Kaplan and Norton

This new scorecard was first popularized by Kaplan and Norton (1995). All organizations have multiple constituencies such as shareholders, customers, employees, and strategic partners. Each of these constituencies has performance needs and concerns that must be met if the organization hopes to survive and thrive. Kaplan and Norton s scorecard emphasizes the need to convert an organization s... 

In addition, maintenance is related to the business activity and contributes value to the customer from several perspectives (Kaplan and Norton, 1996) ... 

Kaplan and Norton (2008) state that strategy develops and management is a closed-loop process where each part of the system influences aU other parts. They proposed the framework shown in Fig. 7.11 to integrate strategy formulation and planning with operational execution. 

Kaplan and Norton, whose quotation introduced this chapter, have also developed what is now a widely employed technique called the balanced scorecard. The balanced scorecard, or BSC, also has value in locking in supply chain changes. Use of concepts behind the balanced scorecard approach will also evaluate whether or not actions to support supply chain changes are having the desired effect. 

The use of metrics has been a hot management topic for several years. This popularity has been fueled by two primary factors. The first is the phenomenal success of a series of articles in the Harvard Business Review and a subsequent book. The Balanced Scorecard, by Kaplan and Norton, which make a case for metrics as a key ingredient for excellence in both operations and strategy. The second is the fact that metrics are easy to implement and produce very clear and measurable results, causing metric success to be largely self-propitiating. 

Balanced score card (BSC) assimilates perspectives of finance, customer, internal business processes and learning and growth (Kaplan and Norton 1992) and presents a holistic performance measure framework. Bigliardi and Bottani (2010) have used it for performance measurement of food supply chain. 

Kaplan and Norton The following reference to a leading indicator in Kaplan and Norton (1996) is an indication of the lack of clarity in term usage. 

Kaplan and Norton (1996) make much of establishing cause-and-effect relationships and testing the hypothesis on which the leading indicators are based. They say The Scorecard should be based on a series of cause-and-effect relationships derived from the strategy. Periodic reviews and performance monitoring can take the form of hypothesis testing (17). (Hypothesis theory, premise, proposition, assumption. Strategy plan of action, tactic, method.)... 

A good reference line of key performance indicators of a supply chain is the Balanced Scorecard by Kaplan and Norton (1996). Kaplan and Norton argue that a valuation of intangible assets and company capabilities would be especially helpful since, for information age companies, these assets are more critical to success than traditional physical and tangible assets . The Balanced Scorecard retains traditional financial measures, customer services and resource utilization (internal business process) and includes additional measures for learning (people) and growth (innovation). This approach complements measures of past performance with drivers for future development. 

Finally, in the well publicized Balanced Scorecard the role of financial perspective, as one of the four perspectives, has been accepted by operations mangers since financial measures are valuable in summarizing the readily measurable economic consequences of actions already taken (Kaplan and Norton, 1996). 

There is evidence (HBS Publishing, 2000) that the Balanced Scorecard (BSC) approach of Kaplan and Norton has made a significant impact on performance management results. Many companies benefited from applying selected metrics in the four perspectives of the BSC, viz. ... 

Source Kaplan and Norton, California Management Review (1996). 

In practice, Kaplan and Norton propose that the balanced scorecard should balance the financial perspective (goals for future performance and measures of past performance) with similar goals and measures for the underlying drivers of longterm profitability. These drivers are identified as the business process perspective, the innovation and learning perspective and the customer perspective. 

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