4.1 chapter 3- building a tactical scorecard

7/28/2019 4.1 Chapter 3- Building a Tactical Scorecard

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Chapter 3: Building A Tactical

ScorecardAfter completing this lesson, you will be able to:

Use the scorecard Check List to assist in the tactical scorecard setup.

Define inputs for a tactical scorecard.

Define results for a scorecard.

Define KPI measures (Key Performance Indicators).

Set best, worst and targeted values for each measure.

Assign the relative importance of each KPI measure.

Layout the relationships in the scorecard.

View the scorecard for alternate periods.


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Building A Tactical Scorecard Chapter 3 Exercise

Tactical Scorecard Information

In this relatively simple example, you will create several tactical scorecards for theOutback Warehouse/Service Center. At this location, two primary functions areperformed: parts are kept in inventory and service calls are received from customers

regarding the products being housed.

When evaluating the performance of the Inventory Area, two key indicators arereviewed:

1. % of Purchasing done on FPA (Forward Purchase Agreement) Thecompanys goal is to purchase at least 15% of products based onpre-negotiated contracts with suppliers. The remainder of the purchases arenegotiated on a case-by-case basis.

2. Inventory Value The company hopes to hold as few dollars in inventory aspossible. The inventory value per month should never be greater than$15,000.

Each of these measures is equally important to good performance in theInventory area.

When evaluating the Customer Service Area, two key indicators are reviewed:

1. % Issues Resolved on 1st Call a well-trained customer service representativeshould be able to answer most of the calls on the first contact with thecustomer.

2. Issues Outstanding at EOMperiodically a customer will ask a question thatrequires some research and follow-up. To make sure that customer questionsare being resolved, the company reviews the number of outstanding issues at

the end of each period. There should never be more than 20 calls outstandingat the end of the month.

Because the number of issues outstanding at the end of month could bedependent on when the call came in, or the particular nature of the calls thatmonth, the first measure (% Resolved on 1st Call) is more important to theperformance of the Customer Service area. The Customer Service managerhas given an 80% weighting to the 1st KPI and only a 20% weighting to IssuesOutstanding at EOM.

The Inventory Management tactical scorecard will be created in the chapters content. TheCustomer Service Customer Service tactical scorecard will be created in the exercise that

follows.To create the Inventory Management scorecard, you will use two scheduled queriescorresponding to the two KPIs being measured:

1. Forward Purchases This query shows the percent of purchases madeagainst an FPA by period.

Page 3-2 CorVu Corporation 2000


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Chapter 3 Exercise Building A Tactical Scorecard

2. Inventory Value This query shows the dollars in inventory at the end ofeach period, as well as the primary category of product making up theinventory dollars.

To summarize, the following KPIs will be measured with the following best/worstvalues and weights:

Creating a New Tactical Scorecard

When creating a tactical scorecard, a check list pane will display showing the varioussteps involved in creating the scorecard. You can use this as a road map to guide youthrough the process. The check list will momentarily flash the next required step in red.

Completed steps are shown with a check next to them. Incomplete steps are shown withan X next to them.

The first steps in creating a Tactical Scorecard is to defining the periodicity of the data,defining the inputs, and defining the results.

Complete the following steps to create a new scorecard:

1. Select the Create New Scorecard icon from the toolbar.

CorVu Corporation 2000 3-3


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In this scorecard, all the information will be reviewed on a calendar month period. Thebalanced scorecard will summarize the detail data by the periods you choose, then applythe data to a statistical formula to show a normalized score on each icon. Whenspecifying that data should be summarized by period, the default is to Use Calendar andshow the appropriate format for the date. The data files in this example have two dates in

them: YYYYMM format and an actual full Standard date format. To facilitatesummarizing scores across time periods, youll select the Standarddate format.

2. Click the Date Format drop down box and select the Standard date format.

3. Click the Date Frequency drop down box and select Calendar Month.

4. Select OK to continue.

Adding the Inputs

In this section you will specify the input files for the Tactical Scorecard. The inputscould be CorVu scheduled queries, CorVu queries, CorVu dynamarts, imported delimitedtext or flat files, or manually entered data. In this case, you will use pre-built CorVu

scheduled queries.

Complete the following steps to specify the inputs:

1. Select the Add Inputbutton on the toolbar or double-click the AddInputs item in the Checklist pane.

2. Using the Files of Type drop down arrow, switch to Scheduled Query Files(*.SQY) file types.



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3. Hold the Ctrl key down and select the files Forward Purchases.sqy andInventory Value.sqy. Both of the files should be highlighted.

4. Click Open to continue.

5. Each of the input scheduled queries have been executed to contain the timespan from the (199801 199902) .Note that the input files have all beenadded to the Input pane and the Create Results check list action momentarilyflashes in red.

The scorecard should look similar to the one shown below:



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TipThere are four ways to add inputs to a scorecard:

Use the Add Input button on the toolbar.

Double-click Add Inputs in the Check List.

Right-mouse click in the Input pane and select Add Inputs.

Use the Data|Add Input selection on the menu, or Data|Add File for aCorVu .qry, .sqy, or .tab, Data|New Query to build a query to use as input,Data|Create to manually enter the input data or Data|New Import to importdata from an ASCII file.

Get help reviewing these methods by positioning the mouse pointer on theAdd Inputs element of the Check List.

You can choose the type of input by right clicking on the input pane and making yourselection from the input method pop out submenu.

Specifiying Aggregation Rules

In the scorecard, all information will be scored by month, however, there may be multipledata rows per period (For example, look at the data associated with Inventory Value).When the data is aggregated for the month or across months, the data can be summedor averaged. Generally dollar amounts or counts would be summed, while ratios or

percentages should be averaged. In this example, the Inventory Value should besummed, and the % on FPA should be averaged. The default is to average or use theratio in a column.

TipBefore specifing the aggregation to the values from the data, view the information

that is being queried from the database by double clicking on the input.



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Complete the following steps to modify the method of aggregation:

Note: All columns from query inputs use ratio calculations (average orpercentage) as the default. To sum the values you will need to open the

select ratio columns option from the speed menu by right-mouse clickingon each input and then de-select the columns. The Forward Purchases

input columns are correct by default, since you want to apply the averageaggregate.

1. Right-mouse click the Inventory Value input in the Input pane.

2. Click on Select Ratio Columns.

3. Click on the Invent Value column to deselect it.

Inventory Value will now be summed within the period instead of averaged whenthere are multiple values for the period.

The values forForward Purchases are correct by default so the Ratio Columns

dont have to be viewed.

Complete the following steps to save the scorecard so far:

1. Click the SaveScorecardbutton on the Scorecard toolbar.

2. Type in Inventory Management as the name of the scorecard and clickSave.

The scorecard will be saved with a .pmm (Performance Management) extension.

TipWhen saving, the scorecard name in the window header is reset. If

you want the header to have a different name than the actual .pmm file

name, rename it by selecting the Tools|Options\Name menu option.

Creating the Results

You are now ready to define the result sets in your scorecard. You will create oneresult (Inventory Management).

Complete the following steps to create the Results:

1. Select the Create Resultbutton on the toolbar or double-clickCreateResults in the Check List pane.

2. This will create a new result and allow you to apply the correct name to the

result. You will rename the result to reflect the meaning of the data.3. You will name the result Inventory Management.



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Your scorecard should look similar to the one shown below:

Note:If you make an error when typing in the name of the result you canright-click on the result and selectRename Result:

TipThere are four ways to create results in a scorecard:

Use the Create Result button on the toolbar.

Double-click Create Results in the Check List.

Right-mouse click in the Result pane and select Create Result.

Use the Result|Create selection on the menu.

Get help reviewing these methods by positioning the mouse pointer on the Create Resultselement of the Check List.



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Designing the Scorecard

You are now ready to connect the inputs to the results. You will drag and drop inputsonto results in the Scorecard pane to show how the sets are related.

Complete the following steps to tie Inventory related inputs to the Inventory

Management result:

1. Double-click the Inventory Management result in the Result pane so it isshowing in the Scorecard pane (If not already showing).

2. Select the Forward Purchases input, hold the left mouse button down anddrag the input box onto the Inventory Management result box in theScorecard pane.

3. Select the Inventory Value input, hold the left mouse button down and dragthe input box onto the Inventory Management result box in the Scorecardpane.

The Scorecard pane should look similar to the one shown below:

1. Select the Savebutton on the toolbar to re-save the scorecard with the latestchanges.

Selecting Measures

To determine a score, CorVu will evaluate the measure(s) selected in each input set.Some of the input sets used in this example have only one data value others have multiplevalues. More than one value can be evaluated to determine a score.

The Check List lists all inputs with unset measures. As measures are set for each input,the input will be removed from the Check List.

Complete the following steps to set the measures (KPIs) being scored:1. Double-click the green Forward Purchases textshown underneath Select

Measures in the Check List.

The numeric columns in the Forward Purchases dynamart are displayed.

2. Select % on FPA as the KPI to measure and clickOK.

Forward Purchases has been removed from the measures to set in the Check List.Also, the color of the link between Forward Purchases and Inventory



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Management in the Scorecard pane has changed to indicate that the measure hasbeen defined.

3. Double-click the green Inventory Value text shown underneath SelectMeasures in the Check List.

4. Select Invent Value as the KPI to measure and clickOK.TipAlternative methods for setting the measures are:

Right-mouse click the link and chooseSelect Measure

Right-mouse click the Scorecard pane and confirm that the Double-Click Link

event is Select Measure. Then double-click any link to set the measure.

Get help reviewing these methods by positioning the mouse pointer on theSelect Measures element of the Check List.

All measures have been defined so the Check List shows a check next to SelectMeasures and Select Linking Columns option momentarily flashes red.

Selecting Linking Columns

To compare the various measures selected, some sort of common column must beidentified. Generally the common element between the input sets is a time period.

Performance is being measured over time and you generally wish to compareperformance in one functional area to performance in another during the same timeperiod. In this section you will identify the period column in each of the input data sets.

Complete the following steps to identify the linking (period) columns:

1. Double-click the green Forward Purchases textshown underneath SelectLinking Columns in the Check List.



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2. Select Period end date as the Linking Column and clickOK.

Note: Do notpick Accounting Period as the Linking Column. The

date format is specified as Standard (not YYYYPP); therefore you must

pick a column containing a true date field.

3. Double-click the green Inventory Value text shown underneath Select

Linking Columns in the Check List.4. Select Period end date as the Linking Column and clickOK.

After the measures and linking columns are selected, data populates intothe stretch targets and weights table for the scorecard. The values that arepopulated depend on the aggregation assigned to the measure columns.

TipAlternative methods for setting the linking columns are:

Right-mouse click the link and chooseSelect Link.

Right-mouse click the Scorecard pane and set the Double-Click Link event toSelect Links. Then double-click any link to set the linking column.

Get help reviewing these methods by positioning the mouse pointer on theSelect Linking Columns element of the Check List.



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Now that all links have been defined, the Check List displays a check next toSelect Linking Columns and the Edit Stretch Targets/Weights check listoption flashes red momentarily.

Note: If an incorrect linking column is selected, the periods will not match

from the inputs. If this occurs date error information will populate in the

scores table. Right-mouse click on the link and select the Select Link

option to re-select the linking column.

5. Select the Savebutton on the toolbar to re-save the scorecard with the latestchanges.

Edit Stretch Targets/Weights

The Tactical Scorecard allows you to enter five alternate values for each measure beyondthe actual values for purposes of comparison. The alternate values to be entered are:Worst, Best, Planned, Benchmark and Business as Usual. The values can be renamed ifother alternate measures need to be compared.

Additionally, each measure within a result is given a weighting, or measure ofimportance. The weightings should add up to 100%.

The score is actually determined based on how the actual numbers compare to the Worstand Best Values. The scores are converted to a normalized number, typically between 0and 10, and then multiplied by the weighting factor. The resulting scores can then be

compared across a wide variety of measures (dollars, counts, percents, etc).Best and Worst Values The best and worst values default to the highest and lowestvalues found in the data for the measures shown. Best and Worst values are only shownwhen looking at input sets, not when looking at result sets. You can change the best andworst values to match company goals by manually entering new values. Note that thelowest number in the data is always assigned as the worst value, and the highestnumber is assigned as the best value.



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Planned Values Planned values are the quantitative goals the organization is expectedto achieve when performance matches the business plan.

Benchmark Values The benchmark value for a measure can be used to measurenormal industry performance, or can also be used as another planned value.

Business As Usual Value The business as usual value can be used to representperformance under normal industry and business environment conditions.

Targets and weights can be entered once for all periods or they can be enteredindividually by period, if the plan values vary by period.

For the data in our scorecard, the following stretch targets will be used for all months:

Result Measure Weights Worst Best Planned Benchmark BAU

Inventory % on FPA 50 0 15 15 10 12

Inventory Value 50 15,000 0 5,000 10,000 8,000

Setting Stretch Targets for Inventory Management

Complete the following steps to enter the Stretch Targets/Weights for Inventory

Management:

1. Click Display Scoresbuttonon the vertical tool bar.

Your scorecard should look similar to the window shown below:



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Note: If you select (Double-click) the Inventory Management result in the

Scorecardpane, you will see the actual KPI data values instead of the

Scores table.

2. Double-click the Edit Stretch Targets/Weights element in the Check List.

3. Modify the Best, Worst and various planned values to match those shown inthe chart on the following page.

The edit window should look similar to the one shown below:

4. Click OKto continue.

Each of the measures you specified in the Inventory Management result areshown. The current weighting is shown as 50-50 and the current worst andbest values are shown based on the data in the dynamarts.

The resulting analysis table should look similar to the one shown below:

Understanding the Numbers

Lets examine the numbers for January 1998 in some detail. The actual January valuesare: (Max and Min are based on normalization values)

% on FPA: 14% (Best = 15%, Worst = 0%) (Max = 10, Min = 0)Invent Value: $2,638.64 (Best = 0, Worst = $15,000)

Methodology for calculating the scoreIndividual Score = Min + (Measure Worst) / (Best Worst) * (Max Min)

January Actual Score (8.79)

On a scale of 0 to 10, the actual % on FPA score is 9.33 [(14 0) / (15 0) * 10]



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On a scale of 0 to 10, the actual Inventory value score is 8.24 [(2638 15000) / (0 -15,000) * 10)]

The combined score is 9.33 *.5 (weighting factor) + 8.25 * .5 (weighting factor) = 8.79

Planned Score (8.33)

On a scale of 0 to 10, the planned % on FPA score is 10 [(15 0)/ (15-0) * 10)]

On a scale of 0 to 10, the planned inventory value score is 6.67 [(5000 - 15000) / (0 15000) * 10]

The combined score is 10 * .5 (weighting factor) + 6.67 * .5 (weighting factor) = 8.33.

The maximum and minimum values are dependent on the scorecard normalization. Thedefault maximum value is 10 and the default minimum value is 0.

Although the Inventory Management scores were frequently below plan in thefirst half of the year, they seem to be on an upward trend during the second half ofthe year. Youll do more investigation on these scores later.

Selecting the Time Period

Now you are ready to view the Inventory Management scorecard. You may view thescorecard for a particular period or across a range of periods. First youll view thescorecard for January 1998.

Complete the following steps to view the scorecard for a designated period:

1. Double-clickSelect Period in the Check List.

2. Select Jan 1998 in the Period selection box.



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The Period Linking window should look similar to the one shown below:

3. Click OKto continue.

The scorecard will be displayed for January 1998. The current period of thescorecard is displayed on the balanced scorecard menu heading.

4. Click the Save button on the scorecard toolbar to save the changes youve

made to the scorecard.

TipThe easiest way to view other periods for the scorecard is by using

the previous and next period icons vertical toolbar on the left of theDesign/Scorecard pane.

There are three other ways to change the period for a scorecard: Double-click Select Period in the Check List.

Double-click on any unoccupied space in the Scorecard pane .

Select Period|Select Current on the Scorecard menu.

Get help reviewing these methods by positioning the mouse pointer on theSelect Period element of the Check List.


Previous Period

Next Period


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Complete the following steps to view the scorecard for January, 1999:

1. Double-click in an unoccupied space in the Scorecard pane.

2. Select January 1999 and clickOK.

You can see that the scores are slightly better during January 1999 than in January

1998.

The January 1999 scorecard should look similar to the one shown below:

3. Click the Save button on the scorecard toolbar.The scorecard is updated and saved.

Modifying the Colors Displayed

The default color for the icons in the input and result panes can be modified as noted inChapter 2. However, the icons in the analytical scorecard can also be modified to reflectscale color coding between two colors or level coding depending on the number of levelsyou set pertaining to the icons score.

You will modify the color level in the Design Pane to display three levels of performanceand then change color of the score and icon text. You will set the colors to display similar

to a stoplight, so scores from 0 to 3.33 are shown in red, 3.34 to 6.66 are shown inyellow, and 6.67 to 10.0 are shown in green.

Complete the following steps to modify the scorecard to display color coding:

1. Right-mouse click in the Design Pane and select Options.

2. Select the Design Options tab.

3. In the Color Coding section select the Iconsbutton.



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The Design Options tab should look similar to the one shown below:

4. Select the Level Coding radio button.

5. Select the Level Settingsbutton.

6. Set the Number of levels to 3.

7. Set the Range to 0 and 10.

Your Levels Parameters dialog box should look similar to the one shownbelow:

8. Select OKto continue.

Next you will set the colors for each break level. This is very similar to theway color levels are set in CorVu Quick Reports and CorVu ExecutiveAlerts.

9. Select the gray box for scores < 3.33.

10. Select the red square in the select color options dialog box and clickOK.



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11. Select the gray box for scores in the range of 3.33 and 6.67.

12. Select the yellow square in the select color options and click OK.

13. Select the gray box for scores greater than 6.67 and select the green squarefrom the select color options dialog box and select OK.

The Select Color window should now look similar to the one shown below:

14. Select OK from the Warning Levels dialog box and the Color Coding dialogbox to continue.

The level coding is now set to indicate what scores are considered bad for

the organization and what is considered good. Now that the levels aredefined you need to apply them to the scorecard icons.

14. Select the Icons tab.

15. Select the Background Color drop down button and choose Coded.



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Your Icons tab dialog box should look similar to the one shown below:

16. ClickOKto close the options window and view the newly colored scorecard.

The icon colors have been updated to display the level settings, but thedefault text and score colors are not easily viewed. You will modify thecolor of the text font and score font to automatically change depending onthe color that displays for the icon level setting. If the icon color is darkthe text color will be white and if the icon color is light the text color willbe black.

Complete the following to change the color of the description text and the icon

score:

1. Right-mouse click in the Design Pane and select Options.

2. Select the Icons tab.

3. Select the Default Text Description Font Color drop down button and selectAuto.

4. Select the Default Text Score Font Color drop down button and select Auto.

5. Select OKto continue.



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The Icons tab in the Scorecard Pane Options should appear as below:

6. Save the changes to the scorecard by selecting the Save button on the toolbar.

Your scorecard should look similar to the one shown below for January1998.



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Chapter 3 Exercise

You will now build a new tactical scorecard for the Outback Warehouse/Service CenterCustomer Service department. To create the tactical scorecard, refer to the page 2-2 fordetailed information or to the quick review. Save your scorecard and as Customer

Service. You will use two scheduled queries for the corresponding KPIs beingmeasured:

1. Resolved 1st Call This query shows the total calls compared to the issuesresolved on the first call by month and customer service representative.

2. Issues Outstanding at EOM This query shows the number of issuesoutstanding at the end of the period by customer service representative.

The Issues Outstanding and % Resolved 1st Call, KPIs will be measured with thefollowing weights, best/worst values, planned, benchmark, and business as usual:



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Create the tactical scorecard that looks like the one below for the month ofJanuary 1999:

Hint: The icons are set to level coding, review pages 2-17 to 2-19 for details.



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Summary Steps to create this tactical scorecard:

1. Create a new scorecard. The time period should be Calendar Month with aStandard date format.

2. Add Resolved 1st Call.sqy and IssuesOutstanding at EOM.sqy.

3. Select the Ratio Columns. From the Resolved 1st Call.sqy you will only havethe % Resolved 1st Call measure be a percent or average and for the IssuesOutstanding at EOM.sqy you will have the measures to sum.

4. Create a Result and type in Customer Service for the name.

5. Drag the two inputs to the result to create the links.

6. Define the measures to me monitored (% Resolved 1st Call and IssuesOutstanding at EOM).

7. Define the Linking column (all links should be based on Period end date).

8. Set the Stretch Targets/Weights for each result by:

Double-clicking the result in the Result pane.

Double-clicking Edit Stretch Targets/Weights from the Check List.

Entering the appropriate values.

9. Set color coding for three levels and then change the font and score color toauto by:

Right mouse click in the scorecard pane and select options.

Select the Strategic Design Options tab.

Select the Color Coding Icons button.

Select the Level Coding radio button and select the Level Settings button.

Set three levels in the range from 0 to 10 and apply the appropriate colors.

Select the Icons tab and change the Background Color to be coded.

Change the Default Text Font and Color to be Auto.

10. Save your scorecard as Customer Service.

4.1 chapter 3- building a tactical scorecard

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