1 © the delos partnership 2004 performance measures linking to the corporate goals
DESCRIPTION
3 © The Delos Partnership 2004 The Delos Model For Business Integration Innovation Innovation Vision Strategy Prioritisation Prioritisation Demand Support SupplyTRANSCRIPT
1 © The Delos Partnership 2004
Performance MeasuresPerformance Measures
Linking to the corporate goals
2 © The Delos Partnership 2004
Business ExcellenceBusiness Excellence• Business Excellence seeks to improve the
Processes• Education is the key to understanding and
improving the processes• Lasting behaviour change is key to
continuous improvement• The right performance Measures will
determine the right behaviour
3 © The Delos Partnership 2004
The Delos ModelThe Delos ModelFor Business Integration For Business Integration
InnovationInnovation
VisionVision
StrategyStrategy
PrioritisationPrioritisation
DemandDemand
SupportSupport
SupplySupply
4 © The Delos Partnership 2004
Business Excellence and Business Excellence and PerformancePerformance Do Business
Excellence Performance measures help the company?
What is the link to the benefit of the company?
What’s the cash value of non-financial performance measures?
5 © The Delos Partnership 2004
Customer Order Delivery – the “Perfect Order”Demand Forecast AccuracyLead Time reduction and achievement – sales, production and suppliersQuality, Right First Time – production and suppliersSchedule Achievement – production and suppliersNew Product IntroductionVelocity – all activities, all functions
Operational MeasuresOperational Measures
Inventory turns
Added value per employee
Health, safety and environment
Customer Satisfaction Ratings
Working Capital as % of sales
Return on Sales
Return on Capital Employed
Financial/External MeasuresFinancial/External Measures
Focu
s he
reBrings results here
The Seven Core MeasuresThe Seven Core Measures
6 © The Delos Partnership 2004
Dimensions to measureDimensions to measure
Vision andStrategy
Employees
Customers Suppliers
Innovation
D A
ISDefineAnalyseImproveStandardise
7 © The Delos Partnership 2004
Planning and Control ProcessesPlanning and Control Processes
• Customer Service – OTIF to Promise and RequestCustomer Service – OTIF to Promise and Request• Demand Forecast AccuracyDemand Forecast Accuracy• Schedule AchievementSchedule Achievement• Plan stability• Master Schedule Performance• Supplier Delivery Performance• Bill of Material Accuracy• Routing Accuracy• Inventory Accuracy
8 © The Delos Partnership 2004
Innovation processesInnovation processes• Number of milestones met on timeNumber of milestones met on time• Time from Product/Process Concept to introduction• Performance to schedule• Per cent yearly revenues from new products• Number of products completed on time and within
budget• Customer satisfaction with new products• Number of ideas• Total value of ideas implemented
9 © The Delos Partnership 2004
Lean InitiativesLean Initiatives
• VelocityVelocity• Right First TimeRight First Time• Lead Time reductionLead Time reduction• Number of levels in Bills of Materials• Number of Kanbans• Number of product items• Set up time reduction• Batch size reduction• Number of suppliers• Number of point of use stores
10 © The Delos Partnership 2004
People ProcessesPeople Processes
• Employee Attitude• Absenteeism• Turnover• Training plans achieved• Employee Feedback survey• Levels of hierarchy
11 © The Delos Partnership 2004
The Core Measures and Financial EffectThe Core Measures and Financial Effect
Relationships to RoCE components– All influence cash flow
12 © The Delos Partnership 2004
Assume that Profitability is the Goal
ROCE
Profit Capital
Sales Costs
Material Labour Overhead
Fixed Current
Stocks Creditors Debtors
The Core Measures and Financial EffectThe Core Measures and Financial Effect
13 © The Delos Partnership 2004Demand Accuracy
ROCE
Profit Capital
Sales Costs
Material Labour Overhead
Fixed Current
Stocks Creditors Debtors
Demand Accuracy Demand Accuracy
14 © The Delos Partnership 2004Perfect Customer Orders
ROCE
Profit Capital
Sales Costs
Material Labour Overhead
Fixed Current
Stocks Creditors Debtors
Perfect Customer OrdersPerfect Customer Orders
15 © The Delos Partnership 2004Lead Time Reduction
Lead Time ReductionLead Time Reduction
ROCE
Profit Capital
Sales Costs
Material Labour Overhead
Fixed Current
Stocks Creditors Debtors
16 © The Delos Partnership 2004Velocity
ROCE
Profit Capital
Sales Costs
Material Labour Overhead
Fixed Current
Stocks Creditors Debtors
VelocityVelocity
17 © The Delos Partnership 2004Right First Time
Right First TimeRight First Time
ROCE
Profit Capital
Sales Costs
Material Labour Overhead
Fixed Current
Stocks Creditors Debtors
18 © The Delos Partnership 2004Schedule Achievement
Schedule AchievementSchedule Achievement
ROCE
Profit Capital
Sales Costs
Material Labour Overhead
Fixed Current
Stocks Creditors Debtors
19 © The Delos Partnership 2004On time New Products
On-time New ProductsOn-time New Products
ROCE
Profit Capital
Sales Costs
Material Labour Overhead
Fixed Current
Stocks Creditors Debtors
20 © The Delos Partnership 2004
Measure Controllers Not ResultsMeasure Controllers Not Results
On time NPIOn time NPIInventory Accuracy
BOM Accuracy
Schedule AchievementSchedule AchievementRight First TimeRight First TimeOn time from suppliers
Number of Suppliers
VelocityVelocitySet up Times
Lead Time reductionLead Time reductionBatch Quantity
Plan stability
Customer ServiceCustomer ServiceForecast AccuracyForecast Accuracy
(Creditors)CashStockDebtorsFixedAsset
O’headCost
LabCost
Mat’lCost
SalesResult/Measure
21 © The Delos Partnership 2004
Measure Controllers Not ResultsMeasure Controllers Not Results
On time NPIOn time NPIInventory Accuracy
BOM Accuracy
Schedule AchievementSchedule AchievementRight First TimeRight First TimeOn time from suppliers
Number of Suppliers
VelocityVelocitySet up Times
Lead Time reductionLead Time reductionBatch Quantity
Plan stability
Customer ServiceCustomer ServiceForecast AccuracyForecast Accuracy
(Creditors)CashStockDebtorsFixedAsset
O’headCost
LabCost
Mat’lCost
SalesResult/Measure
Mea
sure
s
Results
22 © The Delos Partnership 2004
Link Measures to the GoalLink Measures to the Goal
ROCE
Profit Capital
Sales Costs
Material Labour Overhead
Fixed Current
Stocks Creditors Debtors
Business Excellence Performance Measures are the Foundation;
Profitability is just a result
23 © The Delos Partnership 2004
ROCE
Profit Capital
Sales Costs
Material Labour Overhead
Fixed Current
Stocks Creditors Debtors
Link Measures to the GoalLink Measures to the Goal
Business Excellence Performance Measures are the Foundation;
Profitability is just a result
Focus should be here