Post on 26-Dec-2015
1 © The Delos Partnership 2004
Performance MeasuresPerformance Measures
Developing a New Set of Measures
2 © The Delos Partnership 2004
The Delos ModelThe Delos ModelFor Business Integration For Business Integration
InnovationInnovation
VisionVision
StrategyStrategy
PrioritisationPrioritisation
DemandDemand
SupportSupport
SupplySupply
3 © The Delos Partnership 2004
Measurement - BasicsMeasurement - Basics
VISION AND STRATEGY
OBJECTIVESOBJECTIVES
TARGETSTARGETS
MILESTONESMILESTONES
4 © The Delos Partnership 2004
Measurement - BasicsMeasurement - Basics
VISION AND STRATEGY
OBJECTIVESOBJECTIVES
TARGETSTARGETS
MILESTONESMILESTONES
5 © The Delos Partnership 2004
Setting the VisionSetting the Vision
• Simple• Owned by the
Managing Director
• Understood by everyone
• Visiblee.g. Simply the
best
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Communicate to Communicate to Employees ..Employees ..Worried about Confidentiality ?“Knowing our strategy will do our
competitors little good, unless they can execute it. On the other hand we have no chance of executing our strategy unless our people know it. It’s a chance we will have to take.”
– Brian Baker CEO Mobil Ltd.
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Measurement - BasicsMeasurement - Basics
VISION AND STRATEGY
OBJECTIVESOBJECTIVES
TARGETSTARGETS
MILESTONESMILESTONES
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Setting the ObjectivesSetting the Objectives
• Set out areas for success
• Interfaces with– Customers– Suppliers– Employees– Shareholders– Environment
• Clear objectives
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Matching ExpectationsMatching Expectations
OurOrganisation
OurOrganisationINPUTS OUTPUTS
How well do we meet their expectations, and how well do they meet our expectations ?
10 © The Delos Partnership 2004
INPUTS OUTPUTSOur
Organisation
Matching ExpectationsMatching Expectations
How well do we meet their expectations, and how well do they meet our expectations ?
CULTURE/BEHAVIOUR
TECHNO
LOG
Y
WAYS O
F
WO
RKING
Use theseTo Measurethese
To Change this
11 © The Delos Partnership 2004
Measurement - BasicsMeasurement - Basics
VISION AND STRATEGY
OBJECTIVESOBJECTIVES
TARGETSTARGETS
MILESTONESMILESTONES
12 © The Delos Partnership 2004
Targets should be…Targets should be…
• Specific
• Measurable
• Achievable
• Relevant
• Targeted
Each target Each target supports a supports a
measure of one or measure of one or more strategic more strategic objectives that objectives that relate to the relate to the
overall vision and overall vision and goal.goal.
Each target Each target supports a supports a
measure of one or measure of one or more strategic more strategic objectives that objectives that relate to the relate to the
overall vision and overall vision and goal.goal.
13 © The Delos Partnership 2004
Setting the TargetsSetting the Targets
• Establishes Quantifiable aims
• Sets long term picture
• Challenges through outrageous goals
• Provides view of outstanding performance
Customer QOTIF
0%
20%
40%
60%
80%
100%
120%
Yea
r 1
Yea
r 3
Target
Actual
14 © The Delos Partnership 2004
BenchmarkingBenchmarking
• Benchmarking is a process to evaluate company’s performance against– Sites within same company– Companies within the same industry– Companies within different industries– Companies in different businesses
• Collect the best practices of the best to make you the best
15 © The Delos Partnership 2004
World Class Performance – World Class Performance – Fast Moving Consumer Goods Fast Moving Consumer Goods BusinessBusiness
Measure Average Top 10 % YOU ?
Delivery Reliability % 94 99.9
New Products in last 5 years %
4 63
Scrap Rates - % 3.9 0.8
Total Stock-turns (per annum) (1)
13 30
Training Days per Employee
7 20
(1) Sales Value/Total Stock : assuming average Variable Cost Ratio = 60 % then
Figures would be 8 18Source : Cranfield University
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BenchmarkingBenchmarking
Elements to compare– Lead Times for different activities
• Order processing• New product Development
– Velocity– Inventory Turns– Customer Service Levels
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BenchmarkingBenchmarking
Which is appropriate for you ?INVENTORY TURNS• Japanese Automotive Industry 163 TPY• European Automotive Industry 16 TPY• Manufacturing Industry Average 5 TPY• Tesco Food 200 TPY• Marks and Spencer Marble Arch 1500 TPYTPY = Turns Per Year (Inventory on Hand/Forward Cost of Goods Sold Times
12)
18 © The Delos Partnership 2004
Measurement - BasicsMeasurement - Basics
VISION AND STRATEGY
OBJECTIVESOBJECTIVES
TARGETSTARGETS
MILESTONESMILESTONES
19 © The Delos Partnership 2004
Measurement - BasicsMeasurement - Basics
VISION AND STRATEGY
CORE VALUES AND OBJECTIVES
TARGETS
MILESTONES
20 © The Delos Partnership 2004
Setting MilestonesSetting Milestones
Set up Time on Baruka m/ c
0
1
2
3
4
5
6
7
8
9
10
Hou
rs Milestone
Actual
Established short-term checkpoints
Provides guidance on whether targets being met
Allows review of targets and objectives
21 © The Delos Partnership 2004
Measurement ExampleMeasurement Example
Product Leader
Develop exciting products for the customerDevelop exciting products for the customer
98 % of New Products on Time98 % of New Products on TimeTime to market reduced from 12 months to 12 weeksTime to market reduced from 12 months to 12 weeks
Time to market will be reduced to 9 months byTime to market will be reduced to 9 months byDecember this year and to 6 months by end next yearDecember this year and to 6 months by end next year
22 © The Delos Partnership 2004
Challenge the Status QuoChallenge the Status Quo
• Set Targets that will utterly challenge the organisation
• Imagineering will make them possible
• “If you don’t have a dream, how can it come true?”
Customer Service and Inventory
98%
99%
99%
99%
99%
99%
100%
100%
100%
100%
Year1
Year2
Year3
Year4
QOTI
F
0
50
100
150
200
250
Tu
rns QOTIF
InvTurns
23 © The Delos Partnership 2004
Establishing New Establishing New MeasuresMeasures• Define simple vision – meaningful• Establish perspectives that need to be
measured and hence objectives• Establish Targets for each measure• Benchmark against best of the best to
establish targets• Agree milestones to provide progress charts