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KM in transportation: seeing the payoff clearly

This article appears in the issue October 2000 [Volume 9, Issue 8]

In this article, Mark Sneed, KPMG's director of Consumer Markets for Customer Relationship Management and KM, talks about the application of knowledge management principles, and how it applies directly and indirectly to the transportation industry, its real-world impact and ROI. All investment and process decisions are based on knowledge of day-to-day operations--how they work and why they break down. Technology approaches, like logistics, data warehousing and customer relationship management, contribute to accessible, reliable institutional knowledge.

"KM is an evolutionary process," says Sneed, "and we are building on earlier investments in technology. We began advising in the area of data warehousing for our financial services clients. We learned that the same leverage of information understanding could be applied to retail, telephony and transportation.

"To take date warehousing to the next level, we started our KM practice. We had the same aim in our customer relationship management practice, which is to develop repeatable intelligence strategies."

Repeatable intelligence is a thread that runs throughout Sneed's explanation of KM as applied to business operations. To him, data warehousing was an early root of today's KM applications.

"We began pulling business insights and trends from legacy databases, helping our product-centric customers better understand their markets," Sneed says, "but data warehouses were all about the data; it was a data-centric approach."

Customer relationship management evolved from those analytic approaches of data warehousing.

"We took these practices to the next level, to provide context for the data, to create information from raw data," he explains.

"By providing this level of context to the data, we can deliver services such as marketing automation, sales analysis, product and customer trending," continues Sneed. "We find a similar focus across these endeavors in which data warehousing supports marketing initiatives, and the subject of those initiatives is the customer. From that, a customer-focused knowledge management approach develops, creating a better process to identify and know customers in depth.

"We moved to put the business intelligence in place that would allow us to develop greater knowledge of customer behaviors and values."

In the transportation sector, that customer intelligence must be merged with logistics.

The result of the merger is a growing ability to provide better life cycle management, to the point where airline companies, for example, can infer what the next event will be in the customer relationship and delivery of services.

"In transportation, you have a lot of data points about travel, about customer preferences, and so on," Sneed says. "Obviously, in this industry, logistics plays a big part in the customer experience. By anticipating logistics, we can predict events that will have an impact on the customers."

With airlines, flight delays play a critical part in the customer experience.

"In the KM-enabled organization, we can anticipate the chain of events. We know, for example, that certain events--ranging from weather to mechanical to labor problems--will lead to certain impacts on flights," Sneed says. "Those in turn will specifically affect certain customers at different times and different locations."

"The challenge becomes applying KM to the front-line operations," Sneed say, "which means we need to deliver knowledge over the customer's preferred channels. That knowledge has high lifetime value to the customer, but we need to make the knowledge accessible to the customers. That has led us to investigate all potential delivery channels, from telephones to the Web to PDAs (personal digital assistants) and beyond."

The application of KM to the front lines of customer interaction allows it to be evaluated like other investments, because "KM follows an ROI path and affects the customer in measurable ways," according to Sneed.

"It is important to understand that we emphasize the collaboration aspects of KM in this process," Sneed says. "We look at the Web and other technologies to accomplish this ... We need to understand what piece of paper, what data, what information is required to make a decision."

To convince CFOs of the wisdom of a KM investment, Sneed says, "We need to speak in their terms. What is the present value of future inflows from the customer? By concentrating on this customer-centric transformation, organizations can clearly measure their ability to maintain customer capital."


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