In this paper we consider the knowledge flow in supply chain instead of material, money and information flows. The purpose of the paper is to suggest a conceptual model about knowledge flow in supply chain .we shows in this paper how KM activities create value in supply chain. In our perspective supply chains are competing to capture knowledge from environment and use it to gain competitiveness. Different partners in supply chain collaborate in knowledge creation; share and use and compete with others in the rate of externalization of the knowledge in their organization.