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Transferring knowledge in the relocation of manufacturing units

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DOI: 10.1108/17538291011023043

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Transferring knowledge Transferring

knowledge
in the relocation of
manufacturing units
Yang Cheng 5
Center for Industrial Production, Aalborg University, Aalborg, Denmark
Erik Skov Madsen
Institute of Industrial and Civil Engineering, University of Southern Denmark,
Odense, Denmark, and
Jirapha Liangsiri
Carlsberg Breweries A/S, Copenhagen, Denmark
Abstract
Purpose – The global spread of production makes companies relocate their manufacturing units
frequently. Not only equipment, systems, and facilities, need to be moved, but the transfer of
operational knowledge and experience seem to be a major challenge. However, discussions on
knowledge transfer are derived predominantly from a cognitive perspective and normally focus on
the organizational level and are rarely linked with outsourcing. Thus, from the perspective of
operations management, the purpose of this paper is to explore how to transfer production know-how
on the shop-floor level when manufacturing units are relocated and indicate which means can be used
to support this intra-firm transfer process.
Design/methodology/approach – Four cases are identified from research in three Danish companies.
Observations and 77 semi-structured interviews have been made over a time period of two years. Surveys
of documents, questionnaires, and the Delphi method have been used to supplement the research.
Findings – Four cases are analyzed from four aspects. By doing so, different relocation situations are
identified; different types of transferred knowledge are recognized; and different groups of means for
knowledge transfer are introduced and classified according to their usage.
Practical implications – A framework is summarized to integrate all the elements discussed in
this paper, which provides strong support and clear directions to industrial managers when they need
to transfer knowledge in the relocation projects. Together with the framework, a process to help
managers implement their knowledge transfer is also proposed.
Originality/value – Besides the framework and process, this paper also indicates that absorptive
capacity of a production unit depends not only on the level of technical competence at its site, but also
on whether real manufacturing environment has already existed or not. Two means for establishing
virtual manufacturing environment are suggested.
Keywords Knowledge transfer, Relocation, Manufacturing systems, Plant location and layout,
Denmark
Paper type Research paper

Introduction
The increased global operation, both with respect to markets and supply, has
broadened the scope of industrial companies (Riis et al., 2007) and led to widespread
restructuring of international manufacturing systems in MNCs. Manufacturing
engineering and production/operations management are experiencing a rapid change Strategic Outsourcing: An
in manufacturing system concepts from a plant focus towards a focus on international International Journal
Vol. 3 No. 1, 2010
plant networks (Ferdows, 1989). It is normal for industrial companies to disperse their pp. 5-19
plants all over the world (Ferdows, 1997), and to merge manufacturing units together # Emerald Group Publishing Limited
1753-8297
into larger units to have economies of scale, move manufacturing units to developing DOI 10.1108/17538291011023043
SO countries to benefit from labor cost, or move manufacturing units close to local markets
to satisfy local customers.
3,1 However, the relocation of manufacturing units is not an easy job. A number of
tasks can be included. Not only hardware, such as items of equipment, systems, and
facilities, need to be moved, explicit knowledge and particularly tacit knowledge and
experiences among individual workers and groups of employees on the shop floor
about how to produce specific products also needs to be transferred. This knowledge
6 seems to be the most difficult part to transfer (Kusterer, 1978; Orr, 1996; Patriotta,
2003). Kogut and Zander (1993) define knowledge about how to produce products as
production know-how and a recipe for action, often referred to as procedural knowledge,
which is different from information about things or situations (declarative knowledge)
or scientific knowledge about how one variable affects another (causal knowledge)
(Ferdows, 2006). Three types of knowledge are complementary, and packing them
together may help on the knowledge transfer process (Szulanski, 1996; Lapre and Van
Wassenhove, 2003). However, in general, if one kind of knowledge is transferred it may
not necessarily transfer the others two kinds of knowledge (Nonaka and Takeuchi,
1995; Leonard-Barton, 1995; Dhanaraj et al., 2004).
Thus, this paper aims to explore how to transfer production know-how in the
relocation of manufacturing units and will be organized as follows.
After the introduction, a literature review is given, which indicates what have been
researched in the area of knowledge management with a focus on knowledge transfer
and this shows the importance of the work in this paper. Then, methodology used in
this paper is introduced and four empirical cases are shown. The four cases are ranging
from relocation of manufacturing units within Denmark and relocation of
manufacturing units from Denmark to other parts of the world. They are analyzed
from different aspects. Based on the findings and discussions, a theoretical framework
and a process model are proposed to help managers when making decisions about
knowledge transfer in the context of relocations of manufacturing units.

Literature review
The specific focus of knowledge transfer is the processes by which members within an
organization learn from each other. Generally, there are two main research fields for
knowledge transfer:
(1) attempting to explain the factors that drive or hamper transfer; and
(2) attempting to explain how to transfer knowledge.
This paper will mainly focus on answering some issues in the second field, i.e. how to
transfer knowledge.
On one hand, from a research scope’s point of view, two scopes in the context of
knowledge transfer can be distinguished, namely intra-firm transfer (e.g. Szulanski,
1996, 2000) and inter-firm transfer (e.g. Dyer and Nobeoka, 2000). On the other hand,
from a research content’s point of view, three aspects can be generalized, namely
knowledge transfer strategy, knowledge transfer process, and means used in
knowledge transfer. For knowledge transfer strategy, Krogh et al. (2001) proposed two
strategies for knowledge transfer in different knowledge domains: leveraging strategy
and appropriating strategy. A similar research can be found from Williams (2007), as
he explores two different strategies in knowledge transfer relationships: firms replicate
because knowledge is ambiguous and adapt because knowledge depends on context.
More specially, as adaptation almost invariably accompanies the cross-border
knowledge transfer, Szulanski and Jensen (2006) show two conflicting approaches to Transferring
adaptation and report that presumptive adaptation of knowledge assets can be
detrimental to performance.
knowledge
Much research can be found within the area of knowledge transfer process.
Szulanski (2000) discusses intra-firm transfer of best practices and argues that a
transfer is not an action, as typically modeled, but a process. Further, Szulanski
proposes a process model of knowledge transfer, which includes four stages (initiation,
implementation, ramp-up, and integration) and four milestones (formation of the
7
transfer seed, decision to transfer, first day of use, and achievement of satisfactory
performance). Although the sequence of stages is broadly consistent with Szulanski
(1996, 2000)’s model of practice transfer, Maritan and Brush (2003) observe a greater
number of distinct stages particular to flow manufacturing that they find important to
recognize. They identify two sequential but multi-stage sub-processes, and label them
as pre-implementation and implementation.
Correspondingly, not many works focus on means. Argote et al. (2003) categorize
different means into three aspects: ability, motivation, and opportunity. More
specifically, Corso (2002) sheds light on how management can and should design
means to facilitate knowledge transfer in a continuous product innovation perspective.
In summary, different areas of knowledge management and their relationships are
shown in Figure 1. Generally, the literature on knowledge management spans the
disciplines of economics, information system, organizational behavior and theory,
strategic manufacturing, and sociology (Argote et al., 2003). However, except a very
small number of studies, e.g. Willcocks et al. (2004), less research has tried to link
knowledge management and outsourcing. Furthermore, most of works on knowledge
transfer focus either on the individual level or the organizational level, or both (Daft
and Weick, 1984; Kim, 1993). They normally affirm the idea of organizations as cultural
units (Brown and Duguid, 2001) made of individual members who process information
and develop knowledge (Albino et al., 1999). However, focus on the organization as a
cultural unit thus tends to overdetermine the contribution of often quite distant
structures to groups of people with quite distinct practices. The bind that Daft and
Weick (1984) point to suggests a need to consider less distant social forces that, while
not bearing on all members of large and diverse organizations equally, nonetheless
bear on more than just individual member separately. When considering transferring

Figure 1.
Different areas of
knowledge management
and their relationships
SO production know-how in the relocation of manufacturing units, the shop floor is the
level to be addressed, which, comparing to organizations, has its own characteristics.
3,1 In contrast to abundant studies on individual or organizational level, few works take
this specific level as their foci. One exception is from Madsen et al. (2008), which pay
attention to this specific level and identify four task situations based on two
dimensions (complexity and uncertainty). On the complexity dimension, a less complex
task is considered to be carried out by a single operator and a more complex task
8 usually requires the involvement of several operators and specialists with different
kinds of knowledge and experience. The uncertainty axis may similarly be divided into
a less uncertain and a more uncertain task situation; the former characterized by a high
degree of predictability and regularity, and the latter dominated by a lack of knowledge
of what incidents may happen and when (see Figure 2).
The work from Madsen et al. (2008) only identifies different task situations on the
shop-floor level without in depth discussing how to transfer knowledge in each
situation. Ever more discussions, which are built on the previous work from Madsen
et al. (2008) and try to address how to transfer production know-how in allusion to shop
floor, are the need of the hour. Besides, ambiguous descriptions of organization make
empirical work on transferring production know-how on the shop-floor level difficult to
undertake because it makes it hard to link knowledge transfer to operationalization
(Foss and Pedersen, 2004). While this is a theoretical problem, it has obvious
managerial implications. In order to fill these vacancies identified from the literature
review, the research questions of this paper can be concretized further:
. How can production know-how on the shop-floor level be transferred when
manufacturing units are relocated from the perspective of operations
management?
. Which means can be used to support this intra-firm transfer process?
Our objective is limited by investigating how to help production managers choose
appropriate means for transferring different types of production know-how in the
relocation of manufacturing units. Many other important issues, in creation and
retention of knowledge, transfer of knowledge between companies, or factors
impacting knowledge transfer are not directly addressed in this present paper.

Methodology and case examples

The nature of the research questions suggests an explicit aim to develop understanding
and insight in a particular area. Therefore, the case study method is selected as the

Figure 2.
Dimensions of tasks
situations on the
shop floor
primary research method for its relevance in answering how and why questions and Transferring
used for explorative purpose (Yin, 2003). knowledge
The research shown in this paper is based on research in three large Danish
manufacturing companies. Two researchers spent two years by studying and
supporting the companies to transfer production know-how on the shop floor along
with the relocations of manufacturing units. A central aspect of this research design is
the longitudinal participation of authors in fieldwork spending months in all cases,
allowing greater depth and richness of understanding than single-day case interview
9
designs (Coughlan and Coghlan, 2002). Two researchers participated in a variety of
tasks (interviewing, auditing and benchmarking, preparing, and facilitating
workshops) to collect data.
From the research projects, four cases are identified. All of them have been made as
longitudinal studies which lasted from one to more than two years. Cases A and B are
identical to the studies in Madsen et al. (2008) while Cases C and D are first published.
The four cases constitute different technologies and particularly different means,
which were used to transfer and develop manufacturing knowledge at the new
locations. Cases A and D are from the same company, but these two cases taking place
at different locations are not related to each other. Cases B and C are from the other two
different companies. The basic information of the four cases is illustrated in Table I.
The research relies on extensive use of triangulation (from company reports,
interviews, and observations) and protocols to enhance the validity and reliability of
the research outcome (Flynn et al., 1990; Eisenhardt, 1989). A total of 77 interviews
were made in the four cases, including operators, management and technical support
staff, etc. Each interview spanning from 0.5 to 2 h was conducted in a semi-structured
manner with open questions derived from the literature and previous interviews.
Interviews were recorded, transcribed, and transformed to case reports, which were
checked and discussed with the interviewees on several occasions. Besides, a survey of
documents to unveil the presence of explicit knowledge was made in Cases A and B; in
Case C questionnaires were used to collect feedback among the participants in a
training program; and the Delphi method (Dalkey, 1969; Moerke and Eika, 2001) was

Case A B C D

Products Valve Manufacturer of Brewery and Valve

manufacturer electric machines bottling manufacturer
Methods Case study Case study Action research Action research
(Interviews, (Interviews, (Interviews, (Interviews,
observations, observations, observations, survey, lecturing,
surveys) surveys) lecturing, training, Delphi
questionnaires) method)
Number of employees 120 90-150 800-950 20-25
involved
Nature of production JIT production Batch production Mass production Batch production
system
Scopes of knowledge Intra-firm Intra-firm Intra-firm Intra-firm
transfer transfer transfer transfer from transfer
suppliers to
company Table I.
Manufacturing Within Denmark From Denmark Within Denmark From Denmark Information summary of
relocations to Mexico to China four case stories
SO used for evaluation and feedback in Case D, with the purpose of bringing themes,
ideas, tasks, and training means to the surface for further development.
3,1
Case A
Case A is a leading valve manufacturer in the world. In this case complicated and
sophisticated valves are normally assembled manually on workbenches and on a semi-
automatic assembly line. In order to gain advantages of large-scale production, the firm
10 decided to move one plant and merge it into an already existing plant in the same
country which produces similar products. However, 95 percent of blue and white collar
workers and managers of the moved plant found new jobs within five months and new
employees were hired. Means like work instructions (WIs) and standard operational
procedures (SOPs) were used for initial learning when building up ‘‘basic knowledge’’
(Kusterer, 1978) among employees on the shop floor. The SOPs served as quick guides
with less text but more pictures and were found to be relevant means for training of
new workers by helping employees to be able to operate manufacturing equipment in a
situation where everything worked as intended. However, the learning that took place
by the use of instructions and procedures seemed to be assimilative learning, which
also can be denoted as ‘‘add to learning’’ without creating an environment where the
learner can reflect and improve his learning radically (Kolb, 1984; Wahlgren et al.,
2002). In order to deal with this problem, managers realized that they could benefit
from the experienced employees in the receiving unit by mixing experienced workers
with new ones. Thus, the focus was on peer-to-peer training to transfer experience and
knowledge from the experienced workers on the shop floor to the new colleagues. The
workers appreciated this peer-to-peer training. This type of training was open and non-
threatening as expressed by a new worker during an interview; I can ask stupid
questions. This training method seemed to create a learning environment where the
experienced worker could act as a trainer, and in some occasions the new employee was
able to reflect on tasks and the way he was practicing the tasks.

Case B
Case B is from a large manufacturer of electrical machines. In order to access to the new
market and low cost labor, an automatic manufacturing line including four robots and
a number of automated manufacturing processes like welding, rolling, turning,
grinding, and assembling was transferred from Denmark to a green field site in
Mexico, where a large manufacturing facility was established within half a year to host
the line.
Although some new employees had experiences from similar manufacturing
industry, they still needed to learn how to operate the new equipment. In this case, the
idea was to make a knowledge transfer through an extensive use of conventional
knowledge transfer means, i.e. documents, manuals, instructions, and peer-to-peer
training, for each individual process on the line. By using these means, the project
management expected that a quick knowledge transfer could be made by the use of
profound instruction and a Danish ‘‘traveling team’’ acting as instructors, which
consisted of 23 operators and technicians. However, the reality showed that these were
not enough to develop knowledge in the new unit on a green field. On the one hand, the
description of malfunctions and non-normal operation was experienced to be difficult
to make. It was difficult for operators and set-up fitters to describe on paper exactly
what was done to solve a particular malfunction showing up on the line. Thus, the
situation was as hard as a Mexican manager in the receiving unit stated: we were told
that it was easy to run the line and it looked easy, but we later found out that it was Transferring
much more difficult. On the other hand, a number of reasons made it impossible for
operators on the green field environment to gain experience beforehand by training on
knowledge
real equipment since it did not exist yet. These unexpected situations made the project
last much longer, which, in turn, called for more effective means for knowledge
transfer. Therefore, a certain environment, which can represent the real system, was
realized to be useful to support the transfer and development of knowledge in the new
location. Inspired by Riis et al. (1995) and based on discussions between managers and 11
a PhD researcher, prototypes and games seem to be helpful means to transfer and to
establish knowledge on a green field.

Case C
Case C is from a beverage manufacturer. In order to achieve a more efficient operation
for production and distribution, the firm chose to centralize its production and
warehouse facilities to an existing facility. However, in order to facilitate the increase of
production and inventory, a large-scale automated material handling system was
installed at the central production site, which was considered as one of the biggest in
Europe. As a result, the way of working was changed and all employees had to learn
how to operate this new system. In Case C, it was difficult to draw on previous
experience as the system was new to both all of the Company C and the supplier of the
system. The challenge became even fiercer when the automated material handling
system did not exist. This situation called for sophisticated training means. Due to the
size and complexity of the material handling system, it was difficult to use traditional
means to transfer and establish knowledge concerning operation of the system. In
addition, the training of the operators had to start without the physical system to be
able to develop competences among the operators about how to handle the system. In
this case, the firm decided to transfer knowledge during the implementation phase in a
‘‘learning by doing’’ approach with the assistance of an emulation system.
Emulation is the virtual ability of a computer program or electronic device to imitate
another program or device. In Case C, emulation was originally built for the purpose of
testing, finding defects, and verifying the capability of the high-level control software,
as well as transferring knowledge from suppliers to employees in the firm. As a result
of the communication between several software and emulation model, the movements
of the entities in the model occurred. The users or testers could verify whether the
communication was correct by tracing the entities in the model and the operators could
observe the reactions of the system to their actions. Moreover, approximately 140 test
cases were created which included, for example, normal flow situations, error handling
situations, and difficult situations. These situations were identified from experiences of
many years’ production in the firm. All of them were tested in the emulation model.

Case D
Case D is from the same firm as Case A. At this time, a parallel production of valves
was to be established in a Chinese plant with the objective of producing valves to the
growing Asian market. A group of Chinese engineers were sent to Denmark to learn
the whole production process. Even though manufacturing processes and methods had
been constantly improved in the Danish lead factory during the last 40 years, and the
product transferred this time was new to Chinese plant, the Chinese engineers held lots
of experiences about how to make similar valves. Therefore, Remember that they are
not novices was the statement that the project leader emphasized when the initial
SO training program was drawn up for the Chinese engineers who could be described as
advanced beginners (Dreyfus and Dreyfus, 1986). Case D constituted a ‘‘brown field’’,
3,1 but called for means on a higher level during the initial training. Much more complex
tasks, including how to resolve specific malfunctions in operation were trained.
In order to transfer knowledge about how to deal with these complicated situations
and develop knowledge on higher level, particular ‘‘what-if’’ scenarios were used as
training means. These ‘‘what-if’’ scenarios were based on real non-normal operation in
12 the manufacturing environment and accumulated from many years’ of operations.

Findings
Even though the described four cases are all about the relocation of manufacturing
units, they all have their own characteristics and are different from each other.
Therefore a separation in
(1) reasons of the relocation;
(2) environment of the relocation;
(3) transferred knowledge; and
(4) means used for the relocation
are used when analyzing the cases.
Especially, for the environment of the relocation, it normally refers to the sender
environment and the receiver environment, which are labeled as transferability and
appropriateness by Grant and Gregory (1997) or absorptive capacity by Cohen and
Levinthal (1990).
From the relocation reasons’ perspective, two situations are found, including
merging plants for efficiency and effectiveness (Cases A and C) and moving production
lines for new markets and/or low cost (Cases B and D). Especially, the difference
between Cases A and C is that whether the receivers have faced similar situations and
had similar experiences; while the difference between Cases B and D is that production
lines are moved to a green field site or a brown field site. To some extent, these four
situations could cover most possibilities in the relocation of manufacturing units. On
the shop-floor level, as introduced in the literature review, four task situations can be
identified on two dimensions: complexity and uncertainty (Madsen et al., 2008). In
allusion to each work situation, different kinds of production know-how need to be
captured, and transferred. Here, the traditional classification of knowledge could be
adopted, namely simple/explicit knowledge and complicated/tacit knowledge (Polanyi,
1962). From the case studies, on the shop-floor level, simple/explicit knowledge is
normally related to standard/normal operations. This kind of operations is planned
and prescribed by WIs. Most operators were relaxed in this situation and did not find
the activities complicated. They used the explicit data provided by production
engineers and production planners to produce products. In contrast, complicated/tacit
knowledge often refers to mal-functional/non-normal operations, which denotes that
operators may experience incidents that occur randomly and call for an extra effort
often not covered by WIs or SOPs.
Obviously, different means used for transferring different knowledge are identified
from cases correspondingly. In Case A, WIs and SOPs were used for initial learning
when building up ‘‘basic knowledge’’ (Kusterer, 1978) and for transferring simple/
explicit knowledge. Besides, peer-to-peer training was used to create a reflecting
environment which, in turn, facilitates transferring simple/explicit knowledge. These
methods seemed to work successfully in Case A as long as equipment and tasks were Transferring
rather simple, which was also proved by the interviews of new employees. However,
the more complicated the tasks became, e.g. searching for the causes of a malfunction
knowledge
on a semi-automatic assembly; the more sophisticated training means were
necessitated. In this context, in Case B, the Danish ‘‘traveling team’’ was adopted
besides conventional knowledge transfer means, i.e. documents, manuals, instructions,
and peer-to-peer training. However, these means were not enough for transferring
knowledge to a green field. More effective means for knowledge transfer was still
13
asked for, which in Case B was prototypes and games. They were used to create a
certain environment, which can represent the real system. The similar situation
occurred in Case C as well. The difference is that the situation was more complex in
Case C. Thereby, emulation was adapted to establish a virtual manufacturing
environment. In Case D, moving people was adopted again as means for knowledge
transfer. But instead of moving trainers or knowledge senders from Denmark to target
place (Mexico in Case B), this time trainees were moved from China to Denmark
because Chinese engineers were viewed as experienced employees, which also called
for means on a higher level during the initial training. Much more complex tasks
including how to resolve specific malfunctions in operation were trained. In this
context, ‘‘what-if’’ scenarios based on real non-normal operation in the manufacturing
environment were viewed as the effective means. The training was carried out on the
physically available equipment. The method was developed to create an environment
for reflection and discussion among the participants, which was particularly useful
when malfunctions showed up in an extremely complicated manufacturing system.
According to the mid-way and end evaluation by the use of the Delphi evaluation
method (Dalkey, 1969; Moerke and Eika, 2001), means like ‘‘what-if’’ scenarios and
scenarios based on real non-normal operation were proved to be a very useful method
for transferring complicated knowledge such as know-how about non-normal
operation in the manufacturing environment. One of the Chinese engineers even
expressed that: Without these demonstrations, we would never have realized so many
small details that we have to be aware of when we are going to start up this production
and further: we have really built up good connections to the Danish organization. The
results of analysis could be summarized in Table II.

Discussions
Above, we have shown that different production know-how on the shop-floor level calls
for different means to transfer that knowledge. Generally, for simple/explicit knowledge,
WIs, manuals, SOPs, peer-to-peer training are used as basic means while for complicated/
tacit knowledge, moving people, games, and ‘‘what-if’’ scenarios are normally adopted.
Furthermore, successful transfer of production know-how depends not only on the
transfer means, but also on absorptive capacity on the receiving end (Cohen and
Levinthal, 1990; Argote et al., 2003; Levinthal and March, 1993; Gupta and
Govindarajan, 2000; Bjorkman et al., 2004; Allen, 1977). Many factors affect the
absorptive capacity and a full discussion of which factors will be beyond the scope of
this paper, but it is interesting to pay attention to Cases B and C and make
comparisons. Both cases represent examples of transfer to a green field site. Not only
employees were new and needed to learn all the operational knowledge, but
equipments for production were difficult to make ready for production. In Case B, this
is because the production lines were still under the construction. At the same time, it
was impossible to move operators from Mexico to Denmark due to union agreements.
SO Environment of the relocation
3,1 Reasons of the Sender Receiver Transferred Means used in
Case relocation environment environment knowledge the relocation

Case A Gaining Equipments Existing Simple and WIs; manuals;

advantage of were moved to equipments for explicit SOPs; peer-to-
large-scale new location; not producing; knowledge; peer training
14 production; all employees experienced standard
moving and wanted to be employees; more operations
merging a plant relocated new employees procedures
into an already were needed
existing plant
Case B Accessing to High-tech A green field; Simple and WIs; manuals;
new market; equipments; new employees; explicit SOPs; peer-to-
access to low experienced equipments not knowledge; peer training
cost labor; a employees ready standard
production line operations
transferred to a procedures
green field site Malfunctions Traveling team
in Mexico and non-normal from Denmark
operation; tacit to Mexico;
knowledge prototype and
game
Case C More efficient Closed; Using a new Normal flow Emulation;
operation for equipment was handling system; situations, error scenario test
production and moved to new new to all handling cases
distribution; location; not all employees and situations and
centralizing employees suppliers; other operation
production and wanted to be physical situation
warehouse relocated equipment not
facilities ready
Case D New product Manufacturing Existing similar Malfunctions Moving people
producing for a processes and equipments; and non-normal from China to
growing Asian methods had engineers operation; tacit Denmark; ‘‘what-
market been constantly holding knowledge if’’ scenarios
Table II. improved here experiences
Summary of analysis about similar
results production

In Case C, the new and large material handling system was under the establishment,
which was new to both employees and suppliers. Both cases point in the direction that
when transferring knowledge to a green field site, ever more difficulties will be faced as
the real manufacturing environment does not exist yet for many reasons. In this
situation, it is difficult to use traditional means to transfer and to establish knowledge
concerning operation of the system. Therefore, to some extent, absorptive capacity in a
production unit depends not only on the level of technical competence at its site, which
goes up with the presence of more technical experts like engineers, specialists in
relevant process technologies, highly qualified technicians, experienced operators or
other qualified or educated staff (Ferdows, 1997; Tsai, 2001; Soo et al., 2002), but also on
whether real manufacturing environment has already existed or not. In other words, to
be in the position of real manufacturing environment seems to be an important
foundation for knowledge transfer and absorption. Thus, the key point here is how to
establish a virtual environment, which can represent the real world. Two new means Transferring
are introduced in Cases B and C separately: prototype/game and emulation.
Prototypes/games reflect two aspects of the environment for knowledge transfer. On
knowledge
the one hand, prototypes represent the hardware aspect in which workers and
technicians can train and build up knowledge on specific, simple, stand alone
equipment before real production. On the other hand, games represent the software
aspect of the production environment. Games could be open-source and established
rather simply by using of boxes, whiteboards, or other available objects. These objects 15
could create a learning environment where normal and non-normal situations can be
experienced and tested with the purpose to build up knowledge before production in
full scale.
However, in Case C, due to the size and complexity of the material handling system,
it is difficult to develop prototypes of the manufacturing environment. But emulation
provides another chance with the help of scenario test cases. The emulation model
received positive responses from the users. Based on the questionnaires, the users
believed that the emulation model represented the real world and helped them in
understanding how the system functioned without the real system and without
causing any damage to the real world. From the management perspective, emulation
had helped to shorten the ramp-up phase of the real system and reduce errors both
from the operators and from the system itself.
Emulation was in this study a beneficial training means. However, it comes with an
expense, since emulation requires adequate and committed resources. Therefore,
emulation is only recommended for a large and complex project with a limited time
frame but adequate resources. The cost and effort in developing the emulation model
cannot be justified if the project is simple, if there is an available real system for
training or if there is no time constraint. Figure 3 illustrates recommendations from
this research on the use of prototype/game and emulation.
It is highly recommended to conduct an emulation study when the knowledge
transfer project is large or the manufacturing system is complex. In the large and
complex project, the emulation study should be conducted in order to be able to achieve
the good quality solution with the right price. This recommendation is supported by
the statements from the interviews in Case C. Less complex projects can be overviewed
and engineered without the use of emulation even if large in magnitude. However, large
projects tend to require a high investment as well. In this case, the emulation is

Figure 3.
Recommendations of
prototype/game and
emulation
SO suggested in order to justify the investment and give the confidence to companies.
3,1 Emulation is also recommended for small but complex knowledge transfer projects.
The driving factor is, on the contrary, not the same as for the large project. The
emulation is used here to prove the engineering and design of the solution. Lastly, it is
not recommended to conduct an emulation study for small and/or simple projects,
which have simple equipments and no time constraint like Case B. Instead, under this
16 situation, prototype/game is highly recommended for its low cost.
By establishing the virtual manufacturing environments through prototype or
emulation, other normal means for knowledge transfer, e.g. documents, peer-to-peer
training, etc., could be used the same as they are used in the brown field. In a word,
summarizing above discussions, a framework for directing knowledge transfer in the
relocation of manufacturing units could be proposed as in Figure 4.
To some extent, this framework, on the one hand, could be used as a guideline.
Managers might use it to position situations they face and to choose the right means
for knowledge transfer. On the other hand, it could also work as a process model to help
managers implement their knowledge transfer. Following the arrow on the left side of
Figure 4, from bottom to up, the whole implementation of knowledge transfer is
divided into two phases: pre-implementation and implementation (Maritan and Brush,
2003). In the pre-implementation phase, managers need to:
(1) Step 1. Distinguish transfer situations they face: whether production know-how
is transferred to brown field, green field 1 or 2;
(2) Step 2. Decide whether they need to establish a virtual manufacturing
environment; and
(3) Step 3. Choose proper means (prototype/game or emulation) to support
decisions of step 2.
By doing so, foundations for transferring production know-how are prepared.
Managers can turn their attention to the implementation phase, in which they need to:
. Choose right means to transfer production know-how on the shop floor. Different
means could be used for transferring simple/explicit and complicated/tacit
knowledge respectively.

Figure 4.
Means framework for
knowledge transfer in
the relocation
Conclusions and implications Transferring
Even with the rich literature on knowledge management, we still do not know enough knowledge
about how to transfer production know-how on the shop-floor level and which means to
use. As Ferdows (2006) argues, we need more research from a perspective inside the
production function to complement and enrich the knowledge management literature,
more research is needed to help production managers who must ultimately use the new
know-how and change their companies’ production processes (Ferdows, 2006). 17
Based on four cases, this paper has discussed how to transfer production know-how
on the shop-floor level in the context of relocating manufacturing units. Different
relocation situations have been identified; different means for knowledge transfer have
been introduced and classified according to their usages and a means framework is
summarized to integrate all the elements systematically.
Contributions of this paper come from two aspects. First, from the academic
perspective, this paper tries to combine knowledge management with operation
management and discuss knowledge-related topic in the context of operational level.
Second, from the practical perspective, this paper aims to identify suitable training
means and tools for knowledge transfer when a new manufacturing unit is to be
established on a green field site or on a brown field site globally, by making
complicated technologies easier to understand for operators, and more tangible to
learn. Strong supports and clear directions have been provided to managers when they
need to transfer knowledge in the relocation projects.

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Corresponding author
Yang Cheng can be contacted at: cy@production.aau.dk

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