【正确答案】To: The board of Boltzman From: A Accountant Date: December 2014 Subject: A coherent approach to performance management at Boltzman This report brings the different initiatives together using the performance prism framework. The suggested performance measures are evaluated and then used in a benchmarking exercise of Boltzman compared to General Machines. Finally, the quality improvement initiative is commented upon. Performance prism The performance prism has five facets which attempt to unify various methods of performance management into a coherent whole. The facets are stakeholder satisfaction which then depends upon the other four facets of stakeholder contribution, strategies, processes and capabilities. The failure to listen to shareholder concerns may lead to performance measurement which is driven by internally-derived strategies. By taking the wider view offered by the prism and by focusing on stakeholders, the model might help to avoid this problem. The analysis of stakeholder power will assist in answering questions associated with two facets: those of stakeholder satisfaction (what do they desire?) and it may also provide ideas on how the stakeholders can contribute to the success of Boltzman. For example, the relatively weak position of suppliers may lead Boltzman to be able to push them to make improvements to the quality of their components while maintaining the same selling prices. The benchmarking exercise will help in setting strategies with which the business aims to achieve stakeholder satisfaction. It may identify strategies for improvement although here the data used will only give a strategic view as it is not operationally detailed and so is unlikely to supply much information on processes. It may be a starting point on capabilities as it does supply some information on employee pay and so indirectly their satisfaction and motivation. The quality initiative will impact on processes and capabilities. There will be a need to redesign processes in order to meet stricter quality standards. There will be a need to increase the capabilities of the organisation to manufacture with lower fault rates and at finer tolerances and this may come through greater emphasis on staff training to improve their capabilities or alternatively, through investment in the automation of processes to improve speed and accuracy of production.

【正确答案】Stakeholder analysis The matrix suggests different management approaches are appropriate for each group of stakeholders, depending on their likelihood of engagement in decision-making and their ability to influence that decision-making. Shareholders have considerable power but do not wish active involvement in decision-making (this is what they pay the management to handle). Therefore, they must be kept satisfied by ensuring their financial targets are met. Employees have little power generally and so need to be kept informed. However, there is a sub-group of key employees with skills who the company must retain and this sub-group should be kept satisfied by the provision of opportunity to develop their skills through training and work on new technologies. Customers are key players given the importance of our components to their business and the lost revenue if one were to drop us as a supplier. Therefore, they should be managed closely by having staff dedicated to liaising with them and involving them in product development. This type of close cooperation is likely to be necessary in high-technology industries such as ours. Suppliers have little power and Boltzman should be in a position of strength in negotiation over the price and quality of their goods. They should require minimal effort and they would be expected to be doing the work to meet our needs as a major customer. However, suppliers are a common source of innovation, so keeping them informed of developments would be sensible. In particular, good supplier relations will be important for a move to JIT manufacturing. Evaluation of suggested performance indicators Performance measures should be focused on the influential stakeholders identified above. It is appropriate that most of the indicators are directed towards the key players identified above. Return on capital employed,economic value added, revenue growth and net profit margin are all suitable measures for the shareholders as these measure financial returns across the organisation – its efficiency in deploying capital, its ability to grow sales and its efficiency in turning sales into returns for shareholders. There are no indicators directed at customers who are key players. This is a major omission in the list of indicators suggested. It would be helpful to have indicators covering the price/quality mix of Boltzman’s products and their innovative nature in such high-technology industry sectors. Also, there are no external measures of competitive advantage given in the list of indicators. Average pay per employee is a poor indicator as this does not focus on the sub-group of key employees. It is appropriate to have an indicator for this group and it would be their average pay (possibly as a percentage of an industry benchmark) which would be valuable. Suppliers do not have significant power or importance to Boltzman, being easily interchangeable. Therefore, it is appropriate that there is no indicator directed at them, although this will have to change as JIT is introduced.

【正确答案】Benchmarking against General Machines Benchmarking method The benchmarking exercise is an external one where comparison is drawn with a major competitor. This is valuable in identifying areas of the competitor’s competitive advantage and also areas for improvement with a similar business. However,although this method can suggest areas where Boltzman can catch up with its major competitor, it will not identify how to gain advantage over General Machines. Another fault in this method of benchmarking is that it will only indicate strategic improvements not operational ones, as such detailed information is unlikely to be in the public domain. It may be sensible to consider functional benchmarking with a world-class company from another business sector. Boltzman could share detailed operational data without the worry of loss of confidential information directly to a competitor. This is commonly done where quality initiatives, such as at Boltzman, are being introduced. Boltzman may find that its customers are already collecting process quality data and would be willing to share with a top tier supplier.

【正确答案】JIT initiative The JIT initiative will bring great benefits to Boltzman but will also place new demands on management in the business. It will fit well with the move to lean manufacturing. The difficulties involved in introducing just-in-time manufacturing begin with the need to forecast demand accurately in order to time manufacture as required. This requires close links to our customers which should be possible given our status as a top tier supplier. If we are only producing to order, then we can suffer if our own suppliers fail to make deliveries of sufficient quality and on time. The suppliers used at present are bulk suppliers and may not be used to the level of quality and ability to deliver on time which JIT requires. We will need to perform a detailed review of our supply chain in order to identify those suppliers who can meet our needs now, or else be brought up to that standard. We may then partner with a few suppliers in order to help them to improve their standards of service and quality of components. By restricting the number of suppliers, we will be more open to disruption of our supply chain. We may wish to keep our suppliers local to the manufacturing sites but, of course, this restricts further our choice of supplier and so increases their bargaining power with us. A further challenge will be the change in mind set which will come from moving to JIT where the focus of effort is no longer just on cost reduction but also on appreciation of the value of non-financial factors associated with quality. This change will have to occur throughout the organisation and is often most difficult at the operational level, where, for example, the basic layout of the factory must be redesigned and the workforce need to be flexible on working patterns and multi-skilled to avoid bottlenecks.