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What is a balanced scorecard, and what does it have to do with manufacturing

What is a balanced scorecard, and what does it have to do with manufacturing? The balanced scorecard is a specific measurement that is based on learning and strategic management systems. These are created for many different organizations.

The balanced scorecard or BSC is used to align business activities to the strategy, and monitor performance of goals over a specific period of time.

In manufacturing the balanced scorecard in a few different areas. Here is a list of some of what you might see a manufacturer will use the BSC for.

Define perspectives and strategic objectives
Collect data, evaluate progress, and revise goals where necessary
Automate communication tools and resources
Derive performance metrics
Develop a strategy map
Identify strategic themes
Implement the BSC through the manufacturing process

There are benefits to using the balanced scorecard in manufacturing. Many modern businesses implement the use of BSC for these benefits. Here is a list of the benefits of the balanced scorecard process.

- A way to access how well the company is doing
- This shows a general prediction of what will happen with future performance
- There will be an ability to align the company toward new organizational strategies
- Performance measurements are available
- There is guidance to help reach breakthrough goals
- There is a process to help identify what needs to be measured in order to reach goals.

There are also disadvantages to implementing the balanced scorecard process. These disadvantages are able to be worked through, though at first may seem intimidating.

- Implementation of the balanced scorecard takes time and effort
- There will need to be sustained top level support for the success
- There needs to be a good deal of work, funding and an eagerness to meet challenges, or the plan will not work

There have been many programs that have been set up for management, especially in manufacturing. This is due to the constant consumer push of better, less expensive and newest products available. These programs have good ideas, but the balanced scorecard program has in a sense been around for a long time. It will also be around for a long time to come. The names may change, but the ideas will remain the same.

In order for a manufacturing company to implement the use of the balanced scorecard process, it takes around 2-3 months to get into the first steps. This time frame really is dependant on several factors. The total amount of time for full deployment of the balanced scorecard process is around 26 months.

There is some cost involved in the set up of the balanced scorecard process for manufacturing companies. The break down is pretty simple.

1. You can take the total number of employees on the team that will be training, multiply their wage per the amount of hours they are in the activities.
2. The cost of the facilitator during that time
3. The software for RFP and the labor
4. Software licenses expense
5. Installation and testing
6. Maintenance, which is usually 20% of the initial cost.

This may seem like a great deal of money, however with the increase in productivity, manufacturers have found that they can increase profit, and minimize waste.

In order for the continuation and success of the balanced scorecard process, there needs to be a few factors in place.

Fist the process has to be started correctly. Second, there will need to be continuing education involved for the new employees. This is an ongoing process, so there will need to be updates, and accommodations for new challenges. Leaders will need to make sure that the process is followed accurately.

Even though there is work and money involved with implementing and maintaining the balanced scorecard methodology, there have been many manufacturing businesses that have used this process with great success.

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