PERFORMANCE

MANAGEMENT

The foundation theme of operations is:

Process improvement
and
Product improvement
in an environment of increasing customer
expectations and requirements

HOSHIN PLANNING
It is a systematic process that looks at the
organisation and defines long-range business
objectives
It is ensured that all employees fully understand
the long-range goals and follow a co-ordinated
plan to make that vision a reality

It provides for a breakthrough objective focus to

determine the most effective actions and the
development of plans to support those actions
Formal review processes are implemented to
measure performance and provide a framework
for learning

Critical business issues are identified and an

objected and a goal are identified to overcome
each issue

Supporting strategies are developed and specific

goals for each strategy are established
A regular review and monitoring of progress is
effected

Formal review processes are implemented on a

monthly and annual basis
The balanced scorecard may be used to develop the
process measurement

Use a Hoshin review table for each strategy

The Plan-Do-Check-Act cycle can be used to
measure the progress against the target set (the
plan)

Actual results are written alongside each

strategy (Do)
Any difference between target value and the
actual are noted (Check)
The impact or effect of any difference is
documented (Act)
The analysis done for all objectives

For each objective successfully completed, an

analysis is done to find out what went right and
to determine if supporting strategies and
performance measures were appropriate
Any exceptional results noted and all details how
they were obtained noted
Vital to know how to do better and to transfer
knowledge to the organisation

THE CASCADING ATTRIBUTE OF

THE HOSHIN PLANNING PROCESS
The table is passed down to lower level and
inputs added
Total ownership of plan results

The hoshin planning process encourages an

organisation to learn from the problems that are
solved and the business successes
It helps in building up the learning organisation
It enables the organisation to accumulate
performance information about itself from the
routine day-to-day activities and from longerterm-strategic initiatives
It helps the organisation reflect on where it is
headed, the best way to get there and to do that
while in full control

THE BALANCED SCORECARD

Financial performance
measures
How do shareholders see
us?
Internal performance
measures
At what aspects of
business should we excel?

OVERALL
STRATEGIC
OBJECTIVES

Training and innovation

performance measures
Can we continue to
improve and create value?

Customer performance
measures
How do customers see us?

The B.S.C measures business performance from

four perspectives:
(1) Customer perspective
(2) Internal perspective
(3) Innovation and learning perspective
(4) Financial perspective

1. CUSTOMER PERSPECTIVE
How do customers see us?
Strategic objective here
To add value to customers
Satisfy customer needs
Listen to customer wants
Allow customers to participate in process and
product design
To act and think from a customers viewpoint
Ask customers for their views

CUSTOMER PERSPECTIVE
Customer capability is based on:
cost
Quality
Delivery
Flexibility
Service

CUSTOMER VIEW OF COST

Considers the total cost not just the price
Considers also taxes, freight, storage, inspection,
quality assurance, quarantine, pilferage,
deterioration, obsolescence

Quality from the customer point of view is

external quality and measure aspects such as
delivery, specification
Delivery: customers want products delivered to
their premises when and how they want them
Flexibility: Ability to adapt to the customers
needs

2. INTERNAL PERSPECTIVE
At what aspects of business should we excel?
Process design and process improvement, which
occurs internally, affect customers
Processes which have most impact on customers
are:
Lead time, throughput time, employee skills and
attitudes, flexibility, availability, responsiveness
and information systems

Processes are designed and improved to enhance

core competence form a customers perspective
ICT plays an important part in the internal
perspective.
Any identified problem is analysed using ICT (e.g.
identity root cause of delivery performance)

3. INNOVATION AND LEARNING

PERSPECTIVE
Can we continue to improve and create value?
Forces challenging organisations to innovate
Competitive activities
Customer expectations
Need to create new products and services and
also to update these
What is required?
Innovation and learning

What does innovation provide?

New ideas, concepts, processes, approaches and
technologies
What need to be done?
Existing ideas, concepts, processes, approaches
and technologies have to be updated

WHAT IS REQUIRED
Learning
Listen to customers and learn from comments
and reactions received
Understand and judge

4 FINANCIAL PERSPECTIVE
How do shareholders see us?
To capitalise on the other perspectives and
translate gains into financial achievement

Organisation should concentrate on operational

excellence and allow financial results to flow
naturally from that

The balanced scorecard could be implemented

better by using strategy maps
The best strategy should be implemented

CLOSED-LOOP MANAGEMENT
SYSTEM
It consists of the following stages:
Develop the strategy
Translate the strategy
Plan the operations
Monitor and learn
Test and adopt the strategy

(I) DEVELOP THE STRATEGY

Define the mission, vision and values
Look at external as well as internal situations
and challenges

(II) TRANSLATE THE STRATEGY

Translate the strategy into objectives and
measurement
Use a strategy map, which provides a powerful
tool for visualising the strategy as a chain of
cause-and-effect relationships between strategic
objectives

Start with the organisationss long term financial

objectives
Link these to objectives for customer loyalty and
value proposition
Link to goals related to critical processes
Link to people, technology and organisational
climate and culture

(III) PLAN THE OPERATIONS

Develop an operational plan that lays out the
actions that will accomplish the strategic
objectives
Set priorities for process improvement projects;
Followed by preparation of a detailed sales plan,
a resource capacity plan, and operating and
capital budgets

(IV) MONITOR AND LEARN

Review the performance of operating
departments and business fucntions
Address any problems
Strategy management meetings that review
balanced scorecard performance indicators are
held to assess progress and identify barriers to
strategy execution

(V) TEST AND ADAPT THE

STRATEGY
The performance of the strategy is assessed and
change if necessary
If some assumptions underlying their strategy
are no longer applicable, the strategy need to be
changed or transformed
This closes the loop of the management system

BENCHMARKING
Process of measuring a companys products,
services, costs and practices and comparing that
measurement with the best in the industry or
worldclass
Aim: to use that measurement to improve
performance

WHAT IS BEST PRACTICE?

It is the measurement or performance standard

by which similar items are eavaluated

WHAT ARE THE APPROACHES

WHICH PRODUCE EXCEPTIONAL
RESULTS?

Those which are innovative in terms of the use of

the technology or human resources, and are
recognised by customers or industry experts

BENCHMARK
A standard or point of reference by which
something can be measured or judged

COMPETITIVE BENCHMARKING
It involves analysing the performance and practices
of best-of-class companies

The best practice is shown by the best-of-class.

Their performance becomes a benchmark to which
a firm can compare its own performance. Once a
comparison is made, the firm can improve its
processes