Knowledge Management Case Study
by Daniel Stuhlman

Knowledge management techniques permeate across your organization can help your people seem smarter to the public. Here are some examples from a retail environment.

Part I

Big Red Stores started a web site to sell the same goods that appear in their stores. The advertisements induce customers to order gifts with promises that if the receiver wants to return the items they can return the gift to any of their brick and mortar stories. The web site was well done and many visitors ordered merchandise and sent gifts. Gifts are sent with a personalized worded card along and a gift return receipt with a return bar code and a 15 digit receipt id number.

Customer Ann ordered a gift of a small appliance. Ordering was quick and easy as promised. The gift was shipped to her sister, Dee, in another city. Dee thought the gift was marvelous, but she had one already and wanted to return the gift. According to the inclosed documents she learned that the gift could be returned to the nearest Big Red store. She took the gift back to customer service.

The customer service clerk was very nice and friendly. She had never taken a return from a web site purchase. She read all the documents from Dee and recognized that she accept the return. She attempted to read the bar code into her register. It was rejected. She was flustered and called for assistance. The other clerk also had never taken a return from the web. They both tried to get the register to accept the return. They attempted to manually input the receipt id. The register wanted an 11-digit code. The clerks called for a supervisor. Dee asked if they had training in accepting web returns. The clerks and the supervisor said no but they wish that they had the proper training. The supervisor called for IT (Information Technology Department) support from the main office. Thirty minutes had already passed. IT support gave them the proper codes and procedures to manually make the register accept the return. After 45 minutes after Dee entered the store, the transaction was completed. Big Red had the merchandise and the customer, Dee, had certificate good for a new purchase.

Where are the failures? How could IT do a better job? How could knowledge management help?

The system obviously was not tested. The developers of the web site did not test the documentation that the system produced against the codes that the cash register systems required. The customer service personnel had not been trained in the proper procedures for web returns. They felt they could have done a better job serving the customer if they had better training. Companies need to reduce the cost of returns. At a minimum this return took more than 120 minutes of staff time. That does not even count the original time to pick and pack the item and the restocking time for the return. Easily the cost of this transaction was greater than the possible profit.

IT could have done a better job of testing the entire system from the placing of the order to the delivery and possible return. If the cash registers accepted the return, the second clerk and supervisor would have been needed. If knowledge management procedures would have been in place, the customer service staff would have been trained in all return possibilities and procedures.

Part 2

Big Red Stores has a promotion with Quick Batteries. If the customer buys two packages of batteries, Big Red will issue a $5.00 gift card applicable toward another purchase. Customer Dee seeing this great bargain wants to purchase batteries. She notices that the rack is half full and guesses that many other customers have made this purchase. When presenting the batteries to the checkout clerk, the clerk acts as though she had never even seen this offer before. She read the attached coupon and wondered what to do. Finally she called for her supervisor. The supervisor asked if the clerk had any gift card. She answered a very vague, "no." The supervisor gave her a gift card, then told the clerk to scan the card and the coupon. Finally the transaction was complete. The clerk entered the remaining items that Customer Dee wanted to buy. Dee presented the certificate from the merchandise return and the register rejected it. The supervisor said the reason was that the system would not allow a gift card to be issued and a merchandise credit to be made at the same transaction. Not wanting to waste more time, Dee just paid with a credit card and left the store, ready to tell all her friends about the incidents.

A knowledge management audit would have uncovered the fact that employees did not have the knowledge and information they needed to do their best. With the proper training the staff would have felt better about themselves and the customer would have walked away satisfied in a short amount of time instead of wasting precious time. Knowledge management needs to be pervasive throughout the organization. Big Red Stores made and promoted an excellent web site, but they promised something they could not deliver--excellent service when returning gifts. When the transactions went through the two steps did not work together.

Questions to ask before any system (computer or manual) in placed into production.

  1. Has every step and possibility been planned for? Are the human-machine and human-paper interfaces clear and understandable?
  2. Is the system gathering the information that is needed by all participants in the system?
  3. If something happens that is not within the original plans what is the backup or support plan?
  4. Have all staff members including those who meet the public and those who don't been trained in the proper procedures?
  5. Has the system been tested by someone outside of the development staff?
  6. Does everyone have the knowledge to perform the tasks required of them within the system?
  7. Is there a procedure to share knowledge and best practices among the staff of each store and with other stores? How are difficulties or best practices reported, cataloged and stored for others to query? Can difficulties become learning situations so that incidents are no repeated?
  8. How does the incident impact customer satisfaction, staff satisfaction and the bottom line?

Stuhlman Management Consultants can help your company with assessment of your knowledge and information flow and help you answer of each of the above questions. We can test the information flow for your systems and talk to your staff to make sure they have the information and knowledge to be most effective in their jobs. By examining one information flow system, you can learn how to apply knowledge management to the procedures and to other information systems.


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Last revised: November 24, 2008

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