Balanced Score Card (BSC)Springs Window Fashions

Tim MurphyJohn KluthDave Murn

Objectives of BSC Review BSC—Effective Communication Tool

Financial Voice of Customer/Consumer Voice of Process Voice of Associate

BSC—How SWF uses it Integration of Strategic Planning Process Cascading Flow Sustaining BSC Process

Keeping Score tool BSC—Key Learnings and Next steps

BSC-Communication Tool What is SWF BSC? -- Key business metrics that drive core elements of

business—more than financial—BALANCED business view How is SWF BSC formatted? – In addition to Financial, BSC is

formatted around SWF core strategic areas (Customer, Process, Associate)

Metrics should be aligned with Strategic Plan Assign Metric Owners – Accountable to determine and report metrics Make it visual Pick quantitative and qualitative

measures Roll it out to the full organization to

create alignment and engagement How to Start? -- Start with the

metrics you currently have and make improvements as you go forward

Division Balanced Score Card

BSC-How SWF uses it BSC is Agenda for Monthly Business Review meeting Measures ‘how we’re doing’ as a company Process & People Data Critical to business results - (Reynosa turnover) Team Goals (SLT & Management team) developed around supporting BSC objectives A powerful ‘standard’ communication tool-I/T Dept Meeting agenda item Cascading goals driven down through the organization

Integration of Strategic Planning Process CTB Balance Scorecard

Wood Platform DO SR

DH PlatformSF EB

Cellular PlatformDO /SF LG

Stock Platform

SF/ GS /LG JS

Contract Platform DL DS

RZ SF

RZ DL/LG/GE

GS CU +

GS DW

GS MM GS / DO

Various

MC DB

RZTM, DM, MC

RZMC, TM, DM

RZDM, TM, MC

Visual Indicator Key:

= On Target = Above Target = Below Target

Visual Indicator Shows Progress to Project Plan

"The Charge is to make the Important Measurable, Not the Measurable Important!"

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Strategic Insight

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Designer Decorator Growth - Market Segmentation

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Communication

Days to Deliver

Freight Cost Reduction

$10MM Opportunity

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Engineering Department Balanced Score Card

Department Metrics Department Metrics

#Gross-To-Net Costs *

#Cost of Poor Quality

####Engineering Fixes

####TOTALS

#Quality Tra ining 2003

#Air Fre ight

##

Turnover:USA # x $Reynosa # x $

#Remakes# x $ each

####Dept 325 (Inspection)

####Dept 323 (Q ualit y Eng)

#Dept 322 (Rework)

#Scrap (All 680 Accounts)

Ext. FailureInt. FailureAppraisa lPrevent ion

Necessary Quality Costs

Avoidable Quality Costs

COQ Month $COQ YTD $Gross Sales $COQ Month as % of Gross Sales %Net Sales $

COPQ as a % of Net Sales for the Month %

COPQ has been expanded in 2003 to include specific return and allowance codes based on work from the Gross-To Net QAT

*Includes return & allowance codes:

10, 13, 15, 41, 42, 44, 45, 47, 49, 50, 51, 52, 55, 58, 59, 60

Int. Failure =

$#

Prevention = $#

Appraisal =

$#

Ext. Failure =

$#

Senior Leader’s AIP Goals Self -Assessment

Supervisory Assessment

NAME: Mike Cienian TITLE: Vice-President Quality/Engineering DEPT: Officers – 602 SUPERVISOR: Ron Zabel (Name & number)

Wei

ght

Objectives & Actions: List 2-4 object ives at the beginning of the year. Objectives should be Specific, Measurable, Attainable, Relevant and T rackable (SM ART). Additionally, list speci fic actions required to meet each object ive. For each object ive, define the standard by which performance will be measured. Measuremen ts should be quantitat ive (dollars, units, time measuremen ts, service levels, defects etc) and/or qualit ative (customer sat isfaction , survey results). Then define the minimum level of acceptable performance (threshold), the desired level of performance (target), and exceptional performance (max imum).

Target Performance COPQ improvemen ts are 75% of 2003 goal, Final COPQ of # = $ savings Quality Remakes improve 10% to 2 .52% by the end of the year.

30 % Objective &Action: . Achi eve COPQ (Cost of Poor Quality) improvemen ts per Crosby Model and Improvement goals of Balanced ScoreCard Achi eve Remakes Improvemen t Scores for “Quality Remakes” as identified for Strategic Planning goals.

Threshold: COPQ improvemen t is 50% of goal for 2003, Final COPQ of %= $ savings Quality Remakes improve 5% to 2.66% by the end of the year.

Maximum :. COPQ improvemen t is 100% of goal for 2003 Final CO PQ of % = $ savings Quality Remakes Improve 15% to 2.38% by the end of the year.

Target Performance: 7 of 9 projects complete 30% Complete implementation of (9) Product Impro vement Pro jects Threshold:

6 of 9 projects complete Maximum : 9 of 9 projects complete

Department Manager’s AIP GoalsINDIVIDUAL OBJECTIVES WORKSHEET

Self -Assessment

Supervisory Assessment

NAME: Tom Merker TITLE: Engineering Manager DEPT: Product Engineering (368) SUPERVISOR: Mike Cienian (Name & number)

Wei

ght O bjectives & Action s: List 2 -4 objectives at the beginning of the year. Objectives should be Specific, Measurable, Attainable, Relevant and Trackable

(SMART). Additionally, list specific actions re quired to meet each objective. For each objective, define the standard by which performance will be measured. Measurements should be quantitative (dollars, units, time measurements, service levels, defects etc) and/or qualitative (customer satisfaction, survey results). Then def ine the minimum level of acceptable performance ( threshold), the desired level of performance (target), and exceptional performance (maximum).

Target Performance: Complete 7 of 7 by months indicated. 20% O bjective & Actions: Improve Product Quality Implement design changes on the following product quality issues: 1. EZ Up cord tension pulley (April 2003) 2. EZ Up on cordless platform (June 2003) 3. G85 transmission (June 2003) 4. Color coordination project (December 2003) 5. Garden Retreat replacement (December 2003) 6. Product Specifications for drapery hardware(September 2003) 7. New cord lock introductions: cellular /pleated (J uly/Sept)

Threshold: Complete 4 of 7 by year -end.

Maximum: Complete 7 of 7 1 -month prior to indicated under target.

Results at year-end: Assess what level of performance has been achieved, as well as the quality and timeliness of activities completed.

Dept BSC

Department Metrics

Senior Leader’s

AIP Goals

Manager’s AIP Goals

Team AIP GoalVOA- Attitudes, Skills, Knowledge to ensure Engagement

VOP-Processes are created or improved to ensure Discipline to ImplementVOC/C-Products and Services to ensure we Move Closer to the Consumer

MaximumATO On-time vsoriginal promise date -%On-time stock shipments - %

ThresholdATO On-time vsoriginal promise date -%On-time stock shipments - %

TargetATO On-time vs original promise date - %On-time stock shipments - %

Objectives and Actions:

Take BEx to the next level so that our consumer needs determine our actions and directionACTIONS:ATO on-time vs original promise date – %

On-time stock shipments %Circuit breaker - % on original promise date

33.3%

Great Place to Work Associate Satisfaction Survey

Associate Satisfaction

Survey

Division Team AIP

Goal

Senior Leader’s AIP Goals Self -Assessment

Supervisory Assessment

NAME: Mike Cienian TITLE: Vice-President Quality/Engineering DEPT: Officers – 602 SUPERVISOR: Ron Zabel (Name & number)

Wei

ght

Objectives & Actions: List 2-4 object ives at the beginning of the year. Object ives should be Specific, Measurable, Attainable, Rel evant and Trackable (SMART). Additionally, list specific act ions required to meet each objective. For each objecti ve, define the standard by which performance will be measured. Measuremen ts should be quantitat ive (dollars , units, time measuremen ts, service levels, defects etc) and/or qualitat ive (customer satisfaction, survey result s). Then define the minimum level of acceptable performance (threshold), the desi red level of performance (target), and exceptional performance (maximum).

Target Performance CO PQ improvemen ts are 75% of 2003 goal , Final COPQ of # = $ savings Quality Remakes improve 10% to 2.52% by the end of t he year.

30 % Objective &Action: . Achieve COPQ (Cost of Poor Quality) improvemen ts per Crosby Mo del and Improvement goals of Balanced ScoreCard Achieve Remakes Improvemen t Scores for “Quality Remakes” as iden tified for Strategic Planning goals.

Threshold: CO PQ improvemen t is 50% of goal for 2003, Final CO PQ of %= $ savings Quality Remakes improve 5% to 2 .66% by the end of the year.

Maximum :. CO PQ improvemen t is 100% of goal for 2003 Final COPQ of % = $ savings Quality Remakes Improve 15% to 2 .38% by the end of the year.

Target Performance: 7 of 9 projects complete 30% Complete implementation of (9) Product Impro vement Projects Threshold:

6 of 9 projects complete Maximum : 9 of 9 projects complete

Department Manager’s AIP GoalsINDIVIDUAL OBJECTIVES WORKSHEET

Self -Assessment

Supervisory Assessment

NAME: Tom Merker TITLE: Engineering Manager DEPT: Product Engineering (368) SUPERVISOR: Mike Cienian (Name & number)

Wei

ght Objectives & Actions: List 2 -4 objectives a t the beginning of the year. Objectives should be Specific, Measurable, Attainable, Relevant and Trackable

(SMART). Additionally, list specific actions re quired to meet each objective. For each objective, define the standard by which performance will be measured. Measurements should be quantitative (dollars, units, time measurements, service levels, defects etc) and/or qualitative (customer satisfaction, survey results). The n define the minimum level of acceptable performance (thr eshold), the desired level of performance (target), and exceptional per formance (maximum).

Target Pe rformance: Complete 7 of 7 by months indicated. 20% Objective & Actions: Improve Product Quality Implement design changes on the following product quality issues: 1. EZ Up cord tension pulley (April 2003) 2. EZ Up on cordless platform (June 2003) 3. G85 transmission (June 2003) 4. Color coordination project (December 2003) 5. Garden Retreat r eplacement (December 2003) 6. Product Specifications for drapery hardware(September 2003) 7. New cord lock introductions: cellular/pleated (J uly/Sept)

Threshold : Complete 4 of 7 by year -end.

Maximum: Complete 7 of 7 1 -month prior to indicated under target.

Re su lts at year-end: Assess what level of performance h as been achieved , as well as the quality and timeliness of activities completed.

Senior Leader’s

AIP Goals

Manager’s AIP Goals

Team AIP GoalVOA - Attitudes, Skills, Knowledge to ensure Engagement

VOP-Processes are created or improved to ensure Discipline to ImplementVOC/C-Products and Services to ensure we Move Closer to the Consumer

Target BEX survey results for the division move upward with no drop in ratings

by location. Participation level 85% +. (May 02 baseline) “This is a great place to work” question moves 2 pts Survey results specifically supports “ideas and concerns are listened

to.” BECI (BEx Check In- questions to follow) mini survey May 03, Dec 03; next full survey May 2004

33.3% Objectives and Actions: Voice of Associate Goal: Engagem ent Take BEX to the next level by enhancing two -way communication which results in a) increased connectedness with associates and management, b) information flow increases upward, ac ross, and downward in the organization, c) everyone has more knowledge about the business and company direction and business issues, d) associates understand and act upon their role in Quality at the Source.

Threshold Survey participation 70% + “This is a great place to work” question

maintain benchmark score.

Maximum “This is a great place

to work” question increases 4pts

Middleton Facility Balanced Score Card

Crystal Pleat Department Balanced Score Card

Department Manager’s AIP Goals

Supervisor’s AIP Goals

Facility BSC

Dept BSC

Manager’s AIP Goals

Division Team Goal

Supervisor’s AIP Goals

Cascade Flow Associate Satisfaction & Engagement

ROIC

Senior Leader’s AIP Goals Self -Assessment Superviso ry Assessment

NAME: Steve Cable TITLE: Vice President Finance DEPT: Officers – 602 SUPERVISOR: Ron Zabel (Name & number)

Wei

ght

Objectives & Acti ons: List 2-4 objectives at the beginning of the year. Objectives should be Specific, Measurable, Attainable, Relevant and Trackable (SMART). Additionally, list specific actions required to meet each objective. For each objective, define the s tandard by which performance will be measured. Measurements should be quantitative (dollars, units, t ime measurements, service levels, defects etc) and/or qualitative (customer satisfaction, survey results). Then define the minimum level of acceptable performance (threshold), the des ired level of performance (target), and exceptional performance (maximum).

Target Performance: Recurring EBITDA – $ Recurring ROIC – %

50%

Objective & Actions: Company Performance Guide the o rganiza tion towards ach ievement of its

profitab ility measures by do ing the following, as well as other unspecified actions:

We will lead at least two in-depth quarterly reviews to ensure we are p rogressing towards yearend targets

We will ma intain an active keepers list to generate upsides to offset the unfo reseen downsides that will, undoubtedly, arise .

We will continue to review our cost structures and bring insigh ts to the SLT fo r possib le action.

We will enhance the proforma process to assist the organ ization in making sound business decisions.

Threshold: Recurring EBITDA - $ Recurring ROIC - %

Maximum: Recurring EBITDA – $ Recurring ROIC –%

Measures: 30% - Segment recurring EBITDA – consistent with

Divisio nal targets 20% - Recurring RO IC – target w ill be budget

Results at year-end:

Senior Leader’s

AIP Goals

Manager’s AIP Goals

X Self-Assessment

Supervisory Assessment

NAME: John Kluth TITLE: Controller DEPT: Accounting – 612 SUPERVISOR: Steve Cable

Wei

ght

Objectives & Actions: List 2-4 objectives at the beginning of the year. Objectives should be Specific, Measurable, Attainable, Relevant and Trackable (SMART). Additionally, list specific actions required to meet each objective. For each objective, define the standard by which performance will be measured. Measurements should be quantitative (dollars, units, time measurements, service levels, defects etc) and/or qualitative (customer satisfaction, survey results). Then define the minimum level of acceptable performance (threshold), the desired level of performance (target), and exceptional performance (maximum).

Target Performance: Hold monthly internal meetings with key individuals in asset monetization process. These meetings can be separate meetings with each group, or one large meeting with all participants. Achieve 90% of targeted dollar benefit of asset monetization.

5% Objective & Action: Active Projects – Asset Monetization Hold internal asset monetization meetings, and participate in corporate discussions. Correct all vendor terms in Frontier system. Continue to monitor AP performance, and look for ways to stretch terms. Look for other opportunities.

Threshold: Prepare and distribute monthly recap of current status of asset monetization, with expanded analysis of critical areas, such as AP. Highlight areas of opportunity.

Maximum: Achieve 120% of targeted dollar benefit of asset monetization.

Manager’s AIP Goals

On-time Shipments

Cost of Poor Quality

Division BSC

Division Balanced Score Card

Middleton Facility Balanced Score Card

Crystal Pleat Department Balanced Score Card

Department Manager’s AIP Goals

Supervisor’s AIP Goals

Division Team AIP GoalVOA- Attitudes, Skills, Knowledge to ensure Engagement

VOP-Processes are created or improved to ensure Discipline to ImplementVOC/C-Products and Services to ensure we Move Closer to the Consumer

MaximumATO On-time vs original promise date - %On-time stock shipments - %

ThresholdATO On-time vs original promise date - %On-time stock shipments - %

TargetATO On-time vs original promise date - %On-time stock shipments - %

Objectives and Actions:

Take BEx to the next level so that our consumer needs determine our actions and directionACTIONS:ATO on-time vs original promise date – %

On-time stock shipments %Circuit breaker - % on original promise date

33.3%

Sustaining your BSC Communication to all Associates “Keeping Score” Tool for New Associates

Key Learnings Just do it - get started and improve it as you go

We have begun our improvement phase BSC Annual Review and BSC Improvement Team

Key Word: BALANCE Achieve a “Balanced View” of company performance

Table format of BSC has limitations Tend to include mostly lagging indicators Can lead to inappropriate row-to-row comparisons Data are “points in time”

Not able to show trends (where we’ve been/where we’re going) May lead to inappropriate conclusions, for example…

“Point In Time” Example “High-Flyer Airlines” has implemented BSC A key metric is altitude after takeoff

Goal for BSC is 20,000 feet, 10 minutes after takeoff Created a cascading BSC for each plane Review performance for two current flights

Both planes took off 10 minutes ago Plane A is only at 19,000 feet Plane B is at 21,000 feet Plane A gets a “Poor” indicator Plane B gets a “Good” indicator

Now, let’s look at their performance over time…

“Point In Time” Example - continued

Time

Altitude

Plane A

Plane B

Goal 20,000 ft

Which plane would you rather be on???

10 Minutes

Next Steps Create a graph of each key metric showing its

performance over time Appropriate use of SPC techniques provides a range of

normal/typical “System/Process Behavior” Can monitor performance knowing that we will be

reacting to real signals in the metrics, rather than noise Use of “Process Behavior Limits” makes for better

BSC indicators and goals Judging within a range, rather than to a point goal Process limits are predictors of future performance

Better forecasting…better goals

Month/Year

Ind

ivid

ual V

alue

01/0509/0405/0401/0409/0305/0301/0309/0205/0201/02

40000

30000

20000

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UCL=31756

LCL=20226

01/02 02/04

Month/Year

Mo

ving

Ran

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01/0509/0405/0401/0409/0305/0301/0309/0205/0201/02

15000

10000

5000

0

__MR=2168

UCL=7083

LCL=0

01/02 02/04

1

1

Process Chart for SWF SQI PPMJan 2002 through Feb 2005

SWF SQI PPM - For Last Six Months

5,000

15,000

25,000

35,000

45,000

PPM 25,360 28,203 21,960 24,771 26,042 23,196

SWF Goal 30,301 30,301 30,301 30,301 28,642 28,642

IW Benchmark 18,500 18,500 18,500 18,500 18,500 18,500

09/04 10/04 11/04 12/04 01/05 02/05

If you’re interested in receiving a copy of this presentation –

please send an email to:

tim.murphy@springs.com