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Leveraging Knowledge
Management in Plant Operations
Tom Fiske
Senior Analyst
ARC Advisory Group
February 2008
2© ARC Advisory Group
Major Challenge: Aging Workforce
Exodus of Workers is Reducing Companies’ Ability to Sustain Operational Excellence
0
10
20
30
40
50
60
70
80
1900 1920 1940 1960 1980 1990 2000 2010 2020 2030
Mill
ion
s o
f P
eo
ple
Year
People Over Age 65
Source: US Census
-10%
21%
52%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Number of People 35 to 44 Number of People 45 to 54
Number of People 55 to 64
Changing Workforce Demographics from 2000 to 2010
Source: US Bureau of Labor Statistics
US Bureau of Labor Statistics
• By 2010 more than 25% of working population will reach retirement age
• Trend will continue into for seeable future
Globally – Workers are Getting Older
• Largest Group of Workers – over age 45 and will double in next ten years
• Fastest Shrinking Age Group of Workers between 35 and 44 –arguably the most productive
Europe is expected to lose 1 million jobs annually for the next 25 to 30 years
• Severe shortage of skilled workers and engineers!
Oil & Gas Industry
• 50% of its production engineers will reach retirement age by 2010
3© ARC Advisory Group
3
Loss of People and Knowledge
The Degree of Difficulty in Retaining People and Knowledge
All Companies Struggle with Keeping and Replacing People and Knowledge
0% 20% 40% 60% 80% 100%
All
Followers
Competitors
Leaders
Very Easy Easy Niether Easy nor Hard Hard Very Hard
Retaining People and Knowledge
0% 20% 40% 60% 80% 100%
All
Followers
Competitors
Leaders
Very Easy Easy Niether Easy nor Hard Hard Very Hard
Replacing People and Knowledge
4© ARC Advisory Group
Loss of Production Know-How
Pro
du
cti
on
Kn
ow
-Ho
w
Time
Operators
Maintenance
Technicians
Process Engineers
Today
Productivity
or
Quality
One of the Biggest Challenges Facing Manufacturers Today is Retaining Knowledge
Retaining Valuable Knowledge requires Proactive Strategies to Deal With a Shifting Workforce
Knowledge attrition is occurring from a variety of sources including
• Retirement
• Rapid growth
• Turnover
• Layoffs
• Mergers and acquisitions
• Internal redeployment
5© ARC Advisory Group
What is Knowledge Management?
KM is a methodology to create, capture, analyze, enhance, share, and use intellectual capital to drive effective plant operations and create a sustainable business advantage.
Data collected and stored in various plant systems and databases is not knowledge.
Knowledge Management for plant operations means establishing an understanding of the relationship between people, equipment, processes and workflows.
The ultimate goal is to create a culture of understanding that makes the production perform to business objectives.
KM involves getting the right information to the right people in the right context at the right time
Knowledge Is a Valuable Organizational Asset
7© ARC Advisory Group
The Knowledge Management Process
Create Business Value
Business Objectives
Knowledge Requirements
KM Components
Create/Capture
Store/Index
Access/Disseminate
Learn
Use/Collaborate
Enhance/Create
Validate
Knowledge Sources
On-Demand
Create Context
8© ARC Advisory Group
Knowledge Management Best Practices
0% 20% 40% 60% 80% 100%
All
Followers
Competitors
Leaders
Corporate-Wide Most Plants Some Plants Other None
Companies with Institutionalized KM Programs
The Majority of Companies Lack a Corporate-Wide Initiative for Knowledge Management
9© ARC Advisory Group
Knowledge Management Best Practices
0% 20% 40% 60% 80% 100%
All
Followers
Competitors
Leaders
Excellent Good Average Not Good Poor
0% 20% 40% 60% 80% 100%
All
Followers
Competitors
Leaders
Excellent Good Average Not Good Poor
0% 20% 40% 60% 80% 100%
All
Followers
Competitors
Leaders
Excellent Good Average Not Good Poor
Creating Knowledge
Using Knowledge
Capturing Knowledge
Few Companies excel at creating, capturing, or using knowledge
• The majority of companies are average at creating and using knowledge
• Most companies are not good at capturing knowledge
10© ARC Advisory Group
Knowledge Management Best Practices
Knowledge Sharing in a Plant and across the Enterprise
More than Half the Companies are Average or Above in Sharing Knowledge within a Plant, but are Less Effective
Sharing Knowledge across the Enterprise
Sharing knowledge in a Plant Sharing Knowledge Across the Enterprise
0% 20% 40% 60% 80% 100%
All
Followers
Competitors
Leaders
Excellent Good Average Not Good Poor
0% 20% 40% 60% 80% 100%
All
Followers
Competitors
Leaders
Excellent Good Average Not Good Poor
11© ARC Advisory Group
Knowledge Management Systems
Automation Systems
KnowledgeCenters(Portals)
EmailsGroupwareLessons Learned
Knowledge Repositories
Best PracticesBenchmarking
On-line Communities
Blogs
SOPsDocuments
PPT
InternetIntranetsExtranets
TrainingOTS
PLMExpert Systems
Databases
ModelsAnalytics
KPIs
KM is the Foundation for Sustaining and Improving the Proficiency of Human Assets
Why KM in Manufacturing
• Experts leaving the company
• Need for everyone to get consistent information
• Getting and training replacements is difficult
• Capture Best Practices
• Enhance Internal Collaboration
12© ARC Advisory Group
Common Actionable Context
Real-time Performance Management
• Performance Intelligence
• Resolution to Unit Operation Level
• Operator Engagement
• Targets, progress and trouble analysis in real-time
• Operational Perspective
Common View
• Plant and Corporate “single version
of the truth”
• Aggregation of Operations
Intelligence and Business Intelligence
Common Alarm and Event Management
Procedure & Transition Management
ContextData Quality MgmtCommon Time
Dynamic Plant Reference Model
Application Portfolio
Data ModelWork Processes
& State
ContextData Quality MgmtData Quality MgmtCommon TimeCommon Time
Dynamic Plant Reference ModelDynamic Plant
Reference ModelApplication PortfolioApplication Portfolio
Data ModelData ModelWork Processes
& StateWork Processes
& State
Human Asset Reliability
KM Value Proposition
K-WorkerControl
Costs
Production
PerformanceTarget
Feedback
Visualization
Knowledge(Models)
Measurement
Prediction
MarketInformation
Analysis
13© ARC Advisory Group
6%
10%
16%
17%
20%
24%
24%
38%
69%
74%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Percent of Respondents
Other
Threat of Outsourcing
Adoption of Make-to-Order
Product Proliferation
Shorter Product Lifecycles
Synchronization with other Plants
Smaller Production Runs
Regulatory Compliance
Improve quality
Visibility for Business Mgt.
Visibility for Business Management and Real-time Performance Management are the primary drives
Reasons Cited by Users for Purchasing OM Solutions
Operations Management Includes KM
Va
lue
Breadth of Collaboration
The value of information is directly proportional to the number of people
collaborating
Time
The value of information is inversely proportional to the time until it can be
actionable
14© ARC Advisory Group
Summary and Recommendations
“IF A MAN EMPTIES HIS PURSE INTO HIS HEAD, NO MAN CAN TAKE IT AWAY FROM HIM. AN INVESTMENT IN KNOWLEDGE ALWAYS PAYS THE BEST INTEREST”
Ben Franklin
Today, nearly every plant worker can be considered a “knowledge worker”. As such, it is imperative to provide them with the tools, information and knowledge they need to do their tasks proficiently. If they don’t have the knowledge, then find ways to have them get the knowledge.
Broaden the scope of your KM program. Companies with far reaching and institutionalized KM programs outperform those that don’t have one or takes a limited scope approach.
Automation and plant systems contain a lot of information about the capabilities of your plant. Analytical tools are available to transform your real-time and historical information into knowledge.
Utilize IT and applied Internet technologies. Internet technology-based products are available to help share knowledge throughout the plant, across the enterprise and into the supply chain. With these tools, knowledge can be presented in context with each worker's mission.
The most effective way to retain and use knowledge is to embed it into business processes and workflows
15© ARC Advisory Group
Thank You.For more information, contact the author at [email protected] or visit our web pages at
www.arcweb.com