Leveraging Knowledge

Management in Plant Operations

Tom Fiske

Senior Analyst

ARC Advisory Group

tfiske@arcweb.com

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 xxx@arcweb.com or visit our web pages at

www.arcweb.com