balance scorecard proposal for cem – 515: project quality management king fahd university of...
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Balance Scorecard Proposal forBalance Scorecard Proposal for
CEM – 515: Project Quality Management
King Fahd University of Petroleum & Minerals
Department of Construction Engineering & Management
Professor Abdulaziz A. Bubshait
•Purpose of Study
•Bakheet Co. Company Profile
•Literature Review
•Balance Scorecard (BSC) Background
•Proposed Balanced Scorecard for
Bakheet Co.
•Conclusion
OutlineOutline
Purpose of StudyPurpose of StudyIn spite of their struggles for a continuous improvement and the significant end-of- year performance, Bakheet Co. is able to improve by adopting the Balance scorecard system (BSC). So, my term paper I will introduce a typical BSC system for Bakheet Co.
Bakheet Co. Company ProfileBakheet Co. Company Profile Bakheet Co. for Machinery Ltd. was established in
1975 by three ambitious individuals. Two of them are from Bakheet family and one from Al Rifai family.
The Second Generation of those two families is still active in the company to date.
Bakheet Company headquarter is located in Jeddah. The other six branches are spread in:– RIYADH, DAMMAM, MEDINA, GASSIM, TABUK,
AND ABHA.
Bakheet Co. Company ProfileBakheet Co. Company Profile
Company's Activities:
Provides equipment and support for construction and paving industry. (core business)
Diversified in distribution of tools and workshop equipment known as most comprehensive in KSA.
Company ProfileCompany Profile
Concept:
Conducted by Dr. Robert Kaplan from Harvard and Dr. David Norton with Nolan & Norton.
One year research project included 12 companies at the leading edge of performance measurement.
Comparative analysis conducted between these 12 companies and today's general measurement practices.
Concept:
Conducted by Dr. Robert Kaplan from Harvard and Dr. David Norton with Nolan & Norton.
One year research project included 12 companies at the leading edge of performance measurement.
Comparative analysis conducted between these 12 companies and today's general measurement practices.
Literature ReviewLiterature Review
Using a Scorecard by Industry SectorUsing a Scorecard by Industry SectorManufacturing/Service
General ElectricCargil
Johnson ControlsXEROX
IBMUnited Parcel Service
BellSouthAMOCO Corp
NOVA ChemicalsSiemens
Solvay PharmaceuticalsAnheuser Busch
MotorolaAmazon.com
Baltimore Gas & ElectricHewlett Packard
Honeywell/AlliedSignalJohnson & JohnsonShell Oil Company
MCI Worldcom
Health Care
Methodist HealthcareBJC
Novant HealthSLSMHS
Eden Medical CenterNorthwest HospitalOverlake HospitalDuke Children’s
Saint Joseph MercyMayo Clinic
Suburban HospitalAdvocate HealthCare
Duke University MedicalPeel Memorial
Henry Ford HealthKing’s College HospitalShayne Medical Center
North Shore Health RegionGood Samaritan Hospital
Education
University of Michigan
University ofWisconsin Stout
University of San Diego
Educational Testing Srvs
Harvard
University of Montreal
University of MissouriOutreach & Extension
Balance Scorecard (BSC) Background
BSC consists of a set of superior combinations of financial and non-financial measures that provide a comprehensive view of the business to guide strategy development, implementation and communication.
It also provides reliable feedback for management control and performance.
Balance Scorecard (BSC) Background
The Scorecard allows an organization to look The Scorecard allows an organization to look at their performance from four important at their performance from four important perspectives:perspectives: How do customers and other key stakeholders see us (customer
perspective)
What must we excel at (internal perspective)
Can we continue to improve and create value (innovation & learning perspective)
How do we look to financial holders (financial perspective)
Financial Perspective
Goals Measures
Internal Business Perspective
Goals Measures
Innovation & Learning Perspective
Goals Measures
Customer Perspective
Goals Measures
New Products Responsive supply Preferred supplier Customer partnership
% of sales from new products % of sales from proprietary products
On-time delivery (defined by the customer) Share of key accounts' purchases Ranking by key accounts Number of cooperative engineering efforts
Survive Succeed Prosper
Cash flow Quarterly sales growth and operating income by division Increase market share and ROE
Technology leadership Manufacturing learning Product focus Time to market
Time to develop next generation Process time to maturity Percent of products that equal 80% of sales New product introduction vs. competition
Technology capability Manufacturing excellence Design productivity New product introduction
Manufacturing geometry vs. competition Cycle time Unit cost Yield Silicon efficiency Engineering efficiency Actual introduction schedule vs. plan
How do we look to shareholders?
What must we excel at?
Can we continue to improve and create value?
How do customers see us?
Example based on a real semiconductor Co.Example based on a real semiconductor Co.
The Proposed Balanced Scorecard for The Proposed Balanced Scorecard for Bakheet Co.:Bakheet Co.:
Before proposing a BSC for BAKHEET Co. I will propose a vision, mission and objective.
Bakheet Co. Proposed Vision:
To become a leading heavy equipment agent in Saudi Arabia with a focus on seamless customer relationships and delight.
The Proposed Balanced Scorecard for The Proposed Balanced Scorecard for Bakheet Co.:Bakheet Co.:
Bakheet Co. Proposed Mission:
To participate in developing Saudi industry and economy through providing quick solutions and ensuring the delivery of quality after sales support for Bakheet Co. customers to enable them to accomplish their works efficiently.
To operate the company on a sound financial basis of profitable growth, increasing value for Bakheet Co. shareholders and creating career opportunities and financial rewards for their employees.
The Proposed Balanced Scorecard for The Proposed Balanced Scorecard for Bakheet Co.:Bakheet Co.:
Bakheet Co. Proposed Objectives:
The objectives of Bakheet Co. are to increase revenues through expanded sales to existing and potential customers, become service oriented, achieve excellence in order fulfillment through continuous process improvements and to align employee incentives and rewards with the strategy.
Bakheet Co. Proposed Financial Perspective Bakheet Co. Proposed Financial Perspective Goal and Measures:Goal and Measures:
How Do Bakheet Co. Look to Shareholders?
Financial Perspective
Goals Measures
Return on Spending
Net Income /Expenses Saudi Riyal
Revenue Growth
% increase in year to year revenue
Reduce Costs % reduction in cost of sales and after sale services
Bakheet Co. Proposed Customer Perspective Bakheet Co. Proposed Customer Perspective Goal and Measures:Goal and Measures:
How Do Customers See Bakheet Co.?
Customer Perspectives
Goals MeasuresValue Proposition for New Customers
Survey of now customer satisfaction , including feedback in:Bakheet value proposition Employee knowledge and capabilities Convenient access
Provide Consistent/Seamless Service
Survey of existing customers on: Quality Availability Responsiveness Errors and defects
Retain Existing Customers
Customer retention rate in targeted segments
Bakheet Co. Proposed Bakheet Co. Proposed InternalInternal Perspective Perspective Goal and Measures:Goal and Measures:
What Must Bakheet Co. Excel at?
Internal Perspectives
Goals MeasuresAchieving excellent supplier relationship
% strategic partnerships established with suppliersSupplier scorecard, with rating on
1.Cost
2.quality
3.Delivery
4.Flexibility
Developing high quality supplier capability
% perfect order receivedPart-per ten defect rates from supplier %defect, incoming orders %
supplier qualifies to deliver without incoming inspection
Bakheet Co. Proposed Bakheet Co. Proposed Innovation & LearningInnovation & Learning Perspective Goal and Measures:Perspective Goal and Measures:
How Do Customers See Bakheet Co.?
Innovation & Learning Perspectives
Goals MeasuresReskilling competencies to accomplish aggressive revenue
generation targets
Strategic Information The amount of information and knowledge possessed by the employees on company processes, equipment, and customer
Accountability The extent to how incentive program are affection. The extent to how personal goal align with the
company goal.
Financial Perspective
Goals Measures
Internal Business Perspective
Goals Measures
Innovation & Learning Perspective
Goals Measures
Customer Perspective
Goals Measures
New Products Responsive supply Preferred supplier Customer partnership
% of sales from new products % of sales from proprietary products
On-time delivery (defined by the customer) Share of key accounts' purchases Ranking by key accounts Number of cooperative engineering efforts
Survive Succeed Prosper
Cash flow Quarterly sales growth and operating income by division Increase market share and ROE
Technology leadership Manufacturing learning Product focus Time to market
Time to develop next generation Process time to maturity Percent of products that equal 80% of sales New product introduction vs. competition
Technology capability Manufacturing excellence Design productivity New product introduction
Manufacturing geometry vs. competition Cycle time Unit cost Yield Silicon efficiency Engineering efficiency Actual introduction schedule vs. plan
How do we look to shareholders?
What must we excel at?
Can we continue to improve and create value?
How do customers see us?
The Final Proposed BSC for Bakheet Co.The Final Proposed BSC for Bakheet Co.
No single measure can provide a clear target or focus attention on the critical areas of the organization
Leaders need a set of measures that gives them a fast but comprehensive view of the organization
Leaders need a structure that minimizes information overload by limiting the number of measures used
No single measure can provide a clear target or focus attention on the critical areas of the organization
Leaders need a set of measures that gives them a fast but comprehensive view of the organization
Leaders need a structure that minimizes information overload by limiting the number of measures used
ConclusionConclusion
The following cornerstones needed to be taken
into considerations