1. Balanced Scorecard and KPIs
G&S Review Project
Balanced Scorecard and KPIs 1

2. Our approach is to use a balancesd scorecard as opposed to a list of KPIs.The Balanced Scorecard is a tool that can create the focus for making performance come alive for everyone
Creating a cross-functional team to drive it
Plan
Review Do
Establishing Plan-Do-Review at all levels to deliver it
Leaders and Champions to lead it
Target
Actual
Deliver excellent service
Quality developments , delivered to plan
Increase awareness of the potential of IT
Meet our budgets
Projects delivering
business benefit
Follow the financial control processes
We have the skills to deliver
We all live the values
Objectives set and reviews completed
Morale is good
Everyone has a PDP
We receive all the information needed to do our jobs
Deliver the IT Change Programme
Deliver to our technology blueprint
Effective supplier management processes
Effective resourcing
Internal processes are efficient and effective
Customer satisfaction
Building understanding of the measures to prove it
Developing communication processes to shout about it
Training in skills to support it 2

3. Strategy is at the centre of the Measurement System, reflected in 4 balanced critical success factors
Balanced Scorecard
Financial Quadrant
“How do we look to
our shareholders?”
Customer Quadrant
Operations/ Internal Quadrant
“How do we look to our customers?”
STRATEGY
“What business processes are the value drivers?”
People Quadrant
“Are we able to sustain innovation, change and improvement?”
Reference: “The Balanced Scorecard — Measures That Drive Performance, “Robert S. Kaplan, David P. Norton, Harvard Business Review, Jan-Feb ‘92.

4. It is important to start by defining what makes any good Balanced Scorecard operate effectively
Baselining and Tracking *
Historical
Future
Cascade and Drill Down throughout the business
G&S Objectives
G&S Personal Development Plans
Good Links
Corporate Strategy
Corporate Scorecard
Performance Measurement System
Balanced Measures
Operators
Customer
External
Quality based
Non-financial
Internal
Time-based
Cost-based
Finance
People
Plan
Review
P-D-R and Management by Exception Do
We need to ensure that G&S processes are aligned with, and support, a balanced set of measures within Supplies and as part of the business as a whole.

5. Defining Measures/KPIs4

6. These are measures of effect
To drive forward Performance, you need some Lead Indicators and Lag Measures. . .
Lead and Lag Measures: an example
LAG MEASURES
LEAD INDICATORS
Heading
Heading
Petrol consumption
Oil consumption
Tyre wear
Washer levels
Scratches and bumps
Engine wear
Speeding fines •
Text
Speed
Engine revs
Engine temperature
Fuel level indicator
Oil level indicator
Warning light status
Defensive driving
Tiredness breaks •
Text • •
These are measures of effect
These may impact on
EFFECT
CAUSE
. . . where INDICATORS control and communicate BEHAVIOUR which will lead to a measurable result!

7. The Balanced Scorecard has four areas of focus
Balanced Scorecard features
The 4 areas of focus or quadrants are: - Customer Operations Finance People
Each measures/KPI has a budget and a target
Budgets are usually set centrally
Targets are set by the Supplies Team
Target
Actual
Deliver excellent service
Quality developments , delivered to plan
Increase awareness of the potential of IT
Meet our budgets
Projects delivering
business benefit
Follow the financial control processes
We have the skills to deliver
We all live the values
Objectives set and reviews completed
Morale is good
Everyone has a PDP
We receive all the information needed to do our jobs
Deliver the IT Change Programme
Deliver to our technology blueprint
Effective supplier management processes
Effective resourcing
Internal processes are efficient and effective
Customer satisfaction
Each BSC quadrant is broken down into segments and then measures/KPIs
These represent the drivers of performance

8. Measures/KPIs need to be be SMART……….
SMART Measures/KPIs
SPECIFIC
To the business: sends one message
MEASURABLE
Can be quantified
ACHIEVABLE
And sets clear guidelines for “how”
REALISTIC
Implies stretch but within reason
TIME-BASED/TARGETTED
Establishes a clear deadline, e.g in line with annual budgets/targets
. . . and prioritised (ease of implementing, business impact/benefit) in order to establish the top measures per quadrant for focus.

9. In reality the target and tolerance do not remain static
Each measure should have tolerances to enable the Team to gauge how far adrift they are from where they should be
Balance Scorecard Measures: Tolerance Levels
Amber light
Blue light
Green light
Upper Tolerance Level
Target
Lower Tolerance Level
Performance
Red light
Time
In reality the target and tolerance do not remain static
Targets and tolerances plotted on a graph along with actuals (red line) give a picture of performance over time. 15

10. Suggested Balanced Scorecard measures/KPIs for Goods and Services Supply
CUSTOMER
PEOPLE
Feedback from End User Meetings
Sector Manager Reviews
OTIF: On Time In Full
User Satisfaction Surveys
Quality of Goods or Services
No. of days training per year
% of buyers adequately competent in their commodities
Staff Turnover/Throughput
Employee Satisfaction
Individual objectives and measures linked to Supplies KPIs
Target
Actual
Deliver excellent service
Quality developments , delivered to plan
Increase awareness of the potential of IT
Meet our budgets
Projects delivering
business benefit
Follow the financial control processes
We have the skills to deliver
We all live the values
Objectives set and reviews completed
Morale is good
Everyone has a PDP
We receive all the information needed to do our jobs
Deliver the IT Change Programme
Deliver to our technology blueprint
Effective supplier management processes
Effective resourcing
Internal processes are efficient and effective
Customer satisfaction
OPERATIONS
FINANCE
SRM
Processes
Benefits tracked (recorded savings) – per anum/quarter
Cost of operations
Total Cost of Ownership application
Benefits form Supplier innovation
Inventory reduction (VMI)
No. of Suppliers
Spend per Supplier
No. of Supplier meetings
Supplier Satisfaction Surveys
No. of Suppliers covered by contracts/T.A.
Time spent on supplier development
% spend
% error-free invoices
% spend on contract
% compliance with contracted payment terms
% spend through auctions/eRFX

11. Managing Performance 4

12. At regular meetings, the management team should focus on the exceptions and agree next steps to tackle any identified issues
Managing Performance with the Balanced Scorecard
Major issues are identified using the Balanced Scorecard 2
Issue Resolution Team is formed 3
Target
Actual
% Ad Card Transactions
Average Transaction Value
Customer Service/ Satisfaction
Footfall - No of transactions
Training
People Development
Staff Morale
Absenteeism
Staff Availability
Profit Protection
Presentation Standards
Availability on Priority Lines
Store Controllable Profit
Stockholding
Stock Loss
Dispensary Sales Growth
Counter Sales Growth
The Team works to identify the root causes of the problem 1
Plan
PDR is employed by the Issue Resolution Team 4
The Team works to develop potential solutions to resolve the causes of the problem
Review Do 7
Implementation of solutions leads to problem resolution and success for the Team 6
The Team presents recommendations to the Management Team 5
The Team plans and implements the solutions
Through this process the members of the Issue Resolution Team will achieve sustainable improvement,ultimately saving time and effort for everyone. 6

13. In summary the Balanced Scorecard is a tool to help managers focus on the exceptions
What it is
What it isn’t
Business-level set of balanced measures (finance, operations, customer, people)
Tool to help understanding of how Supplies is performing as a business service
Tool to help managers know where the most important issues are
Gives a helicopter view of what’s going on . .
All of the KPIs linked to each job in the store
Tool to understand the detailed workings of the business
Tool to tell managers how to address most important issues
. . . all the detail underneath
The Balanced Scorecard works well with consistent application of Plan-Do-Review to every activity.

14. To use the Balanced Scorecard effectively, a number of behavioral changes are required
Behaviours that support the Balanced Scorecard (BSC)
Managing by exception Following through next steps X
Effort and actions focused on Red and Amber lights This ensures that adequate time is spent on the areas that need improvement, and allows time for celebrating successes
Reporting data periodically
Delivering data on time
The Balanced Scorecard will be reliant on measures and actions being reported periodically,in a timely manner. Late submission of information will have an impact on the ability to deliver an accurate performance update
Understand all the measures
Target
Actual
The Senior Management Team must understand all the objectives and measures within the Balanced Scorecard Understanding the measures will be required when setting personal objectives, delivering progress updates and agreeing next steps.
Continuous improvement
The targets on the BSC may change through the process of Plan-Do-Review (P-D-R) This ensures that targets are reviewed continually and are of sufficient stretch, minimising unrealistic/unachievable targets
Plan-Do-Review
One Team
Shared ownership of problems and actions for resolution Make Supplies performance visible by providing access to and displaying the Balanced Scorecard Involving the whole of Supplies in reviews of performance and corrective action.