Balanced Scorecard (BSC) and organizations’ vision and strategy

Balanced Scorecard (BSC) means translating organizations’ vision and strategy 

Over the years, lean principles, concepts tools and techniques expanded throughout the entire supply chain due to its benefits such as cost reduction, improved quality & flexibility and Just-In-Time deliveries. This has led to an increased importance for lean supply chain performance to the different stakeholders. Balanced Scorecard approach gives a good guidance for a company’s supply chain management.

In simple terms, Balanced Scorecard (BSC) means translating organizations’ vision and strategy into more practical and realistic goals. BSC considers four aspects of an organization. Those are,

·         Financial perspective – Financial performance

·         Customer perspective – Satisfy, retain and acquire customers in targeted segments

·         Internal business process – deliver the value proposition to the target customers

§  Innovetive products and services

§  High quality, flexible and responsive operating processes

§  Excellent post sales support

·         Learning and growth

§  Develop skilled, motivated, employees

§  Provides acces to strategic information

§  Align individuals and teams to business unit objectives

Earlier, the organizations just focused on the financial aspect of the organization. That means the things which have happened in the past. However, BSC focus on creating a long term value for an organization. This is called BSC due to the fact that this system balances financial and non financial aspect of an organization.

Therefore, BSC is very important to any organization, especially for a country like Sri Lanka. The reason BSC is important to Sri Lanka because, strategic thinking and strategy implementation is lacking in our country.

Even there are loads of educated and very well experienced professionals in our country; we are still fear for the change. We need stability and when a change comes even for betterment for our own selves, we resist the change.

That is a mindset which we owned from the colonization period. We still go with the flow as it is and we do not think strategically or out of the box. If we can identify that and do something to overcome it, we will be able to change our country.

Therefore, when implementing a strategy, some kind of a framework is required for us to follow. That is why BSC is very important to a country like Sri Lanka, when implementing strategies. BSC enables an organization to;

§  Formulate and communicate new strategy for a more competitive environment

§  Increases revenues, without just cutting costs and enhance productivity

§  Each and every employee implements the new growth strategy in their day to day operations

The selected research article is about application of lean manufacturing systems in order to continuously improve the supply chain management by using the BSC approach. There should be a perfect alignment between the supply chain strategy and the characteristics of the products or services. Managers should use a combination of lean techniques throughout the SC in order to improve global performance. LSC mainly focuses on obtaining value and eliminating waste that occurs along the supply chain.

There are three approaches for measuring the lean performance. Those are, measuring the degree of implementation of lean tools and techniques, measurement of outputs resulting from lean implementation and finally the combination of the both. However, the lean performance dimensions to be measured are identified based on the type of the business organization and the goal set.

When implementing BSC, aligning the goals with the indicators of the goals previously identified, should be done. In addition to that, those indicators had to be categorized according to the above mentioned four aspects – Financial, Customers, Internal Business process and innovation and learning. And who will perform the measurement, and who will collect the data should be clearly defined by the management.

After the measurement process the result is 27.4%. This indicates that there are more aspects to be improved. Since this is work in progress, it is still early to measure and decide the performance of this organization. However, areas to be improved should be identified.

This method could be implemented in Sri Lanka as well. Any SME could be chosen for this. After selecting an organization, its supply chain should be identified properly. After identifying the supply chain, the lean techniques should be applied using BSC.

However, when selecting the indicators the organizations will face a difficulty on deciding the indicators. That is a barrier which Sri Lankan organizations will face.

 Apart from that this method is very useful for the Sri Lankan organizations. If possible all the organizations should adhere BSC.