Chapter EightWhen Transferring Trapped Corporate
Knowledge to Suppliers Is a
Winning Strategy
Larraine Segil
When should we outsource and transfer knowledge to suppliers?
The answer has been the same for decades: when the knowledge or
expertise required is not core to our mission and activities in pro-
viding value to our customers and shareholders.
The answer changes when knowledge management and valua-
tion is the issue. Let’s rephrase the question: When can knowledge
and expertise be provided to us by our suppliers, in a superior,
turnkey fashion, so that we become more competent and serve
our customers better? This happens when the trapped value of our
knowledge is realized and we are better served with more compe-
tent expertise than we had in-house.
The rephrasing of the question requires a different mind-set
from both the outsourcing provider and the buyer. A regular supply
relationship that is managed by the purchasing department will not
deliver the knowledge and competency desired in the second sce-
nario. However, if that supply or outsourcing relationship were
managed as an alliance, it would generate far more value. What
does this mean? Managing a supply relationship like an alliance
requires the following (see Exhibit 8.1):
A supply alliance that looks costly in the first stages of devel-
opment may create great returns in the last stage of development.
However, if the relationship is seen purely as a supply relationship
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