1 © The Delos Partnership 2004 Performance Measures Developing a New Set of Measures

2 © The Delos Partnership 2004 The Delos Model For Business Integration Innovation Innovation Vision Strategy Prioritisation Prioritisation Demand Support Supply

3 © The Delos Partnership 2004 Measurement - Basics VISION AND STRATEGY OBJECTIVES TARGETS MILESTONES

4 © The Delos Partnership 2004 Measurement - Basics VISION AND STRATEGY OBJECTIVES TARGETS MILESTONES

5 © The Delos Partnership 2004 Setting the Vision Simple Owned by the Managing Director Understood by everyone Visible e.g. Simply the best

6 © The Delos Partnership 2004 Communicate to Employees.. Worried about Confidentiality ? “Knowing our strategy will do our competitors little good, unless they can execute it. On the other hand we have no chance of executing our strategy unless our people know it. It’s a chance we will have to take.” – Brian Baker CEO Mobil Ltd.

7 © The Delos Partnership 2004 Measurement - Basics VISION AND STRATEGY OBJECTIVES TARGETS MILESTONES

8 © The Delos Partnership 2004 Setting the Objectives Set out areas for success Interfaces with –Customers –Suppliers –Employees –Shareholders –Environment Clear objectives

9 © The Delos Partnership 2004 Matching Expectations Our Organisation Our Organisation INPUTSOUTPUTS How well do we meet their expectations, and how well do they meet our expectations ?

10 © The Delos Partnership 2004 INPUTSOUTPUTS Our Organisation Matching Expectations How well do we meet their expectations, and how well do they meet our expectations ? CULTURE/ BEHAVIOUR TECHNOLOGY WAYS OF WORKING Use these To Measure these To Change this

11 © The Delos Partnership 2004 Measurement - Basics VISION AND STRATEGY OBJECTIVES TARGETS MILESTONES

12 © The Delos Partnership 2004 Targets should be… Specific Measurable Achievable Relevant Targeted Each target supports a measure of one or more strategic objectives that relate to the overall vision and goal.

13 © The Delos Partnership 2004 Setting the Targets Establishes Quantifiable aims Sets long term picture Challenges through outrageous goals Provides view of outstanding performance

14 © The Delos Partnership 2004 Benchmarking Benchmarking is a process to evaluate company’s performance against –Sites within same company –Companies within the same industry –Companies within different industries –Companies in different businesses Collect the best practices of the best to make you the best

15 © The Delos Partnership 2004 World Class Performance – Fast Moving Consumer Goods Business MeasureAverageTop 10 %YOU ? Delivery Reliability % New Products in last 5 years % 463 Scrap Rates - % Total Stock-turns (per annum) (1) 1330 Training Days per Employee 720 (1)Sales Value/Total Stock : assuming average Variable Cost Ratio = 60 % then Figures would be 8 18 Source : Cranfield University

16 © The Delos Partnership 2004 Benchmarking Elements to compare –Lead Times for different activities Order processing New product Development –Velocity –Inventory Turns –Customer Service Levels

17 © The Delos Partnership 2004 Benchmarking Which is appropriate for you ? INVENTORY TURNS Japanese Automotive Industry 163 TPY European Automotive Industry 16 TPY Manufacturing Industry Average 5 TPY Tesco Food 200 TPY Marks and Spencer Marble Arch 1500 TPY TPY = Turns Per Year (Inventory on Hand/Forward Cost of Goods Sold Times 12)

18 © The Delos Partnership 2004 Measurement - Basics VISION AND STRATEGY OBJECTIVES TARGETS MILESTONES

19 © The Delos Partnership 2004 Measurement - Basics VISION AND STRATEGY CORE VALUES AND OBJECTIVES TARGETS MILESTONES

20 © The Delos Partnership 2004 Setting Milestones Established short-term checkpoints Provides guidance on whether targets being met Allows review of targets and objectives

21 © The Delos Partnership 2004 Measurement Example Product Leader Develop exciting products for the customer 98 % of New Products on Time Time to market reduced from 12 months to 12 weeks Time to market will be reduced to 9 months by December this year and to 6 months by end next year

22 © The Delos Partnership 2004 Challenge the Status Quo Set Targets that will utterly challenge the organisation Imagineering will make them possible “If you don’t have a dream, how can it come true?”

23 © The Delos Partnership 2004 Establishing New Measures Define simple vision – meaningful Establish perspectives that need to be measured and hence objectives Establish Targets for each measure Benchmark against best of the best to establish targets Agree milestones to provide progress charts