ESTIEM Magazine | Autumn 2003 | Performance Management

ESTIEM Magazine Issue Nr 25 - ISSN 0874-5242 Price 0€

02/2003

Editorial Dear readers, Welcome to the ESTIEM Magazine, the 2nd issue of 2003.

We proudly present this official publication material of our organisation, ESTIEM; European STudents of Industrial Engineering and Management.

During the hardworking 6 month period, with a well coordinated team and successful, highly skilled team members, this difficult project became productive and exciting. I want to thank Josefine Marklund and Charlotte Burkitt for the high quality articles they prepared, and

give many thanks to Canbek Yýldýran for giving quick and accurate translations, to Nazan Yaman and Erhan Gönültaþ for their help in searching articles and sponsors, and lastly the proofreading team for keeping the words in the right order.

In this magazine, you can find “Performance Measurement” articles which contain general information and some application methods. We tried to make the content more interesting and academic by using articles from professors and as well as from professionals within the industry.

These explain the subject step by

step. In addition, there are ESTIEM articles to inform you more about our organisation and projects.

As Local Group Istanbul-ITU, we would like to contribute in the next issue, such that we can develop this project further and create an even better magazine!

Now, it is your turn! Let's read this magazine and measure our performance...

Oya Arý Project Leader Local Group Istanbul-ITU

Contents President’s Speech A brief introduction to ESTIEM Council Meeting St.Petersburg Post Council Meeting Tallinn T.I.M.E.S 2004 InnoVISION International Development Program Introduction to Performance Measurement A Model for Measuring Logistics Structures Gazing into the Crystal Ball

4 5 6 8 10 11 13 14 17 21

A Performance Evaluation Model Human Resources at Mercedes-Benz Türk Summer Academy-Past and Future SAC Hungary 2003 SAC Sweden 2003 ESTIEM Exchange project ESA learning event & activity week Local Group Skopje Local Group Bremen Agenda

25 27 31 32 33 34 35 36 37 38

IMPRINT ESTIEM Magazine - 2003/02 - Issue Number 25 - ISSN 0874-5242 Property: Local Group Istanbul-ITU, ITU Macka Kampüsü, Endüstri Mühendisliði Bölümü, Beþiktaþ,Istanbul, TÜRKÝYE Project Leader: Oya Arý, oya.ari@estiem.org Design, Frontpage and Layout: Levente Baróczi, levente.baroczi@estiem.org; Kadir Karaman, kadir.karaman@estiem.org Editing: Oya Arý, oya.ari@estiem.org; Charlotte Burkitt, charlotte.burkitt@estiem.org; Nazan Yaman, nazan.yaman@estiem.org; Josefine Marklund, josefine.marklund@estiem.org; Canbek Yýldýran , canbek.yildiran@estiem.org; Erhan Gönültaþ, erhan.gonultas@estiem.org NOTES The ESTIEM Magazine is the official publication of ESTIEM, the only student organisation for IEM students that works europewide. The ESTIEM Magazine is published twice a year. The contents are submitted by the members of ESTIEM, sponsors and professionals. The contents may not always reflect the attitude of the publisher. Any reproduction or copy is permitted only with the permission of the editors!

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President’s Speech

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BalĂĄzs Bitay, President balazs.bitay@estiem.org

aving the chance to follow the topics of the last issues of the Magazine and being able to examine it deeply from our organisations ESTIEM point of view in the last two years, I have to say that all of them has been a deep concern within our frame of reference as well. They were not only important and contemporary problems within the business world, we as a european-wide student organisation have to deal with them every day also. Again a proof that student organisations are good models of the real business life, a place where their members can improve skills that are relevant in their future carreer. (and we all do this in a fun, family-like atmosphere!)

The current topic of the Magazine is performance measurement.

Performance measurement started with taking financial indicators into consideration only. The trend is though, that other, long term focused indicators as customer or employee satisfaction, corporate social responsibility, quality, environmental friendliness etc. play more and more important role in the area of performance measurement. Even though the shareholder value concept obtained better results in the past decade, responsible leaders have

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to bear the stakeholder approach (the European heritage) in mind also, when meeting important decisions. Companies thinking long term can no longer measure pure financial results only.

How comes ESTIEM into the p i c t u re w h e n i t s a b o u t performance measurement?

Performance measurement is becoming important for ESTIEM in terms of its sustainable development. The goal of the organisation since 2002 has been to stregthen its already existing network. In order to make a

the activity level of our Local Groups. Therefore we prepared a proposal that is currently being discussed within the organisation and by the time you read this article we propably already came to a solution in our autumn Council Meeting, taking place in Vienna!

Enjoy the new issue of the Magazine!

In High ESTIEM, On behalf of the Board 2003 BalĂĄzs Bitay President

strategic goal to come true, we have to define indicators through which we can monitor our performance. Good defined performance measurement indicators have an all important role in reaching the defined goals, to direct the attention of the whole organisation towards to common goal. In practice for ESTIEM this - according to our vision - means defining indicators for measuring

A brief introduction to ESTIEM

B

ack in 1990, students from 5 different countries founded an organisation called ESTIEM (European STudents of Industrial Engineering and Management).

Its aim is to establish and foster interrelations among European students of industrial engineering and management (IEM).

ESTIEM is currently represented at 65 universities in 23 European countries, and is still growing. All these universities offer courses in IEM. Through its members' organisations ESTIEM reaches and represents tens of thousands students.

The students of Industrial Engineering and Management (IEM) incorporate both management and engineering skills.

Through involvement in ESTIEM, students get an opportunity to experience different cultures, take part in international projects and make friends with other ESTIEMers all over Europe. Our belief is that the activities and projects of ESTIEM give our members knowledge and experiences that are important for their personal development and reaching-tofuture goals. The students involved in ESTIEM incorporate both the skills required for modern business and an openminded approach towards other people and cultural issues.

The decision-making body of ESTIEM is the Council, which meets twice a year, in autumn and

in the spring. Each university, represented by its local group, sends two student representatives.

The five members of the board of ESTIEM are elected during the autumn Council Meeting. The board is responsible for the management, coordination and administration of the association.

The board represents the association in all legal matters.

On the European level, beside the board and the Project Leaders ESTIEM members can also take bigger responsibility by taking part in the work of the Committees. The Committees work closely together with the board, carrying out some of the work of the board members.

ESTIEM has five of them at the moment: the Information and Communication Technologies Committee, the Public Relations Committee, New Members Committee, K n o w l e d g e Management Committee and the recently started Financial and Legal Committee.

For more detailed information about our o rg a n i s a t i o n a n d activities please visit our website at http://www.estiem.org

ESTIEM has continuously increased the number of its activities, thus being able to offer a great variety of events to IEM students. Based on its activities, ESTIEM has attracted many active students and the organisation has seen rapid growth since its inauguration.

Major activities on a European level include the European case competition TIMES, Vision seminar series, ESTIEM Magazine, Summer Academy, Exchange, IEM-net, Council Meetings and European Graduate Catalogue (EGC), lead by the Project Leaders who are elected at the Council Meetings.

ESTIEM Permanent Office Paviljoen A-22 P.O. Box 513 5600 MB Eindhoven The Netherlands e-mail: info@estiem.org fax: 00 31- (0)40 2473871 web: http://www.estiem.org 5

Council Meeting St.Petersburg

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Daria Mikhaliova, Project Leader daria.mikhaliova@estiem.org

ell… the crazy days of the XXVI ESTIEM spring Council Meeting 2003 in St.Petersburg have already passed, everybody has got back to usual, normal life but pictures and reminiscences just do not want to let us be free of that week between 14th and 19th of April. Those who were not as lucky as 146 Council Meeting participants have probably already heard a lot of the stories that happened during that short period of time, but I will try to tell you them from first hand experience.

Idea...

The idea of Council Meeting organisation had already appeared in Council Meeting Budapest.

At that time our local group had already had small, but successful experience in different activities.

Having returned home full of impressions and ESTIEM spirit, and told our Local Group about the trip, we offered to risk it to apply for spring Council Meeting 2003 hosting. Having decided to apply, we, with ready presentation, were soon going to the Council Meeting in Munich where our destiny would be decided.

There were a lot of applicants. We waited with impatience for the voting moment and of course for its results. Excitement was growing and finally a longa w a i t e d r e s u l t o f Vo t i n g

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Committee “Host spring Council Meeting 2003 - St.Petersburg!” was announced. With this joyful and exciting news we came back home.

Preparations...

We had already started with preparations in Autumn 2002.

First of all was our work with sponsors. We were helped in it by all the youth organisations of our University. Part of the money was found, but the biggest part was

given by our University. Rector, Professor Alexander I. Mikhailushkin played a huge part in Council Meeting preparation and organisation. He provided us with full support, helping in everything: event sponsoring and giving us all the necessary resources. Soon the event preparations became not only the matters and problems of our Local Group, they became common both for us and the whole University.

A few weeks before...

Only a few weeks before the big

day, there were still a lot of things to do to order and reserve buses, clubs, bars, museums and the restaurant for Gala-dinner. We were discussing and planning every forthcoming Council Meeting moment in detail from the participants' arrival until their departure. But with every day, we were faced with new tasks. By this time our team already comprised about 25 people and all of us were working as one team-one indivisible whole. We were all burning with one aim, one intention to do our best in organisation, to show our beautiful city in the eve of its 300th Anniversary from different points of view, beginning with the day time life of the Russian cultural capital and finishing with the crazy night-life.

Beginning...

T h e f i r s t ESTIEMers arrived a few days before the start from France, Germany, Italy and a huge delegation from the Netherlands.

For many of them it was not their first time here and they knew the city very well for foreigners.

Guido organised the visit to Catherine palace in Pushkin (summer residence of our Tsars) and acted as their guide, showing the others the most interesting sights.

The Place...

Since St. Petersburg is a very big city (about 5 million inhabitants)

Parties...

All parties took place in the city's best clubs. There, ESTIEMers showed everything of what they were capable. Communicating and socializing with Russian guys, they infected everyone present with ESTIEM spirit. They participated in all competitions, one of which in the PLAZA club ended with more than 150 ESTIEMers singing the ESTIEM song for the whole club.

it would have been very difficult or practically impossible to accommodate all the participants by hosts, therefore to make organisation smooth and easier, we accommodated all the ESTIEMers in one hostel together with organisers. This hostel was not that far from the 4th building of our University.

This is St. Petersburg State University of Engineering and Economy (ENGECON) and it is one of the leading and famous Universities not only in St.Petersburg, but in Russia too.

Our Local Group has had its support for more than 6 years, representing the University at an international level.

The building, in which all the General Assemblies and Working Groups took place, is new and was only opened in September 2002. So, we had all the best.

CM Engine...

The first day started with the

official opening, singing the ESTIEM song and Council Meeting engine: the engine of fresh ideas and creation of activity direction. All the participants were vital components of this engine, cooperating with each other, discussing essential problems, generating new ideas and approaches, brainstorming new projects and improving those which already existed. Everyone seemed to have Energizer batteries inside that kept them working and enjoying St. Petersburg hard. And harder and harder with every subsequent day.

The results of the work were high, since every ESTIEMer put in 100% during Working Groups and General Assemblies. A few days of hard work in an international team results in completely new decisions and approaches. Presentations of Roland Berger Strategy Consultants and Microsoft companies also gave new knowledge to us.

Farewell...

The final result of our event was the Gala-dinner at 'Olympia', one of the best restaurants in the city, with Local Group performances and giving gifts . As the week came to an end, I realized that we had made it possible. Hearing words of gratitude and recognition, I realized that the sleepless nights, effort and worry were all worthwhile. Our local group had rallied, found new members and motivation for the organisation of new projects and gained lots of organising experience for use in later life.

That was a brief description of the craziest week I have ever had in my life. We tried to do our best and to show Russia in full. The only thing I regret is that I could not spend as much time with the others as I wished to. But I hope to make up for it at the next Council Meeting.

From Russia with love, On behalf of all spring CM 2003 organisers, Daria Mikhaliova Local Responsible St.Petersburg

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Post Council Meeting Tallinn

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Etienne van Gils etienne.van.gils@estiem.org

fter the Council Meeting, some ESTIEMers went to the post Council Meeting in Tallinn. Tallinn is the capital of Estonia. This event took place from the 19th of April to the 24th of April. I was one of those lucky people who were there but also some Austrian, Polish, Hungarian ESTIEMers were there and of course the Estonian ESTIEMers themselves. The weather during this week was a little bit cold but not too much. It was a good time of the year to go to Tallinn because during the winter it can be very cold in this town.

Saturday we arrived by bus from St. Petersburg in Tallinn. After this trip we were brought, by some organisers, to a place in the middle of nowhere. It was a small wooden cottage with a beautiful landscape. When we walked into the house we were greeted by a lovely meal. But first we played some games to get to know each other better. After this we had a barbecue and salad. When everybody had eaten and talked for some hours the sauna was turned on. It took only a couple of minutes before the first people got into the sauna. After I went into the sauna I went outside with some others to have a look at the sky. Because there was not much light the stars were very bright.

Sunday morning we had breakfast and were brought to our hosts. Everybody relaxed some and then we went out for sightseeing in the capital of Estonia called Tallinn. The city Tallinn still has some influences of the old communism Soviet time-age that we recognized in

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some monuments. There were a lot of different churches, which were really beautiful. The city also had an old part and a new part. Cafes, restaurants and shops surrounded the new part. The old part of the town started with a big gate and had some small streets.

In the middle of the city there was a big area where a lot of cafes, restaurants and student parades were at that moment. We ended our trip in a Chinese restaurant where they had some really spicy salad. So be careful with an Estonian Chinese salad. We went to the Scotland Yard pub after the dinner. There we sit and talked about the Estonian culture, Tallinn and of course about some social issues.

On Monday we went to the openair museum named Rocca-alMare. This was called open air because we watched some houses outside. In here you could find old

houses which were built somewhere in Estonia 600 years ago for example. Inside the houses the way of living could be seen. They were very small wooden houses. The Finnish golf passed the open-air museum and we could even see Finland. We left Rocca-al-Mare and bought some presents for our hosts. Then we went bowling. We had much fun and so now and a while we threw strikes and spars.

Unfortunately we had to stop and had dinner at a great restaurant.

Compressor was the name of the restaurant. Straight out of this restaurant we went to some pubs which are the best in Tallinn.

Tuesday we went to Saku. It is a well-known beer-brewery in Estonia. Our guide showed us the production places. She also told about how this beer was brewed.

In a great copper kettle it is brewed. This beer is sold in

ourselves of course. The students were very friendly. We even sang on a stage for them to make the atmosphere better. We spent here the rest of the evening. It was very nice to know how the students of Estonia live.

Estonia for about 90% and only for a few percent it is exported to Finland. The guide showed us all the different kinds of beer that Saku sells and I can tell you it where a lot. It varied from a light beer to a strong dark beer. After this we had a lunch in a bistro bar in some basement. Here we ate a warm lunch, which was good.

Our host brought us to the city when we finished the dinner.

After spending some free time in the city we walked to a big student tent. In here we met a lot of students from Estonia. We baked some fries for them and for

Wednesday we had a company visit to Hajru Elekter. Hajru Elekter is a company, which makes electronic components, cables, etc. We had a tour guide of the company who guided us through the production and logistician places. It is a company, which owns some smaller companies also. Hajru Elekter was a sponsor of the Estonia LG for their post CM. In the canteen of the company we had a good warm lunch too just like the day before. After this we went to a swimming pool where we swam and took a sauna. We spent some hours in here. Then

we had dinner in a very expensive restaurant. After this dinner I had to go back to Eindhoven.

I enjoyed the week very much in which I saw a lot of the capital Tallinn and Estonia of course but also I learned about their culture. I had a very nice time. Tallinn is a very nice place, so you should visit it sometimes. Watch out for their InnoVISION. Etienne van Gils Local Group Eindhoven

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T.I.M.E.S 2004

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Marcus Steigmaier, Project Leader marcus.steigmaier@estiem.org

fter our first Newcomer Weekend, the local group Hamburg had finally gained enough members to approach a bigger challenge: we needed a project to revive the ESTIEM Spirit of the old members as well as to ignite the Spirit of the new ones. Therefore, in February 2003 we decided to apply for one of the most exciting and important happenings in the European ESTIEM event calendar; the TIMES Tournament In Management and Engineering Skills -Final.

The next question to be answered was how we should present Hamburg and ourselves on the Council Meeting. We all agreed we wanted an eye-catching presentation to attract the attention of the Council.

Our solution: an “amazing Technicolor” video spot which would help to keep our own personal presentations short and the Council awake and entertained.

Not only was the creation of the video a lot of fun, but also we were also successful: the Council liked the video; we got to the final and could happily return home.

For everybody who does not know what TIMES is about: The best IEM-students of Europe compete with each other in solving business cases dealing with recent problems of companies. The rules of TIMES are quite simple: The group presenting the best solution for the case will succeed.

Round one is your Local

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Qualification organised by your ESTIEM Local Group. Students of your IEM-studies from different semesters compete in groups of four with each other in finding and presenting their solutions (in English!) to the cases given to them. A jury consisting of professors and representatives of the sponsors decides which solution and presentation is the best. The best teams of the local groups participate in one of the SemiFinals taking place in Lyon (France), Bremen (Germany), Istanbul (Turkey), Gothenburg (Sweden), Helsinki (Finland), Porto (Portugal) in early 2004.

ESTIEM HAMBURG proudly presents: TIMES FINAL HAMBURG 2004 The winning teams of these semifinals proceed to the TIMES Final in Hamburg. The Final week will consist of six days, with three of the days spent on solving cases, whereas on the other days we will have a program organised for the participants.

Hamburg, Germany's gate to the world, is famous for its harbour, beauty and the last but not the least the great entertaining mile the Reeperbahn. Great shopping areas, like the Mönckebergstraße

and Jungfernstieg invite you to spend your free time shopping.

Also, after your exhausting s h o p p i n g t o u r s , H a m b u rg provides various recreational possibilities, with its widespread parks and the lake Alster.

Unfortunately, the participants of the final will only have a couple of days to explore the city with us.

The program will include guided tours around Hamburg's most important sights, like e.g. the harbour, the Michel, and of course, our famous entertaining mile.

Times 2004 Final in Hamburg.

Are you with us?

We are looking to welcome you here in April 2004.

For more information please contact: Marcus Stegmaier (Project Leader) or Sarah Thissen (Final Organiser) and please visit http://www.times.estiem.org

Your TIMES 2004 team Marcus Stegmaier (Marcus.Stegmaier@estiem.org) Sarah Thissen (Sarah.Thissen@estiem.org) Hendrik Korb (Hendrik.Korb@estiem.org)

InnoVISION- A European Project about Innovation Management

“In the 21st century we are going to see the world increasingly influenced by innovation and creative minds. Our future depends on our creativity.”

Tony Blair

In the Council Meeting Vaasa in the autumn 2002, “Innovation Management” was chosen as a topic for the new Vision series because it was found to be an essential issue in today's and tomorrow's business. It is not a coincidence that some companies are innovative and some not, or that some companies bring out one innovation after another and others do not. Innovations and innovative culture have to be established on purpose and companies have to be able to innovate in order to gain success.

Also the rapid changes in technology and business increase the importance of innovating,

because in some fields of business innovating can be the only way to survive. Being innovative is not just having sudden inspirations and great ideas; innovations have become systematic, organised and purposeful activities and therefore innovation management is needed.

Each InnoVISION seminar covers a different aspect of innovation management. The seminars focus for example on fostering innovative culture and creativity in organisations, creating innovations, managing future technologies and businesses, bringing innovations into markets and also on showing the importance of innovation in an organisation's success.

Coordination Meeting Some of the InnoVISION organisers and a part of the InnoVISION project team gathered in the Coordination Meeting (CoM) in Berlin on June 19-22. The aim of the CoM was to discuss about the challenges of the whole project and of the individual seminars and to share knowledge and ideas. By the end of the meeting we had found ways to find sponsors and lectures for local seminars, had discussed shortly about having an academic coordinator helping in organisation, talked eg. about the website, posters and publication of the InnoVISION project, got to know each other and experienced the great ESTIEM spirit. During the CoM the participants also had a chance to join a project management seminar and to get to know the great city of Berlin.

All the ESTIEMers are more than welcome to join any of the InnoVISION seminars. You have over 20 seminars to choose from.

Many of the InnoVISION seminars are combined with cultural events, fun activities and company visits. A Vision seminar can offer you academic knowledge, a lot of fun and new friends from different countries.

You can find more information about the InnoVISION project and the seminars on the website: http://www.innovision.estiem.org

I hope to meet you in an InnoVISION seminar somewhere in Europe!

Outi Järvinen Project Leader InnoVISION

Outi Järvinen, Project Leader outi.jarvinen@estiem.org

I

nnoVISION is the name of the current Vision project.

Vision is a Europe wide seminar series, which is o rg a n i s e d e v e r y y e a r b y ESTIEM. Each Vision series focuses on a different topic - one that has, or will have, an important role in business and industry. The topic of the InnoVISION series is “Innovation Management”.

The InnoVISION seminars are organised by over 20 ESTIEM local groups throughout Europe between October 2003 and April 2004.

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International Development Program

T

he world is getting smaller and smaller: the internet is connecting people all over the world and political developments such as the enlargement of the European Union make borders less important. Globalisation is another example of countries and p e o p l e m e l t i n g t o g e t h e r.

Universities have increased their study-abroad programs. Many of you have taken part in these and remember it as one of the best years of your life.

In business, Bosch is a very good example of a national company becoming a successful worldwide enterprise. In 2002, the Bosch Group generated approx.

72% of its sales on foreign markets. With subsidiaries and associated companies, the company is represented on every continent and in more than 50 countries. Bosch manufactures products in 236 locations, 179 of which are outside Germany and employes 55% of its entire workforce outside Germany. And Bosch is continually growing. As a consequence, the world-wide need for highly qualified talent is also rising continually.

For Bosch, this was the reason to create the so-called International Development Program (IDP).

Management positions at Bosch are mostly filled through promoting our own employees.

The IDP is designed to recruit talented individuals to help fill the increasing number of management positions at Bosch.

It aims at high-potential applicants who are ready to start a great career in their home country.

What is the course of the program?

During this 3-year program you will get to know Bosch in your home country and in Germany.

First you will undergo an up to 12 month grounding within Bosch in your home country. Then you will work in Germany for 2 years where you will get to know the Bosch group and its origins.

Finally you will return to your home country to soon assume your first managerial position.

What is in it for you?

You will receive challenging tasks to gain practical experience and you will be given responsibility from day one. Onthe-job-training will be supplemented by seminars to obtain management and leadership skills to prepare you for a leading position later on. In order to give you special support, a senior executive from your home country will act as your mentor, providing you with personal and professional advice.

During the International Development Program you will get the chance to create your own personal network and exchange your experience with other participants. If you are interested in starting a successful career with Bosch, the International Development Program is a great chance for you.

excellent social skills and management potential. Your track record. You also have creativity, an outstanding power of initiative, team-spirit and above-average language skills (English and preferably basic German) If so, then you should apply.

For further information and for the list of countries currently recruiting for the IDP please check http://www.bosch.com/careers or email to idp.contact@de.bosch.com

What does Bosch expect from you?

Bosch requires a university degree in a commercial or technical field with excellent academic results. You should have already gained international experience during your studies or practical training. You have 13

Introduction to Performance Measurement

M

Charlotte Burkitt charlotte.burkitt@estiem.org

any top managers now see 'Performance Measurement' (PM) as an important factor in today's information-driven decisionmaking environment. Quoted from Rose (1995) “performance measurement is the language of progress for an organisation.”

PM can be seen as a way of helping show where an organisation is and where it is heading. It can also be seen as a powerful behaviour tool as it is communicating to the employee what factors are important to the organisation so they are able to understand what matters in the achievement of organisational goals: “Clearly the basis of PM is that unless a score is kept, it is difficult to know whether you are winning or losing” (Hatry, 1978).

Traditional methods of performance measurement relied heavily on financial and accounting data, and this meant from a manufacturing point of view the measures rested primarily on how many piece parts or components could be

produced in a given time.

Modern industrial/manufacturing measurement really began in the 1 9 3 0 ' s w h e n Ta y l o r a n d McClelland developed approaches to what was then known as 'scientific management'. This early work focussed on the new and repetitive production lines of the motor industry, such as that of Henry Ford's highly repetitive production line for the Model T. A great deal of effort was put into developing 'time-study' exercises that concentrated on the time it took to produce the individual parts or components. From this early experience the concepts of process efficiency were developed. Organisations often offered incentive schemes such as 'piecework' payment system whereby the employee would get paid in relation to their volume of work. This system was used as an incentive to increase employee performance and hence, better the organisation.

While the concept of this kind of process efficiency is still a valid one, the problems of such an approach are now well recognised in terms of the way in which they can drive employee behaviour leading to the possibility of problems when faced with modern business strategies.

In 1992 Kaplan and Norton took huge steps in the use of performance measurement and developed the Balanced Scorecard Approach, this not only measured the financial and time indicators, as mentioned above, but also incorporated the measurement of other important

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process factors.

In order to develop an effective performance measurement system it was suggested by such authors as Oakland, (1995) that the following questions must be answered: -Why is measurement required?

(Purpose) -What should be measured?

(Finding the factors that are important) -How it should be measured?

(Methods) -When should it be measured?

(Timing and time frame) -Who should measure it?

(Owner of the process versus independent party) -How should the results be used?

(Assessment, improvement purposes) In 1980 Motorola devised a Total Quality Management (TQM) technique to measure and improve quality, that being what we now know as Six-Sigma.

Six Sigma is a highly disciplined approach that helps organisations focus on developing and delivering near-perfect products and services. The word is a statistical term that measures how far a given process deviates from perfection. To achieve Six Sigma quality, a process must produce no more than 3.4 defects per million opportunities. The central idea behind Six Sigma is that if you can measure how many "defects" you have in a process, you can systematically figure out how to eliminate them and get as close to "zero defects" as possible. To demonstrate the importance of this approach a

quote from General Electric is shown: “Six Sigma has changed the DNA of GE it is now the way we work in everything we do and in every product we design�.

The Balanced Scorecard Developed in 1992 by Kaplan and Norton, and an expansion of the concept of balanced performance set in place in 1986 by Felix and Riggs, the balanced scorecard includes performances that affect the organisations future outcome, learning and growth.

Controversy with traditional performance and control systems, often designed and managed by accounting specialists lead to the need to develop new nonfinancial approaches, i.e. that of the Balanced Scorecard Approach. Traditional performance measurement systems did not provide the important information that is required to represent the overall strategy of an organisation.

Although the balanced scorecard approach does include financial performance measures, it is more centred on operational measures of customer satisfaction, internal processes, innovation and other improvement activities. In measuring these operational factors behind the financial performance it can begin to drive the organisation to financial success. It is a rather comprehensive set of measures that is used to communicate and evaluate the performance of the organisation. With reference to Kutucuoglu et al. (2001), a balanced range of measures enables managers to address the following questions: -How do we look to our

shareholders?

(Financial perspective) -What must we excel at?

(Internal business perspective) -How do our customers see us?

(Customer perspective) -How can we continue to improve and create value?

(Innovation and learning perspective) A modern performance measurement system, which allows the basis of the balanced scorecard to be based upon, will include measures from many different levels within a company.

As quoted in Manufacturing Engineer (2002), these may include: -Detailed manufacturing process level measures, including capability, quality, cost and efficiency data.

-Group performance measures such as quality, plus conformance to plan and group based productivity measures.

-People measures such as skill attainment, individual and team performance.

increase/decrease.

It must be noted that all these levels of measurement should be linked to business strategy and they should focus on creating improvements in performance for the organisation.

The balanced scorecard approach attempts to bring together many different elements, which reflect the organisations strategic position.

These, therefore, include things such as product or service quality measures, product and service development times, customer complaints, labour productivity, etc. Due to the risk of measurement driving employee behaviour and the huge amount of measures available, this approach attempts to avoid the action of 'performancereporting' becoming unmanageable, this is done by restricting the number of measures and only focussing on those that are essential to the strategy of the organisation in question.

This approach offers several advantages over the traditional to

-Supply chain measures such as inventory performance, work in progress control, schedule adherence, fill rates and responsiveness.

-High level Key Performance Indicators (KPIs) such as turnover per unit area, output per person, value added measures.

-Business/shareholder value measures/drivers, for example overall cost reduction performance, free cash flow and market capitalisation 15

performance measurement approaches. It is able to create an overall picture of the organisations performance in one single report and by being methodical in the performance measures it adopts, it encourages companies to make decisions in the interests of the whole organisation rather than suboptimising around narrow and incomplete measures.

Importance-Performance Mapping Importance-performance mapping is an approach that drives the improvement of an organisation. It clearly includes both of the major influences that define market requirements.

Taken from Slack & Lewis, these are stated as being: -The needs and importance preferences of customers -The performance and activities of competitors

16

The Importance-Performance Matrix The importance performance matrix positions each factor of the operation according to its score for importance and performance.

The matrix can aid in the decision of what factors are in need of improvement and those that can be left alone. It is a way of identifying the most important things within the company so they can be altered to improve customer satisfaction and company performance against competitors. The figure below gives and example of the Importance-Performance Matrix using a simple 9-point scale.

As can be seen there are four zones within the matrix. When factors are plotted they will fall into one of the four categories.

The 'appropriate' zone is the level at which the company would not

wish performance to fall and would aim to improve performance for it to reach the upper limits of this zone.

The 'improve' zone indicates that there is room for improvement.

Depending on the positioning within this zone will dictate the priority for improvement.

The 'urgent action' zone is a more critical position for the company to be in. The short term aim would be to at least move the factor into the improve zone before making plans to improve further.

Finally the 'excess' zone, this has the potential to indicate that the company is using too many resources to achieve an appropriate level, however this may not necessarily be the case.

In this approach performance and importance are united to allow a judgement to be made on what the priorities for improvements are.

For example, just because something may be important to customers does not mean that an operation should be given immediate priority for improvement. The operation may already be better than its competitors and hence action is not that urgent.

R

esearch into logistics p e r f o r m a n c e (Abrahamsson & Brege, 1996 and 1997), (Bowersox et al, 1995) indicates that best-practice companies have switched their focus on logistics from individual cost parameters and local units to total costs and global set-ups.

There has also been an increased emphasis on using physical measures (Maskell, 1991). The rationalisation of existing structures by using technology (mechanisation and automation) has been replaced by projects where extended logistics systems have been totally restructured.

The result has been quantum leap improvements where logistics efficiency and effectiveness, in terms of logistics costs, have been increased by 25-30%. At the same time customer service, in terms of shorter lead-times and increased order fill rate, has been likewise improved, the potential improvement within the existing structure being 5-10%, Figure 1.

Traditional trade-offs between customer service and cost are not applicable to quantum leaps.

Efficiency can be increased by Operational efficiency and effectiveness

lowering costs at the same time as decreasing lead-times and delivery service.

Projects like this have been started and also completed with the expected good results, although a large number of projects have not reached further than the idea phase. Partly because of problems in measuring the potential cost savings and improvements.

Even if the use of measurement has increased during the last 10 years (Bowersox et al, 1995), very few companies measure on a structural level (Tinnilä, 1997). In consequence, the potential in quantum leap improvements cannot be fully explored.

This article focuses on a model for calculating existing and alternative structures based on the assumption that structure in itself is an important factor for explaining the size of outcome parameters such as total costs and lead-times.

A two-phase model A fundamental starting point for Figure 1: Quantum leap improvements

Improvements for finetuning the new structure Structural change in order to achieve quantum leap improvements. Potential improvement 25-30%.

Potential improvements within existing structure. Potential improvement 5-10%

Time

our model is that the structure of a logistics system, e.g. a distribution system, itself, is the main driver of both costs and lead-time. The reason for this is that the main aim of structural changes is to achieve economies of scale in administrative and physical activities. Most activities are indeed dependent on the volume of products handled due to a higher volume, meaning, higher degrees of utilisation of buildings, equipment, personnel etc. Over a certain volume economies of scale are reduced (Vos, 1997, pp43-59).

To clarify the mechanisms when changing a logistics structure our model includes two phases to be taken in consecutive order: - The first phase is to calculate the total cost of the structure or system studied.

- The second phase is to find the parameters that drive the size of resources used in the structure.

Phase 1. Identifying the total cost for the system The first phase is to identify the total cost of the system, including all individual cost parameters as well as where the costs occur in the structure. For distribution, we have used the following seven groups, see Figure 2.

Prof. Mats Abrahamsson & Dr. HĂĽkan Aronsson LinkĂśping Institute of Technology, Logistics Management

A Model for Measuring Logistics Structures

The separation of costs is achieved from an analysis of what activities are the most resource consuming and on the analysis of cost drivers. This is very much a standard type of division of costs, apart from communication and IT and packaging, that are not always separated, because they 17

Administrative costs Operation costs Capital costs Transportation costs Communication and IT costs Packaging costs Other costs

-be reduced because of economies of scale.

Overhead and personnel costs for planning, supervising, inventory management, purchasing, order taking, etc.

Premises and personnel for production, warehousing, etc.

Maintenance and rent of machines and equipment Tied up capital, obsolete stock and insurance costs for inventory and work in process Inbound, internal and outbound transportation, divided in standard and express transports Depreciation and maintenance of information systems Packaging for transportation and warehousing Other logistics costs specific to the system in focus

Figure 2: Cost Parameters

are driven by separated cost drivers. When making the analysis in the first phase it might be that, for some distribution structures, some costs are driven by other parameters than the ones above. This is the reason why the first phase is so important as a basis for every analysis.

Phase 2. How are the costs structurally dependent?

Most of the costs are structurally dependent, but in different ways.

By exploring the main cost drivers for each individual cost the model can be used as a simulation tool for different structures.

For each individual cost parameter the place where the cost occurs should be identified.

In other words, every local unit where activities for the system are performed should be in the total cost model, which then in a spread-sheet will contain all the sub-system costs summed up to a total system cost. The total distribution cost for the whole system can then be expressed as a percentage of sales and be compared with best practice costs from open databases and/or be evaluated in the light of experiences of other companies.

Depending on the cost driver some local costs will: -disappear when changing the structure in terms of moving operation from one unit to another, -be moved to another unit, but unchanged in size and

Result of phase 1 The result of phase 1 is a company specific cost profile in terms of a total system cost matrix, with all cost parameters and where in the structure the cost occurs. The matrix in Figure 3 is based on a real case that has been altered to ensure anonymity.

Variables No of units sold Cost of goods sold

The effects of economies of scale are often difficult to explore in quantitative terms and differ between industries and have to be estimated in the light of experience. However it is obvious that a large unit, e.g. a warehouse, has a better utilisation of premises, personnel and equipment than a small unit. It is also a fact that the costs for tiedup capital are lower when consolidating inventory to one unit rather than spreading it out to several small ones.

In the simulation of different structures we have used the following economies of scale calculations when centralising operations from several local to a few central units, where the economies of scale effect will be proportional to the changes in volume as Vx. -V = Vtot/V1

Central Europe Nordic Germany France Benelux Finland Sweden Norway SUM EUROPE 425,000 350,000 100,000 120,000 120,000 120,000 1,235,000 757,900 520,200 173,100 148,300 199,900 167,100 1,966,500

Cost measurements Administration Order handling and Forwarding Purchasing, inventory and inventory management SUB-TOTAL Warehousing Housing Maintenance Machines/equipment Warehouse personnel SUB-TOTAL Inventory carrying cost Tied up capital (10%) Obsolote stock SUB-TOTAL Transportations Depot to customer Between depots SUB-TOTAL Informationsystem System operation and maintenance SUB-TOTAL TOTAL COST % of goods sold

3,056

4,185

1,669

1,608

1,831

1,710

14,059

3,873

2,999

1,265

700

923

785

10,545

6,929

7,184

2,934

2,308

2,754

2,495

24,604

12,070 3,100 5,900 14,453 35,523

6,268 2,996 2,298 9,044 20,606

2,021 1,186 1,400 3,178 7,785

2,175 1,417 645 2,964 7,201

2,562 1,318 723 3,488 8,091

2,063 1,221 508 3,395 7,187

27,159 11,238 11,474 36,522 86,393

18,200 1,400 19,600

16,900 917 17,817

5,700 357 6,057

3,713 420 4,133

4,500 500 5,000

3,600 401 4,001

52,613 3,995 56,608

18,400 2,918 21,318

9,200 4,400 13,600

2,000 270

3,900 400

3,500 600

4,200 400

41,200 8,988

2,500

1,500

500

1,000

1,000

1,000

7,500

2,500 1,500 500 1,000 1,000 1,000 85,870 60,707 19,546 18,942 20,945 19,283 11.33% 11.67% 11.29% 12.77% 10.48% 11.54%

7,500 225,293 11.46%

Figure 3: Resulting matrix of phase two (the figures are in KSEK) 18

Cost parameter

Driver

Effects when centralising structure

Administrative costs Order handling and Forwarding

Number of customers

x = 0,9 0,95

Purchasing, Warehouse & inventory management Common administration and overhead costs Operation costs

Number of items

x = 0,5 0,6

Number of operational units

When closing a local unit the local costs will be a potential saving

Housing/Premises (rent or depreciation/) Maintenance

Number of operational units Volume handled

When closing a local unit the local costs will be a potential saving x = 0,7 0,8

Machines and equipment

Volume handled

x = 0,8 0,9

Operational personnel

Volume handled

x = 0,8 0,9

Tied up capital

Volume in operation

Obsolete stock

Volume in operation

x = 0,6 0,9 depending on assortment overlapping x = 0,6 0,9 depending on assortment overlapping

Capital costs

Transportation costs Standard transports

Volume handled

depends on ton km

Express transports

Availability, order-fill rate Consolidation of volumes will reduce express transports to a minimum

Communication & IT costs Information systems

Number of operational units

When closing a local unit the local depreciation costs will be a potential saving. x = 0,6 (maintenance)

Packaging costs Packaging for transportation and warehousing

Volume shipped

No effect when centralising

Figure 4: Cost drivers

-Vtot = Number of units sold in the region that will be served from the new central warehouse -V1 = Number of units sold today in the local warehouse that will be transferred to a central warehouse -x = economies of scale factor, which differs between 0,5 - 0,95, dependent on cost parameters and the size of the units.

For example the amalgamation of four local units of equal size to one will result in four times the volume being handled in the resulting central unit. If x = 0,8 for the cost parameter (e.g. warehouse personnel), the cost for warehouse personnel in the remaining warehouse will be 40,8=3,03 times higher. In other words, there is a 25% saving in operation costs due to economies

of scale. Notice that when x is 1 there is a linear relation between cost and volume, meaning that there is no economy of scale. The lower the x-value is the larger the economy of scale.

Figure 4 shows the cost drivers as well as the effects when centralising a distribution structure for different cost parameters. The economies of scale factor x is empirically based and depends on the complexity and degree of local specifications of the products handled. The less complex and more standardised the products are between countries, the larger the effect due to economies of scale.

Result of phase 2 The result of phase 2 is a

solution for a new distribution system and a calculation of the total cost of the new system, Figure 5. In reality it is often necessary to calculate several different structures to find the best one. In the example, the new structure is to close four warehouses and keep only the warehouse in France for distribution in central Europe and to keep the warehouse in Sweden for distribution to the Nordic market.

The volume will increase 2,5 times in the French warehouse and by a factor of 3 in the Swedish warehouse. The economy of scale factor x was calculated to be 0,9 for forwarding. In consequence the new cost for forwarding in the French warehouse will be 4185x2,50,9=9546 KSEK. The same type of calculation is done for every cost component.

Compared with the existing structure, the potential saving in total costs in our example is from 225293 KSEK to 161927 KSEK, or 28%, when changing the structure from 6 local to 2 regional warehouses.

Conclusions The simulations described above have been based on a centralisation of the distribution structure and investigate the possibility of achieving quantum leap improvements by reducing the number of warehouses in the distribution or supply system, according to the concept of Time Based Distribution (Abrahamsson, 1992, 1993) (Abrahamsson & Brege, 1996, 1997).

19

The economy of scale factor, x, has been empirically derived from different cases, within the range presented in Figure 4. In all cases the cost drivers have been the same.

As well as our employing it for structural changes, we have used the model, in our research, in all three stages of a change process: Firstly, it gives the necessary description of the existing system on a systems level in terms of total measurable logistics costs.

Secondly, and most important, by dividing the total costs into their different cost parameters and also defining the cost driver for each Variables Germany No of units sold Cost of goods sold Cost measurements Administration Order handling and Forwarding Purchasing, inventory and inventory management SUB-TOTAL Warehousing Housing Maintenance Machines/equipment Warehouse personnel SUB-TOTAL Inventory carrying cost Tied up capital (10%) Obsolote stock SUB-TOTAL Transportations Depot to customer Between depots SUB-TOTAL Informationsystem System operation and maintenance SUB-TOTAL TOTAL COST % of goods sold

parameter, it is a very good basis for proper analysis in phase 2 above and for a detailed design of alternative structures in phase 3.

T h i r d l y, i t i s u s e d f o r dimensioning, when setting the new structure in place.

References ABRAHAMSSON, M. (1992) Tidsstyrd direktdistribution, Department of Management and Economics, disertation, Linkรถping University.

ABRAHAMSSON, M. (1993) Time based distribution, International Journal of Logistics Management, Vol 4, No 2, pp 75-82.

ABRAHAMSSON, M., BREGE, S. (1997) Structural changes in the supply chain, International Journal of Logistics Management, Vol 8, No 1, pp 35-43.

Central Europe France Benelux Finland 875,000 1,451,200

Nordic Sweden 360,000 515,300

Norway SUM EUROPE 1,235,000 1,966,500

9,546

4,921

14,467

5,197

1,784

6,981

-

14,743

-

6,268 6,236 4,783 18,824 36,111

-

32,095 1,741 33,836

-

32,000 32,000

-

-

-

-

6,705

-

6,268 2,562 3,174 1,741 13,745

-

9,709 1,078 10,787

117,940 8.13%

-

21,448

-

12,536 8,798 7,957 20,565 49,856

-

41,804 2,819 44,623

-

44,000 44,000

12,000 -

-

2,500

-

ABRAHAMSSON, M., BREGE, S. (1996) Distribution channel re e n g i n e e r i n g , D e p a r t m e n t o f Managemnt and Economics, Linkรถping University.

BOWERSOX ET.AL. (1995) World class logistics, Council of Logistics management, Oak Brook, Illinois.

MASKELL, B. (1991) Performance m e a s u re m e n t f o r w o r l d c l a s s manufacturing, Productivity Press.

TINNILร , M. (1997) Division of service and business processes, Helsinki School of Economics and Business Administration, Helsinki.

VO S , B . ( 1 9 9 7 ) R e s t r u c t u r i n g manufacturing and logistics in multinationals, Avebury, Aldershot, England.

12,000 1,500

-

-

43,987 8.54%

4,000

-

Figure 5: Total cost for alternative structure (the figures are in KSEK) 20

161,927 8.23%

Gazing into the Crystal Ball:

T

oday's Measurement Crisis: Drowning in Data Management's obsession with measurement appears to grow unbounded. The latest data from Gartner, the Conneticut based research organisation, suggest that over 70% of large US firms had adopted the balanced scorecard by the end of 2001.

The recent Enron scandal has provoked a flurry of debate about corporate reporting, disclosure and the use of creative accounting practices to smooth income and earnings statements. “There, but for the grace of God go we” is statement that has been uttered in numerous boardrooms in the last few months! There has been a storm of related activity in the consulting community.

PwC have launched their Value Reporting initiative.1 CGE&Y continue to work on the Measures that Matter.2 Accenture and Cranfield School of Management have produced research on the Planning and Budgeting Revolution.3 The software industry is also playing a significant role in driving the measurement agenda forward. There are now in excess of forty vendors worldwide that offer performance reporting solutions. 4 Some of these performance reporting solutions are little more than glorified spreadsheets, while others enable executives to access immense amounts of data. Note the use of the word data rather than information or insight.

The problem with many of the software reporting packages on the market today is that all they offer is data. They do not provide

information. They do not provide insight. Instead they provide access to so much data that effectively executives end up “drowning in data”!

It is theme -drowning in datathat lies at the heart of the new measurement crisis.

When commentators, such as Bob Kaplan and H Thomas Johnson, began criticising the measurement systems used by most firms in the 1980s, the thrust

of their argument was that quite simply the wrong things were being measured. 5 Today the problem is not that the wrong things are being measured, but that too much is being measured.

Executives appear to be obsessed with quantification. They want to everything described in numerical terms -customer satisfaction, customer loyalty, customer profitability, brand value, employee satisfaction, supplier performance, health and safety, efficiency, productivity, innovation, new product development, and so on. The list of things that would be nice to measure in even a moderately sized business - is endless! And the result, in many cases, is that organisations fall into the trap of simply trying to measure too much.

This issue is becoming such a significant one that some

executives are now starting to question what value they are getting from their organisation's measurement systems. These questions become even more frantic when the executives concerned think about how much their organisation's measurement systems cost them to run.

Research completed by The Hackett Group, for example, found that the average company devotes a mean of 25,000 person days to planning and measuring performance per billion dollars of sales.

Recent research, completed by members of the Centre for Business Performance at Cranfield School of Management, found that Ford spent 0.7% of sales - $1.2 billion annually on budgeting alone.6 These sums are clearly significant, but somewhat surprisingly it seems that the vast majority of executives have no real idea how much they are spending on measurement.

Everyone knows they are spending a lot, but no one knows how much!

Of course, just because you spend a lot on something does not mean that it is not worthwhile. The current spend on measurement, does not mean that organisations should stop or trim back their measurement initiatives. But it does mean that they should think carefully about how they can best utilise their measurement systems to ensure that they deliver maximum value. And it is to this issue how to make measurement pay - that we will now turn our attention.

Prof. Andy Neely Director, Centre for Business Performance, Cranfield School of Management

The Future of Performance Measurement

Making Measurement Pay If you review recent writing and 21

efforts in the field of performance measurement it becomes clear that significant effort has been devoted to improving measurement methodologies.

People have sought and developed new methods of measuring financial performance activity based costing, activity based management, economic profit, free cash flow analysis and shareholder value analysis and new frameworks to balance financial and non-financial measures the Balanced Scorecard and the Performance Prism. Research has focused on how to design and implement such methodologies and frameworks. How do you decide which measures to use? How do you access the necessary data?

How do you measure the softer dimensions of performance, such intangible assets and/or intellectual captial? How do you overcome the social, political and cultural barriers associated with performance measurement?

How do you align measures with strategy? How do you ensure measures encourage appropriate behaviours? Clearly these topics are important, but as we enhance our understanding of them we need to broaden the agenda and ask explicitly how do we make

22

m e a s u r e m e n t p a y. M o r e specifically I believe we should: 1-Think in terms of performance planning not performance reviews In most organisations measurement forms the basis of performance reviews, which are historic or backward looking in nature and either implicitly or explicitly designed to put people on the defensive. I recently had the opportunity to evaluate a performance review presentation that someone in a large oil major had put together for the next board meeting. The presentation, which consisted of over twenty slides was scheduled to take half an hour, but basically said “everything in my area is fine”.

Having reviewed the slides I asked the simple question “if everything is fine, then why can't you stand up, say everything is fine and then sit down again?

That way you'll only spend 30 seconds on this subject and the meeting can finish half an hour early, or alternatively the spare time can be devoted to a topic that needs it”. The response was one of horror… “we can't possibly do that… we never do that”…

Why? Why is it that in performance reviews people spend most of their time justifying why performance is as it is? They come to the review armed to teeth with excuses that explain why they are where they are. “We are only at 70% of our target because our suppliers let us down, or our customers have not yet confirmed their orders, or our competitors have introduced a new product”.Such discussions, which focus on why we are where

we are, are irrelevant, or at least relatively unimportant in comparison to those discussions that focus on how we are going to get to where we want to be. But discussions about how we are going to get to where we want to be are not performance reviews they are performance planning sessions. They require executive teams to understand the reasons why performance is as it is and then focus on how they are going to make progress.

Excuses become irrelevant. What matters in performance planning sessions is how we are going to deliver.

2-Ask for answers not for data Why do people get sucked into performance reviews rather than performance planning sessions?

A significant reason is that far too often the meetings themseleves are structured as performance reviews. Far too often we simply present raw performance data to executives and expect them to analyse it there and then. You would never conduct a scientific experiment that way. You never make a presentation to an audience without first analysing the data and understanding the messages it contains. Yet far too often in performance reviews we do. We give people figures on profitability by customer segment. We give them figures on absenteeism levels. We give them figures on productivity. But nobody in advance has been through the data and extracted the insights from it. David Coles, the Managing Director of DHL UK, used an excellent phrase to describe this in a recent presentation - “numerical crosswords”. He explained to the audience how his board used to

spend all of their time at performance reviews trying to join up the pieces of the numerical jigsaw that they were presented with.

Individual directors would be looking at performance report trying to draw spurious correlations between d i ff e r e n t e v e n t s t o o ff e r explanations for unusual observations.

When they realised this was what they were doing DHL UK, decided to change the structure of their board meetings and define specific questions that they want answer prior to them. They now ask their performance analysts to come the board meeting armed not with raw data, not with excuses, but instead presentations which address questions of fundamental concern to the board e.g. are we going to hit budget this year, how are our customers feeling, how are our employees feeling. The analysts role at the board meeting is to present their answer to the question. The board's role is to probe the quality of the analysis and once they are comfortable with it decide what they are going to do to move performance in the desired direction.

In changing the structure of their board meetings the board of DHL UK has been able to eliminate the defensive behaviours associated with performance reviews and encourage the creative dialogue associated with performance planning.

3-Build the Capability of Performance Analysts In adopting this new structure and format DHL recognised that they had to upgrade the skills of their

performance analysts. But at least DHL had performance analysts. Many organisations do not and in these cases they need to appoint them.

These performance analysts need not only to be able to manipulate performance data, but also interpret it and present it in a way that engages and provides insight to others.

Research being undertaken in the Centre for Business Performance into this

issue has resulted in the development of a concept we are calling The Performance Planning Value Chain, which effectively encapsulates a systematic process for extracting insights from performance data.

The analogy underpinning The Performance Planning Value Chain is that of a journalist. If you think about what a journalist does when presenting a story he or she is very careful to identify the “hook�, or headline that will capture the reader's attention and then flush out the detail in the small print. Rarely do we do this with performance reports. Rarely

do we ask our performance analysts to tell us the headline. In fact, rarely do we ask our performance analysts really to analyse data. Instead we expect them to spend all of their time pulling collecting and collating data.

This issue becomes even more important when the focus of measurement is shifted to systems not functions.

The reality of organisations, as every executive knows, is that they consist of complex interdependencies. Marketing relies on Operations. Operations relies on Human Resources. Human Resources relies on Finance, etc.

Ye t w h e n i t c o m e s t o measurement we often ignore t h e s e i n t e r- d e p e n d e n c i e s .

Marketing looks at the marketing and customer satisfaction data.

Human resources looks at the people data. Operations looks at the operational data, etc. It is as if we have functionalised measurement, just as we have functionalised everything else in organisations.

Ye t t h e functionalisation of measurement is a mistake. If there is a downturn in employee satisfaction, everyone assumes this will have an adverse impact on customer service. If the operation becomes too inefficient everyone knows this will impact the financial results. The reality of organisations is that the activities being undertaken in different parts of them interact and we have to recognise this interaction if we are to get the most from our measurement data.

Rather than operating in functional silos we need to use our measurement data to 23

understand the big picture, the big story of what is happening inside the organisation.

And this requires us to equip performance analysts with the skills needed to cope with understanding this complexity.

Why Gazing into the Crystal Ball?

To date in the f i e l d o f performance measurement has focused on two specific issues (i) designing measurement systems and (ii) implementing measurement systems. The first stream of work is concerned with making choices about what to measure, how to measure it, what frameworks to use, etc. The second stream of work is concerned with overcoming the political, social and cultural barriers associated with measurement, as well as the technical ones.

These two streams of work are clearly important, for unless they are addressed, it is impossible to develop and implement a robust measurement system.

But I believe that we now know how to address these issues. You can hire consultants and attend courses designed to help you through these minefields. The problem is that measurement is worth nothing unless it is acted upon unless we move into the world of managing through measurement.

And this, for me, is the emerging measurement agenda. What tools and techniques can we use to better manage through 24

measurement?

How can we extract insights from data? How

can we communicate these insights? How can we make sure measurement influences action, which in turn delivers results? It is work in these areas that I believe we will see the academic and practitioner community focusing on as the field of performance measurement enters a new and more mature age.

About the Author Professor Andy Neely is Director of the Centre for Business Performance at Cranfield School of Management and Managing Partner of The Performance Practice, a consultancy specialising in performance measurement and management.

He has been working in the field of performance measurement since the late 1980s and is widely recognised as one of the world's leading authorities on the subject.

Many of themes explored in this article are also discussed in his most recent book - “The Performance Prism: The Scorecard for Measuring and Managing Business Success”,

published by Financial Times/ Prentice Hall in May 1992. For further details on the work of the Centre for Business Performance, and their forthcoming conference on Performance Measures for Strategic Advantage (12-13th June 2003) see www.cranfield.ac.uk/s om/cbp

1-See http://www.valuereporting.com.

2-Anon (2000) “Measures that Matter: An Outside-in Perspective on Shareholder Recognition”, Ernst and Young, UK Study.

3-Neely. A.D.; Bourne, M.; Jarrar, Y.; Kennerley, M.; Marr, B.; Schiuma, G.; Walters, A.H.; Sutcliff, M.; Heyns, H.; Reilly, S. and Smythe, S. (2001) “Delivering Value Through Strategic Planning and Budgeting”, Accenture and Cranfield School of Management, London.

4-Marr, B. and Neely, A.D. (2001) “Balanced Scorecard Software Report”, Gartner, Stamford, CT. 5-Johnson, H. T. and Kaplan, R. S. “Relevance Lost - The Rise and Fall of Management Accounting”, Harvard Business School Press, Boston, MA., 1987.

6-Neely. A.D.; Bourne, M.; Jarrar, Y.; Kennerley, M.; Marr, B.; Schiuma, G.; Walters, A.H.; Sutcliff, M.; Heyns, H.; Reilly, S. and Smythe, S. (2001) “Delivering Value Through Strategic Planning and Budgeting”, Accenture and Cranfield School of Management, London.

A Performance Evaluation Model

The Purpose of Performance Evaluation Studies It is for evaluating the company personnel periodically (for example, once every 6 months), and for calculating performance incentive that will be given to the personnel, which conforms to the pre-set goals and again in predefined values.

The Scope of Performance Evaluation Studies This includes all the company personnel, except the top board members ranked as the president and the vice president, and the personnel, whose wage is calculated according to the sales of it.

The Basic Information: “What is performance?”

Performance is the level of accomplishment of an individual at work.

“Will success of the people solely grant the reach of the success of the company?”

No, it will not. “Unit/Chapter Performance” and “Company Performance” should be taken into consideration beside the “Individual Performance”.

“How will we measure the performance?”

We will measure it with the help of the indicators. The indicators

will be designated by the basis of the Individual, Unit, and Company.

“What properties should the indicators have?”

-The indicators should be objective, measurable, and sufficient in number.

-The formed indicator should be devoted to the measurement of the performance.

-If there is a method for the measurement of the indicator, it should be written down; or else the way it will be measured should be defined.

-The formed indicator should be chosen from the fields that the concerned individual, unit or region could affect.

-The indicators can be the activities that will be completed in a ratio or time.

-The indicator must definitely be formed after talking with the concerned individuals and/or units.

-Indicators may also be about the completion of the work, as well as about the results of the unit's activities after the completion.

“For which functional units and duty ranks in these units should the indicators be designated?”

For example; General Administration, Administrative Affairs, Financial Affairs, Personnel Affairs, Human Resources, Information Technologies, Research & Development, Project Development, Advertising and Human Relations, Regional Administration Performance Evaluation Method 1-An Indicator Designation

Form is formed one month before the end of the previous performance evaluation period by the Human Resources Unit. This form must be designed in a way that the indicators, its units and the source or the way of the obtainment of the indicator values (computer, system, reports, manual entry).

2-After sending the Indicator Designation Form to all employees in the system range of the company, the personnel that doesn't have the unit control is asked to identify the Individual indicators for itself. The unit managers are also asked to identify the Individual indicators for itself, the junior personnel and for the work-unit as well as entering them to the forms.

3-The designated indicators are made goals in the basis of Individual, Unit, and Company, which means the goals to reach are defined at the end of the period. Instead of the most ideal targeting based on the indicators, targeting should be aimed at the point to reach. These goals are to be approved by the seniors. At the end of the evaluation period, the concord level will be found out between the realized values and the targeted values. This concord level will show the achievement of the employee at work. For instance, an employee reaching the goals gets 1000 points generally in the basis of Individual - Unit - Company.

When it is over-scored, the scoring becomes more than 1000 points.

Assistant Prof. Murat Baskak & Cemil Ceylan ,Ph.D. Istanbul Technical University, Industrial Engineering Department

I

n this study, the basic information about the evaluation of the results of the work that is done by the employees, the Performance Evaluation, and a model relating to the ways that can be followed in the application of this model in a company, will be introduced.

4-Importance levels are determined among each other in 25

the basis of Individual, Unit, and Company (weighed).

5-Indicator designation, targeting, and weighing are applied in the basis of Individual, Unit, and Company basis as follows: INDIVIDUAL Indicators: The indicators in the Individual basis are determined by relevant Individuals and the director of Individuals together. They are targeted and weighed by the Individuals and director of Individuals together again. These targets and weights are approved by the assistant general manager.

UNIT Indicators: The indicators in the Unit basis are determined by the Unit director. They are again targeted and weighed by the Unit director. These targets and weights are approved by the General Manager.

COMPANY Indicators: The indicators in the Company basis are determined and targeted by the top administration. The weighing of Company indicators may vary depending on the status of the indicator (for Sales or Operations [the personnel doing the production or service activity]). These weights are also determined by the top administration.

After the Individual and Unit indicators, targets, and weights are cleared up by the relevant Unit, they are presented to the top administration (assistant general manager or general manager depending on the necessary 26

operation) by Human Resources Unit. The Performance Evaluation period starts after the last decisions.

1-When it is time to evaluate, the real indicator values are taken by the relevant units. These values are gathered together in coordination of Training and Human Resources Unit.

2-All the performance values (realization and achievement ratios) are calculated from Individual, Unit, and Company indicators separately.

3-The General Performance Grades of all the employees of the company are calculated in the system range. For this, the employee's own Individual performance grade is multiplied by 50%. The performance of the unit or the region, which consists of the employees, meaning the Unit performance grade is multiplied by 20% [This values is the same for all the employees in the unit or the region]. Lastly, the Company performance grade is multiplied by 30% [This value is the same for everybody

is the same for everybody included in the system and working in the company]. These there obtained values added together give us the General Performance Grade. There is no upper limit for this grade. If each of the Individual, Unit, and Company goals are totally reached, the performance grade of 1.000 is obtained. However, in the case of exceeding the goals this grade may be more than 1.000, the grade is openended [These ratios of 50%, 30%, 20% may be changed on condition that they will sum up at 100% with the decision of top administration, but these changes should not be announced to the company personnel].

4-The performance incentives of everyone in the system range are calculated.

For example, nobody having a General Performance Grade under 800 points (this value should be determined and announced at the beginning of the Performance Period) gets performance incentive. The incentive that is obtained by applying the (y=ex) curve for 1.000 performance grade is calculated as “2 salaries in 6 months�, when a determined upper ratio of 1.80 is taken into consideration as an example. The personnel having a performance grade of 1.000 will deserve 2 times of his/her monthly salary in this case. This incentive can be paid equally in 6 months or in a payment plan with the approval of the top administration.

Human Resources at Mercedes-Benz Türk

Here is brief information about Mercedes-Benz Türk: Mercedes-Benz Türk was established in Istanbul in 1967 under the name "Otomarsan" as a partnership between Daimler-Benz AG (36%), Mengerler Ticaret T.A.Þ.

(32%) and Has Otomotiv (32%).

In 1970, only 2 years after its foundation, the company started to export and of the 36.000 buses produced, over 12.600 buses have been exported to date. In 1984 the company was appointed as the general representative of Mercedes-Benz in Turkey, added with new partners to the enterprise and started a new investment necessary for production of trucks. In 1986, parallel to the growth potential of Turkey, the Truck Plant started production in Aksaray. In November 1990 its name changed to Mercedes-Benz Türk A.Þ.

Mercedes-Benz Türk, currently produces intercity and municipality buses at Hosdere and Davutpasa Plants and light and heavy duty trucks at the Aksaray Plant. The vision of the company is to keep its market-

leader position in the future with superior profitability and sustained growth which is also revealed by the slogan of the company for its Management Trainee program “Are your goals as high as ours?” In order to reach these goals the human resources department's strategy is to create an attractive, performance oriented and challenging work environment. Below is our inteview with the HR manager of the company, with Salih Ertör:

First of all we want to talk about the Human Resources Department of Mercedes-Benz Türk. What exactly are you working about?

There are around 40 people working here in the department.

Our main goals are to practice human resources instruments in such a way that will help the company to reach its own goals, increase the company's value, become a favoured employer offering an attractive work environment as well as training opportunities, which will highly motivate our employees and will contribute to the overall profitability of the company. Our human resources applications supporting the personal and professional development of our

professional development of our employees and interns can be categorized in three different groups as recruiting, training and personal development.

You mentioned about the personal development division.

Can you inform us about the functions of this department and the instruments you are using to evaluate your employees' performances?

Our governing philosophy is to form our company culture in a constructive way through the share between all our employees from different departments as well as different locations and also to create personal development plans and training programs for each individual. For this aim, we are using Performance Management System to set annual goals for each employee, assess the previous year's achievements and evaluate their performances.

Can you give us brief information about the Performance Management System that is applied in Mercedes-Benz Türk?

Salih Ertör Human Resources Manager, Mercedes-Benz Türk A.Þ.

D

uring the ESTIEM Magazine Project we had the opportunity to interview the human resources manager of a global company in Istanbul. At the most modern bus factory in the world, we got information about the company and asked questions about its human resources applications and performance management system.

The Performance Management System in our company allows us to evaluate our employees objectively and in a transparent way by the appraisal of their achievements and considering behavioral attitudes. We want to make the principle of goal oriented work a part of our work c u l t u r e . To s u p p o r t t h i s , employees' goals are determined depending on their departments' overall goals that are formed with respect to the mission statement 27

and strategic goals. Regarding this, the results of our Performance Management System have direct influence on accomplishing the company's overall goals. At the manageremployee meeting, which is held at least once a year, the expectations from the employee for the forthcoming year are discussed. After that the behavioral ability evaluation is applied by which it is determined if the employee possesses the fundamental and leadership abilities effecting Mercedes Benz TĂźrk's performance directly. This evaluation is also a major factor to determine employees with high potential who can advance to higher levels.

How do you use the outcomes of the manager - employee meeting?

The outcomes of the Performance Management System form the base of our salary management, training demand analyse and career mapping activities. It is important to promote wellmotivated, high-performance employees. It is also fair that employees are paid with respect to the degree they reach their objectives. What we plan to implement in the future is a competency based Performance Management System so that we can recruit and develop our employees according to the required competencies of our c o m p a n y. B e s i d e s , b y implementing the competency based HR modules we want to plan our trainings based on the strategic and operative needs and we want to prepare personal development paths for our employees according to these.

Do you think Performance M e a s u re m e n t S y s t e m w i l l

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undergo changes in the future and do you plan other projects relating this system in your company?

Our HR department currently undergoes restructuring due to the automation of our HR process via our new HR management information system. This change also covers our Performance Measurement System and we plan to convert all the system documentation to an online Performance Measurement System program or a “PMS portal� so that all the data relating Performance Measurement System can flow smoothly and quickly through right channels. In this PMS portal project we will also use our e-learning portal to give our managers information how to conduct a performance evaluation meeting and how to report the results to us. I think this is going to be a benchmark for an effective Performance Measurement System in the future.

Summer Academy Past and Future

Gathering in Cambridge, we were not exactly sure how to go ahead with the project. What we did know was that things had not really gone according to plan after the Council Meeting in Ankara, and that September was approaching. We had definitely reached the point of no return, and it was time for action.

In many ways (apart from the SAC Working Group in Ankara, spring 2001) “our” project did not exist till those days in Cambridge.

The name “Summer Academy” had been around and used before within ESTIEM - but what we had in mind was a completely different ship sailing under the same name. This project was going to be different, which made it very interesting, and rather difficult.

We all (Umut, Jules, myself, and the professor who was patient and understanding, (crazy?) enough to support us, giving the academic core to the project) agreed that the project should have “high academic value” and that it should give “students new ideas and thoughts outside their traditional University-based experiences”. Having added a

line about “standard of excellence” in the project description we sent out to companies, we had got ourselves in trouble.

If there were some doubtful voices among students, our friends in the corporate world certainly raised their eyebrows.

We probably would have been better of asking for financial support for a rave-party in the Himalayas.

Henger (Budapest), Etienne van Gils (Eindhoven), Kristijan Petkoski (Skopje), Erik Bergöö (Gothenburg), Cilla Brevinge (Gothenburg), Johanna Porsö (Gothenburg), Erik Hansson (Gothenburg) and Balázs Bitay (Budapest).

At last, but certainly not least, I would also like to thank the company Würth for their financial contribution, making it possible for SAC 2003 to go ahead.

That some students from… “Did you say Turkey?...and you, you are from the UK?” would pull together a two week long event with “high academic value…” reaching a “standard of excellence” etc. was apparently hard to believe even harder to support.

Now today we are three years down the road and the SAC project has gained many things it lacked back in 2001. Rebecca Stanworth (LG Nottingham) successfully took the project through 2002 and together with this year's events, SAC has gained a much needed structure.

The whole idea that students from all over Europe can gather for an “academic get-together” has gained more understanding and respect.

Being the last of the three ESTIEMers, who took part in founding this project, to finally let go, I am most curious to see where you ESTIEMers will take it.

Björn Johansson, Project Leader bjorn.johansson@estiem.org

I

can no longer remember exactly when, but about two and half years ago I met up with Umut Ergunsu and Julian (Jules) Griffith in Cambridge.

Umut was the current project leader of the ESTIEM Summer Academy (SAC) project, Jules well he had just been kind enough to offer Umut his help, and myself, well I was also involved as part of my responsibilities within the board of ESTIEM.

Keep on climbing!

Björn Johansson Project Leader - SAC 2003

This year two successful events took place in Hungary and Sweden, and I would especially like to thank Jim Platts, Dietrich Brandt and Harold Nelson for their academic contributions.

I would also like to take the opportunity to thank: Péter Haraszti (Budapest), Dóra 31

Summer Academy 2003 Eger, Hungary

A D贸ra Henger dora.henger@estiem.org

s a new member of ESTIEM, I did not know too much either about ESTIEM, or the Summer Academy. I only heard some people talking about both so enthusiastically, that I was looking at them with a question in my head: what is it, that can make people act so wierd? I thought I should have a closer look at it.

I read the official explanation of the SAC: It is a project with significantly high academic content and it has been developed to give students of ESTIEM new ideas and thoughts outside their traditional University-based experiences, whilst maintaining a standard of excellence.

I was always interested in international projects, and I also knew that what we learn at university does not really cover reality. I decided to spend the last two weeks of summer with something valuable in the circle of some ESTIEM students.

The Summer Academy was held in a nice pension in Eger, a lovely town of Hungary. Ten people participated in it: three Germans, three Turkish people, one Portugal and three Hungarians.

On the first week we made presentations about a topic we chose. After each presentation we had a discussion, just to understand the theme more deeply and to let everybody add his or her idea to the topic. On the second week, we had less lectures, but more time for writing our thesis mainly based on our presentation and on the reflections of others. The professor worked all day helping us, giving personal tuition. These

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tuitions were of great value not only because of the academic content, but also because it improved us on the level of personal skills and personality as well. We also had some free time for relaxing during the day and in the evening.

When SAC was over I made a list in my mind what I learnt here in order to judge if my decision was right. It was not difficult to judge at all. I made one of the best decisions of my life. I had a problem with the list though. It is almost impossible not to leave anything out of consideration.

Here is the list: Academic Content: -Human-Centred Systems: how important humans are in any kind of a system -Socio-Technical Systems, -Organisations and Networks Leadership: -Involvement of people, dealing with change processes ESTIEM: -To feel what it means to be an ESTIEMer -Study and work in an international environment -To learn about differences of cultures, and that we should always look at these differences with a positive attitude -Facts about the organisation itself

Personal Skills and Improvement: -Listening to each other is one of the most important parts of leadership -We can learn from anybody, and should take the chance -Leading a dicussion -Making a presentation where people are involved -As a leader, giving only positive feedback is vital Culture: -Learnt about the medieval castle of Eger, -We tasted delicious wines of the region, -Spent a day with sightseeing in Budapest, -Had an impression of the totalitarian regime of Hungary, and with that, basically of any regime of that kind, -Celebrated the Founding of the Hungarian State Though the list above is already a great one, when we left Eger I did not know how much I really learnt. I have been realising this since then continously. Being back in my original environment do I really recognise how much my point of view and my personality changed. I think I cannot express how much I am thankful for the professor, Dietrich Brandt and the organisers of the Summer Academy for making these two weeks unforgettable.

I grew enthusiastic about ESTIEM and the Summer Academy. Sometimes when I talk about it I see some people are looking at me in a strange way, maybe with a question in their head.

Summer Academy 2003

W

hat do you think a b o u t ' D e e p E n t re p re n e u r s h i p Manufacturing Europe's Future'?

Many people would probably not have a well-defined idea, neither did we. Therefore, we, 10 enthusiastic young people from various countries in Europe and Asia, travelled to a remote part of Sweden to learn about this through the ESTIEM Summer Academy 2003. We came with the expectations of l e a r n i n g a b o u t entrepreneurship, leadership and design. Not only did we learn about these subjects, but also more importantly, we learnt about the deeper underlying principles in life.

Growth Based on our experiences in universities, we expected to receive things like a manual on how to be entrepreneurial, a checklist of good practices and how to lead a start-up company.

After the learning sessions, it dawned on us that what we have been being taught in universities was at a fairly superficial level.

We were never taught the principles that give rise to recommended good practices. As a result, actions are often without understanding, and can be empty and ineffective. Due to the lack of more fundamental understanding, we are thus unlikely to be able to apply the recommended actions in different situations. In the two weeks of the Academy, the fundamentals that we learnt will allow us to apply this knowledge in other types of companies, and not just start-ups.

Besides this, we also began to realise the deeper meanings and

roles of individuals and companies in the world. With the new realisation, we also became more acutely aware of the responsibilities that we, the future leaders, carry. These new insights

and the serene environment enabled us to reflect on ourselves and think about where we are going in life. The reflection was of great value, especially in this modern age, where many of us are often lost in the business and little details of life.

Rhythm of life The atmosphere at the SAC was very warm and encouraging. All of us, including the professors, lived in a large Swedish country house in the middle of nowhere, outside the range of most telephone networks. Through the intensive interactions we had, strong bonds were formed not only between the participants, but also between the students and the professors. On the front of meals preparation, a self organised system emerged naturally, making an initially drafted cooking rota unnecessary. The cohesiveness that was observed in the process of cooking and dining together is representative of the overall atmosphere and attitude at the SAC.

A typical day in the first week of the SAC started with breakfast, lectures in the morning, lunch, free time in the afternoon, dinner and a reflection session in the evening. The daily structure of theoretical learning followed by reflection was also implemented in the overall structure of the 2-week programme, whereby we had lectures (theory) in the first week and developed a personal thesis (reflection) in the second week. Whilst learning all the new theories was important, we found the reflection in the writing process very valuable as well because our thoughts became clearer.

http://www.sac2003.estiem.org

Sweden - “Pea soup on thursdays”

Cultural potluck The rich cultural diversity of the participants was enjoyed by all through various activities such as the Finnish sauna, Portugal cultural night, language lessons on 'Jag pratar inte svenska, men du är mycket vacker!', Dutch humour, Asian demeanour of asking questions, and, late night kitchen parties with special German-Danish cocktails and Mr. Europe contest.

Concluding remarks …

The SAC was indeed an exceptional learning experience.

We left Sweden with a more developed personality than before. The 2 weeks spent in the Swedish woods learning about life will always be part of our most cherished memories. On a final note, we convey our sincere gratitude to Jim Platts, Harold Nelson and the SAC organising team for making this transforming experience possible for us.

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ESTIEM Exchange Project

E

ver thought about doing part of your studies abroad, but you do not know how to proceed? Then this is definitely something for YOU!

Martin Schönbeck, Project Leader martin.schonbeck@estiem.org

As the integration of Europe increases, more funds and effort are being put into student exchange, an important part of the integration process. The goal of the European Union is to get more people moving to different parts of Europe during their university studies. At the moment there are about 1 million Socrates exchange students and the goal is to increase it much more in the near future.

Europe's integration provides endless opportunities for those wishing to develop international careers, personal networks, experience of other cultures and a true European perspective.

To make it easier for European IEM students to study abroad, ESTIEM has created the Exchange project. The aim of this project is to help students to find essential information about IEM universities when choosing the place of their exchange. The information is collected into a database, which can be accessed from the internet. In this way information becomes available to every IEM student who is interested in studying abroad and wants to know how studies are organised, whom to contact, etc.

We also provide the students with some practical information about

34

the different countries and universities. All information is filled in by local ESTIEMers, so it is information from students to students, which can be considerably different from the “official” information channels.

Several ESTIEMers have put considerable work into this project during the last few years, with the project soon to be successfully completed! This means that you can find a lot of

all ESTIEM Local Groups is an ongoing process! Without up-todate information the web pages are useless!

The Exchange pages are a perfect starting point for a tour on the web to find your way to a period of exchange study anywhere in Europe. Additionally there are travel stories of former exchange students, so you can read their experiences and see what it is really like. If you have been an exchange student yourself, please share your experiences with other students and fill in the online form on the web page! To complete the starting point function, we have gathered a collection of links to all kinds of other useful internet sites, like Erasmus and European Union programmes.

So… do we need say more? Just go to www.exchange.estiem.org

useful information on the web page. The small amount of work left to do, including implementing suggested improvements to the internet pages and the database, adding extra links, integrating the Exchange pages with the general ESTIEM internet, designing a new poster to be handed out at ESTIEM universities all over Europe and adding missing universities to the database. And of course the updating of the database which has to be done by

and find your own way to an exchange in Europe! If you have any questions about the Exchange project or would like to be involved, just drop me an email.

Martin Schönbeck Project Leader Exchange Local Group Eindhoven

ESA Learning Event&Activity Week th

th

Berlin,12 -17 of May

Following recent difficulties in getting enough participants we tried out a new tactic of motivation. Beside the chain emails to the Local Responsibles and later to all the ESTIEMers announcing the event, we sent some ESA promotion posters to the Local Groups whom we knew had holidays (thanks to the holiday database!). And indeed, thanks to the cooperation with the Local Responsibles the number of incoming applications suddenly grew!

The cultural/entertainment programme was created and tested, but the lectures?

Fortunately one of the organisers was doing a project with the German ESA, so thanks to this we got excellent lecturers and a lot of promotion stuff which we shared with our guests.

Well, you know what we did to make it happen but let me tell you the important things: how was the week?

GREAT!!! (did you honestly expect anything else from Local Group Berlin ?)

On the Arrival day, everybody managed to find our - really popular and admired - office and to be picked up by their hosts. In the evening there was a welcome

party on the glass roof of our university, with a wonderful view of Berlin by night, pizza, beer and the ESTIEM song.

The first day of lectures, despite the party the night before and trouble navigating the way through the city jungle, managed to start on time! However, there was a smaller problem on the first day, later there was some time shifting. But where food was concerned, the breakfast breaks with snacks and home-made cake, as well as the lunch breaks in our praised and beloved cafeteria always started on time!

The afternoon continued with some excursions and culture: there were visits to Adlershof (German ESA in Berlin), ZEISS Observatory, museums, a 3D movie about the ISS and of course sight seeing and free/shopping time.

In the evening we did our best to meet the ESA conditions: to show our guests Berlin´s culture (night life) and to integrate them right into it. I guess we did quite well.

We started at a cocktail bar, where some were smoking a shisha accompanied by a German beer and then dancing on tables (space was a rarity) to the same (but every time still catchy) Indie song. Then onto some other bars and clubs, with the crowning glory being a club with huge windows so that it felt like you were dancing directly on the riverbank, observing the Spree by night and admiring the light decoration of club boats and bars.

a good-bye party) which took place in an organiser's flat. This was the “international alcohol” party, where every participant had to deliver his/her participation fee: typical drink from his/her country.

Well, how to describe it? Imagine a great ESTIEM party, square it and then you might get an idea of what was going on there. I guess, we can proudly claim to have taken the main aim of ESTIEM to "Establish and foster relations among European Students of Industrial Engineering and Management” very literally.

Olga Levina olga.levina@estiem.org

E

SA has a great concept: they give money to a student organisation to organise a learning and cultural event. The only conditions are: 1.they tell us about themselves 2.we have to invite some neighbour Europeans to have an educational- cultural interaction…

After such a great party, of course, we needed a good meal. The farewell brunch was badly needed and took place in the late morning in one of Berlin's famous cafés!

For us, the organisers, it was a great week full of fun. We hope our guests enjoyed their stay as much as we did! Thanks to all the participants!

We look forward to seeing all of you for another great event or simply for a visit!

If you have any questions about how to organise an ESA event, do not hesitate to ask!

See you in Berlin!

Olga Levina Local Group Berlin

The cultural highlight however, was a private party (unfortunately 35

ESTIEM New Members Local Group Skopje

T Bisera Kajmakoska bisera.kajmakoska@estiem.org 36

here are always two choices for everything in life, to choose between the heart and mind. It might sound like a farce, but it is the truth.

When we make the choices of life, we often hear what the mind says rather than our intuition. I have decided to present our Local Group Skopje in a different way (I hope it would not be boring for you), that we learn on our faculties: how a person becomes a team. Well, Macedonia is a small country situated in the heart of the Balkan but some people call it “Paradise on Earth”.

For the capital of Macedonia the Austrian general Picollomini in 1689, said: “Skopje is a bit smaller than Prague and Vienna.

The city has beautiful grapewines, good soil and it is very cultivated. I have never seen such beautiful houses.” The city now has more than 600.000 inhabitants. The multitude are Macedonians and other nationalities are Albanians, Turks, Gypsies, Romanians, Serbs and other. Forty years ago (before the disastrous earthquake on 26th July, 1963) the city had a totally different face than now, but yet has lots of monuments from the past: The Old Bazaar, The Stone-bridge on the river Vardar that brings the two “separate” parts of the city together, there are over than thirty churches and monasteries, also

there are mosques like MustafaPasha, Jaja-Pasha etc. If you find yourself in the old-town, you will think that you have returned to the 18th century. If you then go over the Stone-bridge, within a minute, you will see buildings that will remind you that you are now living in the 21st century. It is amazing how the scenery is changed within seconds, as you walk...

In Skopje is the University of “St. Cyril and Methodius” where the

Faculty of Mechanical Engineering and the group for Industrial Engineering and Management are. When I had to choose my studies, I decided to go to a completely different faculty from this one, but deep inside I was very unhappy about it. In one of the night clubs I met the president of the Local Group of ESTIEM, Kristijan Petkoski.

He told me about the Industrial Engineering and Management studies, that it offers a good study program and its diploma is recognized in foreign countries.

So without a doubt, I decided to

go there. Listening to my heart I chose to be a student in one of the prestigious faculties in the country. On 6th of November 2001, in Budapest , the Student Association of Industrial Engineering and Management from Skopje, became member of the ESTIEM. Now we have two years of experience and much more work to do in the future.

We took part in the TIMES competition twice, and as you know we were winners on the Semi-Final in Budapest this year, we are so proud of!

Also, we took part in Vi s i o n o f R i s k seminar series from 5th to 8th of December in 2002. The topic was “Investments in high risk regions”, and from 27th to 30th September 2003 we had a Regional Coordination Meeting in Skopje.

The group counts over 60 members, and we already met many students from Turkey, Bulgaria, Spain, Hungary, and from other countries. We all function as one team. The individual's opinion and effort is essential, but it is much stronger and effective when individuals become part of well organised team. That is the reason why I am saying that I have made the right choice.

Bisera Kajmakoska Local Group Skopje

ESTIEM New Members Local Group Bremen

So it was the spring of the year 2002 at our traditional IEMWeekend that changed the life of Bremen's IEM students. One of the working groups focusing on company contacts asked themselves how to enrich the learning experience but in the international field. A student mentioned an already existing organisation that in Europe had achieved a bit of fame and might be an interesting partner to consider: ESTIEM! So not even really knowing how to spell it two guys got the task of doing research about this subject. Hours later after searching on the internet we got a glimpse of what the ESTIEM Spirit is all about.

First thoughts: interesting agenda, interesting projects.

In the middle of 2002, the ESTIEM project was presented to the IEM students in Bremen at our annual meeting where it was p u t t o a v o t e . Wi t h a n overwhelming majority it was decided that we should become a Local Group of ESTIEM. The German Association VWI e.V. also played a major role supporting us while establishing our organisation, which is a requirement to become a member of ESTIEM. So finally a new organisation was born: VWI Hochschulgruppe Universität Bremen e.V. (us).

Meanwhile contact with the

ESTIEM board was established and we were invited to the 25th Council Meeting in Vaasa, Finland. Well…what can I say, it was certainly more than a glimpse of the ESTIEM Spirit what we got to experience. Impressive I would say, it was exactly what we wanted, same ideas, the projects that we wanted for our Local Group and of course much more…

Being only guests at the CM in Vaasa gave us the spark to start many of the projects we have n o w. We g o t t o a c t u a l l y experience the advantages of the ESTIEM network, and in a way was probably the best motivation to develop our Local Group.

Being a new student group allows you to be creative and yearn to do many things yet at the same time you find yourself trapped in uncertainty mainly due to the lack of experience.

But it was the Council Meeting that definitely gave us the path we wanted to walk through. Our fortune I suppose: the support of two organisations with vast knowledge to get us started.

The winter came and even throughout the coldness we had transmitted the ESTIEM Spirit by means of many informative newsletters, presentations and in greater part as a result of several activities on the ESTIEM agenda.

We were invited to participate in the Vision of Risk Seminars; among them Darmstadt, Berlin, Brussels also the TIMES in Kaiserslautern and the Newcomer Weekend organised by the LG Hamburg. At this point our many thanks to those

Local Groups who treated us as ESTIEMers from the very beginning.

The ESTIEM Board and New Members Committee gave us the necessary support guiding us through all the necessary steps.

So we prepared the application and ourselves for the 26th Council Meeting in the spring and successfully we became Observer in St. Petersburg, Russia. Since then our Local Group has experienced a considerable growth, now we have 25 members and more importantly the support from many Professors and the faculty itself. It is to us very important to count with the Professors support as they are in immediate contact with companies, surprisingly many of them already knew ESTIEM from their own universities. Even though we are a relatively new formed group, we have been able to develop a structure within the group that allows to work more efficiently as some are in charge of the IT others do PR or take care of company contacts and so on.

José Luis León Henkle jose.luis.leon@estiem.org

B

efore 2002 I can say that in Bremen a group of students had been working on pretty much the same ideals that ESTIEM has, yet we did not know anything about ESTIEM.

So what is next for us in ESTIEM? In St. Petersburg we took the responsibility to host a TIMES Semi Final in 2004, and we are considering a week together with Local Group Helsinki in the Fall, a weekend with Local Group Kaiserslautern is also on the way, as well as our participation in the InnoVISION seminars. These are some points on the agenda this semester so we hope to see you all soon.

José Luis León Henkle Local Group Bremen 37

Agenda NOVEMBER 10th - 14th 14th - 18th 17th - 18th 23rd - 25th 24th - 29th

InnoVISION Seminar, Helsinki "Promoting Creativity and Innovation in Organisations" InnoVISION Seminar, Skopje "Innovations - Competitive Advantage of the Developing Countries" Bosch ESTIEM Workshop (in English), Bühl, Germany InnoVISION Seminar, Clausthal "Sustainable Development" InnoVISION Seminar, Berlin "Management of Radical Innovations”

http://www.estiem.org

DECEMBER 30th Nov- 6th Dec 10th - 11th

InnoVISION Seminar K2K2003, Karlsruhe & Kaiserslautern "Strategic Innovation - Karlsruhe" "Technology Tomorrow - Kaiserslautern" InnoVISION Seminar, Ilmenau "Innovation Management - Design Your Future"

JANUARY 9th - 13th 22nd - 26th

InnoVISION Seminar, Cambridge "Creativity in Enterprise" InnoVISION Seminar, Naples "Innovation Styles"

FEBRUARY 28th Jan - 3rd Feb 4th - 8th 9th - 15th 20th - 25th

InnoVISION Seminar, Eindhoven "Tools to Innovate" InnoVISION Seminar, Trondheim "The Power of New Solutions" InnoVISION Seminar, Tampere "Turning Innovations into Products" InnoVISION Seminar, Budapest "Innovation between the Universities and Companies"

MARCH 29th Feb - 3rd Mar 3rd - 6th 6th - 10th 10th - 14th 28th Mar - 3rd Apr

38

InnoVISION Seminar, Istanbul "Innovation Management in Marketing" InnoVISION Seminar, Graz "Innovation - The Future of Mobility" InnoVISION Seminar, Vienna "Intangible Assets Development" InnoVISION Seminar, Grenoble "Becoming an Innovation Stakeholder" InnoVISION Seminar, St.Petersburg "Innovation Marketing"

CAREER Inter national Business Linkage Program & Infocom Management Program Helsinki University of Technology 2004-2005 Do you want to spend a year abroad, learning new things, getting new friends from all over the world, and at the same time have the time of your life?

The International Business Linkage Program and the Infocom Management Program are two one-year study programs geared to university students who already have completed their Bachelor’s degree (or equivalent).

The International Business Linkage Program focuses on strategic management, international business and technology management.

What makes the programs unique?

Five 1-2 weeks intensive courses tailored especially for the participants 2 international modules in the neighbouring countries of Finland Nationality Nights organized by each participating nationality Exceptional class spirit and new friendships that are formed during the year

In the 2003 - 2004 International Business Linkage and Infocom Management Programs there are participants from 13 countries: China, UK, Finland, France, Germany, Iran, Japan, Pakistan, Peru, Russia, Spain, Sweden and USA.

The Infocom Management Program provides understanding of the dynamic Infocom Industry and tools for strategic management in this sector.

Additional Topics for both programs include e.g. marketing, accounting, supply-chain management, finance, business law and presentation skills.

How to apply to the programs?

The programs start in early September and end at the end of May. The deadline for applications is April 15 th 2004.

The tuition fee of the programs is 4000 euro. The tuition fee may be fully or partially covered by scholarships or exchange agreements (e.g. Erasmus/ Socrates).

For application forms and further information, please visit the program home page or contact the program administration: Mr. Veli-Pekka Pulkkinen Program Coordinator Ms. Valeria Zimenkova Program Coordinator Email: business.linkage@hut.fi infocom.management@hut.fi

http://www.tuta.hut.fi/linkage/ http://www.tuta.hut.fi/infocom/

The ESTIEM PRC

The ESTIEM ICT

(Public Relations Committee)

(Information and Communication Technologies)

is the right place for you if you are interested in areas such as designing, press visibility and shaping the exterior look of ESTIEM. The PRC is working in close cooperation with the Vice President of Public Relations, and is the perfect group if you want to practise your team working skills in an international group. The PRC is currently looking for people interested in designing and working with press visibility issues. If this sounds interesting to you, then please send a mail to

prc@estiem.org and maybe soon you will be part of our team!

is the right place for you if you are interested in areas such as web designing, server administration, programming and improving the IT infrastructure of ESTIEM. The ICT is working in close cooperation with the Vice President of Administration & ICT, and is the perfect group for you if you want to develop your IT skills, work in an international team and deal with latest technology. If this sounds interesting for you, then please send an email to

it@estiem.org and maybe soon you will be part of our team!