Balanced Scorecard

In the early 1990s, Drs. Robert Kaplan (Harvard Business School) and David Norton developed the balanced scorecard approach to business management. It is a conceptual framework for translating an organization's strategic objectives into a set of performance indicators distributed among four perspectives:

Organizations use some indicators to measure a business' progress toward achieving its vision and others to measure the long-term drivers of success. Through the balanced scorecard, an organization monitors both its current performance (including finance, customer satisfaction, and business process results) and its efforts to improve processes, motivate and educate employees, and enhance information systems. As a result, this business methodology applies to all aspects of the business, including modern supply chain management. Except for the Learning and Growth perspective, the performance categories are consistent with the Supply Chain Operational Reference (SCOR) model. In fact, many companies use SCOR-based metrics as balanced scorecard metrics. Many of the balanced scorecard measures for the acquisition arena are not part of supply chain databases. Instead, organizations capture them through surveys, meetings with customers and other methods. Measurement is not an end in itself, but a tool for more effective management. The results of performance measurement will tell you what happened, not why it happened or what to do about it. In order for a business to make effective use of the results of performance assessment, it must be able to make the transition from assessment to management. It must also be able to anticipate needed changes in the strategic direction of the organization, and have a methodology in place for effecting strategic change. Successful accomplishment of these two tasks represents the foundation of good performance management. Measurement can: