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Balanced scorecard

In this step, we look at the balanced scorecard tool.
© Coventry University. CC BY-NC 4.0

The balanced scorecard (BSC) is a tool to measure organisational performance that goes beyond financial aspects.

The tool has attracted much interest in recent years (Christopher 2016: 265), and is intended to be used by managers to monitor different aspects of an organisation in a strategically holistic way.

A logical four-step process is used to construct a scorecard, which includes establishing:

  • The contribution of logistics and supply chain strategy to organisational goals
  • The measurable outcomes of success
  • The processes that impact these outcomes
  • Drivers of performance within these processes

The BSC framework comprises four perspectives: customer, financial, process and people (which incorporates innovation and environment).

Diagram of balanced scorecard representing the perspective outlined in the text above. Customer perspective includes customer satisfaction and new client. Financial perspective includes profitability, growth, debt/equity and return on investment. Process perspective includes efficiency increase.

The following table provides examples of measurements relating to each perspective:

Image of table representing perspectives and examples of performance measurements. For customer perspective, measurements include on-time delivery, orders in full first time, correct documentation, damage claims, perfect order, total order cycle time, customer complaints, POD returns. For financial perspective, this includes operational cash flow, budget vs actual, day's sales outstanding, overtime costs, inventory days of supply, logistics costs as a % of sales, logistics costs per unit, stock loss/obsolescence. For people, innovation and environment perspective, this includes employee turnover, % of turnover spent on training, training days per employee, accident levels, sickness and absence, CO2 footprint, level of waste, energy usage. For process perspective, this includes forecast accuracy, stock accuracy, dock to stock time, picking accuracy, returns percentage, space efficiency percentage, order to completion time, and audit results.

Click to expand image

Your task

Consider the company you currently work for (or a previous company), and describe in the comments area one or two performance measurements for each of the four perspectives.

References

Christopher, M. (2016). Logistics and supply chain management (5th ed.). Pearson.

© Coventry University. CC BY-NC 4.0
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