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Balanced Scorecard for Manufacturing – Focusing on Internal Processes to Drive Results

In my final blog regarding Balanced Scorecard (BSC) development for manufacturing, we’ll focus on the Internal Business Process perspective or “What must your company excel at?” in order to satisfy your customers. For example, if your strategy centers on growth, the business processes should support the growth strategy with alignment to customer acquisition and customer targeting strategies.

Manufacturing operational excellence strategies tend to focus on reducing manufacturing costs and time to market while increasing quality. These internally focused processes should support your value proposition. In turn, the value proposition for your products and/or services differentiates itself from its competitors.

Direction Decision Chance Opportuinity Intersection Concept

Breaking Out Internal Business Processes

Establishing a growth framework for Internal Business processes should address the following:

  1. New Product Introduction – Provides just-in-time needs of new and existing customers. Enables companies to grow beyond current capabilities.
  2. Customer Service Capability – Builds positive relationships with customers to increase customer retention.
  3. Manufacturing Capability – Operational Excellence; quality products at low costs to increase profits.
  4. Technology Capability – Ability of the company to leverage technology as a way to support customers and production capabilities.

Once the growth strategy is built out, initiatives and metrics for each Internal Business Process can be defined. Below are some 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


Internal Business Process Initiatives

Typically when developing any business systems companies begin with a Business Process Engineering initiative. These tend to take time–that’s why the strategic structure is so important. The strategic structure provides the guide as to what processes need to be created and integrated.

For example, developing the New Product Introduction Process requires input and support from across the organization: Marketing, Sales, IT, Manufacturing, Finance and Customer Support. Getting all areas working together ensures that the products created serve the needs of the customer and is essential to meet the new products’ objectives.

Similarly, any Internal Business Process engineering initiative needs to include all key stakeholders. Equally important are the steps to prototype the process and test it prior to implementation and rollout. Doing so ensures that the implemented business process is refined and successfully adopted.

Working in concert with Customer and Organizational Capacity BSC perspectives, the Internal Business Process perspective can drive results and make your organization’s Financial initiatives a success.

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