Balance Scorecard Proposal for King Fahd University of Petroleum & Minerals Department of Construction Engineering & Management CEM – 515: Project Quality Management Balance Scorecard Proposal for Professor Abdulaziz A. Bubshait

Outline Purpose of Study Bakheet Co. Company Profile Literature Review Balance Scorecard (BSC) Background Proposed Balanced Scorecard for Bakheet Co. Conclusion

Purpose of Study In spite of their struggles for a continuous improvement and the significant end-of- year performance, Bakheet Co. is able to improve by adopting the Balance scorecard system (BSC). So, my term paper I will introduce a typical BSC system for Bakheet Co.

Bakheet Co. Company Profile Bakheet Co. for Machinery Ltd. was established in 1975 by three ambitious individuals. Two of them are from Bakheet family and one from Al Rifai family. The Second Generation of those two families is still active in the company to date. Bakheet Company headquarter is located in Jeddah. The other six branches are spread in: RIYADH, DAMMAM, MEDINA, GASSIM, TABUK, AND ABHA.

Bakheet Co. Company Profile Company's Activities: Provides equipment and support for construction and paving industry. (core business) Diversified in distribution of tools and workshop equipment known as most comprehensive in KSA.

Company Profile

Literature Review Concept: Conducted by Dr. Robert Kaplan from Harvard and Dr. David Norton with Nolan & Norton. One year research project included 12 companies at the leading edge of performance measurement. Comparative analysis conducted between these 12 companies and today's general measurement practices. Notes

Using a Scorecard by Industry Sector Manufacturing/Service General Electric Cargil Johnson Controls XEROX IBM United Parcel Service BellSouth AMOCO Corp NOVA Chemicals Siemens Solvay Pharmaceuticals Anheuser Busch Motorola Amazon.com Baltimore Gas & Electric Hewlett Packard Honeywell/AlliedSignal Johnson & Johnson Shell Oil Company MCI Worldcom Health Care Methodist Healthcare BJC Novant Health SLSMHS Eden Medical Center Northwest Hospital Overlake Hospital Duke Children’s Saint Joseph Mercy Mayo Clinic Suburban Hospital Advocate HealthCare Duke University Medical Peel Memorial Henry Ford Health King’s College Hospital Shayne Medical Center North Shore Health Region Good Samaritan Hospital Education University of Michigan University of Wisconsin Stout University of San Diego Educational Testing Srvs Harvard University of Montreal University of Missouri Outreach & Extension Notes

Balance Scorecard (BSC) Background BSC consists of a set of superior combinations of financial and non-financial measures that provide a comprehensive view of the business to guide strategy development, implementation and communication. It also provides reliable feedback for management control and performance.

Balance Scorecard (BSC) Background The Scorecard allows an organization to look at their performance from four important perspectives: How do customers and other key stakeholders see us (customer perspective) What must we excel at (internal perspective) Can we continue to improve and create value (innovation & learning perspective) How do we look to financial holders (financial perspective)

Example based on a real semiconductor Co. Financial Perspective Goals Measures Internal Business Perspective Innovation & Learning Customer Perspective New Products Responsive supply Preferred supplier Customer partnership % of sales from new products % of sales from proprietary products On-time delivery (defined by the customer) Share of key accounts' purchases Ranking by key accounts Number of cooperative engineering efforts Survive Succeed Prosper Cash flow Quarterly sales growth and operating income by division Increase market share and ROE Technology leadership Manufacturing learning Product focus Time to market Time to develop next generation Process time to maturity Percent of products that equal 80% of sales New product introduction vs. competition capability excellence Design productivity New product introduction Manufacturing geometry Cycle time Unit cost Yield Silicon efficiency Engineering efficiency Actual introduction schedule vs. plan How do we look to shareholders? What must we excel at? Can we continue to improve and create value? How do customers see us? Notes

The Proposed Balanced Scorecard for Bakheet Co.: Before proposing a BSC for BAKHEET Co. I will propose a vision, mission and objective. Bakheet Co. Proposed Vision: To become a leading heavy equipment agent in Saudi Arabia with a focus on seamless customer relationships and delight.

The Proposed Balanced Scorecard for Bakheet Co.: Bakheet Co. Proposed Mission: To participate in developing Saudi industry and economy through providing quick solutions and ensuring the delivery of quality after sales support for Bakheet Co. customers to enable them to accomplish their works efficiently. To operate the company on a sound financial basis of profitable growth, increasing value for Bakheet Co. shareholders and creating career opportunities and financial rewards for their employees.

The Proposed Balanced Scorecard for Bakheet Co.: Bakheet Co. Proposed Objectives: The objectives of Bakheet Co. are to increase revenues through expanded sales to existing and potential customers, become service oriented, achieve excellence in order fulfillment through continuous process improvements and to align employee incentives and rewards with the strategy.

Bakheet Co. Proposed Financial Perspective Goal and Measures: How Do Bakheet Co. Look to Shareholders? Financial Perspective Goals Measures Return on Spending Net Income /Expenses Saudi Riyal Revenue Growth % increase in year to year revenue Reduce Costs % reduction in cost of sales and after sale services

Bakheet Co. Proposed Customer Perspective Goal and Measures: How Do Customers See Bakheet Co.? Customer Perspectives Goals Measures Value Proposition for New Customers Survey of now customer satisfaction , including feedback in:Bakheet value proposition Employee knowledge and capabilities Convenient access Provide Consistent/ Seamless Service Survey of existing customers on: Quality Availability Responsiveness Errors and defects Retain Existing Customers Customer retention rate in targeted segments

Bakheet Co. Proposed Internal Perspective Goal and Measures: What Must Bakheet Co. Excel at? Internal Perspectives Goals Measures Achieving excellent supplier relationship % strategic partnerships established with suppliersSupplier scorecard, with rating on Cost quality Delivery Flexibility Developing high quality supplier capability % perfect order receivedPart-per ten defect rates from supplier %defect, incoming orders % supplier qualifies to deliver without incoming inspection

Bakheet Co. Proposed Innovation & Learning Perspective Goal and Measures: How Do Customers See Bakheet Co.? Innovation & Learning Perspectives Goals Measures Reskilling competencies to accomplish aggressive revenue generation targets Strategic Information The amount of information and knowledge possessed by the employees on company processes, equipment, and customer Accountability The extent to how incentive program are affection. The extent to how personal goal align with the company goal.

The Final Proposed BSC for Bakheet Co. Financial Perspective Goals Measures Internal Business Perspective Innovation & Learning Customer Perspective New Products Responsive supply Preferred supplier Customer partnership % of sales from new products % of sales from proprietary products On-time delivery (defined by the customer) Share of key accounts' purchases Ranking by key accounts Number of cooperative engineering efforts Survive Succeed Prosper Cash flow Quarterly sales growth and operating income by division Increase market share and ROE Technology leadership Manufacturing learning Product focus Time to market Time to develop next generation Process time to maturity Percent of products that equal 80% of sales New product introduction vs. competition capability excellence Design productivity New product introduction Manufacturing geometry Cycle time Unit cost Yield Silicon efficiency Engineering efficiency Actual introduction schedule vs. plan How do we look to shareholders? What must we excel at? Can we continue to improve and create value? How do customers see us? Notes

Conclusion The following cornerstones needed to be taken into considerations No single measure can provide a clear target or focus attention on the critical areas of the organization Leaders need a set of measures that gives them a fast but comprehensive view of the organization Leaders need a structure that minimizes information overload by limiting the number of measures used Notes