1. 1 © The Delos Partnership 2004 Implementation of Measures The part Performance measures play in getting the benefits

2. 2 © The Delos Partnership 2004 Delos Change Journey MobiliseDesignCommunicateReviewUnderstandASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS Performance Measures

3. 3 © The Delos Partnership 2004 Establish Team Performance Measures Task Force Project Leader Marketing Manufacturing Finance Engineering/Development Human Resources Meet once per week for 3/4 hours

4. 4 © The Delos Partnership 2004 Educate and Re-Educate Responsibilities of Task Force Define the Measures Establish the Hierarchy Carry out the Education Liaise with other Task Forces

5. 5 © The Delos Partnership 2004 Performance Measures Implementation l A vital part of redesign of Business Processes  Process Function Measure l An opportunity for early benefits  Data Accuracy and Customer Service l Establishes base zero for Implementation of Business Excellence

6. 6 © The Delos Partnership 2004 Performance Measures 10 point Implementation plan 1.Establish Goal and Core Values – workshop 2.Examine today’s measures 3.Review Business Excellence measures 4.Decide which to eliminate from today’s list 5.Decide which few to take from Business Excellence List 6.Determine Hierarchy of measures 7.Allocate responsibilities for measures 8.Educate and re-educate 9.Measure 10.Throw away old measures

7. 7 © The Delos Partnership 2004 Measures - Implementation Establish Vision and Values Long term Audacious Goals The Values needed to achieve that Competitive Value Proposition Major Objectives or Critical Success Factors

8. 8 © The Delos Partnership 2004 Vision example ABC Ltd want to grow from £ 50 million to £ 250 million in 5 Years We will develop long term relationships with 5 customers gaining 100 % of their business We need to be proactive in developing their products We need to deliver 100 % of the time on time

9. 9 © The Delos Partnership 2004 Examine Today’s Measures Look for actual vs budget All graphs and reports Board reports Charts in factory Informal measures Financial and non- financial Explain what you are doing - No Fear !

10. 10 © The Delos Partnership 2004 Examine Today’s Measures Who owns Who reports What are they measuring - Process or Function Do they cause conflicts ? –Overhead recovery –Purchase Price Variance

11. 11 © The Delos Partnership 2004 Review Business Excellence Measures Given the vision and values what do you need to measure ? –Forecast accuracy –New product development –Velocity –Delivery to Customer Request date Operational Excellence Customer Excellence Innovational Excellence

12. 12 © The Delos Partnership 2004 Decide Which to Keep KEEP On time in full Schedule Adherence Right First Time - Core measures REJECT Overhead recovery Inventory level Purchase price variance Actual vs budget ! Earnings per share

13. 13 © The Delos Partnership 2004 Implement the seven core measures Forecast accuracy Schedule achievement On time new products Right First Time Customers’ on time delivery Velocity Lead Time Reduction

14. 14 © The Delos Partnership 2004 Allocate Responsibility Process:Measure: Who ? ForecastingAccuracySales & Marketing NPD On TimeTechnical DeliveryQOTIFLogistics SpeedVelocityManufacturing MakingScheduleManufacturing

15. 15 © The Delos Partnership 2004 Final Agreement on Measures Steering Committee should agree: –Measurement Principles –Number of Measures … Few –Objectives, Targets and Milestones –Organisational Structure –Process for Developing Measures

16. 16 © The Delos Partnership 2004 Identify the “VITAL FEW” which most clearly reflect the business strategy and industry sector. Demonstrate the link with the business objectives The “VITAL FEW”

17. 17 © The Delos Partnership 2004 Value Disciplines and the Vital Few

18. 18 © The Delos Partnership 2004 Industry Sector - Aerospace & Defence New ProductsSchedule Lead-time Reduction Quality Forecast Accuracy Velocity The Vital Few The Core Measures Perfect Order Additional critical lower level measures Earned Value Management System (EVMS) Cost/Schedule – Control Systems Criteria (C/Scsc) Industry Sectors and the Vital Few

19. 19 © The Delos Partnership 2004 Industry Sector - Automotive New ProductsQuality Velocity Schedule Forecast Accuracy Lead-time Reduction The Vital Few The Core Measures Perfect Order Additional critical lower level measures Vehicle Build Time Products Produced According to Plan (PPAP) Defective Parts Against Plan (DPAP) Industry Sectors and the Vital Few

20. 20 © The Delos Partnership 2004 Industry Sector – Industrial Equipment & Machinery Perfect OrderSchedule Lead-time Reduction Quality Forecast Accuracy Velocity The Vital Few The Core Measures New Products Additional critical lower level measures Unbilled work in progress Customer profitability – sales and service Industry Sectors and the Vital Few

21. 21 © The Delos Partnership 2004 Industry Sector - Electronics New ProductsQuality Velocity Schedule Forecast Accuracy Lead-time Reduction The Vital Few The Core Measures Perfect Order Additional critical lower level measures Pricing models Customer returns Industry Sectors and the Vital Few

22. 22 © The Delos Partnership 2004 Industry Sector – Third Party Logistics VelocitySchedule Quality Perfect Order Forecast Accuracy Lead-time Reduction The Vital Few The Core Measures New Products Additional critical lower level measures New Products is New Service Provision Fleet Utilisation Industry Sectors and the Vital Few

23. 23 © The Delos Partnership 2004 Obstacles to Change History Traditional culture Corporate dinosaurs Criticism Subjectivity Loss of status Loss of protection Comfort with old paradigms

24. 24 © The Delos Partnership 2004 Obstacles on the change journey Sudden depth scare Scope crisis No 3 Sponsor switch Informed resistance Real world shock Eva- luation avoid- ance Early results disappointment Ownership struggle Scope crisis No 2 Test of nerve Smoke and fire Wet blankets Scope crisis No 1 Sponsor- ship fights Resource draining Sniping & rumours New challenge panic Loss Shock over early failures Imple- mentation crawl ExecutiveTeam MiddleManagers Employees ProjectTeam MobiliseDesignCommunicateReviewUnderstand

25. 25 © The Delos Partnership 2004 STOP The Inhibitors Good at ideas but poor at delivery Consensus decision-making Organisational politics Short attention span Changing responsibilities Lack of belief Inadequate systems Too many initiatives

26. 26 © The Delos Partnership 2004 GO Discuss, decide, then do Establish clear business vision Address ‘difficult’ issues Advertise success Reward delivery, not ideas Encourage change and risk-taking Resource properly The board to publicly lead The Enablers

27. 27 © The Delos Partnership 2004 Education Process Needs to Show the integration of the Measures with the Values of the Business Bring out the checks, balances and conflicts into the open Show the integration of the measures with each other Show how each individual contributes to the Corporate Vision

28. 28 © The Delos Partnership 2004 How to Succeed  The Boss Must believe and lead  Clear Vision and value statement  Measurable believable Customer Focused targets  Benchmark to create dissatisfaction  Publish Results  No second best  Reward Good process improvement  Use Measures to drive continuous improvement  Committed change agents or paradigm pioneers  Willingness to break the old paradigms

29. 29 © The Delos Partnership 2004 Kill off the Old Measures Productivity Direct/Indirect Labour Ratio Inventory as an asset Over-head Recovery Purchase Price Variance Productivity Direct/Indirect Labour Ratio Inventory as an asset Over-head Recovery Purchase Price Variance

30. 30 © The Delos Partnership 2004 Kill off the Old Measures It is difficult - they keep on coming back ! Productivity Direct/Indirect Labour Ratio Inventory as an asset Over-head Recovery Purchase Price Variance Productivity Direct/Indirect Labour Ratio Inventory as an asset Over-head Recovery Purchase Price Variance

31. 31 © The Delos Partnership 2004 Business Excellence - Paradigm Challenge “The difficulty lies, not in the new ideas, but in escaping from the old ones.” John Maynard Keynes 1936