Warsaw University of Technology Faculty of Production Engineering Institute for Organization of Production Systems

Introduction to the Balanced ScoreCard – what is it?
“The Balanced Scorecard translates an organization's mission and strategy into a comprehensive set of performance measures that provides the framework for a strategic measurement and management system”.
(Kaplan and Norton, 1996)

OPERATIONS AND PRODUCTION MANAGEMENT
Balanced Scorecard
Presented by: MSc. Eng. Bartłomiej Gładysz MSc. Eng Aldona Kluczek
OPMAN exercises A.Kluczek&B.Gładysz

BSC is a tool developed by Robert Kaplan and David P. Norton.
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BSC – aims
• To achieve strategic objectives.
• To provide quality with fewer resources. • To eliminate non-value added efforts. • To align customer priorities and expectations with the customer. • To track progress. • To evaluate process changes. • To continually improve. • To increase accountability.
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Balanced Scorecard
To achieve our vision, how should to appear to our customers?

Financial

To succeed, how should to appear to our shareholders?

Customer

Vision

Business Process
To satisfy our shareholders and customers, what business processes must we excel at?

To achieve our vision, how will we sustain our ability to change and improve?

Development

Source: R.S. Kaplan, D.P. Norton, Strategiczna karta wyników (The Balanced Scorecard), Warszawa 2001, p. 28. 22-Nov-11 OPMAN exercises A.Kluczek&B.Gładysz 3/22

BSC – perspectives

The four perspectives
Financial Perspective • Financial performance • Diversity and stability of funding • Investment strategy • • • • • • Customer Perspective Customer focus Customer satisfaction Changing customer demands and needs The value of the organization to its customers Customer relationships Organization's image and reputation with customers Innovation & Learning Perspective • • • • • • Employee training Individual and institutional improvement Human resource capabilities Learning capacity Motivation and reward system Information technology and systems capabilities and capacity
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Internal Process Perspective • Internal business processes • Resource allocation and unit cost • Quality control • Productivity

Adapted from Kaplan R.S., Norton D.P., “Using the Balanced Scorecard as a Strategic Management System,” Harvard Business Review (January-February 1996): 76.
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OPMAN exercises A.Kluczek&B.Gładysz

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22-Nov-11 OPMAN exercises A. SMART Specified Measureable Ambitious Realistic in Time 8/22 9/22 22-Nov-11 OPMAN exercises A.Why measure? • To determine how effectively and efficiently the process or service satisfies the customer. and means to achieve that target.Kluczek&B.Kluczek&B.Kluczek&B.Gładysz 10/22 How to start it? 22-Nov-11 OPMAN exercises A.Gładysz 6/22 7/22 Targets • Targets need to be set for all measures • • • • Should have a “solid basis” Give personnel something for which to aim If achieved will transform the organization Careful not to develop measures/targets in a fragmented approach: i.Gładysz 11/22 2 . • To make decisions based on FACT and DATA.Gładysz 22-Nov-11 OPMAN exercises A. it is the responsibility of management to determine HOW the organization will achieve its goals. tools.Gładysz Initiatives • Once measures and targets are established. Measurements should: • Translate customer expectations into goals. • Focus our efforts on our customers.Kluczek&B. Asking people to increase customer satisfaction has to be backed up with the knowledge. • Measures are used to determine the effectiveness of strategic initiatives.Kluczek&B. 22-Nov-11 OPMAN exercises A. • To identify improvement opportunities. • Evaluate the quality of processes. • Support our strategies.e. • Track our improvement.

Gładysz 14/22 22-Nov-11 OPMAN exercises A.com/training/pdfiles/course11r.Kluczek&B.exinfm.Kluczek&B.Gładysz 16/22 List of ca. 100 software vendors 22-Nov-11 OPMAN exercises A.Gładysz 13/22 Strategy mapping – BSC 2nd generation The Balanced Scorecard in practice 22-Nov-11 OPMAN exercises A.pdf 22-Nov-11 OPMAN exercises A.Business Process Perspective Examples of objectives and measurements Goals Measures An improvement in delivery time (40%) Half the time of completion of an order ( from 4 days to 2 days) The 10% rise to the end of years Example Customer Perspective Goals Increase customer satisfaction A rise in participation of regular customers Meetinig the customers` need Measures 85% of surveys rank high satisfaction A 40 % increase of customers 0 of broken contracts An improvement in delivery time Shortening the time of completion of an order Investing in a safety of information Development Perspective Goals Increase customer satisfaction Staff training Measures A 5 % increase in employment in a company An amount of training hours/one person within one year 2 new products within a year Vision and strategy Extending the range of products` offer Finance Perspective Goals Net turnover Measures A 30% rise in net turnover compared to last year A decrease in spending by 20% to the end of a year Source: http://www.Kluczek&B.Kluczek&B.Gładysz 17/22 3 .Gładysz 15/22 Why implement the Balanced Scorecard? Increase focus on strategy and results Improve organizational performance by measuring what matters Align organization strategy with the work people do on a day-today basis Focus on the drivers of future performance BSC – software support BSC Designer Improve communication of the organization’s vision and strategy Prioritize projects / Initiatives 22-Nov-11 OPMAN exercises A.Kluczek&B.Gładysz 12/22 22-Nov-11 Decreasing expenditure on office OPMAN exercises A.Kluczek&B.

com/PDFs/200628.List objectives for each strategic perspective.1st BSC 22-Nov-11 3rd generation – „destination statement”.pdf g.org/jit/Articles/chen021606. 22.. 1.pdf 3. Balanced Scorecard Basics. No.Gładysz 20/22 Team work 1. 70% of organizations had at least partially implemented a balanced scorecard by 2006 • 50% of Fortune 1.Show sketch and improve it at home.tefkuwait. http://www.List measures for each objective.000 companies are using BSC Microsoft Business Intelligence Conference 22-Nov-11 • 30% of companies think that the most important to their company today is performance management Source: http://www. http://www.excitant.BSC – few facts Cranfield Uni. Case studies: a. framework for drawing links OPMAN exercises A.org/LinkClick..cluteinstitute-onlinejournals. The Balanced Scorecard.Gładysz 18/22 Source: http://www.htm OPMAN exercises A.aspx?fileticket=tOmjwPcVlUQ%3D&tabi d=36 c.balancedscorecard. Kaplan R..Incorporate BSC in final paper. http://atmae.Gładysz 19/22 Evolution 2nd generation – strategy map. 2.Gładysz 23/22 4 . Journal of Industrial technology. 4.com/case-studies e. links between objectives References 1. The Strategy-Focused Organization.Kluczek&B. • >50%of large enterprises use BSC BSC – few facts Balanced Scorecard Forum • 80% of organizations using BSC reported improvements in operating performance • 66% of these organizations reported an increase in profits Balanced Scorecard Collaborative • 95% of typical workforce does not understand its organizations’ strategy • 90% of organizations fail to execute their strategies successfully • 86% of executive teams spend less than one hour per month discussing strategy • 70% of organizations do not link middle management incentives to strategy • 60% of organizations do not link strategy to budgeting Bain & Co • ca.bscdesigner.bscdesigner.Kluczek&B.co. 2..aspx 7. http://www. Balanced Scorecard Institute 2008 2. Norton E.P.-Y. http://www. No..balancedscorecard. 6.pdf 22-Nov-11 OPMAN exercises A. Journal of Business Case Studies – 4th Qtr 2006. Chen C. Norton E. Proctor Plumbing Limited: A Case Study Of The Balanced Scorecard (BSC). Harvard Business Publishing.org/LinkClick.Kluczek&B. 1998. http://www. Vol. 3. Thank you for your time! 22-Nov-11 OPMAN exercises A.bscdesigner. Chou S.balancedscorecard.Kluczek&B.htm 22-Nov-11 OPMAN exercises A.com/balanced-scorecard-fact-sheet..Kluczek&B.com/training/pdfiles/course11r.Gładysz 22/22 22-Nov-11 OPMAN exercises A.Draw sketch of BSC for Rockford..pdf 6.com/photos/sem121107/handout/NovaScotiaPowerBSC. Vol. http://www.Gładysz 21/22 1st generation – only list of metrics Ari Schneiderman .org/BSCResources/AbouttheBalancedScorecard/tabid/55/ Default. http://www.exinfm.2gc.uk/resources-casestudies b.Kluczek&B. 2001 5. 4. 7. Kaplan R. Harvard Business Publishing. http://www. Shanahan Y.htm f.Join Your team.co.-H. A BSC Framework for Air Cargo Terminal Design: Procedure and Case Study.List targets for each measure 5.aspx?fileticket=LS4KXycFC%2B8%3D&t abid=56 d. http://www.uk/pages/case_studies_access.com/balanced-scorecard-fact-sheet. 4.

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