PERFORMANCE MEASUREMENT
CONTENTS MISSION STATEMENT MISSION AND VISION STATEMENT GOALS& OBJECTIVES
CRITICAL SUCCESS FACTORS KPI:KEY PERFORMANCE INDICATORS494 DIFFERENCE BETWEEN KPI CSF page 494
FI AND BALANCED SCORECARD
INCREASED USE OF NFI • CHANGE IN COST STRUCTURE • Important to look at how cost can be managed better • Or seek ways for cost to be reduced sooner • CHANGE IN COMPETITIVE ENVIRONMENT
• Important aspect like pdt quality, service ,reliability more
important..so need measure addressing those aspects of business • CHANGE MANUFACTURING ENVIRONMENT • Management of new mfg environment focus on setup times, rather than just on costs. •
NFI CAN BE PROVIDED QUICKLY, EASILY UNDERSTOOD AND USEFUL
BALANCED SCORECARD AN APPROACH TO PERFORMANCE MEASUREMENT. IT EMPHASISES ON THE PROVISION A SET OF FINANCIAL & NON FINANCIAL INFORMATION WHICH SHOWS ALL RELEVANT AREAS OF PERFORMANCE FROM A W I D E R P E R S P E C T IV E A N D I N A N O B J E C T I V E A N D UNBIASED MANNER
BALANCED SCORECARD-PERSPECTIVES
FINANCIAL
PROCESS EFFICIENCY (BUSINESS PROCESS)
CUSTOMER SATISFACTION
GROWTH (INNOVATION/ LEARNING &GROWTH)
BALANCED SCORECARD-PERSPECTIVES
FINANCIAL How ORGN CREATE VALUE FOR SHAREHOLDERS?
PROCESS EFFICIENCY (BUSINESS PROCESS) WHAT PROCESS MUST ORGN EXCEL IN?
CUSTOMER SATISFACTION HOW CUSTOMER SEE US?
GROWTH (INNOVATION/LEARNING &GROWTH) IS OUR ORGN SUSTAINABLE? CAN WE STILL EXIST IN THE NEXT 5 0R 10 YEARS?
BALANCED SCORECARD-PERSPECTIVES
FINANCIAL How ORGN CREATE VALUE FOR SHAREHOLDERS? TRADITIONAL MEASURES
CUSTOMER SATISFACTION HOW CUSTOMER SEE US? QUALITY, SVC, TIMINGTHINGS THAT MATTER TO CONSUMERS
PROCESS EFFICIENCY (BUSINESS PROCESS) WHAT PROCESS MUST ORGN EXCEL IN? OPERATIONS, INTERNALAPROCESS, DM, RESOURCE U.
GROWTH (INNOVATION/LEARNING &GROWTH) IS OUR ORGN SUSTAINABLE? CAN WE STILL EXIST IN THE NEXT 5 0R 10 YEARS? DEVELOPMNT OF NEW SKILLS OR PDTS
BALANCED SCORECARD-KPI’S FINANCIAL How ORGN CREATE VALUE FOR SHAREHOLDERS? NET PROFIT MARGIN SALES FIGURES NEW OUTLETS OPENED Share price
PROCESS EFFICIENCY (BUSINESS PROCESS) WHAT PROCESS MUST ORGN EXCEL IN? Order delivery time, Processing time, Reject qty, reject %
CUSTOMER SATISFACTION HOW CUSTOMER SEE US? Good response in cust survey Number of customers Number of units sold
GROWTH (INNOVATION/LEARNING &GROWTH) IS OUR ORGN SUSTAINABLE? Labour turnover, training hours per employee, Investment in new system, number new products Modernization of system-web based, online sales etc.
BALANCED SCORECARD-PROS&CONS Advantages 1.Manager forced to look at both financial and non financial measures and this makes them more aware how their actions affect both. 2.Improve communication & understanding of biz goals among all levels of orgn. 3. Helps align key performance measures with strategy at all levels of an organization. 4.Using the same key performance indicators and metrics consistently, improvement can be tracked over time.
Disadvantages 1.Some measures conflict with each other and thus difficult to prioritise on which is more important and to balance them. 2.Problem interpreting the measures 3.More measures may confuse manager on what action they need to take. 4. Existing systems may not provide the data necessary to track the desired metrics. An organization will need to develop information systems to collect and analyze the measurement data. Costly and laborious