1 © The Delos Partnership 2004 Performance Measures Linking to the corporate goals

1 © The Delos Partnership 2004

Performance MeasuresPerformance Measures

Linking to the corporate goals


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


The Delos ModelThe Delos ModelFor Business Integration For Business Integration

InnovationInnovation

VisionVision

StrategyStrategy

PrioritisationPrioritisation

DemandDemand

SupportSupport

SupplySupply


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?


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


Dimensions to measureDimensions to measure

Vision andStrategy

Employees

Customers Suppliers

Innovation

D A

ISDefineAnalyseImproveStandardise


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


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


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


People ProcessesPeople Processes

• Employee Attitude• Absenteeism• Turnover• Training plans achieved• Employee Feedback survey• Levels of hierarchy


The Core Measures and Financial EffectThe Core Measures and Financial Effect

Relationships to RoCE components– All influence cash flow


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


Fixed Current


Demand Accuracy Demand Accuracy

14 © The Delos Partnership 2004Perfect Customer Orders

ROCE

Profit Capital

Sales Costs


Fixed Current


Perfect Customer OrdersPerfect Customer Orders

15 © The Delos Partnership 2004Lead Time Reduction

Lead Time ReductionLead Time Reduction

ROCE

Profit Capital

Sales Costs


Fixed Current


16 © The Delos Partnership 2004Velocity

ROCE

Profit Capital

Sales Costs


Fixed Current


VelocityVelocity

17 © The Delos Partnership 2004Right First Time

Right First TimeRight First Time

ROCE

Profit Capital

Sales Costs


Fixed Current


18 © The Delos Partnership 2004Schedule Achievement

Schedule AchievementSchedule Achievement

ROCE

Profit Capital

Sales Costs


Fixed Current


19 © The Delos Partnership 2004On time New Products

On-time New ProductsOn-time New Products

ROCE

Profit Capital

Sales Costs


Fixed Current



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


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


Link Measures to the GoalLink Measures to the Goal

ROCE

Profit Capital

Sales Costs


Fixed Current


Business Excellence Performance Measures are the Foundation;

Profitability is just a result


ROCE

Profit Capital

Sales Costs


Fixed Current


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

Documents

1 © The Delos Partnership 2004 Performance Measures Linking to the corporate goals