Corresponding author : Jun-Zhi Chiu ,No.38, Sicnsieng Rd., Changjhih Township, Pingtung County 980, Taiwan (R.O.C.) ; Tel:886-8-7626365ext. 3003 ; Fax: 886-8-7627882 ; E-mail:

Abstract

The purpose of this study is to explore the relationship between knowledge management and supply chains. The key point of this relationship is that how the knowledge can create the more effective supply chains management.

This paper was applied the qualitative research approach as the methodology. Based upon The concept of cooperative competence, the previous studies and literature indicate that that the Supply chain, Partnership and Knowledge management have the significant relationship among those three variables. The result of this research find that the supply chains’ organizations must pay attention on the connection of the all supply chain’s companies in order to applied the knowledge management, the partnership to help and sharing new knowledge all the members to learn which can increase the supply chain performance more effective.

Keywords: Supply Chain Management, Partnership, Knowledge Management

Introduction

The supply chain (SC) is a global network used to deliver products and services from raw materials to customers, through an engineered flow of information, physical distribution and cash. SC integration is considered as a strategic tool,which attempts to minimize the operating costs and therebyenhancing values for the stack-holders (customers andshareholders) by linking all participating players throughoutthe system; from supplier’s suppliers to the customers.Supply chain management (SCM) partnership requires trust and commitment for long-term cooperation along with a willingness to share risks. (Luo, 2003). Partnership can be defined as a complex members interaction channel. In this relationship the members need to trust and cooperative with each other in the way to have this kind of relation the goal is very important because only have the same goal then the members can do anything at the same path toward the goal (Dixon, 2000). Thurow (1999) proposed that the knowledge management (KM) is one of the important parts in the organization. The KM can increase the organization’s comprehension. For the supply chain companies the knowledge resource sharing and delivery are the important facts (Luo, 2003). Park and Luo (2001) found that different kind characteristics of knowledge could affect the KM. From pervious studies and literatures once can find that having the well knowledge management can increase the SC companies’ performance. (Nonaka, 1994; Luo,2003).

The aim of this study is to explore the following sections; first, the dimensions of KM, partnership and the SCM. Second, how does the different partnership affect the KM and SC’s performance? Third, the correlational model in SC and KM. Fourth, based upon the literature and previous studies to propose the research questions.

Literature Review

SC’s Partnership and performance

SCM is the integration of all activities associated with the flow and transformation of goods from new materials, through to the end user, as well as associated information flows, through improved SC relationships to achieve a sustainable competitive advantage (Handfeld and Nichols, 1999).

The literature is replete with buzzwords such as: integratedpurchasing strategy, integrated logistics, supplierintegration, buyersupplier partnerships, supply basemanagement, strategic supplier alliances, SC synchronization and SCM, toaddress elements or stages of this new managementphilosophy (Tan et al., 1999). SCM has been defined to explicitly recognize the strategic nature of coordination between trading partners and to explain the dual purpose of SCM: to improve the performance of an individual organization, and to improve the performance of the whole supply chain.The concept of SCM has received increasing attention from academicians, consultants, and business managers alike (Croomet al.,2000；Tanet al.,2002). Many organizations have begun to recognize that SCM is the key to building sustainable competitive edge for their products and/or services in an increasingly crowded marketplace.

Otherwise, from the studies and literature above, the coordination plays an important role and trust and commitment are the key factors of coordination (Tanet al., 2002). In order to clarify the meaning of coordination, the trust and commitment were needed to discuss as follow.

Trust

Trust is frequently defined as a willingness to take risk (Mayeret al., 1995) and a willingness to rely on an exchange partnerin whom one has confidence. Trust exists when one party hasconfidence in an exchange partner’s reliability and integrity(Morgan and Hunt, 1994).In their attempt to bring trust into the TCA framework,scholars have argued that trust has the important effectof lowering transaction costs. Trust is frequently definedas a willingness to take risk (Mayer et al., 1995). Trust existswhen one party has confidence in an exchange partner'sreliability and integrity (Morgan and Hunt,1994). The outcome of trust, therefore, is the "firm's beliefthat another company will perform actions that willresult in positive outcomes to the firm as well as not takeunexpected actions that result in negative outcomes"(Anderson and Narus, 1990). Analyzing their field data,Beccerra and Gupta (1999) categorized both key negativeconsequences of lack of trust and key positive resultsfrom high-trust relationships. Pertaining to negativeaspects resulting from a lack of trust, they observed tineemergence of higher transaction costs and agency costsin low-trust relationships. For instance, a manager's timeand energy spent on dealing with low-trust relationshipsare higher than those spent in dealing with high-trustrelationships. In contrast, a partnership with high trustwould enjoy open mind and willingness totake risks. People in high-trust relationships are not afraidto share all information and believe in tile content of theinformation received. Furthermore, partners with high-trust relationships are more inclined to take risks thanlow-trust partners. They also indicated that the overallperformance would be enhanced if the problems of dis-trust were reduced (Beccerra and Gupta 1999).

Commitment

This study adopts the concept of commitment from (Morgan and Hunt, 1994) who define it as “an exchange partner believing that an ongoing relationship with another is so important as to warrant maximum efforts at maintaining it; that is, the committed party believes the relationship endures indefinitely”, and commitment is central to all the relational exchanges between the firm and its various patterns. The above definition has its roots in social exchange (Cook and Emerson, 1978), marriage (Thompson and Spanier, 1983), and organizations (Meyer and Allen, 1984).Without commitment, business relationship and subsequent transactions become fragile and vulnerable. Accordingly, enduring commitment is a basic requirement for successful SC implementation.(Ik-Whan G. Kwon andTaewon, 2005 )

SC’s Performance

The literature on ‘‘competitive priorities’’ forms thebasis for the performance variable included in our study.This works suggests that four ‘‘priorities’’ are directlytied to SC’s performance. Speed refers to thetime it takes from initiation to completion of an orderfulfillment process in the SC (Mentzeret al., 2001).The focus of speed is the ability to deliveron time, according to a set schedule. In such cases, theorganization may not have the least costly, greatestflexibility, or the highest quality process, but is able tocompete on the basis of reliably delivering productswhen promised (Ward et al., 1998). Quality, cost, and flexibility, in our study, are tied tothe order fulfillment process itself, not directly to theproduct or service resulting from it. SC thatstress quality-based operations continually focus onimproving their SC processes to increaseproduct reliability and customer satisfaction (Youndtet al., 1996). Ward et al., (1998) find Cost-driven SC strive to createcustomer value by either reducing costs or increasingbenefits in the SC equation. Flexibility refers to a SC’s agility, adaptability, and responsivenessto the needs of its users (Youndt et al., 1996).

SC’s Partnership and KM

The concept of cooperative competence was proposed by Silvadas and Dwyer (2000). This concept based upon the trustworthy which contains two main dimensions trust and commitment. Based upon the trust the organization can having an effective coordinate, sharing the knowledge, and cooperation. Partnership can be defined as a complex member interaction channel. In this relationship the members need to trust and cooperative with each other in the way to have this kind of relation the goal is very important because only have the same goal then the members can do anything at the same path toward the goal which they have (Dixon, 2000).

Nonaka and Takeuchi (1995) proposed that the knowledge creation was generated by the interaction oftacit knowledge and explicit knowledge.DeLong and Fahey (2000) developed an useful framework to classify knowledge, which distinguished among human, social, andstructured knowledge. Human knowledge is what humans know or know how to do. Social knowledge is usually tacit knowledge that arises outof relationships. An example of social knowledge is the way employees at different levels inthe employment hierarchy interact with other employees (e.g. a cutter and a finisher versus acutter and a manager).Structured knowledge is rooted in the systems, processes, rules, androutines of an organization and is usually explicit knowledge. Many organizations are now engaging in KM in order to leverage knowledgeboth within their organization and externally to their customers and suppliers (Rubinstein-Montano et al. 2001). KM is an emerging filed which is a matter of grave concern of academicand industry.Scarbrough (1998) discusses that the knowledge-based view of a form focuses onfostering specialization of employees knowledge and on creating internal networks of these humanknowledge sources, while business process reengineering focuses on external relationships forrapidly growing performance complemented by generalization of the knowledge source. Much of the literature on managing knowledge in organizations has dealt with specificelements of the knowledge enterprise, such as knowledge transfer (Szulanski, 1996), knowledge creation (Nonaka,1995), the design of technology tools forknowledge sharing (Davenport and Prusak, 1998; Nonaka,2000); and developing a knowledge strategy(Zack, 1999).

When the organizations realize that they don’t have enough knowledge or skill to improve their products they have to enrich their knowledges. Normally when the organization meets this, they used to catch or learn the new knowledge from outside of organization (Zack, 1999). In this kind of situation, when the organization earning the new tech or skills should be faced that the organization change and that will be affected the sc partnership.

According to the concept of cooperative competence and the literatures above once can indicate that the supply chain management has significant relationship in KM.

KM in SC’sperformance

The SC could look like the channel which going through sharing and integrating. This process can create more effective way to manage the organization (Ronald, 1985). The sharing means in System the suppler and customer can both sharing the resource and profits. For the integrating means that the supplier can integrate the whole SC’s companies or organizations, which can reduce the cost, risk , and others. This kind of strategy once could be defined as the SC performance.

In the previous studies and literature found that many organizations are now engaging in KM in order to leverage knowledgeboth within their organization and externally to their customers and suppliers (Rubinstein-Montano et al. 2001). KM is an emerging filed, which is a matter of grave concern of academicand industry.Scarbrough (1998) adopt knowledge-base as form focused on fostering specialization of employees’ knowledge and on internal networks of these humanknowledge sources, when the organization processing reengineering which concentrated on external relationships forrapidly growing performance complemented by generalization of the knowledge source; in the end Scarbrough (1998) concluded that the KM has a significant relationshipin SCperformance.

Based upon the literature and pervious studies can be concluded that SC Partnership and KM have a significant relationship (Tan et al., 1998; New, 1997; Croomet al.,2000；Tanet al.,2002). For the SC Partnership and KM the literature and the concept of cooperative competence (Silvadas and Dwyer (2000) indicate that SC Partnership and KM have significant relationship. The previous studies and previous studies also can indicate that KM in SCperformance has significant relationship between these two factors (Scarbrough ,1998; Rubinstein-Montano et al. 2001).

Based upon those literature and studies, this study will focus on the relationship among Supply chain, Partnership, Knowledge management to investigate more detail relationship and factors, which might influence those variables.

Fig 1. The conceptual model for this study.

Conclusion and Implication

The purpose of this study is to explore the relationship among knowledge management, partnership, SC’sperformance and SC. The key point of this relationship is that how the knowledge can create the more effective SCM. There are three research questions have been proposed.

First, the partnership has significant relationship with KM.

Partnership can be defined as more than one member whom doing the same thing which become some kind of cooperation ship. The members should negotiate and cooperate together then sharing the advantages and risks; together to reach the same goal (Zack, 1999). This kind of relationship also exist in KM; the concept of cooperative competence which proposed by Silvadas and Dwyer (2001). The key dimensions of this concept contains trust and commitment these two dimensions. Through these three dimensions can have the commitment among all members in the SC so we can call this kind of phenomenon is one kind of partnership. Anyway from the above evidences once can indicate that the partnership has significant relationship with KM.

Second, the partnership has significant relationship with SC performance.

The value chain analysis offers the organizations to increase their competition and implication’s direction (Porter, 1985). Due to the digitalglobalization, in the past decades, the concept of organization function has been changed from inner arrangement became the integration between inside and outside factors of organization. The whole SC should be cooperated among each single part of SC’s company. Therefore the flowing supply chain system is the key for all different kinds of SC organization (Lorenzoni and Fuller, 1995). According to the literature and previous studies can indicate the partnership has significant relationship with SC performance.

Third, the SC performance has significant relationship with KM.

The success in the whole supply chain performance is relied on the members’ cooperation, interaction and commitment which also regarding to the trust and fully participating in order to sharing the knowledge then increase the performance of the SC (Barquin, Bennet, and Remez, 2001). By going through the definition of ontology to promote the all SC’s company having the same recognition of knowledge then do with the semantic web technology extending at the same time in order to making the knowledge transfer more quick and easily which can increase SC performance. Base among above once can indicate the KM has significant relationship with SC performance.

Recently the KM had been studied in many ways but only few in the partnership and SCM. Due to the lacking of the whole structure of those, this research is tended to seek that the SC’ organizations must pay attention on the connection of the all SC’s companies in order to applied the KM, the partnership to help and sharing new knowledge all the members to learn which can increase the SC performance more effective.

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