OPERATIONS OPERATIONS ANDANDPRODUCTIONPRODUCTION MANAGEMENTMANAGEMENT

Warsaw University of TechnologyWarsaw University of TechnologyFaculty of Production EngineeringFaculty of Production Engineering

Institute for Organization of Production SystemsInstitute for Organization of Production Systems

PRODUCTIONPRODUCTION MANAGEMENTMANAGEMENT

MSc. Małgorzata Zalewska-Traczyk

OPMAN exercises ©M.Zalewska-Traczyk

Mission – What we do?

Vision – What we aspire to be?

The Strategy Focused

Organization

Strategies – How we accomplish our goals

Measures – Indicators of our progress

� Introduced in 1992, by Robert Kaplanand David Norton, the BalancedScorecard is the most commonly usedframework for ensuring that agencies

Where it started . . .Where it started . . .

framework for ensuring that agenciesexecute their strategies.

� Today, about 70% of the Fortune 1,000companies utilize the Balanced Scorecard tohelp manage performance.

What What is it?is it?

� The Balanced Scorecard is a managementtool that provides stakeholders with acomprehensive measure of how theorganization is progressing towards theorganization is progressing towards theachievement of its strategic goals.

The Balanced ScorecardThe Balanced Scorecard

� Balances financial and non-financial measures

� Balances short and long-term measures

� Balances performance drivers (leading indicators) with outcome measures (lagging indicators) with outcome measures (lagging indicators)

� To give a complete picture of organizational performance

� Leads to strategic focus and organizational alignment.

The Balanced Scorecard• To achieve strategic objectives. • To provide quality with fewer resources.• To eliminate non-value added efforts.• To align customer priorities and

expectations with the customer.expectations with the customer.• To track progress.• To evaluate process changes.• To continually improve.• To increase accountability.

The Five Principles1. Translate the strategy to operational

terms.2. Align the organization to the strategy.

The Strategy Focused

Organization

2. Align the organization to the strategy.3. Make strategy everyone’s job.4. Make strategy a continual process.5. Mobilize change through executive

leadership

Source: The Strategy Focused Organization, Norton & Kaplan

FINANCIAL/REGULATORYTo satisfy our constituents, what financial & regulatory

objectives must we accomplish?

CUSTOMERTo achieve our vision,

what customer needs must we serve?

INTERNAL

THE BALANCED SCORECARDTHE BALANCED SCORECARD

stakeholders, in which business

INTERNALTo satisfy our customers and

stakeholders, in which business processes must we excel?

LEARNING & GROWTHTo achieve our goals, how

must we learn, communicate and grow?

Customer Perspective

Customer Satisfaction (Average)

Satisfaction Gap Analysis (Satisfaction vs.

MeasuresMeasures

To achieve our vision, what customer needs

must we serve?

Satisfaction Gap Analysis (Satisfaction vs.

Level of Importance)

Satisfaction Distribution (% of each area

scored)

Financial / Regulatory Perspective

Cost / Unit

Unfunded Requirements or Projects

Cost of Service

MeasuresMeasures

Cost of Service

Budget Projections and Targets

Internal Perspective

Cycle Time

Completion Rate

MeasuresMeasures

To satisfy our customers, in which business

processes must we excel?

Completion Rate

Workload and Employee Utilization

Transactions per employee

Errors or Rework

Learning and Growth

To achieve our goals and accomplish core activities,

how must we learn, communicate and work together?

MeasuresMeasures

Employee Satisfaction

Retention and Turnover

Training Hours and Resources

Technology Investment

Why Measure?Why Measure?

• To determine how effectively and efficiently the process or service satisfies the customer.

• To identify improvement opportunities.

• To make decisions.

Advantages to this Approach

� Simple to Use and Understand� Based on Vision and Strategy� Multidimensional

•Quantitative and Qualitative Measures•Quantitative and Qualitative Measures•Current and Future

� Provides Measurement of and Method for Improving our Services

� Ties QI initiatives together� Serves as a Communication Tool

Customer Business Partners Homeowners

Mission

IncreaseHome Ownership

Increase Market Share Reduce Claims

Housing Strategy Map example: Cause-effect hypotheses

Strategic Competencies Strategic Technology Climate for Action

Infrastructure Applications

Processes Value Chain (faster, better, or cheaper)

Receive Applications

ProcessApplications

ServiceMortgages

Develop LoanPrograms

Skills, Technology, Motivation

Source: Presentation by Patrick Plunkett Department of Housing & Urban Development July 20, 2006

BalancedBalancedScorecardScorecardIllustratedIllustrated

ConclusionConclusion

♦ Can be used to:

- clarify and update strategy

- communicate strategy throughout the company

- align unit and individual goals with the strategy

GEN0190n.ppt 16

- link strategic objectives to long term targets & annual budgets

- identify and align strategic initiatives

- conduct periodic performance reviews to learn about and improve strategy

Software used at Software used at Ericsson Ericsson (”Cockpit (”Cockpit communicator”)communicator”)

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Kaplan, Robert and Norton, Edward. The Balanced Scorecard.Harvard Business Publishing, 1998

Kaplan, Robert and Norton, Edward. The Strategy-Focused Organization.Harvard Business Publishing, 2001

Book

Buckingham, Marcus and Coffman, Curt. First, Break All the Rules The Gallup Organization, 1999

Brown, Mark. Keeping Score. Mark Graham Brown, 1996

http://www.afd.calpoly.edu/afd/Strategic_plan/

http://cqi.csusb.edu/

What we will be doing?What we will be doing?

1. Read Case Study 2GC

2. I would have a … minute break and 2. I would have a … minute break and have them write down how they could use The Balanced Scorecard for our case RCM

OPMAN exercises ©M.Zalewska-Traczyk

7-Nov-13

Thank you!Thank you!Thank you!Thank you!

OPMAN exercises ©M.Zalewska-Traczyk