1 © The Delos Partnership 2004 Performance Measures Linking to the corporate goals

2 © The Delos Partnership 2004 Business Excellence Business Excellence seeks to improve the Processes Education is the key to understanding and improving the processes Lasting behaviour change is key to continuous improvement The right performance Measures will determine the right behaviour

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

4 © The Delos Partnership 2004 Business Excellence and Performance  Do Business Excellence Performance measures help the company?  What is the link to the benefit of the company?  What’s the cash value of non-financial performance measures?

5 © The Delos Partnership 2004 Customer Order Delivery – the “Perfect Order” Demand Forecast Accuracy Lead Time reduction and achievement – sales, production and suppliers Quality, Right First Time – production and suppliers Schedule Achievement – production and suppliers New Product Introduction Velocity – all activities, all functions Operational Measures Inventory turns Added value per employee Health, safety and environment Customer Satisfaction Ratings Working Capital as % of sales Return on Sales Return on Capital Employed Financial/External Measures Focus here Brings results here The Seven Core Measures

6 © The Delos Partnership 2004 Dimensions to measure Vision and Strategy Employees Customers Suppliers Innovation DA IS Define Analyse Improve Standardise

7 © The Delos Partnership 2004 Planning and Control Processes Customer Service – OTIF to Promise and RequestCustomer Service – OTIF to Promise and Request Demand Forecast AccuracyDemand Forecast Accuracy Schedule AchievementSchedule Achievement Plan stability Master Schedule Performance Supplier Delivery Performance Bill of Material Accuracy Routing Accuracy Inventory Accuracy

8 © The Delos Partnership 2004 Innovation processes Number of milestones met on timeNumber of milestones met on time Time from Product/Process Concept to introduction Performance to schedule Per cent yearly revenues from new products Number of products completed on time and within budget Customer satisfaction with new products Number of ideas Total value of ideas implemented

9 © The Delos Partnership 2004 Lean Initiatives VelocityVelocity Right First TimeRight First Time Lead Time reductionLead Time reduction Number of levels in Bills of Materials Number of Kanbans Number of product items Set up time reduction Batch size reduction Number of suppliers Number of point of use stores

10 © The Delos Partnership 2004 People Processes Employee Attitude Absenteeism Turnover Training plans achieved Employee Feedback survey Levels of hierarchy

11 © The Delos Partnership 2004 The Core Measures and Financial Effect Relationships to RoCE components –All influence cash flow

12 © The Delos Partnership 2004 Assume that Profitability is the Goal ROCE Profit Capital Sales Costs Material Labour Overhead Fixed Current Stocks Creditors Debtors The Core Measures and Financial Effect

13 © The Delos Partnership 2004 Demand Accuracy ROCE Profit Capital Sales Costs Material Labour Overhead Fixed Current Stocks Creditors Debtors Demand Accuracy

14 © The Delos Partnership 2004 Perfect Customer Orders ROCE Profit Capital Sales Costs Material Labour Overhead Fixed Current Stocks Creditors Debtors Perfect Customer Orders

15 © The Delos Partnership 2004 Lead Time Reduction ROCE Profit Capital Sales Costs Material Labour Overhead Fixed Current Stocks Creditors Debtors

16 © The Delos Partnership 2004 Velocity ROCE Profit Capital Sales Costs Material Labour Overhead Fixed Current Stocks Creditors Debtors Velocity

17 © The Delos Partnership 2004 Right First Time ROCE Profit Capital Sales Costs Material Labour Overhead Fixed Current Stocks Creditors Debtors

18 © The Delos Partnership 2004 Schedule Achievement ROCE Profit Capital Sales Costs Material Labour Overhead Fixed Current Stocks Creditors Debtors

19 © The Delos Partnership 2004 On time New Products On-time New Products ROCE Profit Capital Sales Costs Material Labour Overhead Fixed Current Stocks Creditors Debtors

20 © The Delos Partnership 2004 Measure Controllers Not Results

21 © The Delos Partnership 2004 Measure Controllers Not Results Measures Results

22 © The Delos Partnership 2004 Link Measures to the Goal ROCE Profit Capital Sales Costs Material Labour Overhead Fixed Current Stocks Creditors Debtors Business Excellence Performance Measures are the Foundation; Profitability is just a result

23 © The Delos Partnership 2004 ROCE Profit Capital Sales Costs Material Labour Overhead Fixed Current Stocks Creditors Debtors Link Measures to the Goal Business Excellence Performance Measures are the Foundation; Profitability is just a result Focus should be here