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December, 2006

Making Scorecards Actionable Newsletter # 24 (2006)

Content of Making Scorecards Actionable Newsletter # 24 (2006)

» Merry Christmas and a Happy New Year
» Linking BSC to productivity in manufacturing



MERRY CHRISTMAS AND A HAPPY NEW YEAR

To start with we would like to wish you all a Merry Christmas and a Happy New Year. In this short Christmas Newsletter we summarize a recent dissertation on Balanced Scorecard, which was published in Sweden in the end of 2006.



LINKING BSC TO PRODUCTIVITY IN MANUFACTURING

In December 2006, Mandar Dabhilkar presented his doctoral thesis in Industrial Work Science at Stockholm's Royal Institute of Technology (KTH), Acting creatively for enhanced performance: challenges for Swedish manufacturing in an age of outsourcing. It consists of four papers coauthored with Professor Lars Bengtsson at the University of Gävle and a 60-page general discussion.

The author combines two surveys of Swedish companies with two rounds of interviews, each in three major Swedish companies, and reaches the encouraging conclusion that there is still a lot to be done to improve production processes in Swedish firms:

"To sum up, the real threat to Swedish industry is not coming from lower wages in Eastern Europe and Asia. ... The threat comes from an inability to make the most of existing manufacturing systems."

He quotes a recent NUTEK report that estimated that many engineering industry firms would be able to improve their productivity by 30 to 50´%. According to Dabhilkar, the recipe for doing this is applying continuous improvement (CI) and lean manufacturing principles. Outsourcing may also contribute, but it then has to be used more selectively and strategically than it has so far, when most firms have been much too concerned with short-term costs.

Applying CI and "lean" however also needs to be done in a better way, ensuring that people throughout the organisation focus on strategically important improvements. This is where balanced scorecards should play a role. BSC provides "an opportunity to link the local work on continuous improvements to the overall strategic planning of the company, i.e. developing systematic and strategic continuous improvement ability." As reported in the first of his papers (published in 2004 in Journal of Manufacturing Technology Management) Sapa Heat Transfer linked BSC and CI by making each action in the scorecard a CI project, thereby ensuring that improvements are strategically aligned. An SKF plant required CI teams at the shop floor to link any proposed CI activity to the production line's scorecard, before work on that activity can continue. (It seems this information was collected in the first years of the 2000s.)

The author points to the importance of "new forms of management accounting and remunerations systems" in order to reap the benefits of improvement techniques. "[I]n order to support the shop-floor teams in their new and more important role, lean adopters have transformed their management accounting systems and remuneration systems to a higher extent."

The connection between continuous improvements and BSC has also been addressed by us, and we refer the interested reader to the article “Employee-propelled information provision”, which can be downloaded from the following address: www.ida.liu.se/~TDMM32/documents/Employee_propelled_information_provition.pdf.






MAKING SCORECARDS ACTIONABLE NEWSLETTER is a bi-monthly update on our experiences and opinions on how scorecards and strategy maps can be made actionable – to help organisations realise their intended business strategies. The newsletter is compiled and distributed for free by the authors of the book “Making Scorecards Actionable – Balancing Strategy and Control”. Also make sure to check out www.makingscorecardsactionable.com to get up to date information about our seminars, to evaluate your organisation’s BSC skills according to our computerised BSC Analyser and to download presentations from the document archive.
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