Balance Scorecard Proposal forBalance Scorecard Proposal for

CEM – 515: Project Quality Management

King Fahd University of Petroleum & Minerals

Department of Construction Engineering & Management

Professor Abdulaziz A. Bubshait

•Purpose of Study

•Bakheet Co. Company Profile

•Literature Review

•Balance Scorecard (BSC) Background

•Proposed Balanced Scorecard for

Bakheet Co.

•Conclusion

OutlineOutline

Purpose of StudyPurpose of StudyIn spite of their struggles for a continuous improvement and the significant end-of- year performance, Bakheet Co. is able to improve by adopting the Balance scorecard system (BSC). So, my term paper I will introduce a typical BSC system for Bakheet Co.

Bakheet Co. Company ProfileBakheet Co. Company Profile Bakheet Co. for Machinery Ltd. was established in

1975 by three ambitious individuals. Two of them are from Bakheet family and one from Al Rifai family.

The Second Generation of those two families is still active in the company to date.

Bakheet Company headquarter is located in Jeddah. The other six branches are spread in:– RIYADH, DAMMAM, MEDINA, GASSIM, TABUK,

AND ABHA.

Bakheet Co. Company ProfileBakheet Co. Company Profile

Company's Activities:

Provides equipment and support for construction and paving industry. (core business)

Diversified in distribution of tools and workshop equipment known as most comprehensive in KSA.

Company ProfileCompany Profile

Concept:

Conducted by Dr. Robert Kaplan from Harvard and Dr. David Norton with Nolan & Norton.

One year research project included 12 companies at the leading edge of performance measurement.

Comparative analysis conducted between these 12 companies and today's general measurement practices.

Concept:

Conducted by Dr. Robert Kaplan from Harvard and Dr. David Norton with Nolan & Norton.

One year research project included 12 companies at the leading edge of performance measurement.

Comparative analysis conducted between these 12 companies and today's general measurement practices.

Literature ReviewLiterature Review

Using a Scorecard by Industry SectorUsing a Scorecard by Industry SectorManufacturing/Service

General ElectricCargil

Johnson ControlsXEROX

IBMUnited Parcel Service

BellSouthAMOCO Corp

NOVA ChemicalsSiemens

Solvay PharmaceuticalsAnheuser Busch

MotorolaAmazon.com

Baltimore Gas & ElectricHewlett Packard

Honeywell/AlliedSignalJohnson & JohnsonShell Oil Company

MCI Worldcom

Health Care

Methodist HealthcareBJC

Novant HealthSLSMHS

Eden Medical CenterNorthwest HospitalOverlake HospitalDuke Children’s

Saint Joseph MercyMayo Clinic

Suburban HospitalAdvocate HealthCare

Duke University MedicalPeel Memorial

Henry Ford HealthKing’s College HospitalShayne Medical Center

North Shore Health RegionGood Samaritan Hospital

Education

University of Michigan

University ofWisconsin Stout

University of San Diego

Educational Testing Srvs

Harvard

University of Montreal

University of MissouriOutreach & Extension

Balance Scorecard (BSC) Background

BSC consists of a set of superior combinations of financial and non-financial measures that provide a comprehensive view of the business to guide strategy development, implementation and communication.

It also provides reliable feedback for management control and performance.

Balance Scorecard (BSC) Background

The Scorecard allows an organization to look The Scorecard allows an organization to look at their performance from four important at their performance from four important perspectives:perspectives: How do customers and other key stakeholders see us (customer

perspective)

What must we excel at (internal perspective)

Can we continue to improve and create value (innovation & learning perspective)

How do we look to financial holders (financial perspective)

Financial Perspective

Goals Measures

Internal Business Perspective

Goals Measures

Innovation & Learning Perspective

Goals Measures

Customer Perspective

Goals Measures

New Products Responsive supply Preferred supplier Customer partnership

% of sales from new products % of sales from proprietary products

On-time delivery (defined by the customer) Share of key accounts' purchases Ranking by key accounts Number of cooperative engineering efforts

Survive Succeed Prosper

Cash flow Quarterly sales growth and operating income by division Increase market share and ROE

Technology leadership Manufacturing learning Product focus Time to market

Time to develop next generation Process time to maturity Percent of products that equal 80% of sales New product introduction vs. competition

Technology capability Manufacturing excellence Design productivity New product introduction

Manufacturing geometry vs. competition Cycle time Unit cost Yield Silicon efficiency Engineering efficiency Actual introduction schedule vs. plan

How do we look to shareholders?

What must we excel at?

Can we continue to improve and create value?

How do customers see us?

Example based on a real semiconductor Co.Example based on a real semiconductor Co.

The Proposed Balanced Scorecard for The Proposed Balanced Scorecard for Bakheet Co.:Bakheet Co.:

Before proposing a BSC for BAKHEET Co. I will propose a vision, mission and objective.

Bakheet Co. Proposed Vision:

To become a leading heavy equipment agent in Saudi Arabia with a focus on seamless customer relationships and delight.

The Proposed Balanced Scorecard for The Proposed Balanced Scorecard for Bakheet Co.:Bakheet Co.:

Bakheet Co. Proposed Mission:

To participate in developing Saudi industry and economy through providing quick solutions and ensuring the delivery of quality after sales support for Bakheet Co. customers to enable them to accomplish their works efficiently.

To operate the company on a sound financial basis of profitable growth, increasing value for Bakheet Co. shareholders and creating career opportunities and financial rewards for their employees.

The Proposed Balanced Scorecard for The Proposed Balanced Scorecard for Bakheet Co.:Bakheet Co.:

Bakheet Co. Proposed Objectives:

The objectives of Bakheet Co. are to increase revenues through expanded sales to existing and potential customers, become service oriented, achieve excellence in order fulfillment through continuous process improvements and to align employee incentives and rewards with the strategy.

Bakheet Co. Proposed Financial Perspective Bakheet Co. Proposed Financial Perspective Goal and Measures:Goal and Measures:

How Do Bakheet Co. Look to Shareholders?

Financial Perspective

Goals Measures

Return on Spending

Net Income /Expenses Saudi Riyal

Revenue Growth

% increase in year to year revenue

Reduce Costs % reduction in cost of sales and after sale services

Bakheet Co. Proposed Customer Perspective Bakheet Co. Proposed Customer Perspective Goal and Measures:Goal and Measures:

How Do Customers See Bakheet Co.?

Customer Perspectives

Goals MeasuresValue Proposition for New Customers

Survey of now customer satisfaction , including feedback in:Bakheet value proposition Employee knowledge and capabilities Convenient access

Provide Consistent/Seamless Service

Survey of existing customers on: Quality Availability Responsiveness Errors and defects

Retain Existing Customers

Customer retention rate in targeted segments

Bakheet Co. Proposed Bakheet Co. Proposed InternalInternal Perspective Perspective Goal and Measures:Goal and Measures:

What Must Bakheet Co. Excel at?

Internal Perspectives

Goals MeasuresAchieving excellent supplier relationship

% strategic partnerships established with suppliersSupplier scorecard, with rating on

1.Cost

2.quality

3.Delivery

4.Flexibility

Developing high quality supplier capability

% perfect order receivedPart-per ten defect rates from supplier %defect, incoming orders %

supplier qualifies to deliver without incoming inspection

Bakheet Co. Proposed Bakheet Co. Proposed Innovation & LearningInnovation & Learning Perspective Goal and Measures:Perspective Goal and Measures:

How Do Customers See Bakheet Co.?

Innovation & Learning Perspectives

Goals MeasuresReskilling competencies to accomplish aggressive revenue

generation targets

Strategic Information The amount of information and knowledge possessed by the employees on company processes, equipment, and customer

Accountability The extent to how incentive program are affection. The extent to how personal goal align with the

company goal.

Financial Perspective

Goals Measures

Internal Business Perspective

Goals Measures

Innovation & Learning Perspective

Goals Measures

Customer Perspective

Goals Measures

New Products Responsive supply Preferred supplier Customer partnership

% of sales from new products % of sales from proprietary products

On-time delivery (defined by the customer) Share of key accounts' purchases Ranking by key accounts Number of cooperative engineering efforts

Survive Succeed Prosper

Cash flow Quarterly sales growth and operating income by division Increase market share and ROE

Technology leadership Manufacturing learning Product focus Time to market

Time to develop next generation Process time to maturity Percent of products that equal 80% of sales New product introduction vs. competition

Technology capability Manufacturing excellence Design productivity New product introduction

Manufacturing geometry vs. competition Cycle time Unit cost Yield Silicon efficiency Engineering efficiency Actual introduction schedule vs. plan

How do we look to shareholders?

What must we excel at?

Can we continue to improve and create value?

How do customers see us?

The Final Proposed BSC for Bakheet Co.The Final Proposed BSC for Bakheet Co.

No single measure can provide a clear target or focus attention on the critical areas of the organization

Leaders need a set of measures that gives them a fast but comprehensive view of the organization

Leaders need a structure that minimizes information overload by limiting the number of measures used

No single measure can provide a clear target or focus attention on the critical areas of the organization

Leaders need a set of measures that gives them a fast but comprehensive view of the organization

Leaders need a structure that minimizes information overload by limiting the number of measures used

ConclusionConclusion

The following cornerstones needed to be taken

into considerations