Information � .QRZOHGJH � 6\VWHPV Management 1 (1999) 267–281IOS Press

1389-1995/99/$8.00 © 1999 – IOS Press. All rights reserved

267

Knowledge Networking in Supply Chains: A CaseStudy in the Wood/Furniture Sector

Dimitris Apostolou1, Nikos Sakkas2, Grigoris Mentzas1,*

1Department of Electrical and Computer Engineering, National Technical University of Athens,Athens, Greece2PLANET S.A., Athens, Greece

ABSTRACT: In the new global economy, where value and differentiation are the essential ingredients for businesssuccess, an organisation’s knowledge is often the company’s primary value proposition. Increasingly more compa-nies, even in traditional, manufacturing sectors, are expanding the knowledge management concept externally: theyexplore new ways to put enterprise knowledge in the hands of customers, suppliers, and partners and share withthem their intellectual capital. This study examines how Internet-based, networked infrastructures can support sup-ply chain entities participation in emerging knowledge markets. WIT, a software toolset developed to facilitateknowledge sharing in the wood/furniture sector, is used as a case study.

INTRODUCTION

To stay competitive in the world markets, enterprises know that they must develop better techniques tomanage knowledge, which is increasingly becoming their greatest asset. To successfully respond to pres-sures that require companies to react flexibly to diversified and changing structures of market demand,the “learning ability” of enterprises is often seen as the most important factor in re-organising structuresand processes, where flexibility and quality are the benchmarks. In addition, increased innovation andrenewal of companies puts much emphasis on the management of knowledge; see also Leonard-Barton(1995); Nonaka and Takeuchi (1991; 1995). Knowledge in the form of corporate policies, market com-petition analyses, products, technologies and especially the skills, know-how and expertise of employees,is the source of innovation and growth.

Increasingly more companies are expanding the knowledge management concept externally: they ex-plore new ways to put enterprise knowledge in the hands of customers, suppliers, and partners and toshare with them their intellectual capital. In the new global economy, where value and differentiation arethe two essential ingredients for business success (APQC, 1998), an organisation’s knowledge is often thecompany’s primary value proposition. Consider for example Ernst & Young LLP (The Ernst & YoungCenter for Business Innovation, 1997), which by creating “Ernie”, the online business consultant, hasharnessed the experience of thousands of consultants to better serve a previously undeserved sector of themarket — companies with $200 million per year or less in revenue. Users — many of whom otherwisemight not be able to afford E&Y’s expertise — subscribe to “Ernie”, for approximately $6,000 per yearand gain access to a detailed database of answers to common business problems. By making consultants’tacit knowledge available to customers, Ernst & Young avoids having its consultants spend hours on the

* Corresponding author: G. Mentzas, Department of Electrical and Computer Engineering, National Technical University ofAthens, 9, Iroon Polytechniou Str. 15773 Zografou, Athens, Greece; E-mail: gmentzas@softlab.ntua.gr

D. Apostolou et al. / Knowledge Networking in Supply Chains268

phone for low returns and maintains positive relationships with potential large-scale clients. Furthermoreit has achieved differentiation in a complex industrial sector where companies find it increasingly difficult todistinguish themselves from their competition.

Moreover, companies are seeking to improve efficiency of inter-corporate interactions by applyingknowledge management concepts at the supply chain level. For example Michelin North America(KMWorld, 1998), is investing in new software that will allow improved customer service and increasedefficiency at lower costs by improving communications with supply chain partners. A core function of theadopted software suite is the involvement of customers, suppliers and partners in solving business problems.

The primary objective of this paper is to demonstrate how business entities operating in supply chains canbenefit from Information Technology (IT) tools to support knowledge transactions at the supply chain level.We first describe the market for knowledge at the supply chain level by applying what is already knownabout markets for knowledge exchange and transfer within organisations. We also discuss the services ofthe knowledge broker and its business and technical implications for the knowledge market. Throughoutthis paper examples are drawn from the wood/furniture sector. The case study of the sector is based on thefindings of WIT1, an initiative of Resoflex, a leading European furniture manufacturer (SOANE group), andShelman, a world-wide wood board/component supplier, that has developed a software toolset to facilitateknowledge sharing across all business entities of the sector.

A MARKET APPROACH TO KNOWLEDGE EXCHANGE

Knowledge Leverages Product and Service Convergence

Increasingly, knowledge and related intangibles not only make businesses operate but are part of all of the“products” firms offer. Old distinctions between manufactured objects, services, and ideas are breakingdown. Not surprisingly, distinctions between manufacturing and service firms are disappearing too. Thereal impact of the information economy is to explode the distinction between manufacturing and servicesaltogether (Webber, 1993).

Clearly, it no longer makes sense to think of the world in terms of products and services. Davis andMeyer (1998) suggest the term “offers” for the new product-service “hybrids”. It is becoming increasinglyhard to sell anything that doesn’t represent that combination. Vendors, who sell unsupported, unconnectedproducts may become obsolete. These changes and pressures make knowledge vital to organisations.Knowledge-based intangibles add value to most products and services: technical know-how, product design,marketing presentation, understanding the customer, personal creativity and innovation.

These characteristics of the new economy have propagated into more traditional sectors of the economysuch as the wood/furniture sector. Furniture manufacturers realise that it is not anymore sufficient to sellwell manufactured tangible products; they have to trade a complete solution. This certainly involves form-ing alliances with other business entities such as interior design houses; it also involves effort to packageintellectual capital in a form that can supplement their tangible product in order to deliver an “offer”.

Information and Knowledge markets

Improvements in supply chain management are helping organisations manage and integrate the flow ofinformation, money and products beyond the physical boundaries of the enterprise; see for instance Upton 1 The paper is largely based on the research findings which have taken place at the framework of a European Community Espritproject (WIT: Enabling Data Sharing And Business Interactivity Across The Wood Sector Value Chain By Developing A Cus-tom Set Of Internet Based It Tools) running since October 1997 and aiming to facilitate knowledge sharing across all businessentities of the wood sector. The results of the project have been pilot-tested in Resoflex and Shelman.

D. Apostolou et al. / Knowledge Networking in Supply Chains 269

and McAfee (1996). More recent initiatives have been examining how supply chain management can beaugmented with the management of the flow of knowledge. For example the objective of the GNOSIS proj-ect (Gaines et al.1995) was the development of a manufacturing paradigm for virtual enterprises based onthe systematisation of knowledge for the design and manufacturing processes. The WIT architecture andsoftware toolset was developed with similar objectives i.e. supporting the design, and marketing processesof the wood/furniture supply chain, but targeting the heart of the emerging knowledge market: leveragingthe transition from “product manufacturing” to “offer delivery”. An overview of the WIT technical andfunctional characteristics is given in the next sections.

Knowledge transactions are powered by market forces similar to those that animate markets for other,more tangible goods (Davenport & Prusak, 1998). Like markets for good and services, the knowledge mar-ket has buyers and sellers who negotiate to reach a mutually satisfactory price for the goods exchanged. Italso has brokers who bring buyers and sellers together. Knowledge market transactions occur because par-ticipants believe that they will benefit from them in some particular way. In the following, we discuss whoare possible buyers, sellers and brokers in the wood/furniture sector and what are indicative knowledgetransactions within the sector (see Figure 1).

Fig. 1. Indicative knowledge transactions in the wood/furniture sector.

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Machinerytrader

furnituremanufacturer

Wood boardmanufacturer

solut ionprovider

smal lcarpenter

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D. Apostolou et al. / Knowledge Networking in Supply Chains270

Buyers

Knowledge buyers or seekers are usually individuals or organisations trying to resolve an issue whosecomplexity and uncertainty precludes an easy answer. Searching for a particular armchair for example isby no means a knowledge search. Knowledge seekers are looking for insights, judgements and under-standing. They want answers to questions such as “How do I best organise my office furniture so that itfits my business needs?” They seek more than information because knowledge can help them accomplisha task more efficiently. In the wood supply chain a buyer can be an architect that tries to understand herclient needs and provide unbiased guidance to converge on the best cost/benefit solution to satisfy therequirements; a designer that just wants to have insight knowledge on best usage/best practices about aproduct range; or a small carpenter that is affiliated to a major manufacturer and receives training aboutproduct functionalities.

Sellers

Knowledge sellers in our context are companies that believe they will benefit from sharing or tradingtheir intellectual capital. For example, as mentioned above, the consultancy Ernst &Young has created“Ernie”, the online business consultant, offering to its customers for approximately $6,000 per year accessto a detailed database of answers to common business problems.

But money is not always the medium of exchange in the knowledge markets. Broderbund Software, asoftware vendor, has launched a Web site offering customers the ability to access the company’s internalcase-based reasoning (CBR) database — cleaned up for “non-technical users” — and answer their ownsupport questions. In addition, customer questions and comments and the support staff’s responses toprevious questions are posted — allowing many to answer their own questions by reviewing what othershave asked before. According to their estimates the company avoided more than $250,000 per annum inadditional support costs and has gained access to the customers — for future product development input(APQC, 1998).

Brokers

Knowledge brokers make connections between buyers and sellers. An activity usually informal andundocumented in corporate knowledge management practices, can attract significant attention at the sup-ply chain level. It is often predicted (see Upton & McAfee (1996), Evans & Wurster (1997), Sakkas et al.(1999)) that business forces and technical limitations will lead to the evolution of separate business enti-ties that will assume the role of managing the knowledge flow. Arguments include the lack of specialisedskills requirements for the management of knowledge flows and conflict of business interests in the sensethat no manufacturer would channel his client to a major competitor as a source of knowledge, even if thiswould be to the client’s best interest. Furthermore it is easy to understand that the design, implementationand maintenance of these knowledge brokerage services can only be managed by a specialised manage-ment entity operative at the full value chain level and not affiliated with any major player of the sector.

INFORMATION TECHNOLOGY SUPPORT FOR KNOWLEDGE TRANSACTIONS

Nonaka and Takeuchi (1991, 1995), in their reference study about knowledge creation in the Japaneseindustry, distinguish two types of knowledge flowing in any kind of knowledge transaction: explicit andtacit. Explicit knowledge is formal and systematic and thus, easy to communicate and share; it is knowl-edge that is transmittable in a formal language and can be stored in databases, libraries, etc. Tacit

D. Apostolou et al. / Knowledge Networking in Supply Chains 271

knowledge is personal knowledge that is hard to transmit; it consists of mental models, beliefs and per-spectives that can not be easily articulated and shared.

Accordingly, four types of interactions (or modes of knowledge conversion) can occur duringknowledge transactions: From tacit to tacit (Socialisation), from explicit to tacit (Internalization); fromtacit to explicit (Externalization), from explicit to explicit (Combination) — see also Figure 2.

In order to understand how information technology can support knowledge transactions it is con-venient to focus on each one of the four modes of knowledge conversion. A classification of existinginformation technology tools according to the four modes of knowledge conversion is presented below;see also Table 1.

Knowledge Socialisation

Knowledge socialisation generates new tacit knowledge by sharing and exchanging know-how andpast experiences. Socialisation can receive direct support from information technologies that make us-ers communicate without imposing any particular structure on their interaction. A more structuredapproach, like workflow management can also powerfully support knowledge management by enablingthe interaction between communities associated with different functional domains of the organisation.Examples of tools include email, discussion lists, bulletin boards, collaborative hypermedia, multime-dia conferencing, brainstorming applications, etc.

Knowledge Internalisation

Knowledge internalisation maps explicit knowledge into internal knowledge. Internalisation hap-pens when individuals, exposed to other’s people knowledge, make it their own. People internaliseknowledge by doing, but also by looking at what other people have done in a similar context and byexample. Information technology tools can record explicit knowledge and make it available to poten-tials users and enable re-experiencing what other people have done in similar situations, help themfamiliarise themselves with analogous situations, etc. Indicative information technologies supportingthis mode are data warehousing, data mining, Computer Based Training (CBT), etc.

Knowledge Externalisation

Externalisation involves structuring knowledge and making it available to other users. This is a crucialstep in the knowledge life-cycle that leads to the creation of the organisational memory. An organisa-

SOCIALIZATION e.g. exchanging experiences while

drinking coffee

Tacit Knowledge Explicit Knowledge

TacitKnowledge

ExplicitKnowledge

INTERNALIZATION e.g. implementing knowledgeacquired in a training course

EXTERNALIZATION e.g. capturing personal knowledge

in “transmittable” form

COMBINATION e.g. adding new knowledge in a

corporate database

FROM

TO

Fig. 2. Modes of knowledge conversion (Nonaka and Takeuchi, 1995).

D. Apostolou et al. / Knowledge Networking in Supply Chains272

tional memory is an enterprise-internal, application-independent information and assistance system thataims at supporting knowledge preservation, knowledge capitalisation and knowledge creation.

Knowledge Combination

Knowledge combination generates new knowledge by combining pre-existing explicit knowledge andbringing it together to produce new insight. Decision support systems and workflow applications aretypical supporting tools for knowledge combination.

It is important to notice that although the modes of knowledge conversion were initially proposed byNonaka and Takeuchi as the basic patterns for knowledge creation and management within organisations,they can be equally applied to model and understand knowledge transactions in the extended enterprise orat the supply chain level. Understanding the importance of tacit knowledge and how this can be trans-ferred or converted to explicit knowledge is of immense importance for the design of appropriate ITsupporting tools. The WIT toolset was designed around the modes of knowledge conversion as shown inthe following.

OVERVIEW OF THE WIT TOOLSET

The WIT toolset provides an infrastructure based on the Internet to support the virtual enterprise para-digm in the wood/furniture supply chain, focusing primarily in the field of design, sales, and

Table 1ICT support and example of tools for each mode of knowledge conversion

Mode Support required for Examples of tools Socialisation informal communication

on-line discussions during work question raising information discovery

e-mail discussion lists bulletin boards collaborative hypermedia multimedia conferencing brainstorming applications

Internalisation search for methods & lessons-learned process documentation knowledge sharing knowledge interpretation

lessons-learned databases information retrieval process history tracking hypermedia CBT data warehouses data mining

Externalisation concept mapping tacit knowledge: categorisation / representation organisational memory creation personalised pathways

semantic networks knowledge ontologies network publishing push technologies agent technologies issue-based argumentation data warehousing

Combination knowledge sharing decision co-ordination

computer-mediated comm. Searching and filtering document management workflow systems Group DSS

D. Apostolou et al. / Knowledge Networking in Supply Chains 273

marketing. This toolset, addressing the main functions required within the targeted supply chain, operatespartly locally on the end-user’s computer and partly in collaboration with remote entities (WIT-servers).The architecture of the client as well as the server applications allows for the possible modification of theexisting tools or the extension of the basic tool set by integrating other functions. This approach, alongwith the careful design of the infrastructure allows WIT to be adopted and used in the domain of othersupply chains, outsides the wood industry.

WIT Architecture

Technically speaking, the WIT infrastructure is based on a 3-layer service architecture, as depicted inFigure 3, where the main elements are:

1. WIT-N layer. The WIT-N layer is a key part of the WIT architecture. In an expanding environ-ment with many servers publishing rich information, it is absolutely necessary to set-up a neutralmechanism that will help users carry out their tasks. The main purpose of WIT-N servers is toprovide directory services, which will help clients navigate themselves to the correct sites, wheremeaningful (to their purpose) product information might be hosted. All the WIT-N servers are in-terconnected, thus sharing the management of the WIT network amongst themselves. The servicesprovided by the WIT-N servers also include the download of the latest version of the WIT clientsoftware and the WIT user registration. WIT-N servers also host all kinds of descriptive informa-tion, e.g. about how to become either a WIT-N or WIT server company — according to acompany’s business profile. From a business perspective, WIT-N is operated by an independentthird party service provider in a fair and non-advertising way. This entity also takes care of theWIT-server installations and related services, e.g. database authoring and maintenance, as willmost likely be requested by the furniture companies. The WIT-N level, by not being linked to anyparticular wood-furniture node, provides a platform that can be utilised by the “knowledge bro-ker”.

2. WIT-server layer. Each company that belongs to the wood furniture supply chain is a potentialowner of a WIT-server installation. Once the server software is configured, linked to the appropri-ate Database Management System (DBMS) and registered to a WIT-N server, the company’sproducts become available to all the end-users that browse through the WIT network. A WIT-server hosts three different kinds of services (and the respective data, naturally): User administra-tion, product data delivery and a “point of contact” service (collaboration brokering). The WIT-server allows the management of registered end-users with different profiles — thereby reflectingsome of the nuances of the real world. To circumvent the fact that companies will differ regardingtheir IT infrastructure, legacy systems, and data formats, a common data model has been built us-ing STEP methodology. Thus, it allows for the definition of a common API for product dataoperations. The WIT-server also provides a set of services dedicated to collaboration, such as es-tablishing immediate collaboration sessions or scheduling them in advance. The WIT-server keepstrack of all interaction between every WIT-client and itself, thus achieving a twofold objective ofcomplementing the security mechanisms for enabling E-Commerce and of providing the companywith information for market assessment based on trends. The WIT server is installed in “knowl-edge seller” entities of the supply chain.

3. WIT-client layer. The client software consists of an applet that provides an integrated user inter-face to the WIT functionality. The end-user may search for furniture products, thereby building uphis own customised product catalogue, build interior designs with the chosen products, negotiateprices or other details and finally, place orders. The WIT client is completely developed in JAVAand thereby benefits from the features available in the language, such as security, strong network-

D. Apostolou et al. / Knowledge Networking in Supply Chains274

ing, cross-platform, amongst others. From a business perspective, the WIT client is used by any“knowledge buyer” of the supply chain.

WIT Functionality

The WIT toolset comprises the following applications:• WIT.Project. As the user (architect) usually organises his work by projects, it is natural to follow

this strategy within the client software. The so-called Project Manager part of the client softwarelets the user define what kind of space has to be furnished, how it is divided into rooms, who is theend-customer, how much money might be spent on furnishing, and so on. The definition of theproject provides guidelines for the remainder of the functions.

• WIT.Query. The user must be able to find furniture that best matches the project requirements,which is a core functionality also from the vendors viewpoint. In the Query Tool, the user speci-fies values for a number of attributes, for which WIT-servers can search in their databases. Resultsare displayed on the same screen, so that interactive refinement of query attributes is possible.

• WIT.Space Planner. To give a best possible impression of how a certain combination of furniturewould look like in a room, a 3D composition tool is included in the client software. The goal of theSPACE PLANNER (Figure 4) is visualisation of such a composed design, rather than preciseplanning for construction. The emphasis here lays on good graphics performance and ease-of-use.

• WIT.Quotation and WIT.Order. Both quotations and orders are managed by a tool called theQuotation Builder, which helps the user in preparing requests for quotations and in dispatchingorders. It is possible for an end-user to go through an interactive cycle where a series of parametersmay be settled before placing an order.

Fig. 3. A WIT service architecture overview.

D. Apostolou et al. / Knowledge Networking in Supply Chains 275

Additional functionalities include:• Collaboration. The user is enabled to get into personal contact with service people on the server

side using collaboration mechanisms, such as video conference. These may be sales people ortechnical support staff, depending on the kind of questions that may arise. This capability providescompanies with a more efficient and competitive customer support strategy. The collaboration toolis flexible enough to also be used as a training tool, e.g. for introducing new products and bestpractise cases. With collaboration, it is possible for the company to have geographically dispersedexpertise, thus making better use of its human resources.

• Server Query. This part of the client system sends out calls to the directory service provided bythe WIT-N server. If a user is unsure, which WIT-server to contact, he performs a kind of meta-search and gets back a list of WIT-servers that provide the kind of products the user is looking for.

• A graphical representation of the WIT functionalities is shown in Figure 5. For a more detailedpresentation of the WIT architecture see Sakkas et. al. (1999).

Fig. 4. The WIT space planner.

D. Apostolou et al. / Knowledge Networking in Supply Chains276

HOW WIT SUPPORTS KNOWLEDGE TRANSACTIONS

Knowledge Socialisation

WIT uses a structured approach, supporting a virtual work environment for design and training be-tween communities associated with different functional domains within the same or between differentorganisations. WIT.Collaboration supports the creation of virtual work environments to discuss and agreeon different aspects of furniture design, construction and application. A WIT client can interact withother WIT clients and server(s) in order to optimise the exchange of ideas and information between ar-chitects, decorators and customers. Such collaboration sessions consist of audio/video conferencing,whiteboard functionality and application sharing.

Knowledge Internalisation

Company-specific knowledge on products and services, such as product information, best practices,training material in multimedia formats, can be codified, stored and made available throughWIT.Query. This tool concerns itself with providing access to the knowledge assets of the value supplychain. The WIT searching mechanism is characterised by the ability to post requests to the whole net-work or to parts of the network. The first type resembles the well-known, WEB engine type of searchingwhile the second provides a map to the product and other information residing on the WIT servers. Theuser posts can traverse the whole WIT network and select appropriate servers based on domain orproduct characteristics, such as country, product range, price range, etc. Clustering of results based on

WIT SERVER 1

WIT CL IENT Internet

directory-assisted search

search

direct direct

accessvisualise

query

productdata

composit iontool

push softwareand updates

set-up spacedata

create design

initiate collaborativesession with involved

users

request offerand send orderInternet

automatedquery

processing

push genericspace settings

deliver offerand receive

order

WIT SERVER Nproduct

data

push softwareand updates

automatedquery

processing

push genericspace settings

deliver offerand receive

order

Fig. 5. The WIT functional architecture

D. Apostolou et al. / Knowledge Networking in Supply Chains 277

the metadata categories defined in the product data model enables the user to quickly drill down to ormine the most relevant knowledge assets.

Knowledge Externalisation

WIT provides the 3Dcatalogue application to support this mode. The 3D electronic catalogue pres-ents for each WIT server the wood products organised by product lines, furnished model rooms, pricelists, availability indication, etc. The catalogue presents for each product information such as partsstructure, geometry, allowed adjustments, materials, colours, textures, dimensions, finishing, assemblydetails, and maintenance details. The 3D electronic catalogue extends with advantage the 2D papercatalogue, of great use in the specific sector. The electronic version can be kept updated in productline, availability and price list without the fixed costs associated with paper publications. This is themost powerful facility to support the design decisions. The creation of a virtual space, the ability tovisualise 3D objects and spaces as well as the impact of different finishing, colours, textures, andlighting, can expedite drastically the project concept decision. In addition WIT.SpacePlanner, supportsvisualising 2D spaces and 3D models. The space planner is a composition tool that replaces the free-hand sketch drawing by the architect to illustrate a solution and includes the legal, technical and bestpractice constraints that are specific knowledge of the project designer. Additionally it allows popu-lating the office space with different versions of furniture, converging to the full satisfaction of theclient under the designer guidance.

Knowledge Combination

WIT.Project provides a repository of information related to the client furnishing project decision process, theproject negotiation process, the capturing of user requirements and the project start-up. The decision todevelop a new office project is a complex process with multiple drivers as well as constraints. It mightbe a decision taken inside a corporation who develops clear terms of reference, or only develops theproject idea in dialogue with the office design specialist. In both cases WIT can provide different roommodels exemplifying different styles and applications. WIT supports the project definition with anumber of predefined scripts allowing users to define office space area, business organisation charac-terisation, type of business, business strategy, evolution plans, number of users, budget target, andproject schedule. The WIT support to the four modes of knowledge conversion are summarised inTable 2.

BENEFITS OF KNOWLEDGE NETWORKING AT THE SUPPLY CHAIN LEVEL

Davenport and Prusak (1998) have identified four key factors that often cause knowledge markets tooperate inefficiently in organisations. In the following we discuss how technology infrastructures likeWIT address these issues, effectively providing improvements for the knowledge market.

• Incompleteness of information. The lack of maps to guide a knowledge buyer to a seller is afundamental problem. To address this problem, brokered infrastructures provide first a virtualnetwork aimed to serve as a framework wherein information and knowledge resides, and secondinformation and knowledge maps supported by search mechanisms that help individuals locatetheir knowledge sources within that network.

• Absence of explicit information about the pricing structure is also a source of inefficiency, withknowledge transactions inhibited by uncertainty about what the likely return on shared knowl

D. Apostolou et al. / Knowledge Networking in Supply Chains278

Table 2ICT support, example of tools and WIT applications for each mode of knowledge conversion

Mode WIT supporting applicationSocialisation • WIT.Collaboration

• email, discussion listsInternalisation • WIT.QueryExternalisation • WIT.3Dcatalogue,

• WIT.SpacePlannerCombination • WIT.Project

has value to particular constituents and how revenue might be generated from this informa-tion. For example, one company may have ready-made CAD drawings of a wide range ofmechanical board connectors and may choose to sell them to a company that wants to avoiddrawing them from scratch.

• Asymmetry of knowledge. There often is abundant knowledge on a subject in one company and ashortage somewhere else. This scarcity is perfectly justifiable and is one of the market drivingforces. But strong asymmetry prevents knowledge from getting where it is needed. But oncecompanies operating in the same supply chain are connected, each one can access a wider pool ofinformation and specialised knowledge.

• Localness of knowledge. People usually get knowledge from their neighbouring enti-ties. Mechanisms for getting access to distant knowledge tend to be weak or non-existent. Customers usually prefer buying product or services from the neighbouring company orthe one they already know rather than deal with the effort and uncertainty of trying to discoveranother company that has the best “offer”. This relatively tight integration of entities in a par-ticular virtual enterprise has certainly not evolved by accident. In an era and in a sector wheremany new materials are finding industrial applications in furniture manufacturing and where newproducts are constantly launched in the market, it is reasonable to expect a small carpenter shopto align with some major manufacturer in order to receive the continuous technical and market-ing support required to stay up to date and competitive. Networked infrastructures, by bridgingthe communication gaps between business bodies, enable the small shop to gain access to manysources of rich information and knowledge. What if the shop is also enabled to operationallytake this product information in its design application tools? And in such environment how loyalis it going to be to his traditional main partner? In the furniture sector there is already an evidenttrend of tight value chains being decomposed and reshaped into less hierarchical but more com-plex and business efficient structures.

In addition to helping improve knowledge market inefficiencies, knowledge networking may providethe following improvements in a supply chain:

• Awareness — Every entity will know where to go to find the specific knowledge, saving time andeffort

• Accessibility — All business entities can have access to the sector combined knowledge and expe-rience in the context of their own interest.

• Availability — Knowledge is usable wherever it is needed; responsiveness of an architect to hercustomer, for example, increases.

• Timeliness — Knowledge is available whenever it needed, eliminating time-wasting distribution ofinformation “just in case” customers are interested.

But more importantly networked infrastructures help increase the sector’s “surface area”, or the num-ber of points at which it has access to knowledge. Companies that participate in such networks are much

D. Apostolou et al. / Knowledge Networking in Supply Chains 279

more likely to stay in the knowledge flow than those that do not. Such access is as important in continu-ously refreshing knowledge as it is in acquiring it in the first place.

The WIT infrastructure in particular leverages the existing business model of wood sector companies tomove beyond the static, product-oriented environment, into the community and conversation environmentwhere knowledge provision is a key enabler factor. In this environment, a designer will visit the WITvirtual world to see and read about a new product of company X or she can search among the WIT serv-ers for a product that fits her needs. She will then be able to discuss with other users (architects,designers, etc.) or with the manufacturer itself about product functionalities, best practices or she will beable to see successful installations. In a way, WIT has the capabilities of fostering an organic community.Clearly, the technology is seen only as an enabler; it is the community members that will maintain the tiesthat bind them together. The role of the technology — and of the broker providing and maintaining it —is to further facilitate the growth of that community by assuring that value chain members enjoy closercontact with each other and with the knowledge sources.

CONCLUSIONS

In an attempt to differentiate and satisfy customers in an increasingly knowledge-driven economy,companies are giving customers part of their intellectual capital usually in the form of “knowledge prod-ucts”. External sharing of corporate knowledge and participation in knowledge-sharing virtualenvironments can yield benefits direct benefits in monetary terms, and indirect benefits that include:

• higher customer satisfaction• greater customer loyalty• controlled and reduced support costs• continuous refreshment of knowledgeThis paper has presented the “knowledge market” concept as a way to analyse knowledge exchange at

the supply chain level. Throughout the paper examples were drawn from the wood/furniture supply chainand the WIT toolset was presented. The early feedback we have from pilot testing the WIT system in twomajor user sites (Resoflex and Shelman) has revealed strengths and weaknesses of the system, even at thisearly stage.

From a technology perspective, the WIT toolset was easily adopted within the two companies. The factthat WIT is based on open, Internet technologies that do not require any advanced IT uptake from thoseparticipating in the network, allowed for an easy adoption of the toolset. This is of significant importancebearing in mind the low IT uptake of the sector and the previous history with similar systems of Resoflexand Shelman. Shelman for instance, has attempted in the past to establish value added network servicesto deal with more traditional information management in the wood sector. These services were imple-mented through a proprietary network and were made available to partners and clients. The projecthowever did not take off; one of the reasons being that technology was overwhelming for some partners(such as small shops) or small clients of the company. On the other side, some parts of the WIT technol-ogy are still rather advanced and impose significant overhead, primarily on those that wish to becomeWIT-servers. Creating 3-D elements for instance (VRML, video, etc.) is a significant task that requiresmuch effort from the WIT servers. Off course one can still participate in the network without the 3-Delements, but the two piloting companies have put great emphasis on the 3-D elements from the begin-ning, because they consider such rich information on essential part of their “knowledge” about theirproducts.

From a business perspective, it is clear that the knowledge market concept that underlies the develop-ment of the infrastructure proved useful. It forced the two user companies to think up front in terms ofhow and what they will gain from the information they put online. Training knowledge for example is

D. Apostolou et al. / Knowledge Networking in Supply Chains280

given for free, as it is considered that it will decrease the training expenses, and so is marketing material.In the longer term however, the companies wish to also sell some of their intellectual capital throughWIT. The toolset already distinguishes between the FREE and the FULL client to accommodate thepricing mechanism.

The pilot testing also revealed the business implications of the WIT philosophy, i.e. that WIT is opento everyone and does not limit access only to a closed circle of existing partners and clients. The idea ofWIT is to make knowledge about products and services accessible virtually to anyone with Internet ac-cess. The toolset is not only for existing clients but can be immediately downloaded by anyoneinterested. The potential advantages of the high accessibility of this approach, although very clear to thecompanies, do not prevent them from having a reluctant attitude towards delivering what is considered“sensitive” and important intellectual capital to such a broad potential audience. The companies do real-ise however, that expanding knowledge management initiatives externally by forming new relationshipswith customers and suppliers is a key element in the creation of an ‘extended enterprise’. In an ‘extendedenterprise’ the network is not merely a supply chain or financial connection — it is based on an increas-ingly intimate sharing of information and knowledge.

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Mr. Dimitris Apostolou is a senior researcher in the Department of Electrical and Computer

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Engineering, National Technical University of Athens (NTUA). He holds an MSc in IT fromUCL, UK, and an MS in Chemical Engineering from NJIT, USA. He is also working as an R&Dconsultant with PLANET S.A., a Greek management consultancy. Dimitris Apostolou iscurrently working in a number of research projects developing technological infrastructures thataim to leverage knowledge sharing, both at an enterprise and at an-inter-enterprise level.

Dr. Nikos Sakkas is currently a project manager with Planet S.A, a leading Greek business and

IT consultancy. In the past ten years, he has had significant international experience in designingand developing advanced IT applications, mainly for manufacturing enterprises. He is projectmanager of the WIT Esprit project.

Dr. Gregory N. Mentzas is an Assistant Professor in the Department of Department of Electrical

and Computer Engineering, National Technical University of Athens (NTUA) and Director ofthe Information Management Unit, a research laboratory of NTUA. Professor Mentzas has led orparticipated in more than thirty research and consulting projects in the areas of: strategic man-agement of information technology; business process innovation; computer-supported co-ordination and workflow systems. He has published over twenty-five papers in internationaljournals and presented more than thirty articles in international conferences. He currently leadsKnowNet (Knowledge Management with Intranet Technologies), a European wide researchinitiative, which develops methods and tools for producing business value by leveraging

orporate knowledge assets. He holds a Ph.D. and a Diploma Degree in Engineering, both from NTUA.