Balance Scorecard Proposal for

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Balance Scorecard Proposal for
King Fahd University of Petroleum
Minerals Department of Construction Engineering
Management
CEM 515 Project Quality Management

Professor Abdulaziz A. Bubshait
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Outline

• Purpose of Study
• Bakheet Co. Company Profile
• Literature Review
• Balance Scorecard (BSC) Background
• Proposed Balanced Scorecard for
• Bakheet Co.
• Conclusion

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Purpose of Study

• In spite of their struggles for a continuous
  improvement and the significant end-of- year
  performance, Bakheet Co. is able to improve by
  adopting the Balance scorecard system (BSC). So,
  my term paper I will introduce a typical BSC
  system for Bakheet Co.

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Bakheet Co. Company Profile

• Bakheet Co. for Machinery Ltd. was established in
  1975 by three ambitious individuals. Two of them
  are from Bakheet family and one from Al Rifai
  family.
• The Second Generation of those two families is
  still active in the company to date.
• Bakheet Company headquarter is located in Jeddah.
  The other six branches are spread in
• RIYADH, DAMMAM, MEDINA, GASSIM, TABUK, AND ABHA.

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Bakheet Co. Company Profile

• Company's Activities
• Provides equipment and support for construction
  and paving industry. (core business)
• Diversified in distribution of tools and workshop
  equipment known as most comprehensive in KSA.

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Company Profile
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Literature Review

• Concept
• Conducted by Dr. Robert Kaplan from Harvard and
  Dr. David Norton with Nolan Norton.
• One year research project included 12 companies
  at the leading edge of performance measurement.
• Comparative analysis conducted between these 12
  companies and today's general measurement
  practices.

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Using a Scorecard by Industry Sector
Manufacturing/Service General Electric Cargil Joh
nson Controls XEROX IBM United Parcel
Service BellSouth AMOCO Corp NOVA
Chemicals Siemens Solvay Pharmaceuticals Anheuser
Busch Motorola Amazon.com Baltimore Gas
Electric Hewlett Packard Honeywell/AlliedSignal Jo
hnson Johnson Shell Oil Company MCI Worldcom
Health Care Methodist Healthcare BJC Novant
Health SLSMHS Eden Medical Center Northwest
Hospital Overlake Hospital Duke Childrens Saint
Joseph Mercy Mayo Clinic Suburban
Hospital Advocate HealthCare Duke University
Medical Peel Memorial Henry Ford Health Kings
College Hospital Shayne Medical Center North
Shore Health Region Good Samaritan Hospital
Education University of Michigan University
of Wisconsin Stout University of San
Diego Educational Testing Srvs Harvard Unive
rsity of Montreal University of
Missouri Outreach Extension
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Balance Scorecard (BSC) Background
BSC consists of a set of superior combinations of
financial and non-financial measures that provide
a comprehensive view of the business to guide
strategy development, implementation and
communication. It also provides reliable
feedback for management control and performance.
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Balance Scorecard (BSC) Background
The Scorecard allows an organization to look at
their performance from four important
perspectives

• How do customers and other key stakeholders see
  us (customer perspective)
• What must we excel at (internal perspective)
• Can we continue to improve and create value
  (innovation learning perspective)
• How do we look to financial holders (financial
  perspective)

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Example based on a real semiconductor Co.
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The Proposed Balanced Scorecard for Bakheet Co.

• Before proposing a BSC for BAKHEET Co. I will
  propose a vision, mission and objective.
• Bakheet Co. Proposed Vision
• To become a leading heavy equipment agent in
  Saudi Arabia with a focus on seamless customer
  relationships and delight.

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The Proposed Balanced Scorecard for Bakheet Co.

• Bakheet Co. Proposed Mission
• To participate in developing Saudi industry and
  economy through providing quick solutions and
  ensuring the delivery of quality after sales
  support for Bakheet Co. customers to enable them
  to accomplish their works efficiently.
• To operate the company on a sound financial basis
  of profitable growth, increasing value for
  Bakheet Co. shareholders and creating career
  opportunities and financial rewards for their
  employees.

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The Proposed Balanced Scorecard for Bakheet Co.

• Bakheet Co. Proposed Objectives
• The objectives of Bakheet Co. are to increase
  revenues through expanded sales to existing and
  potential customers, become service oriented,
  achieve excellence in order fulfillment through
  continuous process improvements and to align
  employee incentives and rewards with the strategy.

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Bakheet Co. Proposed Financial Perspective Goal
and Measures

• How Do Bakheet Co. Look to Shareholders?

Financial Perspective Financial Perspective
Goals Measures
Return on Spending Net Income /Expenses Saudi Riyal
Revenue Growth increase in year to year revenue
Reduce Costs reduction in cost of sales and after sale services
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Bakheet Co. Proposed Customer Perspective Goal
and Measures

• How Do Customers See Bakheet Co.?

Customer Perspectives Customer Perspectives
Goals Measures
Value Proposition for New Customers Survey of now customer satisfaction , including feedback inBakheet value proposition Employee knowledge and capabilities Convenient access
Provide Consistent/ Seamless Service Survey of existing customers on Quality Availability Responsiveness Errors and defects
Retain Existing Customers Customer retention rate in targeted segments
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Bakheet Co. Proposed Internal Perspective Goal
and Measures

• What Must Bakheet Co. Excel at?

Internal Perspectives Internal Perspectives
Goals Measures
Achieving excellent supplier relationship strategic partnerships established with suppliersSupplier scorecard, with rating on Cost quality Delivery Flexibility
Developing high quality supplier capability perfect order receivedPart-per ten defect rates from supplier defect, incoming orders supplier qualifies to deliver without incoming inspection
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Bakheet Co. Proposed Innovation Learning
Perspective Goal and Measures

• How Do Customers See Bakheet Co.?

Innovation Learning Perspectives Innovation Learning Perspectives
Goals Measures
Reskilling competencies to accomplish aggressive revenue generation targets
Strategic Information The amount of information and knowledge possessed by the employees on company processes, equipment, and customer
Accountability The extent to how incentive program are affection. The extent to how personal goal align with the company goal.
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The Final Proposed BSC for Bakheet Co.
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Conclusion

• The following cornerstones needed to be taken
• into considerations

• No single measure can provide a clear target or
  focus attention on the critical areas of the
  organization
• Leaders need a set of measures that gives them a
  fast but comprehensive view of the organization
• Leaders need a structure that minimizes
  information overload by limiting the number of
  measures used