Transferring workers' knowledge into the information system: a case of recommendation system for supplier selection in e-procurement service company

• Authors: Gwangjae Jung;Seonyoung Shim
• Venue: Proceedings of the 13th International Conference on Electronic Commerce
• Year: 2011

With the emergence of indirect procurement, it has become a global trend for companies to outsource their maintenance, repair, and operating (MRO) supplies to procurement service providers (PSPs). Due to the variety of MRO items, evaluation of numerous suppliers in various industries is a particularly complex task for PSPs. In order for companies to find suppliers that offer quality goods not just low prices, a systemized and transparent evaluation model is needed. However, many PSPs still evaluate and select suppliers based on the sourcing managers' subjective experiences. IMK, the leading procurement service provider in Korea, tried to systemize its supplier evaluation and selection processes by developing a recommendation system (named WI) for supplier selection. This innovative system brought cost reduction and transparency in sourcing processes. IMK not only transferred sourcing managers' knowledge of supplier evaluation into WI, but also made the system evolve by sourcing managers' collective intelligence --one of the important features of Web 2.0 -- in order to adapt dynamic changes in supplier and MRO markets. Because of these unique characteristics, the participation of the sourcing managers is very critical for WI's performance. This case explains how IMK encouraged sourcing managers' participation to improve WI's performance. We classify several management issues, which are derived by the three maintenance projects for WI, into three perspectives of technology-organization-environment (TOE) framework. This case mainly shows that transferring too much tacit knowledge increases the system complexity and reduces the ease of use. Communication among users helps them to identify their roles in the system and facilitates knowledge contribution. A CEO-driven implementation stimulates system use in the beginning, but it cannot be maintained without sufficient understanding of the system on the user's side. Coping with trial errors during the system development and maintenance, WI was successfully implemented and became the core competency in IMK's business.