financial reporting presentation
TRANSCRIPT
Few Interesting Aspects of BSC
Short & Long Term Measures
Strategy FormulationFinancial & Non
Financial Aspects
Its an approach
Organizational Alignment
Strategic Performance
Measurement
Communication Media
Balanced Scorecard
Gives Big Picture
Mission(Why we exist)
Values(What’s Important to us)
Vision(What we want to be)
Strategy(Our Game Plan)
SatisfiedShareholders
Delighted Customer
Efficient and Effective
Processes
Motivated Workforce
Strategic Outcomes
What is Balanced Scorecard (BSC)?
BSC – ‘The Multi purpose Bridge’
Shareholders
Senior Managers
Functional Managers
• Contract between FM & SM
• Bridge strategy and personal objectives
• Unlike normal budgeting vision mission and strategy are cascades to measurable objectives
• Coordinate between strategies and short-term managerial targets
Aspects Balanced Scarecard
Motivation & StressProvide guidance and may limit managers ‘Best Guess’
Balances Leading KPIs & Lagging KPIs
Prevents Sub Optimization
Used for Performance Management
Consensual Space & Budgetary Slack?
Something to Think About…
Shareholder expectations may not
always be financial
Interpretation of the Model and Feasibility
Issues
Welcome to OMEGA LINE
• Fully Italian
• Exporting non quota garments
• Largest exporter to Europe Sales volume $ 0.819 Billion (2015)
• Employees over 12000 youth State of the art facilities located in
• Badalgama• Bingiriya• Polgahawela• Sandalankawa• Vauniya
BSC Process in OMEGA LINE
Mission – “Preferred
innovative apparel solution
provider for branded clothing”
Objective
Strategies
Performance Measures
through BSC
Translate Objectives in to actionable strategies
Set measurements in line with strategies
Adjust objective and or strategies based on results
• Introduced as a measure to improve organizational performance
• Study revealed OMEGALINE primarily uses BSC as a tool for strategy implementation and as a performance measurement tool.
• Moreover, for implementing & measuring performance in• Corporate level• Operational level• SBU Level • Individual level
Corporate Level KPIs
Level of
Analysis
Perspective
Finance Learning & GrowthInternal Business
ProcessCustomer
Corporate
Level
Contribution for
standard unit
Cadre composition
ratio
Forecast Accuracy
On Time
Delivery
Overhead cost per unitMachine Capacity
Utilization
Account Receivables Labor turnover
Total inventory daysLabor
absenteeism
Business Level KPIs
Level of
Analysis Sector
Perspective
FinanceLearning
& Growth
Internal Business
ProcessCustomer
Business
Level
1.Apparel
1.Cut ship ratio
2.Sewing efficiency
3.On time tracking
4.Sample order CT
5.Sample hit rate
2.Textile
1.Efficiency 1.Customer
Complaints
2.Lap dip CT Avg .CT. for Sample
Dev.
3.Manufacturing CT 3.Product Dev. Hit
Rate4.Supplier Lead time
3. Finishing
1.Final QC – 1st pass 1. Overall CT
2.Despatch Hit rate
3.Sample cycle time
Methodology
• Used Last 12 months averageKPI Information for the Study
• Used only CKPI information's
• Employs Multiple regressionAnalysis for 4 Perspective
• Used Single Regression Analysisfor each perspective
Data Analysis
1- Four BSC Perspective & OrganizationalPerformance are positively correlated
2 - Learning & Growth, Financial, InternalBusiness Process & Customer Perspectiveshave a greater impact on OrganizationalPerformanceHYPOTHSIS
Interpretation of Parameters
1. Adjusted coefficient of determination (R2) = 20.5%
2. Learning & Growth and Financial Perspectives are
statistically significant at 0.001 levels.
3. Hence the 1st Hypothesis;
Total perspectives have a certain impact on Organizational Performance is partially (LGP & FP)
accepted in Omega Line.
Concluding Remarks for Hypothesis
Total perspectives have significant relationship with organizational performance
Specially Learning & Growth and Financial Perspectives are significantly contributed to total perspective and positive organizational performance
Total Perspectives Increase
Organizational PerformanceIncrease
References
Johnson, H. T. and R. S. Kaplan (1987) Relevance Lost: The Rise and Fall ofManagement Accounting, Boston: Harvard Business School Press.
Howell, R., J. Brown, S. Soucy, and A. Seed (1987) Management Accounting in the NewManufacturing Environment, Montvale, NJ: National Assn. of Accountants andCAM-I
Huselid, Mark A (1995) The Impact of Human Resource Management Practices on Turnover,Productivity, and Corporate Financial Performance, Academy of Management Journal: 635-672
Kaplan, R. S. and D.P. Norton (1996a) The Balanced Scorecard: Translating Strategy intoAction, Boston: HBS Press.
Kaplan, R. S. and D.P. Norton (1996b) Using the Balanced Scorecard as a StrategicManagement System,” Harvard Business Review (January-February):75-85.
Kaplan, R. S. and D.P. Norton (1993) Putting the Balanced Scorecard to Work, HarvardBusiness Review (September-October).
Kaplan, R. S. and D.P. Norton (1992) The Balanced Scorecard: Measures that DrivePerformance, Harvard Business Review, (January-February): 71-79.