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Balanced Scorecard for Manufacturing – Focusing on Customers to Drive Results

In my January 29th Blog, I introduced the Balanced Scorecard approach for Higher Education. This Harvard School of Business method is used by over 50% of the large companies in the United States to align their business strategies with their operational goals and strategies.

Focus Group. People with Magnifying glass

Recently Delta Initiative has been working with manufacturing companies to help them develop business processes and leverage technology to support these processes. In helping our customers, we’ve recommended the Balanced Scorecard tool to ensure the company has a balanced approach across four external and internal perspectives.

Perspective Focus Metric Examples
Financial Stewardship (External)
  • Revenue
  • Expenses
  • Number of orders / $ per order
  • Product profitability
  • Budget comparison
Customer / Stakeholder Satisfaction (External)
  • Customer acquisition / retention
  • Customer complaints / returns
  • Survey feedback
Internal Business Process Efficacy (Internal)
  • First pass yield (effectiveness)
  • Throughput (efficiency)
  • Data quality
  • IT projects
Organizational Capacity (Employee) Learning and Growth (Internal)
  • Training rollout
  • Communications
  • Employee satisfaction survey

Driving the strategy development, the company executives need to start with the externally focused perspectives, Financial and Customer.

Customer Perspective Initiatives Driving Financial Metrics

Acquiring and retaining customers is the top goal for most companies. Before that can happen, companies need to understand and define customer target markets. This initiative will drive the rest of your key initiatives. Once target markets are defined, organizations need to define and execute on strategies to sustain current customers, open new markets and grow beyond current revenue streams.

Entrepreneur.com’s article, “10 questions to Ask Before Determining your Target Market”, is a helpful outline in either defining your target market or challenging your existing understanding of your targeted customers.

Key questions are:

  1. Who will pay for my product or services?
  2. How will I sell my product or services?
  3. How will I find my customers?
  4. Is there room to expand my target market?
  5. What’s my revenue model? (Note the alignment to the Financial Perspective)

Without a clearly understood target market, marketing and sales efforts generally result in a shotgun approach similar to what we all experience with telemarketers prospecting at our homes. As a consumer, you’ve probably wondered why someone is trying to sell you on a product or service in which you have no interest. The answer is that some telemarketers are aiming at everyone in order to convert a small percentage of prospects. For smaller manufacturing companies, this is not a cost effective approach.

Identifying your target market is the key to minimizing marketing expenses and driving profitable revenue. Revenue then provides funding for other initiatives in the internally focused perspectives, Organizational Capacity and Internal Business Processes, which drive customer support and quality products and services. Those perspectives will be the subject of my next blog.

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