MGSC 6204: Managing Information Resources within the
Professor Richard Kesner
Fall 2 2018
MGSC 6204: Managing Information Resources
within the Enterprise, Kesner − Fall 2 2018
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MGSC 6204: Managing Information Resources within the Enterprise,
Kesner − Fall 2 2018
Table of Contents
“KL Worldwide Enterprises, Inc.: Putting IT to work” by Kesner, Richard M.
“Verisk Analytics Achieves Global−Local Balance with Verisk Health” by
Sebastian, Ina; Wixom, Barbara H
“Creating Customer Value Using Analytics” by Wixom, Barbara H.; Schüritz ,
“BNY Mellon: Redesigning IT for Digital Transformation” by Ross, Jeanne
W.; Sebastian, Ina; Beath, Cynthia M.
KL WORLDWIDE ENTERPRISES, INC.: PUTTING
INFORMATION TECHNOLOGY TO WORK
Professors Richard M. Kesner and Patrick D. Laughran wrote this case solely to provide material for class discussion. The authors
do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain
names and other identifying information to protect confidentiality.
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Copyright © 2005, Northeastern University, D’Amore-McKim School of Business
In 2005, the Boston-based sports apparel retailer KL Worldwide Enterprises, Inc. (KL) faced several new
threats to its business. Margins were tightening, as competitors with lower cost production capabilities in
China began posing a serious threat to the firm’s private-label business. And the Internet had become
cluttered with KL look-alike sites. Company Chief Executive Officer (CEO) Joseph Campbell and Jens
McCreary, chief operating officer (COO), were concerned. Noted McCreary:
We can’t let others steal KL’s thunder. We must reinvent our use of IT [information technology] to
both improve our production capabilities and capacity and facilitate the rapid and economical
integration of anticipated KL acquisitions. We need to be able to turn on a dime and leverage our
supply chain management expertise to outpace our competitors in our markets. But to do that we
need timely, accurate data that we can slice and dice to forecast where we are headed and what to
KL was also witnessing serious challenges in its key demographic markets — teenagers and young adults
— from Web-based enterprises with manufacturing largely sourced in mainland China. McCreary felt the
need to add “more sizzle” to the KL experience while keeping costs down.
It is a cliché that we need to do more with less. I would go beyond that, we need to find creative
ways to cut our operating costs so that we can invest more in product innovation and quality and
At that point in time, neither Joseph Campbell nor Jens McCreary realized KL was about to experience a
decade of transformation that would leave the company profoundly changed and yet agile enough to
continue to adapt with the times. While the competitive marketplace served as an impetus for KL’s
metamorphosis, innovations in information management, information technologies, and social media also
played a large role in setting the direction and pace of change at KL.
KL WORLDWIDE ENTERPRISES, INC.: A BUSINESS OVERVIEW AND HISTORY
KL Worldwide Enterprises, Inc., was established in 1983 through the merger of several small but highly
regarded sports equipment and clothing manufacturers, all of whom were located in the United States.
Incorporated in the state of Delaware but operating out of a headquarters facility in Boston, Massachusetts,
the founder of KL, Scott Porter (CEO and Founder of Skateworld USA and subsequently of KL
Worldwide) envisioned a global company engaged in the production, marketing and distribution of
footwear, fitness and sports apparel, and equipment, favoring winter sports, such as skiing and ice hockey,
and rugged outdoor activities, including boating, camping, hiking, rock climbing and hunting. The initial
offering of KL stock took place in 1983 through the American Stock Exchange but as the firm grew into a
multi-national conglomerate, KL moved up to the New York Stock Exchange where it traded under the
As he put it to his board of directors at their first stockholders’ meeting, Porter’s vision was simple:
At KL Worldwide Enterprises we will expand rapidly and globally within our niche to become the
very best provider of high quality, yet eminently affordable sportswear and equipment. We will
become a household name among those devoted to outdoors activity from professional athletes to
the typical active family of sports enthusiasts. To that end, we will acquire other quality providers
of sporting goods — both at home and abroad, teach them the “KL” ways of doing business, and
integrate them into a thriving global enterprise.
KL Worldwide Enterprise remained true to its founder’s strategy. When Porter stepped down as CEO and
president in 2003, KL stood at $720 million in gross sales and, as of the end of fiscal year 2005, eclipsed
the $1 billion mark. His successor, Joseph Campbell, continued KL’s winning ways by acquiring,
improving and growing a host of smaller sports product providers and merging them into KL. He has also
moved KL globally through the extension of KL’s manufacturing and distribution arms in India, Brazil and
Singapore. Between 2005 and 2015, KL manufacturing operations opened several acquired facilities,
supplemented by partnerships, in China, Germany, Turkey, Mexico, and Canada.
KL still had its headquarters in Boston, Massachusetts, and regional offices in all of the firm’s primary
markets, namely the United States, Canada, Europe, and more recently China and Korea. In addition, KL
operated a highly successful eCommerce arm through its Web site, KLBrand.com. In fiscal year 2005, the
eCommerce branch of KL Enterprises reached the same level of sales as KL’s own boutique sporting
goods outlets, and by 2015, online sales were nearly ten times that of KL’s brick and mortar outlets.
Campbell was the first leader to bring a focus on business-driven information technology (IT) investment
to KL. He explained,
If we are to remain competitive, KL must retain its brand recognition, maintain a commitment to
high quality and reasonable prices, and leverage its worldwide manufacturing, design, and
distribution capabilities. Effective and efficient use of IT is essential here. This is why I have
pushed for ever-improving eCommerce capabilities and the very best, global supply-chain
management that money can buy.
As always the challenges are around coordinating the various, and at times conflicting, business
priorities across the enterprise. We sure could use better IT tools for this as well as ready access to
timely performance data.
However even when he penned these words in 2005, Campbell had no clear sense of what it would take in
the first two decades of the 21st Century to keep up with and leverage the transformative power of IM and
IT. The new business world would be both global and intimately connected. It would operate 24 × 7 and at
a pace that eclipsed even the vision and sense of purpose of KL’s new CEO. While the current state (in
2005) of KL’s business was built upon the distribution of KL products through established retail chains in
its three primary markets — the United States, Canada and Europe, consumers began to demand a more
participatory role in the design and manufacturing of products. Whether they liked it or not KL was
entering an era of customized manufacturing and social network-driven marketing. As noted by Evan
McGinnis, executive vice-president (VP) of Global Marketing and Sales in his report to the board in 2010:
Like its competitors, KL must strike a balance in its approach to the marketplace. For those who
want the cache of the KL brand and our latest designs and product innovations, and who are
willing to pay a premium, we offer KL sports stores and KLBrand.com. This includes the
customized design and development of product for individual consumers through our Web sales
platform. For those who don’t care to use the Web and don’t live in an urban center that offers
access to a KL boutique, consumers can get products from an array of middle-tier to up-scale
sports retailers. But in this highly competitive market and given our competitive edge in
manufacturing and logistics, we can also provide low-cost, private-label goods for retailers who
promote their own branding.
In the end, it’s all about numbers (what is in the pipeline, where is it headed, who needs what
when) and KL’s ability to respond to changing patterns of sales and consumer interests.
The company’s sales figures suggested that this approach had served KL Enterprises well (see Exhibit 1).
KL ENTERPRISE ORGANIZATION STRUCTURE
As of December 31, 2004, KL Enterprises had approximately 15,737 employees, including management.
In 2005, KL Enterprises that totaled 16,680 employees stationed in facilities throughout the world with
1,242 of these being management personnel. By 2015 those numbers had grown but not as substantially as
production numbers and sales might suggest (see Table 1). While existing facilities grew slightly in terms
of capacity and headcount, and while new locations were added in both Latin America and Asia, the
substantial increase in KL manufacturing and distribution capabilities came from third-party partners,
especially in China but also in Germany, Mexico and Turkey. This agile, organic approach to capacity
growth at KL had many implications for its ability to compete in global markets. According to Jackie
Terrazas, the VP of Customer Service:
As KL has added more and more operations overseas, maintaining a common vision and a
common sense of the company’s value proposition has been a real challenge. It shows up
particularly in the issues around product design and quality where our salespeople have achieved
considerable success in translating customer inputs into improved product offerings. The use of
social networking platforms and a supply chain capability built around mass customization now
drive sales, design and manufacturing. Given the seasonal nature of our business, we can be very
flexible and high responsive to the needs of our third-party retailers as well as our eCommerce
Table 1 — KL Enterprises Employment Data, 2015
Boston, MA, Headquarters
Waltham, MA, data center
KLBrand.com operations and fulfillment
KL stores, U.S.
KL stores, Canada
KL stores, Europe
After 2005 additional sales offices in China, Germany,
Korea, Poland, and Russia
After 2010 satellite management offices overseeing partner
relationships in China, Germany, Mexico and Turkey
Total KL personnel
PRODUCTS, MANUFACTURING AND DISTRIBUTION
KL originated in the United States and its core product line manufacturing capabilities for sports
equipment remained U.S.-based until the end of the 20th Century, supplemented after 2000 by an
expansion into Brazil and Singapore, followed by China Germany, Mexico and Turkey. Over the past
decade, KL migrated the majority of its clothing and sportswear manufacturing to India, Mexico,
Singapore and Turkey, with some sports gear production going to China and Germany. As of 2015, KL
employed its own and partner-provided facilities at home and abroad to enable a highly flexible and
responsive manufacturing platform for its products. Even in 2005, it was clear to KL leadership that to
manage and innovate within this more disbursed and complex global supply chain, how KL planned,
communicated and operated would need to change.
As of 2005, with the exception of clothing lines that required tight coordination between KL M&D India
facilities, where cloth was produced and then sent on to Singapore, all of KL manufacturing was selfcontained, including the sourcing of raw materials through final assembly and distribution. After products
were manufactured, they were stored in distribution and warehousing centers located in Canton,
Massachusetts; São Paolo, Brazil; Tanjong Pager, Singapore and Mumbai, India, as well as several sites in
China, Germany, and Tukey until such a time as they were shipped to regional KL distribution warehouses
or directly to KL customers in the United States, Canada and Europe. This massive operation posed a
variety of logistical challenges for KL but even these paled in comparison to the requirements associated
with the emerging demand for the mass customization of product lines. From the perspective of those
involved, some things needed to change.
The U.S. operation is the oldest within KL and the most capital-intensive, yet we run on the most
outmoded SCM [supply-chain management] system. It is taking forever to move us over to SAP,
which is a state-of-the-art commercially available SCM system we desperately need to fully
implement. It is also nearly impossible to get information about the status of work that will require
additional finish work once the product reaches the States from our Brazil and Singapore facilities.
— Jack Powell, Director of Manufacturing, U.S.A.
The operation in India is complicated by the number of outsourced services that we employ to
supplement and complement our in-house capabilities. The legacy systems we use are also a
barrier to managing our supply chain and logistics activities efficiently. But the move to SAP is
slowed by the product’s inability to address the unique compliance requirements imposed by the
Indian government as well as by the different business and manufacture processes already in place
— Mukesh Vishal, Director of Manufacturing, India
Everything in Brazil takes a little longer to accomplish. We try to be responsive and our new SAP
system really makes a difference. However, we cannot get what we need from corporate in terms
of production line and delivery requirements. The designs emerging from our colleagues in the
U.S. do not work well with the factory configurations and production capacity in KL’s Brazilian
— Pepe Simmon,
Director of Warehousing and Distribution, Brazil
Planning and coordination between KL and global manufacturing and distribution partners is
daunting. Our systems are not compatible with one another and it is therefore difficult to get timely
data on where we stand with orders for raw materials, semi-finished goods and warehoused
finished goods. The robustness of our communication and collaboration tools still are not what
they need to be.
— Elizabeth Tan, Director of Global Supply Chain Coordination, USA
SALES AND MARKETING
By 2005, KL Enterprises sold its products domestically and internationally through third-party retailers, as
well as directly through its own eCommerce Web site (KLBrands.com) and its own specialty stores. To
manage the associated sales processes, KL Enterprises employed four independent sales teams located in
the United States, Canada, Europe, and Russia/China/Korea respectively, all reporting to the same EVP for
Global Marketing and Sales. Each sales office was responsible for maintaining working relationships with
customers, including private-label and third-party retailers. KL eCommerce sales through KLBrand.com
were managed by a separate marketing and sales team, and KL Stores operated as a separate entity with its
own direct relationship to KL operations, manufacturing and distribution. Both the KL stores and
eCommerce organizations utilized local KL distribution centers for their inventory management and order
fulfillment needs. These arrangements were not without their issues, especially concerning inter-operating
unit communications and coordination, as noted in the following comments. But as both social media and
business analytics grew in importance as business process enablers, KL established the role of Chief
Marketing Officer in 2010 to oversee all sales channels and more importantly to manage and leverage
marketing and sales business intelligence.
Our new web platform [ca. 2010] allows customers the ability to custom design high-end products
within our product lines, including clothing, footwear, and even some equipment lines. However,
timelessness of delivery and error rates in the customization process remain issues.
— Ivan Henderson, VP of eCommerce
We need to offer a “boutique” experience and therefore the latest and greatest in design but it takes
too long to work our designs through the system to get new and improved product out the other
end. We also need to better integrate launch efforts with our Facebook and Twitter communities
and to sort out what we should offer versus our colleagues at KLBrands.com.
— Alex Johnson, EVP for KL Store Operations
The design ideas and customization requests that we get from KLBrands.com, KL Stores, and their
respective social network communities make sense and often look nice but at times require a lot of
work and time before they can be integrated into our manufacturing processes. Manufacturability
is a real issue and it is increasingly difficult to get all the right players involved to decide how best
to move from a concept to production.
— Jens McCreary, COO
The private-label portion of our market is still very strong but our margins keep getting tighter.
Broadening our manufacturing base to include Chinese partners has helped with costs and
responsiveness but coordinating all the orders and dealing with language and cultural issues in
communication and sales processes has been a challenge for my entire staff. The added element of
customer-driven design/product choices has further complicated these overseas arrangements.
— Ed Griffin, VP of Sales, U.S.A.
Same here! I need to be able to create forecasts from real-time data to focus my team and grow the
— Leslie Lambert, VPP Sales, Europe
European consumers have a greater sense of style than their U.S. counterparts. I need a way to
provide feedback to Boston as th ...
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