1 © the delos partnership 2004 implementation of measures the part performance measures play in...

1 © The Delos Partnership 2004

Implementation of MeasuresImplementation of Measures

The part Performance measures play in getting the benefits


Delos Change JourneyDelos Change Journey

MobiliseMobilise DesignDesign CommunicateCommunicate ReviewReviewUnderstandUnderstand

AASSSSEESSSS

AASSSSEESSSS

EDUCATIONSTRATEGY & DESIGN

DEFINE & MEASURE BENEFITS

ORGANISATIONSYSTEMS

Perform

ance Measures

Perform

ance Measures


Establish TeamEstablish Team

Performance Measures Task Force

Project Leader

Marketing

Manufacturing

Finance

Engineering/Development

Human Resources

Meet once per week for 3/4 hours Meet once per week for 3/4 hours


Educate and Re-EducateEducate and Re-Educate

Responsibilities of Task Force

• Define the Measures

• Establish the Hierarchy

• Carry out the Education

• Liaise with other Task Forces


Performance Measures Performance Measures ImplementationImplementation

A vital part of redesign of Business Processes

Process Function Measure An opportunity for early benefits

Data Accuracy and Customer Service

Establishes base zero for Implementation of Business Excellence


Performance MeasuresPerformance Measures10 point Implementation plan10 point Implementation plan

1. Establish Goal and Core Values – workshop2. Examine today’s measures3. Review Business Excellence measures4. Decide which to eliminate from today’s list5. Decide which few to take from Business Excellence

List6. Determine Hierarchy of measures7. Allocate responsibilities for measures8. Educate and re-educate9. Measure10. Throw away old measures


Measures - ImplementationMeasures - Implementation

• Establish Vision and Values

• Long term Audacious Goals

• The Values needed to achieve that

• Competitive Value Proposition

• Major Objectives or Critical Success Factors


Vision exampleVision example

• ABC Ltd want to grow from £ 50 million to £ 250 million in 5 Years

• We will develop long term relationships with 5 customers gaining 100 % of their business

• We need to be proactive in developing their products

• We need to deliver 100 % ofthe time on time


Examine Today’s Examine Today’s MeasuresMeasures

• Look for actual vs budget

• All graphs and reports• Board reports• Charts in factory• Informal measures• Financial and non-

financial

Explain what you are doing - No Fear !


Examine Today’s MeasuresExamine Today’s Measures

• Who owns

• Who reports

• What are they measuring - Process or Function

• Do they cause conflicts ?– Overhead recovery– Purchase Price Variance


Review Business Review Business Excellence MeasuresExcellence Measures

Given the vision and values what do you need to measure ?

– Forecast accuracy– New product development– Velocity– Delivery to Customer Request date

• Operational Excellence• Customer Excellence• Innovational Excellence


Decide Which to KeepDecide Which to Keep

KEEP

On time in full

Schedule Adherence

Right First Time

- Core measures

REJECT

Overhead recoveryInventory levelPurchase price

varianceActual vs budget !Earnings per share


Implement the seven core Implement the seven core measuresmeasures

• Forecast accuracy• Schedule achievement• On time new products• Right First Time• Customers’ on time delivery• Velocity• Lead Time Reduction


Allocate ResponsibilityAllocate Responsibility

Process:Measure: Who ?Forecasting Accuracy Sales & Marketing

NPD On Time Technical

Delivery QOTIF Logistics

Speed Velocity Manufacturing

Making Schedule Manufacturing


Final Agreement on Final Agreement on MeasuresMeasuresSteering Committee should agree:

– Measurement Principles– Number of Measures … Few– Objectives, Targets and Milestones– Organisational Structure– Process for Developing Measures


Identify the “VITAL FEW” which most clearly reflect the business strategy and industry sector.

Demonstrate the link with the business objectives

The “The “VITAL FEWVITAL FEW””


Value Disciplines and the Vital Value Disciplines and the Vital FewFew


Industry Sector - Aerospace & Defence

New Products Schedule Lead-timeReduction

QualityForecast Accuracy

Velocity

The Vital Few

The Core Measures

Perfect Order

Additional critical lower level measuresEarned Value Management System (EVMS)Cost/Schedule – Control Systems Criteria (C/Scsc)

Industry Sectors and the Vital Few


Industry Sector - Automotive

New Products Quality Velocity

ScheduleForecast Accuracy

Lead-timeReduction

The Vital Few

The Core Measures

Perfect Order

Additional critical lower level measuresVehicle Build TimeProducts Produced According to Plan (PPAP)Defective Parts Against Plan (DPAP)



Industry Sector – Industrial Equipment & Machinery

Perfect Order Schedule Lead-timeReduction

QualityForecast Accuracy

Velocity

The Vital Few

The Core Measures

New Products

Additional critical lower level measuresUnbilled work in progressCustomer profitability – sales and service



Industry Sector - Electronics

New Products Quality Velocity

ScheduleForecast Accuracy

Lead-timeReduction

The Vital Few

The Core Measures

Perfect Order

Additional critical lower level measuresPricing modelsCustomer returns



Industry Sector – Third Party Logistics

Velocity Schedule Quality

Perfect Order Forecast Accuracy

Lead-timeReduction

The Vital Few

The Core Measures

New Products

Additional critical lower level measuresNew Products is New Service ProvisionFleet Utilisation



Obstacles to ChangeObstacles to Change

• History• Traditional culture• Corporate dinosaurs• Criticism• Subjectivity• Loss of status• Loss of protection• Comfort with old paradigms


Obstacles on the change journeyObstacles on the change journey

Suddendepthscare

ScopecrisisNo 3

Sponsorswitch

Informedresistance

Realworldshock

Eva-luationavoid-ance

Early resultsdisappointment

Ownershipstruggle

ScopecrisisNo 2

Test ofnerve

Smokeand fire

Wetblankets

ScopecrisisNo 1

Sponsor-ship

fights

Resourcedraining

Sniping &rumours

Newchallenge

panic

Loss

Shockover early

failures

Imple-mentation

crawl

ExecutiveExecutiveTeamTeam

MiddleMiddleManagersManagers

EmployeesEmployees

ProjectProjectTeamTeam

MobiliseMobilise DesignDesign CommunicateCommunicate ReviewReviewUnderstandUnderstand


STOP

The InhibitorsThe Inhibitors

• Good at ideas but poor at delivery• Consensus decision-making• Organisational politics• Short attention span• Changing responsibilities• Lack of belief• Inadequate systems• Too many initiatives


GO

• Discuss, decide, then do• Establish clear business vision• Address ‘difficult’ issues• Advertise success• Reward delivery, not ideas• Encourage change and risk-taking• Resource properly• The board to publicly lead

The EnablersThe Enablers


Education ProcessEducation Process

Needs to• Show the integration of the Measures

with the Values of the Business• Bring out the checks, balances and

conflicts into the open• Show the integration of the measures

with each other• Show how each individual contributes

to the Corporate Vision


How to SucceedHow to Succeed

The Boss Must believe and lead Clear Vision and value statement Measurable believable Customer Focused targets Benchmark to create dissatisfaction Publish Results No second best Reward Good process improvement Use Measures to drive continuous improvement Committed change agents or paradigm pioneers Willingness to break the old paradigms


Kill off the Old MeasuresKill off the Old Measures

ProductivityProductivity

Direct/Indirect Labour RatioDirect/Indirect Labour Ratio

Inventory as an assetInventory as an asset

Over-head RecoveryOver-head Recovery

Purchase Price VariancePurchase Price Variance







Kill off the Old MeasuresKill off the Old Measures

It is difficult - they keep on coming back !It is difficult - they keep on coming back !












Business Excellence - Business Excellence - Paradigm ChallengeParadigm Challenge

““The difficulty lies, not in the new ideas,The difficulty lies, not in the new ideas,but in escaping from the old ones.”but in escaping from the old ones.”

John Maynard Keynes 1936John Maynard Keynes 1936

1 © the delos partnership 2004 implementation of measures the part performance measures play in...

Documents

business strategy

keepkeepon time

vital fewindustry sectors

measuresthe vital fewidentify

implementation of measuresthe

todays listdecide

long term relationships

actual vs budgetall