Strategy and Performance

K Pl
Ken Platts
tt and
dDDominic
i i OOughton
ht

IfM Briefing Day, Tuesday 18 May 2010

Agenda
Overview of the Centre for Strategy and Performance

Two examples of Industrial Tools

Performance Measurement
- Performance measurement record sheet

Strategic Analysis
- Make vs Buy
Aims of the Centre
• to develop effective research-based
techniques for strategy-making and
performance measurement system design

• to develop practical tools for industrial

managers and consultants

• to interpret and disseminate research

findings

• to support and provide an industry

industry-academic
academic
community focused on strategy and
performance

• to deliver educational and training materials

 Themes
Strategic
St t i Decision
D i i Making
M ki
Building structured approaches that support strategy making

Strategy
St t M
Modelling
d lli andd Visualisation
Vi li ti
Developing visual approaches to support strategy development

Competence, Capability and Resource Analysis

Competence
Studying the way companies create and exploit competences

Performance Measurement
Designing, developing and implementing performance measurement systems

Servitization
Developing tools to support servitization

Strategy
gy Options
p for Start-ups
p
Exploring the strategic challenges for start-up companies
Taking a Process View

• Aims to understand ‘how’ operations management activities are

carried out, with a view to improving them
– especially
i ll ‘high’
‘hi h’ level
l l processes - e.g. strategy
t t f
formulation,
l ti
performance measurement design

Output
• Processes and tools which will help managers manage their
operations better
Typical output - workbooks

Competing through competences Creating a winning business formula Getting the measure of your business

Winning
Wi i ddecisions
i i -translating
t l ti Competitive Manufacturing Make-or-Buy
business strategy into action
plans
Example 1 – Developing Appropriate
Performance Measures
CSP have developed and tested a
Performance Measurement System design
process over the
th llastt 15 years.

The process is described in detail in

“Getting the Measure of your business”,

Cambridge University Press, 2002
ISBN 0-521-75031-8
Designing a Performance Measurement System

Do we have a
measurement problem?
What do we measure?

How do we measure it?

What do we do
with the measure?
 How do we measure it?

Measure it right

• Measures must match objectives

• Measures must be understandable and robust
• Measures
M mustt drive
d i required
i db behaviour
h i
But choosing the measure might not be straightforward:

Examples:

Baggage handling

Delivery reliability
Measuring Delivery Reliability

• Meeting Customer Delivery Date

– delivered on requested customer delivery date
– despatched on agreed/promised delivery date
– delivered on agreed/promised delivery date

Which is right?
Performance Measure Record Sheet
Measure Delivery performance

Purpose To stimulate improvements in our delivery reliability

Relates to Business objectives: delivery on time and minimise overall lead times

Target 95% by end of next year

Formula 100 * Orders delivered in full on the promised day / Total no. of orders

Frequency Weekly

Who measures? A Smith - production control

Total orders scheduled for delivery in the week from the MPS system
Source of data A t l delivery
Actual d li d
dates
t - by
b phoning
h i th the customers
t
Who acts on
A.N. Other - manufacturing manager
the data?
If performance is improving rapidly enough,
enough nothing.
nothing If not,
not set up
Wh t do
What d they
th do?
d ? manufacturing engineering task force to: (a) investigate why (b) make
recommendation and (c) make appropriate changes.
Notes Measure places equal weighting on early as well as late delivery
Time to quote
Measure Time to quote - days

Purpose Stimulate improvements in our responsiveness to our customers.

Relates to “Improve sales team performance” and “time to quote” objectives.

Target 7 calendar days by end 2002.

Formula Date of confirmation of quote receipt by customer - Date of first request

from the customer.
Frequency Monthly.

Who measures? Stuart Taylor, Karen Ash.

Source of data Check receipt date by phoning customer

customer. Request date is first cust contact
contact.

Who acts on Should be Brian Henry, but is the quote generation process under
the data? his control?

What do they do? Monitor time to quote and investigate any unexpected results.

Notes There is a need to examine this business process in more detail.

The performance measure record sheet

• The Value of the Record Sheet

- communicates why this measure is required
- it helps structure the design of the measure
- identifies who is responsible for improvement
- identifies what should be done
- fully documents measures
Practical Exercise – PM Record Sheet
 An opportunity to engage in CSP research on
Performance Measurement

Over the summer we will be running a Delphi study in

conjunction with Cranfield and Strathclyde Universities to
explore the future of Performance Measurement systems.

We are looking for 20-30 knowledgeable industrial managers

to participate.

Involvement - 2 short questionnaires, and attendance at a

plenary workshop in mid September in Cambridge.
Cambridge

There is no charge for participation.

For further info please email me, Ken Platts, kwp10@cam.ac.uk.
Example 2 – Strategic Analysis
Make vs Buy