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The Balanced Scorecard is a strategy performance management tool recommended to be used by the supply chain leaders to track a business crucial metrics. The tool covers four areas:
· Financial Example: Profit, The cost of warehousing, transportation etc.
· Customer Example: Delivery accuracy, satisfactions, claims
· Internal Business Process Example: Production methods, Handling, SOPs
· Learning & Growth Example: In house Training Hours, R&D
Strategic fit
How do we use Balanced Scorecardapproach to achieve the strategic fit?
Actually one of the most important supply chain goals is to achieve the strategic fit between the supply chain strategy and the business strategy otherwise the business will be dearly hurt by his own supply chain strategy,
Usually to achieve this kind of strategic fit there is a trade-off between supply chain efficiency and responsiveness; we need to choose wisely, Obviously the BSC first three basic measurements ( financial, Customers, Internal process ) have a clear set of KPIs with direct impact on the both wing of the strategic fit formula (efficiency and responsiveness)
Balanced Scorecard approach was not specifically designed for the Supply Chain, but it does give a good guidance for your core measures. The central idea is to focus on key metrics that have real meaning to your company. You don't want to get lost in a sea of numbers that don't really mean anything. The Balance Scorecard approach helps you to keep your measures aligned with your objectives. These measures should be tracked over time (usually monthly) with specific targets for each.
Balanced Scorecard should never be used in isolation. Before setting the balanced scorecard the organisational strategy has to be in place consisting of Mission, Vision, Strategic Themes, Perspectives and Strategic Objectives. The strategic objectives need to be measured by the KPIs/ Measures and initiatives should be identified to meet those objectives, Once these are fixed the organisational strategy map can be drawn along with the BSC. These can now be cascaded to all the departments.
The biggest pitfall is making the BSC without the steps mentioned above.