Operations Management: Planning and Breakeven, Essay Example

Taking in consideration the fact that organizations today are competing in challenging and complex business environments, it is important to underline the fact that an accurate understanding of organizational goals and methods of achieving those goals is vital. With that in mind organizations are using Balanced Scorecards, which provide “managers with the instrumentation they need to navigate to future competitive success” (Kaplan & Norton, 1996). BSC interprets organizations mission and strategy into objectives and measures, organized in four different perspectives: financial, customer, internal business process and learning and growth (Olve, Sjöstrand, & Petri, 2006). “These four perspectives permit a balance between short- and long-term objectives, between outcomes desired and the performance drivers of those outcomes” (Kaplan & Norton, 1996). What we are going to discuss in this paper is whether a Table System should be used as a part of Operations BSC plan, basing the argument on the identification and acknowledgement of such essential BSC plan characteristics as organizational goals, objectives, measurements and targets.

When considering the organizational goals in terms of the BSC, one should point out that for the majority of the organizations those goals represent the strategic map and are all about achieving such highly important business criteria as, for example, increased sales or profit and debt reduction in the financial perspective, improved brand image and the increased number of customers in the customer perspective, improved marketing or turnaround time for the internal perspectives as well as optimized workforce and its increased knowledge and skills in the learning perspective. The correctly constructed strategic map shows the main points of the BSC emphasis as well as underlines the number one priorities for the organization.

When the organizational goals are set, it is time to break them down in smaller and easier achievable elements known as objectives. Just as the goals are interrelated, so are the objectives. It means that the quality of the objective fulfillment in one perspective can have a direct influence on the objectives in the other perspective and vice verse. The financial objectives serve as a focus for the objectives and measures in all the other scorecard perspectives. According to Kaplan & Norton (1996), “the scorecard should tell the story of the strategy, starting with the long-run financial objectives, and them linking them to the sequence of actions that must be taken with financial processes, customers, internal processes, and finally employees and systems to deliver the desired long-run economic performance”.

When the goals and objectives are clear, the organization should think of the measures that are to be taken in order to achieve those. “Every measure selected should be a part of the link of cause-and-effect relationships that culminate in improving financial performance” (Kaplan & Norton, 1996). Thus, for example, the goal of increased profitability can be broken down in two objectives: lower costs and increased revenue. For lowering the costs, the organization should establish the measures of optimizing the operational and production processes, meanwhile offering new services or options to increase the amount of overall income.

Another important part of the BSC is targets. These refer to “a particular value of some metric, which has to be agreed during a planning process” (Olve, Sjöstrand, & Petri, 2006). It is important to always set the targets with clear accountability and a determined timeframe. What the targets basically do is set certain metric values for each objective. For example, if the objective is to cut down operational expenses, the accompanying target would specify the money value for the desired decrease or a percentage. On the other hand, when considering the learning perspective, one can specify here the training or seminars hours, while in customer perspective a percentage-value increase in the number of customers will be the direct target.

Finally, when all parts of the BSC are identified and put forward, it is time to construct the scorecard itself. The main idea to keep in mind at this point is that the scorecard should be easy-understandable and have no need for further explanations or fulfillments. When considering the form of the BSC, one can definitely use a Table System. Unlike the cascade approach, for example, with the use of the Table System one can put the goal, objective, target and measure in one line, just in different categories, so that when an employee reads the BSC, he/she has at once a clear picture of what, when and how is to be achieved. Table System allows enough room for the text not to interfere or get in the way of another. Not only does it simplify the understanding process but also enables clarification of the goal achieving process and consideration for the importance of those goals’ accomplishment in regard to the overall organizational success.

In conclusion, I find it important to underline again that the success of the organization depends on the number of items, among which the clear goals and ways of their achievement play one of the vital roles. When setting the goals, each organization has also to come up with specific steps to be taken in each area in order to achieve desirable results. For this reason organizations can use the Balanced Scorecard, which not only helps to see the whole picture of the organizational goals and targets, but also provides measures for their fulfillment. When put in the Table System, BSC provides employees with the clear understanding and perception of each part of the BSC as well as enables coherence and mutual strive to success.

References

Kaplan, Robert S. & Norton, David P. (1996). The Balanced Scorecard: Translating Strategy into Action. Harvard Business Press.

Olve, N., Sjöstrand, A. & Petri, C. (2006). Balanced Scorecard. Wiley-India.