The Command Board
System based on graphical presentation tools that allows the visualization and multidimensional analysis of performance indicators.
command-board-1- Study Objective:
The objective of this practical work is to provide the student with theoretical and practical knowledge of a command board, based on the knowledge learned in class and based on different sources of reading.
The company that we carry out in this practical work is an Argentine SME that produces mass consumer bookstore products, which it sells to supermarkets and retail stores.
- Design Orientation
STAGE I. COMPANY, BUSINESS, SUCCESS FORMULA
Mission
Be part of the 5 current leading companies in Argentina.
View
Leading the Argentine market in school products.
Business Definition
- Customers: supermarkets and shops that buy more than 100 units per month. Products: Products comparable to the best in the world, with special details required by the local market.
goals
- Return on investment before tax: 20% Market share: more than 50%
Strategy
- Concentration on products and customers Innovation, quality, speed of delivery, service
STAGE II. MANAGERS AND MANAGEMENT CONCEPTS
According to the analysis applied to the company, we find that there are different types of problems and decisions to be made; Next, 3 levels were defined: (at the high level, a general inventory policy will be defined, at the intermediate level, the amount of inventory per product group will be defined, and at the low level, when to compare each item).
The indicators, then, will vary by level. They influence the personal goals of managers, their driving styles and their opinions of how the best way to run their company are in their selection.
The nature of the context influences decision making. At the time of hyperinflation we saw the flow of funds daily, in which there was a shortage, more supply indicators were monitored than today.
In this company there are:
- Managers who know and adhere to new management concepts. Decentralized driving, pressure for results.
The required management decisions are:
- Rapid reaction to price and product competition. Fast delivery and customer service.
STAGE III. THE COMMAND BOARD FOR HIGH MANAGEMENT
The selection of key indicators for Senior Management (normally the Board and the General Manager use the same information) depends on the factors mentioned in stages I and II.
It is usually a balanced mix of physical and monetary indicators, between internal information and context information, between short and medium term information.
For the application of indicators in our company, at least, there should be these indicators:
STAGE IV. OBJECTIVES, GOALS, INDICATORS AND RESPONSIBLE BY LEVEL.
Defined the indicators at the top of the company, it is necessary to do a very important task, the vertical chaining of indicators, according to the processes and organization.
More than one conflict stems from not having clarified how each person should contribute to achieving the company's results.
For this SME, the work of a table such as the one below was carried out, where some indicators are indicated for the Commercial Manager.
OBJECTIVES, INDICATORS AND GOAL BY AREA
| AREA | OBJECTIVE | INDICATOR | FREQUENCY | EXPRESSION | GOAL |
| COMMERCIAL
|
Good position in the market. |
|
D and M
M M |
$, Units
$, Units %, Units |
> 50% |
| Customer satisfaction | Complaints received | M | Number of claims | ||
| Improve profitability |
|
M M |
$
$ |
||
| Incorporate sales of
new products |
% of sales of new products in total sale |
M |
% / total sales (Units and%)
$ Units |
||
|
COLLECTIONS |
Improve the term of collections | Effective Collection Term | M | Days |
> 80% |
| Collection effectiveness |
|
M
M |
% of past due debts, $, weighted average days of delinquency
% of total debt $ |
STAGE V. VARIABLE REMUNERATION - BUSINESS TRANSFORMATION
In this matter, it is necessary to consider the existing variable remuneration systems in the company (if the factory workers have an incentive based on labor productivity, we will have to measure that productivity).
In turn, it is necessary to take into account special programs that exist to improve the competitiveness of the company (if there is a cost reduction program, we will have to measure costs).
The company has the following systems in force:
- Managers. Share in net profits Professionals. Goalsharing (fulfillment of objectives). Sellers. Commission on what is sold and collected. Factory personnel. Multiple cost.
The context is presented with:
- Greater concentration of retail trade and competitive pressure that forces prices to fall. Recession and lower sales in units. Delays in collections.
The company is making an effort to improve its competitiveness;
Consequently, it will be necessary to incorporate (as a minimum) the following indicators in the list of the Commercial Manager:
- Net profits Commissions paid to sellers Term
STAGE VI. CALCULATION FORMULA
Once the indicators have been defined, it is necessary to specify their calculation formula. How are sales, absenteeism, EVA (economic value added), company value calculated? It is not a minor step, the labor productivity index measured in physical units can go up and the same index measured in monetary units can go down.
STAGE VII. BENCHMARKING, COMPARISONS, GRAPHIC REPRESENTATION
Once the indicator is defined we have to have some reference.
A person 1.75 m tall, is he tall or short? Swimming 100 meters butterfly in 55 seconds, is swimming fast ?, A return on investment of 15% is adequate?
The ideal in the key indicators is:
- Record historical values Compare with a goal compare with the value that arises from "best practices" (benchmarking)
The presentation of the information may be in tables, graphics or in text. Ideally, it should allow for a quick interpretation of the topic.
In the case of the example, stages VI and VII can be illustrated in the case of a key indicator for this company: distribution time
- Calculation way:
Days between receipt of customer order and physical delivery to your warehouse.
- 2002 average: 3.5 days 2001-2002 competition average: 2 days 2003 goal: 1 day Benchmark: 4 hours
STAGE VIII. EIS
In this type of SME company where the objectives are not yet used, nor are there Management Control reports, it is advised to use a folder where someone from the administrative area collects the main indicators from the Management.
Perhaps the most complicated software they use is Excel. This folder will be the « Command Board » of the Management and the Boards by sector would be the monthly reports that the area managers would make. This is the simplest, fastest and cheapest way to start.
The providers and software available are many. Typically the data is taken from transactional systems, the Internet, and other sources.
These data are arranged in a database («Data Warehouse»), from which they are extracted with some criteria. Presentation to the information manager requires the use of certain tools (OLAPs are used today, more expert systems / artificial intelligence will be used in the future).
- They have the relevant indicators, allowing the condensation of the information and its investigation (drill-down). Example: you have total sales and, if it does not sell well, the manager can investigate sales by product, geographical area, customer, etc. There are traffic lights that indicate important deviations and allow control by exception. They allow graphic display. they make simulations of the "what if" type. They present external and internal information.
In the example company, the following steps were followed:
- Once stages I to VII have been completed, work will be carried out for six months with monthly “folders”. This will make the necessary information even more precise. The company did not have sophisticated hardware or an ERP. He did not want to spend more than $ 25,000 on this project (for any reason) and he wanted to have results in three months.
In a first step, the general manager and five other managers were to have access to the EIS.
- Three suppliers (SAS, Procesac and Pirámide) were asked for proposals and one of them was chosen, which fulfilled what the company wanted. At the moment a greater use of the Internet is being studied: to build an Extranet with main suppliers and clients, boost e-commerce sales, etc.
STAGE IX. COMMUNICATION AND TRAINING
The elaboration of the TC implies an effort of explicit and implicit communication additional to the normal one. All stages (its design, its construction, its use) is a very valuable educational process, for all levels.
In the work company, the discussion in the objectives and indicators meetings was very helpful. The greater dissemination of information and its analysis changed the behavior of managers.
STAGE X. INTEGRATION TO ALL PHASES OF BUSINESS MANAGEMENT
The TC is part of business management and is related to all managerial activities. Once designed and completed, you should:
- Join the planning and budgeting process of the company. In other words, each goal must have a plan, a program and a budget that allows it to be met. Use it in the management of personnel and their evaluation.
SYNTHESIS
On the analysis of this company, it was achieved (in a short time) that the TC formed an essential part of the tools used by managers. The company believes that part of the best results achieved (greater market share, more profit, etc.) are due to TC.
The benefits achieved far exceed the investment made.
BIBLIOGRAPHY
| YEAR | AUTHOR (s) | BOOK | EDITORIAL |
| 1999 | R. Bacal | Performance Measurement | Mc Graw-Hill |
| 1999 | Alberto M. Ballvé | "Control panel" | Macchi editions |
| 2002 | Boccalandro | Notes in class | |
| 2002 | www.tablerodecontrol.com.ar |
Title: "COMMAND BOARD"
Contributed by: Ariel Severo - [email protected]
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