balance score card presentation_final

8/8/2019 Balance Score Card Presentation_final

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Intangible assets has become far more important than physical assets

needed for future growth

Balanced scorecard complements financial measures to measure

performance

Customers

Internal Business process

Learning and growth

Emphasis of most companies is on short-term financial measures leaves a

gap between the development of a strategy and its implementation

Balanced scorecard links a companys long-term strategy with its short-term

actions with four new management processes

The Processes :

Translating the vision

Communicating and linking Business planning

Feedback and learning

Introducing The Balanced Scorecard


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A set of measures that give comprehensive

view of the business. It includes :

Financial Measures that tell the results

of action already taken, lagging parameters

and

complements with operational measures

that are the drivers of future financial

performance, leading parameters.

Balanced Scorecard


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Balanced Scorecard: Four new management processes


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Translating vision and strategy: four perspectives

Lofty vision and

strategy statements

dont translate easily

into action at the

local level

Statements

must be expressed as

an integrated

set of objectives and

measures which are

long-term drivers of

success

To provide superior service to targeted customers


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Communicating and Linking

Managers communicate their strategy up and down the organization and

link it to departmental and individual objectives

All levels of the organization understand the long-term strategy and that

both departmental and individual objectives are aligned

Generally engage in three activities:

Communicating and educating

Brochures, newsletters, town meetings, electronic bulletin boards

provide basis for feedback and accountability

Setting goals

High level strategy must be translated into objectives and measures for operating units

and individuals

The personal scorecard helps people to translate communicate corporate into

meaningful tasks and targets

Linking rewards to performance measures


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Business Planning

Most Organizations have separate strategic planning group and

resource allocation Senior management in strategic planning group draws plan for next

3/5/10 years down the line

Finance group does their budgeting in isolation and set financial

targets for different business unit

Unfortunately, targets set by finance staff does not get in sync withlong-term strategic objectives set by strategic planning group

This becomes the base document for monthly/ quarterly/ annually

review of organizational performance

Balance scorecard helps in integrating strategic planning to financial

objectives of the business organization


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Feedback and Learning

The Balance score card achieves in fourimportant attributes

Articulates the companys shared vision

Communicates a holistic model that linksindividual efforts and accomplishments to

business unit objectives.Supplies the essential strategic feedback

system.Facilitates the strategy review that is essential

to strategic learning.


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Strategy is described using

four perspectives

Cause and effect is a key

element

Measures are developed to

monitor performance

Profitability Growth

ShareholderValue

Organisation Vision

Price Service Quality

Market Innovation ContinuousLearning

Intellectual Assets

If we succeed,how will welook to ourshareholders?

To achieve ourvision, how mustwe look to ourcustomers?

To satisfy ourcustomers, whatmanagementprocesses must weexcel at?

To achieve ourvision, how mustour organisationlearn and

improve?

Cycle TimeProductivityCost

Financial Perspective

Customer Perspective

Internal Perspective

Organization Learning

Balanced Scorecard provides a framework to translate strategy into operational terms.

Linking measures on Perspectives


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Financial Yesterday

Customer Today

Business Process

Growth & Learning Tomorrow

The challenge is to identify the operational parameters focussing

on effectiveness and efficiency

We shall identify balanced set of THRUST AREAS


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Clarify and update strategyCommunicate strategy throughout the companyAlign unit and individual goals with the strategyLink strategic objectives to long-term targets and

annual budgetsIdentify and align strategic initiativesConduct periodic performance reviews to learn

about and improve strategy.

Uses of Balance Scorecards


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Year 2003-04 : ChallengesBalanced Scorecard - StepsVision

Mission

Strategy Map

Balanced Scorecard

X Matrix Deployment

Vision:

To be amongst the top 3 flacconage manufacturers inthe world

Mission:

a) To attain a market share of 10% in C&P worldwide

market

b) To be rated as strategic supplier by top 3 C&P

customers

c) To enhance EVA in Pharmaceuticals

d) All Furnaces to be EVA positive by 2010

e) Deming Level 4 by 2011


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Objectives

World ClassMfgProcesses

Statementof whatstrategy

mustachieve and

whatscritical to

its success

Target

25 Days Revenue

fromSelect _

The levelof

performance or rate

ofimprovem

entneeded

Projectfor leadtime

KAMs

Key actionprogramsrequired

to achieveobjectives

InitiativeMeasurement

Faster NPD Select

bottles Mfg

Howsuccess inachieving

thestrategywill be

measuredand

tracked

Strategic Theme:Operating Efficiency

Delta EVATarget

Financial

Learning

Increased AssetProductivity

Hireexperienced

Managers

Customer

Intern

alDevelop World Class

Mfg Processes

Strategy Map: Diagram of thecause-and-effect relationships

between strategic objectives

Differentiated Capacity forSelect & Mass in India & US

Balanced Scorecard terminologyVision

Mission

Strategy Map

Balanced Scorecard

X Matrix deployment


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Balanced Scorecard exampleVision

Mission

Strategy Map

Balanced Scorecard

X Matrix deployment

* Initiatives Captured only partly

Category Element Measures Target

Financial

Achieve targeted Cost Reduction(eg Productivity and efficiency; For Low

Mass and NP)

%

Optimise Work In Process Inventory(Heldware)

Less than 1 CrCustomer

Quality Assurance Process for NonSelect

No of CustomerComplaints

60% ofExisting

Quality Assurance Process for Select No of CustomerComplaints

-

Internal

Processes

Reduce NPD Cycle Time NPD Lead Time 45 Days byEnd ofYear

Differentiated ManufacturingCapability For Select

No of SamplesApproved from

Customer

???

Enhanse Manufacturing Capability Revenue generatedfrom NPD's

25% ofTotalBusiness

Energy Management Energy Cost pertonnes

???

Manufacturing Excellence Project Level Score

Improve Order to Delivery Process % OTIF

Learning Establish Pillar Structure No of Pillars

Acquire International Certifications Cerification Dates

Implementation of SHE % SHE NonConformance

Enhance Quality of people Training Man Days


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Based on the Vision and Mission of the company, SBU level strategy

maps are formed

From Strategy maps SBU level score cards are formed

From SBU level score cards, department level scorecards are formed

The Balanced Scorecard gives us the framework to describe our strategy

(perspectives)

The Strategy Map is how we describe the detail of our strategy

Themes help us focus on specific aspects

Summarising


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Translate a strategy into operational terms

Ensure that the components of the strategy -- objectives,

measures, and initiatives -- are aligned and linked

Communicate the strategy throughout the organisation

Form the basis of an effective and integrated strategic

management process

Some Goals of the Balanced Scorecard


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For each KFA3 Find out, what type of result when measured, will give us confidence, that the

unit is creating the desired focus. Prioritise top 2-3 KRAs for each KFA.( May use relationship diagram / criteria

matrix / judgement.)

For each KRAq Determine which all departments will have key roles

q

Discuss and arrive at Measures & Targets for each of the KRA

Identify KFAs


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Brainstorm for creating right focus in the unit to achieve the desiredthrust

KFAs selected : Target Receivables cycle for Select Market Reduce Receivables cycle for Non Select Market (Non LC) Increase Asset productivity

Optimise Work In Process Inventory Optimise Finished Goods Inventory Improve EBITA Revenue from Select Customers (Europe/ Non US) Revenue from Existing Non-Select Customers Revenue from New Non-Select Customers

Toach

ieve

EVA

Target

Key Focus Areas (KFAs)Vision

Mission

Strategy Map

Balanced Scorecard

X Matrix deployment


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Thrust Area

Achieve EVA Target

Receivab

lescycle

forNo

nSelectMa

rket

Optimise

FG

Inven

tory

X Matrix - Thrust AreasVision

Mission

Strategy Map

Balanced Scorecard

X Matrix deployment

Rev

enuefrom

Sele

ctCu

sto

mers(Europe/Non

US)


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Receivablescycle

forNon

SelectMarke

t

Achieve EVA Target

Revenuefrom

Se

lectCustomers

OptimiseFini s

hed

GoodsInventory

Thrust

Area

K

FA

KRA

Receivables targets

Reduce delays

Revenue customer wise

Customerwise NPDs

Linewise inventory

Sales from inventory target

Finalised X Matrix

Measure

s

Tgt..

95%

60 2

crs

OTIF

Receivable

sno

ofday

s

Inventoryv

alu

eRedn

2crs

14

Linewisein

ventory

value

NoofNPD

sfo

r

keycustom

ers

Totalrevenue

from

selectplay

ers

10crs

WHO

Prodnpl an

ning

MFG.

Logistics

Marketin g

Finance

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