Absorptive Capacity

CIOP sessions are conducted by a pool of faculties who also offer the other international certification programs. The typical faculties are having experience between 20 to 30 years in the domains of procurement and supply chain and have a wealth of industry and teaching experience. All of them have great passion for teaching and believes in continuous learning and sharing those learnings. The faculties also go through periodic trainings titled “Faculty Development Programs” to keep them abreast with the latest developments in supply chain and teaching methodologies. Basically, all the faculties are practitioners or consultants who work for the industry and teach supply chain during their spare time or execute this as a project.

In business management, absorptive capacity is defined as "the ability of a firm to identify the worth of new data, assimilate it into relevant production processes, and apply it to future market needs".

Absorptive capacity is studied both on organizational, individual, sector, and national levels. Many processes that affect production are categorized under absorptive capacity. These include pricing, production, planning, scheduling, finance, human resources, distribution, storage, information technology, and industrial policy.

The three theories of Absorptive Capacity include individual factors, information processing theory, and external knowledge. The theories describe the process in which firms accumulate and use information prior to the actual utilization of that information. It then follows the development of internal structures and learning structures to facilitate the absorption of information in production activities. The process may be internal in nature or external in nature. External knowledge is the knowledge of prior related knowledge about the production activities of a firm. This knowledge may have either been acquired by experience or by instruction.

The theoretical concepts of Absorptive Capacity are important for a sound management of large scale operations. The ability to absorb is a necessary part of all firms. In addition, firms need to learn how to develop and deploy their absorptive capacities. Proper knowledge development strategies are also important. These strategies allow firms to build their absorptive capacity so they can meet the demands of their customers.

Related Articles

The role of absorptive capacity within supply chain quality integration
Absorptive Capacity in Supply Chains: Does Responsive Strategy of a Firm Matter?
Absorptive capacity and strategic alliance in the supply chain context
Green supply chain collaborative innovation, absorptive capacity and innovation performance
Oracle Supply Chain Management & Manufacturing (SCM)