Case modelling for management: revised flow diagram & measurement strategy

Flow diagrams charting the process are found at the end of the paper. Potential areas for bottlenecks are highlighted in red.

Developing a measurement strategy is imperative to the success of our overall operations. First the company needs to understand what their competitive dimensions are in order to translate them into the performance requirements that are specifically targeted to one of the specific product areas. This has to be accomplished because each product group has different priorities. For example, if the most competitive aspect of our product is technology, the need will be to focus on the flexibility to cope with a wide product range and with design problems.

The other area of our strategy is that of operations. The company must ensure that the operational flow of the production is sufficient to accomplish the ultimate goal of manufacturing and shipping of the doll. The steps for prioritizing these dimensions are:

* Segment the market according to the product group

* Identify the product requirements, demand patterns, and profit margins of each group

* Determine the order winners and order qualifiers for each group.

* Convert order winners into specific performance requirements.

Since the company only has one product line, the manufacturing requirements are outlined below:

* Product Doll

* Customers Retail stores

* Product specs Not high

* Product range Narrow - 1 unit

* Design changes Periodic

* Delivery Conformance

* Demand variation Unpredictable

* Volume/line Medium to low

* Margins Low to medium

External Performance Dimensions

* Order winners Price & new technology

* Qualifiers Price & new technology

* Main Operations Performance Cost & quality

With the criteria outlined above ZAPS must consider a strategy from the following: process-based, systems-based and/or organization based. Since ZAPS has only one product line and their focus is on cost and quality, the company will use a process-based strategy. The strategy will look closely at each process in the manufacturing processes and determine standards for completion of each process and measure the performance against each standard. One of the key performance indicators (KPI) the company will use is the Balanced Scorecard.

Again, since the company has only one product line, the productive measure to be used should be a partial measure. This will target areas of concern and focus in on standards that should be reviewed and possibly changed to increase production and produce more revenue. Examples of these measures are represented as Output/Labor; Output/Capital; Output/Materials and Output/Energy.

As mentioned previously, Equipo has decided to help develop and implement a balanced scorecard which will let the company clarify their strategy and translate it in to action by developing action plans, performance indicators and additional strategies that will help achieve the organization's vision and mission.

This balanced scorecard will align financial, non financial, quantitative and qualitative performance measures. It will not only use traditional measures that summarize the financial and operational results from the past but include measures and performance indicators across the four organizational perspectives (financial, customer, internal business processes, and learning and growth) which are mentioned in the article "Does your Scorecard need a workshop" (February 2005) by Hugh Pforsich.

Equipo has determined that it is critical to translate the company vision and strategy into terms that employees are able to understand and act upon; continually obtaining employee feedback that generates innovative improvements in order to avoid failure. It is also very important not to include too many metrics in the scorecard or rely on too much historical information as it is one of the causes of failure reported by a study of the Hackett group. Two difficult areas mentioned in the same article will be to translate general concepts into concrete action and getting the right performance measures.

The company will use the following five steps to create the balanced scorecard using the right people and having leadership commitment.

Typical time period required to create a BSC is 8-12 weeks, there are many factors that affect this duration, including size and complexity, data, calendar and leadership. The scorecard will include at minimum the following six characteristics in order to be successful:

* Focus (having day to day diagnostic tools)

* Balance (Mix of leading and lagging indicators focusing on needs and strategic issues).

* Scope (Limited number of metrics updated regularly).

* Audience (Include scorecards for employees reflecting also their responsibilities).

* Technology (Used for reporting and analysis).

* Implementation (Different levels and divisions).

The key area to be measured is the technology area. By measuring this area, the company will be able to see where improvements need to be made and can plan accordingly. Some areas for improvement are new technology, skills development, quality, and innovation.

In this paper, Equipo updated the current flow diagrams, which identified the

bottlenecks in the process, and expanded the diagrams to include supplier dependencies. Equipo also developed a measurement strategy and a balanced scorecard for the operation. In addition, they covered the key areas to be measured.

1. Flow Diagram - ZAPS overall process

References

Chase, R. (2003). Operations Management for Competitive Advantage, Tenth Edition. Operations Strategy and Managing Change, 6-8. McGraw-Hill Co.

Revised Strategy 1