Balanced Score Card Approach

Definition= set of performance measures driven by & supporting the organizations strategy Strategies can include: cost leadership, differentiation and/or focus/niche must be something employee can have an effect on and understand

Performance Measures 4 Groups

Score Card Normally Has the following sections:

Financial - tied to financial goals/objectives

Internal Business Processes what to we need to support 1 & 2 Learning & Growth -how to react and manage change with continuous improvement

Customer base - to win & retain customer based

Performance Measures
Quite often link between performance measures i.e.. Customer satisfaction increase = increased car sales Need to keep in mind: consistency so all are working together(avoid cross purposes), dont have too many measures, ensure they are specific and measurable Balance Score Card helps track & test management strategy

Other Performance Measures

Delivery - focus on getting increase quality product to the customer asap to retain and attract customers Involves examining delivery cycles and throughout time

Delivery Performance Measures

Critical to focus on the customer as extremely costly to get lost customers back Need to calculate delivery time accurately in order and must deliver on time to keep customer happy Concentrate on value added activities

Delivery Performance Measures

Order Received Production Started Goods Shipped

Wait Time

Process Time + Inspection Time + Move Time + Queue Time Throughput Time Delivery Cycle Time

Process time is the only value-added time. Manufacturing Cycle = Efficiency

Value-added time Throughput time

Delivery Performance Measures

Delivery Performance
If the MCE is less than 1, non-value-added time is present in the production process

An MCE of 0.4 would mean that 60% (1.0 0.4 = 0.6) of the total production time consists of queuing, inspection, and move time, and therefore only 40% of the total time is productive

By monitoring and improving MCE, companies are able to pare away non-valueadded activities

Delivery Cycle Example MCE

Bob Dylan Inc. keeps track of the following time related to producing and delivering 1000 units of the latest greatest hits album:

Waiting time = 10 days Inspection time = .1 Processing time =.5

Move time = .2
Queue time = 2

What is the throughput time, MCE and Delivery Cycle time?

Solution