You are on page 1of 106

TOMMIE JUAN

JOHANSSON MILLÁN

TALLER:
LAS 4 PERSPECTIVAS DE UN SISTEMA DE
NEGOCIO: PROCESOS, PERSONAL, SERVICIO
A CLIENTES Y ASPECTOS FINANCIEROS.
Copyright: Tommie Johansson 2007 1
Las 4 perspectivas - procesos,
personal, servicio a cliente y aspectos
financieros de un sistema de negocio

Based on the Balance Scorecard and applied


to the ISO 9000 family of standards

Tommie J. Johansson
Suecia

Copyright: Tommie Johansson 2007 2


Breakthroughs in performance...
... require major changes, and that includes
changes in the measurement and management
systems used by an organization.

{ It cannot be accomplished only by


monitoring and controlling financial
measures of past performance
{ Reliance on summery financial performance
measures are hindering organizations’
abilities to create future economic value.

Copyright: Tommie Johansson 2007 3


Why important?

oThe
oThe information
information age
age requires
requires new
new
capabilities
capabilities for
for competitive
competitive success.
success.
o develop customer relationships
o introduce innovative products/services
o customized high quality products/services
o low costs and short lead times
o mobilize employee skills and motivation
o deploy information technology

Copyright: Tommie Johansson 2007 4


Balanced Scorecard

{
{ Measures
Measures thethe organization’s
organization’s
performance
performance across
across four
four perspectives:
perspectives:
z financial
z financial
z customer
z customer
z internal
z internal business
business processes
processes
z learning
z learning and
and growth
growth (personnel)
(personnel)

Copyright: Tommie Johansson 2007 5


Internal and external perspectives

Financial
Financial Customers
Customers

Processes
Processes

Personnel
Personnel

Copyright: Tommie Johansson 2007 6


The balance between…

{ short and long term objectives


{ financial and non-financial measures
{ outcome indicators and performance
drivers
{ external and internal performance
perspective

Copyright: Tommie Johansson 2007 7


Financial Perspective

Financial
Financial measures
measures are
are valuable
valuable in
in summarizing
summarizing
the
the readily
readily measurable
measurable economic
economic consequences
consequences
of
of actions
actions already
already taken.
taken.

Financial
Financial performance
performance measures
measures indicate
indicate
whether
whether aa company’s
company’s strategy,
strategy, implementation
implementation
and
and execution
execution are
are contributing
contributing to
to bottom-line
bottom-line
improvement.
improvement. (see
(see ISO
ISO 10014)
10014)

Copyright: Tommie Johansson 2007 8


Customer Perspective

Management
Management identifies
identifies the
the customers
customers and
and
market
market segments
segments inin which
which the
the organization
organization
will
will compete
compete and
and the
the measures
measures of of performance
performance
in
in these
these segments.
segments.

The
The customer
customer perspective
perspective enables
enables managers
managers
to
to articulate
articulate the
the customer
customer and
and market-based
market-based
strategy
strategy that
that will
will deliver
deliver superior
superior future
future
financial
financial returns
returns

Copyright: Tommie Johansson 2007 9


Internal Business Process Perspective
In
In this
this perspective,
perspective, management
management identify
identify
the
the critical
critical internal
internal business
business processes
processes in
in
which
which the
the organization
organization must
must excel.
excel.
These
These processes
processes enable
enable the
the organization
organization to:
to:

{ deliver the value that will attract and retain


customers,
{ satisfy owner’s expectations of excellent
financial returns

Copyright: Tommie Johansson 2007 10


Learning and Growth Perspective

This
This perspective
perspective identifies
identifies the
the infrastructure
infrastructure
that
that the
the organization
organization must
must build
build to
to create
create
long-term
long-term growth
growth and
and improvement.
improvement.
Organizational
Organizational learning
learning and
and growth
growth come
come from
from
three
three principal
principal sources:
sources:
oo People,
People, systems
systems and
and company
company culture.
culture.
The
The far
far most
most important
important resource
resource inin the
the
organization
organization is is Competence
Competence (see (see ISO
ISO 10015)
10015)

Copyright: Tommie Johansson 2007 11


The framework of a Business
Management system

Copyright: Tommie Johansson 2007 12


Linking the measures to the strategy

{ Cause-and-Effect relationships
{ Outcomes and Performance drivers
{ Linkage to the financial perspective

Copyright: Tommie Johansson 2007 13


Cause and Effect Relationship (ex)
Return on
Financial
capital

Customer
loyalty
Customer
On-time
delivery

Process Process
Process Internal Business Process
quality cycle
cycletime
time

Employee’s
Learning and growth
competence

Copyright: Tommie Johansson 2007 14


Outcomes and Performance drivers

The outcome measures are more generic


and tend to be lag indicators (operational),
such as Profitability, Customer satisfaction,
Employee turnover etc.
The performance drivers, the lead indicators
(strategic), tend to be unique for an organization
and reflects the strategy, such as Cycle time,
Defect rates, strategic competence etc.
A good business system should have a mix of
Outcome measures and Performance drivers.
Copyright: Tommie Johansson 2007 15
Linkage to Financials

ItIt is
is easy
easy to
to become
become pre-occupied
pre-occupied with
with such
such
objectives
objectives as as quality,
quality, cycle
cycle time,
time, innovation
innovation and
and
employee
employee empowerment
empowerment for for their
their own
own sake.
sake.

These
These objectives
objectives must
must bebe linked
linked to
to outcomes
outcomes
that
that directly
directly influence
influence customers
customers andand that
that
deliver
deliver future
future financial
financial performance
performance (ISO 10014).

Copyright: Tommie Johansson 2007 16


The model

Copyright: Tommie Johansson 2007 17


Model of a process-based QMS

Continual improvement of the


quality management system

Management
responsibility
Customers Customers

Measurement.
Resource
Management
analysis and Satisfaction
improvement

INPUT Product OUTPUT


Requirements realization
Product

Copyright: Tommie Johansson 2007 18


The 4 perspectives and ISO 9001

ISO 9001, clause 7.2


ISO 9001? and 8.2.1
ISO 10014 Financial
Financial Customers
Customers

ISO 9001, clause 7


Processes
Processes

ISO 9001, clause 6


People
People ISO 10015

Copyright: Tommie Johansson 2007 19


People perspective

… is mainly about linking the need for


competence to the business plan and
to manage knowledge

Copyright: Tommie Johansson 2007 20


People

{ Employees’ competence
{ Information systems capabilities
{ Motivation and empowerment
{ ISO 10015:1999 (2006)

Copyright: Tommie Johansson 2007 21


Lead

Core employee measures Lag

Results Core
Measures

Employee Employee
Retention Productivity

Employee
Satisfaction
Enablers

Employees Technology Climate for


Competence Infrastructure Action
Copyright: Tommie Johansson 2007 22
ISO 10015:1999 & 2006

Quality Management - Guidelines for


training

Copyright: Tommie Johansson 2007 23


Quality management - Guidelines
for training

Changes may require an organization to analyze it’s


competence-related needs.

This standard provides guidance that can help an


organization and their personnel when addressing
issues related to training.
5
1 001
I SO

Copyright: Tommie Johansson 2007 24


Linking Competence

Business plan

Other Financial Human Technical


resources resources resources resources

Others Competence Remuneration

Other Training
needs needs
Copyright: Tommie Johansson 2007 25
ISO 9001:2000

6. Resource Management
6.2 Human resources

Competence, awareness and training


The organization shall
a) Determine the necessary competence for personnel
performing work affecting product quality,
b) Provide training or take other actions to satisfy
these needs,
c) Evaluate the effectiveness of the actions taken,
d) …
e) Maintain appropriate records of education,
training, skills and experience.

Copyright: Tommie Johansson 2007 26


Definitions: (from ISO 10015)

Competence - application of knowledge,


skills and behaviours in performance

Training - process to provide and develop


knowledge, skills and behaviors to meet
requirements

Copyright: Tommie Johansson 2007 27


Scope of ISO 10015

These guidelines cover the development,


implementation, maintenance and improvement of
strategies and systems for training that affect the
quality of the products supplied by an organization.

This standard applies to all types of organizations.


5
1 001
I SO

Copyright: Tommie Johansson 2007 28


Training: a four-stage process

1
Define
training needs 2
Design and
plan training

MONITOR

4
Evaluate training
outcomes 3
Provide for
training

Copyright: Tommie Johansson 2007 29


1. Defining training needs

#1 Defining the needs of the organization


#2 Defining and analyzing competence requirements
#3 Reviewing competence
#4 Defining competence gaps
#5 Identify solutions to close the competence gaps

Output:
Document - Training needs specification
(part of the Training Plan specification)

Copyright: Tommie Johansson 2007 30


Purpose of this stage

The purpose of this stage should be to define:


• the gaps between existing and required competence;
• the training needed by employees.

Copyright: Tommie Johansson 2007 31


2. Designing and planning training

#1 Defining the constraints


#2 Design the training plan
• training methods and criteria for selection
• Training plan specification
• selection of a training provider

Output:
Document - Training plan specification
incl. criteria and methods for evaluation of outcomes

Copyright: Tommie Johansson 2007 32


Purpose of this stage

The purpose of this stage should be:


• design and planning of actions to be taken;
• definition of the criteria for evaluation and monitoring

Copyright: Tommie Johansson 2007 33


Learning Objectives

{ Cognitive (Knowledge)

{ Affective (Attitude)

{ Behavioral (Skills)

{ Business Impact

Copyright: Tommie Johansson 2007 34


3. Providing for the training

# Providing support
* pre-training support
* training support
* end-of-training support
Outputs:
- Evaluation reports of training outcomes
- Reports from interviews with the trainees

Copyright: Tommie Johansson 2007 35


Purpose of this stage

The purpose of this stage should be:


• supporting trainer and trainee;
• monitoring the quality of the training delivered

Copyright: Tommie Johansson 2007 36


4. Evaluating training outcomes

Has the competence gap been closed by the training?

#1 In the short term...


#2 In the long term...
#3 Collect data and prepare evaluation report

Outputs:
- up-dated individual training record
- evaluation report with description of corrective
and preventive actions

Copyright: Tommie Johansson 2007 37


Remember ISO 9001/6.2.2
- the organization shall…

{ determine the necessary


competence…
{ provide training or take other
actions…
{ evaluate the effectiveness of the
actions taken

Copyright: Tommie Johansson 2007 38


Purpose of this stage

The purpose of this stage should be:


• to confirm that both organizational and training
objectives have been met;

Copyright: Tommie Johansson 2007 39


Kirkpatrick approach, four levels
for evaluation of training

1. Reaction
„ How trainee reacted to training (subjective)
„ How did trainee feel about the training

Useful in improving instructional techniques,


selection of methods etc

Copyright: Tommie Johansson 2007 40


Kirkpatrick approach, four levels
for evaluation of training

1. Reaction
2. Learning
„ What trainee knows as a result of the
training
„ What skills, knowledge or attitudes
have changed and by how much

Useful for improving task analysis,


knowledge and skills analysis and
selection & design of instructional
methods
Copyright: Tommie Johansson 2007 41
Kirkpatrick approach, four levels
for evaluation of training

1. Reaction
2. Learning
3. Behavior
„ What trainee does differently after
the training
„ Whether trainee applies knowledge &
skills acquired to the job
„ What on-the-job performance
improvements occurred as a result of
the training

Copyright: Tommie Johansson 2007 42


Kirkpatrick approach, four levels
for evaluation of training

1. Reaction
2. Learning
3. Behavior
4. Results
„ Whether on-the-job application of the
knowledge & skills acquired during
training produced measurable results
„ In the market
„ At the customers
„ In the organization
„ As increased productivity
Copyright: Tommie Johansson 2007 43
The 2000 ASTD* state of the
industry report

{ 77% used level 1


{ 36% 2
{ 15% 3
{ 8% 4

What does it indicate?

* ASTD – American Society for Training and Development

Copyright: Tommie Johansson 2007 44


A five level model

{ Since Kirkpatrick established his


original model, other theorists (for
example Jack Phillips), and indeed
Kirkpatrick himself, have referred to
a possible fifth level, namely ROI
(Return On Investment).

Copyright: Tommie Johansson 2007 45


Copyright: Tommie Johansson 2007 46
Monitoring and improving the training
process

Inputs:
- all records from previous stages, and/or
- records from an internal quality audit procedure

Output:
- action plan defining actions, setting deadlines and
assigning responsibilities

Copyright: Tommie Johansson 2007 47


Purpose of this stage

To ensure that the training process, as part of


the organization’s quality system, is being
managed and implemented correctly and that the
process is effective in meeting organizational and
competence requirements.

Copyright: Tommie Johansson 2007 48


Linking Competence

Business plan

Other Financial Human Technical


resources resources resources resources

Others Competence Remuneration

Other Training
needs needs
Copyright: Tommie Johansson 2007 49
Competence acquisition

{ Other needs than training


z Recruitments
z Consultants
z Insourcing
z Outsourcing
z Taking over a company
z Etc

Copyright: Tommie Johansson 2007 50


Knowledge Management

”Companies must learn to invest in and manage


brain-power if they hope to compete in an
economy where, more than ever, knowledge is
what we buy and sell.”
-Thomas S. Stewart-

Copyright: Tommie Johansson 2007 51


Copyright: Tommie Johansson 2007 52
Business process perspective

…is mainly about reducing costs and


continual improvement

Copyright: Tommie Johansson 2007 53


Business Process Perspective

{ Time { Conformity
{ Quality { Non-
{ Cost conformity
{ Efficiency

Copyright: Tommie Johansson 2007 54


Total Quality Management

Customer Customer
needs results

External
supplier

Copyright: Tommie Johansson 2007 55


Managing the economics of a process

{ all processes within an organization have an


economic effect
{ these effects will be experienced by the
customer, the organization or both
{ the organization can measure the effect as
costs of conformity or nonconformity
{ the customers will indicate the effect by the
level of customer satisfaction
{ reports about costs and customer satisfaction
should be analyzed to identify causes of any
problem and opportunities for improvement

Copyright: Tommie Johansson 2007


The costs of the organization

Cost of conformity
cost to fulfill all the stated
and implied needs of
customers in the absence
of failure of the existing
process Cost of nonconformity

cost incurred due to failure


of the existing process

Copyright: Tommie Johansson 2007


The Model
Start
Identify / Review
processes

Identify process Identify factors Plan & implement


activities affecting Cus.Sat. improvements
Monitor costs Monitor customer
satisfaction
Produce process Produce customer yes
cost report satisfaction report
no Is proposed
Management improvement
review justified?
no
Improvem.
Identify opportunities
Conduct cost /
opportunities identified? yes benefit analyses
Copyright: Tommie Johansson 2007
Monitoring costs
turn-over

Savings

25 - 30%
Correction

3 - 5%
Control

1%
Prevention
time
Copyright: Tommie Johansson 2007
Quality Costs

Prevention Control Correction


before delivery after delivery

• instructions • testing • re-work • repair


• manuals • inspections • scrap • replace
• training • proof reading • loss of Image!
• good suppliers

Copyright: Tommie Johansson 2007 60


Customer perspective

…is mainly about understanding the


customer’s needs

Copyright: Tommie Johansson 2007 61


Monitor Customer Satisfaction

Customer satisfaction can be assessed through:


o verbal survey
o written survey
o suggestion process
o complaint process
o focus groups
o comparison study
o reasons for lost sale
o other methods

Copyright: Tommie Johansson 2007


Customer Perspective

o Market share
o Customer acquisition
o Customer retention
o Customer satisfaction
o Customer profitability
o Image and reputation
o Trademark protection

Copyright: Tommie Johansson 2007 63


Core measures

Market
Share

Customer Customer Customer


Acquisition Profitability Retention

Customer Lead
Satisfaction
Lag

Copyright: Tommie Johansson 2007 64


Market segmentation

{ Identify the customer objectives in


each targeted segment
{ not just choosing what to do - but
also choosing what NOT to do

Copyright: Tommie Johansson 2007 65


Financial perspective

…is mainly about realizing financial


and economic benefits of the quality
management system

Copyright: Tommie Johansson 2007 66


Financial strategy

{ Revenue growth and mix


{ Cost reduction
{ Productivity improvement
{ Asset utilization
{ Investment strategy

Copyright: Tommie Johansson 2007 67


Financial Perspective

o Revenue
o Cash flow
o Sales Growth
o Cost reduction
o Productivity improve
o Return-on-capital-employed (ROCE)
o ISO 10014:2006

Copyright: Tommie Johansson 2007 68


ISO 10014:2006

Quality Management - Guidelines for


realizing financial and economic benefits

Copyright: Tommie Johansson 2007 69


Guiding stars for the review

Addressing top
management
as non-QM
experts “Show
“Show me the
Money”
Money”

Copyright: Tommie Johansson 2007 70


ISO 10014 aims high

{ To bridge the gap between top


management and the quality
professionals
{ To assist top management to
understand and implement the
quality management principles

Copyright: Tommie Johansson 2007 71


Differing perspectives – the gap

{ Top management’s view of


operations is highly compressed and
expressed in financial terms
{ Quality professionals is routinely
unable to translate improvement
efforts into financial terminology

Copyright: Tommie Johansson 2007 72


Importance of the principles

{ How would it be possible to


implement and operate a
management system if top
management doesn’t understand
and/or are aware of the principles
that are fundamental to lead the
organization towards improved
performance?

Copyright: Tommie Johansson 2007 73


Financial and economic benefits

{ Financial benefit is the result of


organizational improvement expressed in
monetary form, and realized by cost-
effective and motivational management
practices within the organization.
{ Economic benefit is generally attained
through effective and efficient management
of resources and implementation of
applicable processes for improving the
overall strategic worth and health of the
organization.

Copyright: Tommie Johansson 2007 74


The scope of ISO 10014

{ This International Standard provides guidelines for


realizing financial and economic benefits from the
application of management principles developed from
the ISO 9000 quality management principles.
{ It is directed to top management of the organization
and complements ISO 9004:2000 for performance
improvements. It provides examples of achievable
benefits and identifies management methods and
tools that are available to assist with the
achievement of those benefits.
{ This International Standard consists of guidelines and
recommendations, and is not intended for
certification, regulatory or contractual use.

Copyright: Tommie Johansson 2007 75


The structure and content

{ Based on the 8 quality management


principles of ISO 9000:2005
{ Encouraging the process approach to
manage an organization
{ Presenting a Self-assessment tool
based on the principles
{ Giving examples of methods and tools
to realize financial and economic
benefits
Copyright: Tommie Johansson 2007 76
Quality management principles
ISO 9000:2005

a) Customer focus
b) Leadership
c) Involvement of people
d) Process approach
e) System approach to management
f) Continual improvement
g) Factual approach to decision making
h) Mutually beneficial supplier
relationship
Copyright: Tommie Johansson 2007 77
The way to use the guideline

Copyright: Tommie Johansson 2007 78


The self assessment (annex A)

{ Maturity level descriptions – 1 to 5


z Level 1 – immature organization, the
practice is not found or not yet started

z Level 3 – approximately 50% occurrence,


the practice is commonly found

z Level 5 – almost 100% occurrence, the


practice is recognized as best-in-class

Copyright: Tommie Johansson 2007 79


The self assessment (annex A)

{ Two different levels of assessment


z One initial – 24 questions
z Comprehensive - ~80 questions

Copyright: Tommie Johansson 2007 80


Copyright: Tommie Johansson 2007 81
Copyright: Tommie Johansson 2007 82
Use of quality management principles

{ The principle quoted


{ P – D- C – A approach for each principle
{ A flowchart for each sub-clause

Copyright: Tommie Johansson 2007 83


Customer focus

{ Organizations depend on customers


for their sustainability. To ensure
sustainability, organizations should
identify and manage the risk of
customer dissatisfaction by
understanding and meeting current
and future customer needs and
expectations.

Copyright: Tommie Johansson 2007 84


Customer focus, examples of
achievable benefits and tools

Copyright: Tommie Johansson 2007 85


Leadership

{ Leaders, as top management, direct the


organization to ensure sustainability,
corporate and social responsibility and
governance.
{ They should establish unity of purpose,
confidence and trust, in a way that balances
the needs and expectations of all interested
parties.
{ They should create and maintain an
environment that encourages involvement of
people, learning, innovation and
sustainability for achieving the organization’s
objectives.

Copyright: Tommie Johansson 2007 86


Leadership, examples of
achievable benefits and tools

Copyright: Tommie Johansson 2007 87


Involvement of people

{ Employees embody the knowledge


capital and intellectual resource of an
organization.
{ The full involvement of employees
enables them to utilize their talents and
abilities to contribute to the financial
and economic well being of the
organization.

Copyright: Tommie Johansson 2007 88


Involvement of people, examples of
achievable benefits and tools

Copyright: Tommie Johansson 2007 89


Process approach

{ A process is a set of interrelated or interacting


activities that transforms inputs into outputs.
It is a mechanism that adds value by
facilitating the successful operation of an
organization.
{ The systematic identification and
management of the processes employed
within an organization, and particularly the
interactions between such processes, is
referred to as the process approach.
{ Top management should utilize the processes
established in the organization for effective
planning and control of its operation.

Copyright: Tommie Johansson 2007 90


Process approach, examples of
achievable benefits and tools

Copyright: Tommie Johansson 2007 91


System approach to management

{ Organizations consist of complex,


interrelated and interacting networks of
processes. Because no activity or
process exists in isolation, it is
beneficial to manage interrelated
processes as a single system.
{ The system approach to management
facilitates sustainability and adaptation
to change.

Copyright: Tommie Johansson 2007 92


System approach, examples of
achievable benefits and tools

Achievable Benefits

ƒ optimized use of available resources


• optimized, effective and efficient processes;
• reduced time to market
• enhanced organizational performance, credibility
and sustainability

Copyright: Tommie Johansson 2007 93


Continual improvement

{ A key factor in successfully sustaining the realization


of financial and economic benefits is an effective
continual improvement process.
{ This is reliant upon the committement of top
management in the application of all eight
interrelated management principles.
{ The benefits from the selection and use of the
methods and tools identified in clause 5 become
evident as added value continual improvement
measurements.
{ It is important to take a holistic view of the needs of
all interested parties to ensure an organization
capable of effective changes for the realization of
continual improvement.
Copyright: Tommie Johansson 2007 94
Continual improvement
S o u r c e s o f O p p o r t u n itie s
f o r I m p r o v e m e n t P la n s P r o c e ss S te p s R e v ie w f o r A c tio n
In p u ts
• A u d it r e s u lt s
• B e n c h m a rk in g o u tp u ts
• B ra in s to rm o u tp u ts
• C u s to m e r fe e d b a c k
• E x te rn a l fa c to rs • A c tio n p la n d e v e lo p m e n t
- R e g u la to r y • A ll o c a t i o n o f r e s o u r c e s • B u d g e t a llo c a tio n s
- E m e rg in g te c h n o lo g ie s
- C h a n g e s in th e m a rk e tp la c e • A p p li c a t i o n o f a l l p r i n c ip l e s a n d • C a p ita l e x p e n d itu re
- E n v ir o n m e n t a l/ s o c i a l s e le c te d to o l
• C a s h flo w
• F in a n c ia l P e rf o rm a n c e • D a ta a n a ly s is
• C o s t r e d u c tio n t a r g e t s
• H u m a n R e so u rc e
• I d e n t if i c a t i o n o f a c t i o n it e m s
• P e r f o r m a n c e t a r g e t le v e l s
- A p p ra is a l,
- S a tis f a c t io n fe e d b a c k • P r io ritis a t io n
• P ro je c te d s a le s
- S u g g e s tio n s • R e - c o n d u c t i n g s e lf - a s s e s s m e n t a n d
• S tr a te g ic p la n
• P r o b l e m s o lv in g ( c o r r e c t iv e a c t i o n ) e v a lu a tio n s
• R e c o m m e n d a t i o n s f o r im p r o v e m e n t • R e s u lts e v a lu a tio n
• R e s u l t s o f F a il u r e m o d e s & e f f e c t s • S e lf - a s s e s s m e n t s
a n a ly s is (F M E A )
• S e t a n d c a s c a d e o b j e c t iv e s
• R e s u l t o f B u s i n e s s e x c e ll e n c e
m odel B E M • T r e n d i d e n t if ic a t i o n

• R e s u lts o f b a la n c e d s c o re c a rd
• R e s u l t s o f m a n a g e m e n t r e v ie w
• R e s u lts o f S ta tis tic a l p r o c e s s c o n tr o l
O u tp u t
(S P C )
• S e lf - a s s e s s m e n t r e s u l t s
• V a lu e o f g o o d s a n d s e rv ic e s
• Y ie ld

I m p le m e n te d A c tio n s = F I N A N C I A L & E C O N O M I C B E N E F I T S
A c h ie v a b le B e n e fi ts

• im p r o v e d p r o f it a b ili t y
• im p r o v e d r e v e n u e s
• im p r o v e d b u d g e t a r y p e r f o r m a n c e
•re d u c e d c o s ts
ƒ im p r o v e d c a s h f l o w
ƒ im p r o v e d r e t u r n o n i n v e s t m e n t
F ig u re 7
Copyright: Tommie Johansson 2007 95
Factual approach to decision making

{ Decisions should, as far as practical, be based


on evidence.
{ Knowledge generated from information and
data, derived from measurement of processes
or acquired from other sources, provides an
essential base for enhancing the decision
making capability of the organization.
{ Knowledge management is an important
element in capturing, protecting and
disseminating information.

Copyright: Tommie Johansson 2007 96


Factual approach, examples of
achievable benefits and tools

Achievable Benefits

ƒ improved cash flow


ƒ improved return on investment
ƒ improved effectiveness of decision making
ƒ optimized use of available resources
ƒ optimized, effective and efficient processes
ƒ enhanced organizational performance, credibility
and sustainability

Copyright: Tommie Johansson 2007 97


Mutually beneficial supplier relationship

{ Top management should establish


supplier partnerships that generate
improved and sustained profits for both
organizations.
{ Partnership between a supplier and the
organization could include cooperative
process improvements, information
sharing, mutual resolution of problems
and product development.

Copyright: Tommie Johansson 2007 98


Supplier relationship, examples of
achievable benefits and tools

Achievable Benefits

• reduced costs
• optimized use of available resources
• improved supply chain performance
• reduced time to market
• enhanced organizational performance, credibility
and sustainability

Copyright: Tommie Johansson 2007 99


Two annexes

A. Self assessment tool


z Two simple and effective assessments

B. Methods and tools


z Brief summaries

Copyright: Tommie Johansson 2007 100


Business basics

Revenue – Cost = Profit

Key areas

{ Customer satisfaction { Effective processes


{ Better products { Efficient management
{ Supplier relations { Strategic competence
{ Image and reputation { Less problems

Copyright: Tommie Johansson 2007 101


The management system

Business
vision

Sustainable
ISO 10014 competitiveness
Profitable
Interested parties
ISO 9004 satisfaction
Efficient
Customer
ISO 9001 satisfaction
Effective

Copyright: Tommie Johansson 2007 102


Most visible benefits

{ Optimization of available resources


{ Increased effectiveness
{ Improved profitability
{ Increased competitiveness
{ Improved communication
{ Increased support for and confidence
in decisions

Copyright: Tommie Johansson 2007 103


To sum up

{ Results are always achieved financially


and/or as a degree of customer
satisfaction
{ Business processes create the results
{ People (competence) are the main
resource and the foundation for process
improvement

Copyright: Tommie Johansson 2007 104


Sources of information

{ Kaplan R, Norton D: The balanced


Scorecard (HBS Press 1996)
{ ISO 9000
{ ISO 9001
{ ISO 9004
{ ISO 10014: Guidelines for realizing
financial and economic benefits
{ ISO 10015: Guidelines for training

Copyright: Tommie Johansson 2007 105


www.sighard.com
tommie@sighard.com

Copyright: Tommie Johansson 2007 106

You might also like