Question

a.     Define the Balanced Scorecard!
b.     What are the four major parts of a balanced scorecard?
c.      How are these parts needed in logistics strategies?

Answer 1

Answer A - A balanced scorecard is a strategic management performance metric used to identify and improve various internal business functions and their resulting external outcomes. Balanced scorecards are used to measure and provide feedback to organizations. Data collection is crucial to providing quantitative results as managers and executives gather and interpret the information and use it to make better decisions for the organization.

The balanced scorecard model reinforces good behavior in an organization by isolating four separate areas that need to be analyzed. These four areas, also called legs, involve learning and growth, business processes, customers, and finance.

The balanced scorecard is used to attain objectives, measurements, initiatives, and goals that result from these four primary functions of a business. Companies can easily identify factors hindering business performance and outline strategic changes tracked by future scorecards.

Answer B - Four Major Parts of Blance Scorecard -

Financial Component

The financial component of the balanced scorecard includes how well the company is doing financially with revenue and expenses. Financial considerations include salaries, cost of benefits, training, travel expenses, equipment, supplies, rent and taxes. This information can assist HR in determining ways to cut costs in certain areas. For example, HR may decide that benefits are a major portion of revenue and research more economical alternatives. Also, a change in travel policy may result in less air travel expense.

Customer Component

The customer component of the balanced scorecard includes such areas as customer satisfaction, delivery of product and quick response to customer issues. Customer concerns can include the quality of the product and the costs incurred for packing and shipping a product. HR can send out surveys to customers to determine their levels of satisfaction and concerns. The company can then give attention to those areas and make immediate improvements if necessary.

Processes Component

The processes component of the balanced scorecard relates to the internal processes the company uses to get the work done. Such areas as information technology hardware and software may be considered to determine efficiency in time and cost. Also, the company needs to detail and report accounting functions according to accounting rules. HR also can identify if the processes, including recruiting, staffing, orientation and maintaining employees, are providing the desired business results.

Learning and Growth Component

The learning and growth component of the balanced scorecard refers to how much the company has learned and improved during the years of operation. In reviewing this area, employee satisfaction and morale are two critical factors. Other areas include continuous improvement and change. HR can work to improve weaker areas by developing strong performance improvement and training programs. Establishing award and recognition programs may be another HR strategy practice identified by the scorecard.

Answer C

Mendes (2002), in his study on the BSC model implementation focus on a services logistics organization, observed that the BSC measures the past performance also plan future actions. This model allowed us to observe the growth, profitability and market share of the company. The use of the BSC collaborated in defining the mission, vision and for strategies formulation. This study has helped to highlight the scope of the model for service providers. Additionally, this author observed that managers could view the most fundamental business activities and decide based on avoiding premonitions. Similarly, Nakamura et al. (2005) showed that the strategic activities are implemented through functional strategies involving different areas of the value chain activities such as marketing, finance, human resource management, production, and research and development. They concluded that for the performance measurement system to be effective it must include different process variables of the organization.