Role of Knowledge Management in SCM and ERP

With every passing day, customers are becoming more and more demanding desiring products that suit their need and not standardized product or service options. They also have started pressing heavily for more economical pricing and lower lead times. This has increased the importance of innovation as well as the need to reduce the turnaround times which also impact the overall costing of products or services. Better and precise supply chains are becoming ever important link in the whole process and since a supply chain today runs across organizations instead of focusing only in one organization with the advent of collaboration all around, we can say that instead of organizations, today supply chains compete. These supply chains, as I said earlier, run across organizations, so it makes prudent to create, record and share knowledge that flows from one organization to another and we do not lose any intelligence that was gathered by any of the constituents of the supply chain. This makes knowledge management, a very important tool in the whole business plan of continuous improvement in supply chains by leveraging intelligence on knowledge like alternate supplier base, price deflation trends and levers, item substitutes and their sources, best possible routes of particular product manufacturing, best practices to resolve supply chain conflicts etc. Leveraging knowledge that gathered in these fields by different experts will make not only the job easier and also will reduce the lead times considerably as the wheel does not need to be invented from scratch every-time which makes an important impact on reduction of overall pricing of the your product or service.

We all know that basic ingredients that go in a knowledge management program are:
  • Creation of knowledge in identified areas
  • Recording it in a collaboration tool so that it can be easily accessed by everyone
  • Ability to search and find relevant knowledge by the potential users
  • Effective utilization of knowledge
  • Continuous updation and revision of knowledge to keep it pertinent and latest
All KM programs, need to incorporate above points and with the advent of multiple knowledge management tools like MS SharePoint (the most popular among all), managing KM has become easier but still the onus of creating, sharing and updating knowledge still lies with the experts.

Supply Chains around the world are gaining specifically in the fields of supply chain modeling, simulation and new product introductions, the most as they include not only multiple iterations of the activities involved but also include multiple experts spread across various geographies and time zones. Also, the knowledge created during these iterations becomes the basis of further improvements in the products or services and again a huge impact on overall lead times and cost.

Talking about ERP, the role of KM is equally important here but we see a shift in the role if you compare it to SCM. Here, the importance is more about the knowledge acquisition, knowledge transfer process because of multiple parties (teams) involved one after another (quite a contrast with SCM where multiple teams work at same time frame) and of-course knowledge updation. Every stage of an ERP implementation cycle needs to capture and share knowledge and the main objectives here are to again leverage the knowledge that already exists, to reduce the timeline of that particular activity, make the project delivery independent of the people so that sudden attrition does not impact the project heavily where loads of money is invested by organizations and to make sure that the incoming team (whenever it happens) have access to the compete documentation of the project. One of the major bottlenecks in an ERP project is a long testing cycle that includes defects identification, their resolution and re-testing and this cycle can be vastly reduced by ensuring that correct codes are transferred to the test instances of the new system and proper version control is in place. In addition, sharing best practices of other important stages of an ERP product like system design, integration testing, data migration and production black outs etc. make sure that we implement tried, tested and winner ways to complete the project.

Knowledge Management is a vast field and one small article on this heavy topic even if we are topic of niche areas of SCM and ERP, is not possible. Though I have touched upon a few areas where KM can be beneficial in both these fields, I am sure there are much more to it and I would like to have readers suggest how they are leveraging KM in their SCM and ERP projects so that everyone else can benefit form the experiences.


  1. Thanks for the timely reminder and brilliant discourse on the subject. Knowledge management is particularly important in today's globalized supply chain, where teams work spread across the globe, perhaps only on a temporary or project basis, ready to move on when one project is completed. What happens then? The knowledge is lost, as I wrote in my post on How the wrong people can ruin a supply chain

  2. I think typical ERP project follows standardized implementation plan and explicit knowledge from this kind of project have been gathered over the years. KM already exists in this type of project but it's overlooked because most companies want to complete the project "too quick".


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