Wednesday, September 3, 2014
Businesses now operate in a data overload environment, which can be increasingly overwhelming and paralyze operations if not managed well. Knowledge Management—efficiently handling information and resources— is a sore area for many companies both in terms of knowledge management capacity and the company’s bottom line. Managers are often bombarded with a constant stream of data daily— a typical person is sent the equivalent of 174 newspapers every day in the course of a year[i]— and failing to share this information has resulted in Fortune 500 companies losing roughly $31.5 billion a year.[ii] Ultimately, illustrating that an overwhelming amount of data can get in the way of achieving high quality decision-making. Therefore, it is essential that knowledge management systems be put in place to help “cut through information noise, share information and improve decision-making.”[iii] All of which improves the decision-making.
There is no surprise that data is integral for decision-making, which is evident when we zoom into the monetary loss Fortune 500 companies faced in association with poor knowledge management. And while this may not be causal there is a negative correlation between poor knowledge management, business forecasting— predicting the future on the basis of what’s gone on in the past— and process design. Take the US Army, for example, a robust organization that is in charge of ensuring national security. One bad decision, based on poor data, can be catastrophic. A reality mitigated by the Army’s knowledge support program, After Action Review (AAR). AAR is a structured review process that analyzes what happened, why it happened, and how the participants and those responsible for the project or event can do it better. [iv] AAR is a solid example of knowledge management being used to helped build a learning organization by making learning routine, which has developed a culture where everyone is continuously assessing themselves, their units, and their organization, looking for ways to improve.[v] Companies like Walmart have adopted a similar assessment approach in its forecasting and inventory management, which has lead to lower product costs and highly competitive pricing for the consumer.
In this global business environment, knowledge management can stimulate cultural changes and innovation through the free flow of ideas and data. It breaks down the information silos that exist for businesses, by opening up dialogue, instilling corporate values, and perpetuating organizational learning. All of which results in solid decision-making and supply chain management.
Knowledge management is not easy for all supply chains, whether it be because of low employee retention or poor data collection infrastructure. Matters that lead to the question, of how can technologies mitigate the risks associated with poor knowledge management for smaller companies that are not as financially robust as Walmart but receive a comparable level of data?
[i] Why Knowledge Management is Important to the Success Of Your Company. Lisa Quast. Forbes. 8/20/2012
[ii] Why Knowledge Management is Important to the Success Of Your Company. Lisa Quast. Forbes. 8/20/2012
[iii] Why Knowledge Management is Important to the Success Of Your Company. Lisa Quast. Forbes. 8/20/2012
[iv] After Action Review. En.wikipedia.org/wiki/after-action_review
[v] Why Knowledge Management is Important to the Success Of Your Company. Lisa Quast. Forbes. 8/20/2012