Methods for Strategic Development - Case Study Example

Strategic Development - The Application of Methods Models Introduction When it comes to strategic development for a company or an organization, many elements are required to create an effective and feasible development strategy. The elements that are usually required for this include objective setting, performance measurement as well as strategic evaluation, strategic initiative formulation and process modelling to depict the factors which can be controlled and those which cannot be controlled. This provides a systematic approach through which the strategic development can be initiated and implemented into a case. There also exist many hard and soft methods for strategic development which support the approach taken. These techniques and tools include the balanced score card, the SWOT (strengths, weaknesses, opportunities & threats) analysis, a strategic TOWS matrix, as well as scenario development, cognitive mapping, system dynamics modelling and visioning. The techniques which support strategic development and have been selected to be focused on in this paper are the balanced score card technique and that of SWOT analysis and TOWS matrix. The balanced score card approach is a performance management tool which measures the small scale operation activities of an organization and aligns the objectives to the vision and the min strategy of the organization. "Balance score card is a tool designed to give companies the right information to effectively manage the tactics that support their business strategy. It is divided into four areas, the financial, customer, learning and growth perspectives, and internal business process." (Pangarkar, & Kirkwood, 2007) Through the methodology of the balanced score card the perspectives of the business or the organization are divided into four different perspectives which have been highlighted as the financial,, the customer, the internal process and the innovation and learning perspectives. Each perspective is then assigned various key point indicators which can be used to measure the performance. These can include cash flow, ROI, financial result, return on capital, and return on equity for the financial perspective, delivery [performance to customer, quality performance to customer satisfaction rate, customer loyalty and customer retention for the customer perspective. The internal business process perspective can include KPI's like number of activities, opportunity success rate, accident ratios and overall equipment effectiveness, while the KPI's for the learning and growth perspective include the investment rate, the illness rate, the internal promotions, the employee turnover, and any gender racial ratios. Case Summary The case that has been selected is that of Neilson Manufacturing Incorporated. The company has employed the balanced score card approach for determining the strategy for improving the performance of the suppliers for the lean manufacturing organization. The case puts forward the mechanism employed, and the score card methodology used to improve the performance of its suppliers. The specific steps that are taken by the company to improve the supplier performance pertain to designing and implementing a score card based supplier performance model for the metal fabrication manufacturer. The score card is developed as a three part score card at the site of the case study. The case also provides the challenges that are present for the designing and the implementation of the strategy for development and improvement of supplier performance. Neilson manufacturing incorporated is a medium sized metal fabricator operating from Salem in "NMI is ISO 9001:2000 certified and offers high flexibility fabrication services including laser cutting, punching, forming, welding, printing, and silk-screening. The company's primary focus is in the electronics industry. Products produced by NMI include mainframe server cabinets; high end test cabinets for wafer, chip, and circuit board test equipment; enclosures for clean room applications and telecommunications equipment. NMI employed approximately 400 people at the time of the study." (Doolen et al, 2006) Prior to the case study, the company had recently started employing lean manufacturing practices like just in time manufacturing and inventory management, cellular manufacturing and open book management. However the company needed to establish business operations and relationship with its suppliers in such a manner that its productivity was effective, efficient and on time in terms of the supply of the materials required. For this the company required supplier collaboration for lean manufacturing. The balanced score card approach was used by the company to improve the relations with the suppliers, its collaboration with them as well as the product quality, and overall performance of the company. Even the customers of the company had highlighted improvements that could be made in terms of costs, the quality, and the delivery of the systems. The company worked with 50 suppliers however the top 20 of these suppliers provided the company with the 90 percent of the materials required. The balanced score card approach was employed by the company to incorporate an improvement model for the suppliers including all the major as well as the minor suppliers of the company. The balance score card used was had three perspectives, the Quality, the Cost and the Delivery and the Customer Support. The KPI's and the performance measures that were taken into account were PPM, Factory disruption, fault analysis and root cause for Quality perspective, cost reduction percentage, cost reduction proposals and cost reduction implementations for the cost perspective while the ON time delivery percentage, lead time percentage, lead time reduction percentage and flexibility percentage formed the performance measures for the delivery perspective. The Customer support perspective and measures specific to the RFQ response, the PO confirmation time, the financial statements of the suppliers and the EOL certification data. Critique of Techniques used in Case The following section provides the various techniques and tools that were employed for the strategic development of the supplier selection and improvement strategy at Neilson Manufacturing Incorporated. The main techniques that have been observed in the case have been those pertaining to the balanced score card and the SWOT analysis based TOWS matrix. What Worked Well The balanced score card approach that was taken for developing the performance measurement technique and strategy for suppliers and this was the methodology which was most effective and successful for the "In the case of NMI, strong relationships with suppliers, a focus on teamwork and the open sharing of information were foundational to the supplier scorecard process development. The development of supplier scorecards underscored NMI's commitment to both developing and maintaining strong relationships with suppliers. At the time of the study, NMI leaders attributed bottom-line results with the implementation of the supplier scorecard system." (Doolen et al, 2006) The company required strong alliance and collaborative relationship with the suppliers in order to fully implement the just in time methodology for managing its operations and manufacturing in real time. The strategic objectives of the Nielsen company and the suppliers needed to be shared by both of them and the balanced score card approach that was used for the program to best integrate the suppliers and the company was highly appropriate as it focused on the long terms as well as the short term objectives of the company while providing the specific measurements and KPI stats for the measurement of the performance of the suppliers with the company. What Did Not Work Well Nielson Manufacturing Incorporated had been trying to implement lean production, operation and management procedures for some time now as depicted in the case, however the company had been unsuccessful in its previous experiments to come up with a an effective strategy for collaboration with the suppliers which benefits the company and provides it with measures to compare, contrast and best selected the suppliers for improvement on the basis of their performance in the four fields which pertained to quality, cost, delivery time and the customer support provided. The company also made of the TOWS matrix approach to determine the strengths, and weaknesses of the suppliers and work accordingly to form the corrective strategies for the improving the performance of the suppliers. However the company was having problem determining the performance measures which could be used to judge and monitor the performance of the suppliers and their improvement over time as per the four highlighted perspectives. This is why the approach of using the TOWS matrix by the company failed to serve the purpose of developing a performance based improvement strategy for the suppliers of Nielson Manufacturing Incorporated. What Can Be Improved The techniques use din the case study can generate better and more effective results if a few changes regarding perspective and application of the strategy were to be made. AS mentioned earlier the TOWS matrix approach was not successful for the company for determining the performance measurement strategy for improving suppliers for Neilson Manufacturing Incorporate. This was mostly due to the perspective taken to the application of the TOWS Matrix. The case depicts use of the TOWS matrix in terms of each individual suppliers, while if the TOWS matrix was used on the supplier interaction process with the company which pertains to the procurement process, then the technique would have provided results which could further support the balanced score card technique and methodology that was employed. Combination of the Techniques with Respect to the Multi-methodology Literature A literature review on the topic provided that the multi-methodology approach is usually taken for integration strategy development. Strategy development for quality purposes and for attaining objectives is best addressed through the balanced scorecard approach where quality can be addressed through specific key indications. Different strategy development methodologies have different strengths and weaknesses and in order to come up with the best solution to an issue and form the most appropriate strategy for addressing the problem a multi-methodology strategy can be employed which uses a combination of techniques to develop strategy. (Jackson, 1999) Another study conducted by Gill in 2004 highlighted the use of system dynamics and system modelling along with the balanced scorecard approach to manage and develop strategies for change I an organization. "Combining areas of strategy, system dynamics, and viable system modelling in a single study can be used to inform the management of change. The process of managing change defines the gap between where an organization currently is and where it would like to be. This makes the process a goal seeking one and performance measurement is thus required to ensure the 'gap' is reducing over time. The balanced scorecard is used for this purpose." (Gill, 2004) The case with the Nielson Manufacturing Incorporated requires the development of strategies for integrating the operations of the suppliers with the manufacturer and the measurement of the performance of the suppliers according to the objectives and goals of the manufacturing company. The main purpose was to align the operation strategy of the supplies with the manufacturer which was achieved by using the balanced scorecard technique which aided in getting identifying the gaps and the discrepancies in the current operations. Value Assessment of Techniques Supporting Strategic Development The balanced scorecard approach tends to add value to the strategic development process for Neilson Manufacturing Incorporated as it provides an actionable strategy which can be enacted to integrate the suppliers with the manufacturer and to assess the supplier performance improvement based on the score ac5rd approach. The key issue in the case is to integrate the operations of the suppliers and the company to fully implement lean manufacturing and operating methodology. "As a structure, balanced scorecard methodology breaks broad goals down successively into vision, strategies, tactical activities, and metrics. As an example of how the methodology might work, an organization might include in its mission statement a goal of maintaining employee satisfaction. This would be the organization's vision. Strategies for achieving that vision might include approaches such as increasing employee-management communication. Tactical activities undertaken to implement the strategy could include, for example, regularly scheduled meetings with employees. Finally, metrics could include quantifications of employee suggestions or employee surveys" ('Balanced Scorecard Methodology', 2008). The balance score card supports the purpose by translating the mission statement, the objectives and the goals specific to the suppl8ers relations and procurement system in to achievable goals in the scorecardhe approach is comprehensive one which highlights the discrepancies which arise in the specific measures and indicators in the four perspectives of the scorecard namely quality, cost, delivery time and customer feed back. In the long run, the scorecard can be adjusted to add new perspectives which might need consideration making the score card approach dynamic for strategic development at Neilson Manufacturing Incorporated. Reference 2008, Balanced Scorecard Methodology, available at http://searchcio.techtarget.com/sDefinition/0,,sid182_gci347160,00.html Doolen, T., Traxler, M., McBride, K., 2006, 'Using Scorecards for Supplier Performance Improvement: Case Application in a Lean Manufacturing Organization.', Engineering Management Journal, Vol. 18 Issue 2, p26-34, 9p, available at http://web.ebscohost.com/bsi/detailvid=1&hid=13&sid=8b2677ae-6147-4692-b564-afa150d48189%40sessionmgr9&bdata=JnNpdGU9YnNpLWxpdmU%3d#db=buh&AN=21974913 Gill, A., 2004, 'Managing Organization Change: Integrating Strategy through the exploration of detail and dynamic complexity', available at http://www.systemdynamics.org/conferences/2004/SDS_2004/PAPERS/387GILL.pdf Jackson, M.C., 1999, 'Towards Coherent Pluralism in Management Science', Operational Research Society, available at http://www.jstor.org/pss/3010384 Pangarkar, A.M., Kirkwood, T., 2007, 'Linking Learning Strategy to the Balanced Score Card', Chief Learning Officer, Vol. 6 Issue 7, p38-52, 5p, 1 color, available at http://web.ebscohost.com/bsi/detailvid=1&hid=13&sid=4f8517c6-e14b-46b7-959b-e93735f0b13b%40sessionmgr2&bdata=JnNpdGU9YnNpLWxpdmU%3d#db=buh&AN=25451363 Read More