Knowledge is the Key

When we think about what's going on in the manufacturing sector today, technology immediately comes to the forefront. Many of the improvements in productivity that have resulted since the late 1990's have come from the revolution in information technology. Moreover, the increase in productivity from 2000 to 2005 was primarily the result of firms becoming better and better at using technology (2007 Economic Report of the President) .

According to the 2007 Economic Report of the President, from 2000 to 2005 the sales of all manufacturing corporations in the U.S. increased from roughly $4.3 billion to more than $5.4 billion. That's about a 27 percent increase over the five year period and a 4.8 percent compounded annual growth rate. Technology played a big role in that increase. The administrative side of business is being upgraded as manufacturers streamline those operations by using increasingly sophisticated software that tracks inventories, costs, shipments and much more.

Even rural manufacturers are benefiting from the skillful use of technology. They are shipping to new customers located in new markets — often overseas — and this is happening through web sites and other uses of technology. As noted in The Main Street Economist (2007), "many small businesses ... can use the Internet to reach new customers at home and abroad."

One of the areas in which technology is having a profound effect on manufacturers is the field of knowledge management. Leaders within the manufacturing sector are using technology to manage their knowledge bases more effectively. This allows them to better understand their industry; the local, regional, national, and international economies; and the myriad issues and concerns they have about their businesses. Knowledge management is revolutionizing the way business and industry leaders see their companies, their employees and the possibilities for both.

Harnessing knowledge is much more than just tracking your customers in databases and using the Internet to find information. As stated in a KM World white paper, "knowledge management has the purpose of making existing knowledge networks visible so that they can be analyzed, improved and combined with each other to seed new networks and encourage innovation. " For example, capturing what your employees have learned through their customer contacts and building best practices with this and other knowledge can ensure better product quality, more efficiencies and better employee relations.

In the competitive arena, many small companies fail to see the importance of a formal knowledge management system. Leaders often prefer to trust their intuition and judgment alone rather than spend the resources on developing and maintaining a system that would allow them access to critical information. It's important that leaders of small companies understand what is going on while remaining open to new ideas and letting go of previous paradigms. That flexibility can mean the difference between success and failure in a rapidly changing market and industry.

These current trends toward the use of technology to enhance knowledge management in the manufacturing sector pose opportunities and challenges for company leaders in both rural and urban locations. Knowledge management will help leaders uncouple and reconnect strategic bits of information into systems that build and grow companies with ever larger markets and greater economic potential.

Sources:
Economic Report of the President, 2007, Chapter 2, Table B-93
The Main Street Economist, 2007.
Raas, Urs, "Turning Information Into Knowledge," Best Practices in Enterprise Knowledge Management, white paper, KM World, November/December 2007.