Why Procurement must also be able to acquire knowledge!
In recent years, capital goods purchasing has developed strongly, especially in investment-intensive industries. Instead of starting anew with every purchasing project, cost structure analysis, guidelines and cooperation with the specialist departments have been established.
However, the digitalization of processes and the rising flexibility of development and production procedures are leading to a new category of purchasing objects: Knowledge capital. This category has all the characteristics of capital goods purchasing paired with classic service purchasing. While Germany is still investing heavily in concrete, global investment in knowledge capital has risen sharply. This is caused by the increasing binding of corporate capital in intangible assets such as the R&D department or software licenses. The assets tied up there are often referred to as „knowledge capital“, since it also includes the organizational knowledge fixed in the employees’ heads.
Status of investments in knowledge capital
In July 2019, the Bertelsmann Stiftung published a study on the current status of global investments in knowledge capital („International Comparison of Sectoral Knowledge Capital“). According to this study, knowledge capital is becoming increasingly important for the innovation activity, productivity and competitiveness of modern economies. Compared to other European countries or the USA, the use of knowledge capital in Germany is still very low, both in the service sector and in industry. In terms of the degree of modernity of the knowledge capital, Germany also lags behind comparable countries.
The reason for this may be that Germany’s economic success in the past, especially as an exporting nation, has been based on sectors such as the automotive, commercial vehicle, mechanical engineering and chemical industry. Until now, growth in these sectors required primarily expansion of production and investment in tangible fixed assets. If, however, new organizational solutions, training or software are decisive for competition in the future, this will mean that German companies need to make a massive change in their investment behavior.
Knowledge capital in Procurement and Supply Chain
Procurement and Supply Chain have not distinguished themselves in connection with developing and expanding their own knowledge capital. Exactly here, there is massive potential. Identifying the existing knowledge, making it available to the entire organization and further developing this knowledge is one of the keys of Procurement to generate a decisive competitive advantage for the company. The investment activities of Purchasing and Supply Chain should not be limited to their own knowledge. Rather, Procurement creates added value when it perceives it as part of its tasks to control the knowledge capital of other departments, too, and thus to set an example. The old mentality of seeing one’s personal knowledge as a unique selling point and a safeguard for one’s own employment has become obsolete.
Procedure for investing in knowledge capital
Once an organization has recognized the importance of knowledge capital, the first step has already been taken. Now it is important not to invest indiscriminately into the acquisition of further knowledge capital, but first to analyze the status quo: Which knowledge is already available? In which form? What knowledge will be needed in the future? How can this knowledge be made accessible to all? Once these questions have been clarified, the next step can be taken and the investment in further knowledge capital can be planned.
We support you with our experience in the development of knowledge databases for Procurement and Supply Chain as well as in the expansion of existing knowledge by means of coaching or training measures.