1 © the delos partnership 2004 implementation of measures the part performance measures play in...
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1 © The Delos Partnership 2004
Implementation of MeasuresImplementation of Measures
The part Performance measures play in getting the benefits
2 © The Delos Partnership 2004
Delos Change JourneyDelos Change Journey
MobiliseMobilise DesignDesign CommunicateCommunicate ReviewReviewUnderstandUnderstand
AASSSSEESSSS
AASSSSEESSSS
EDUCATIONSTRATEGY & DESIGN
DEFINE & MEASURE BENEFITS
ORGANISATIONSYSTEMS
Perform
ance Measures
Perform
ance Measures
3 © The Delos Partnership 2004
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
4 © The Delos Partnership 2004
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
5 © The Delos Partnership 2004
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
6 © The Delos Partnership 2004
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
7 © The Delos Partnership 2004
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
8 © The Delos Partnership 2004
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
9 © The Delos Partnership 2004
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 !
10 © The Delos Partnership 2004
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
11 © The Delos Partnership 2004
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
12 © The Delos Partnership 2004
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
13 © The Delos Partnership 2004
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
14 © The Delos Partnership 2004
Allocate ResponsibilityAllocate Responsibility
Process:Measure: Who ?Forecasting Accuracy Sales & Marketing
NPD On Time Technical
Delivery QOTIF Logistics
Speed Velocity Manufacturing
Making Schedule Manufacturing
15 © The Delos Partnership 2004
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
16 © The Delos Partnership 2004
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””
17 © The Delos Partnership 2004
Value Disciplines and the Vital Value Disciplines and the Vital FewFew
18 © The Delos Partnership 2004
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
19 © The Delos Partnership 2004
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 Sectors and the Vital Few
20 © The Delos Partnership 2004
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 Sectors and the Vital Few
21 © The Delos Partnership 2004
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 Sectors and the Vital Few
22 © The Delos Partnership 2004
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
Industry Sectors and the Vital Few
23 © The Delos Partnership 2004
Obstacles to ChangeObstacles to Change
• History• Traditional culture• Corporate dinosaurs• Criticism• Subjectivity• Loss of status• Loss of protection• Comfort with old paradigms
24 © The Delos Partnership 2004
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
25 © The Delos Partnership 2004
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
26 © The Delos Partnership 2004
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
27 © The Delos Partnership 2004
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
28 © The Delos Partnership 2004
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
29 © The Delos Partnership 2004
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
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
30 © The Delos Partnership 2004
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 !
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
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
31 © The Delos Partnership 2004
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