The purpose of this paper is to present the framework and research design of a two-year European Social Fund project which aims to improve the abilities of logistics SMEs in Kymenlaakso region to utilize knowledge management tools and practices for improving management and organizing of work. The paper describes the rationale, activities and expected outputs of the research and development project. Activities include surveys, interviews, seminars, workshops and academic research activities. Outputs are new tools for evaluation of knowledge management practices in SMEs and for assessment of digitalization and related practices in SME context; KM and digitalization “development maps” for project organizations; new development methods for three most critical KM challenges; targeted development workshops; general seminars on KM in logistics SMEs; an electronic handbook of KM; an applied university KM course; and research reports. The paper proposes a holistic approach for increasing understanding of KM in logistics SMEs, and at the same time explains a practical approach for improving KM in SME context. It thereby contributes to the understanding KM in SME context, as well as in the logistics industry. This project implements practical knowledge management methods and tools within SMEs operating in logistics. The evaluation methods developed during the project can be applied also to other regions and industries to assess the performance and to improve the management of SMEs in general.