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Customer Perspective: Performance Measure Desired Change

The document discusses Mason Paper Company's (MPC) shift from an old manufacturing strategy focused on high-volume production of a limited range of paper grades to a new strategy focused on low-volume production of a wide range of grades. It notes that MPC's previous performance measures around equipment utilization, tons produced, and cost per ton would not support the new strategy. The new strategy aims to increase flexibility through more changeovers, grades produced, and employee training to decrease changeover times and increase yields. MPC's balanced scorecard hypothesizes that these changes would decrease order fill times and increase customer retention, sales, and margins.

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Jemaimah Buhayan
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166 views

Customer Perspective: Performance Measure Desired Change

The document discusses Mason Paper Company's (MPC) shift from an old manufacturing strategy focused on high-volume production of a limited range of paper grades to a new strategy focused on low-volume production of a wide range of grades. It notes that MPC's previous performance measures around equipment utilization, tons produced, and cost per ton would not support the new strategy. The new strategy aims to increase flexibility through more changeovers, grades produced, and employee training to decrease changeover times and increase yields. MPC's balanced scorecard hypothesizes that these changes would decrease order fill times and increase customer retention, sales, and margins.

Uploaded by

Jemaimah Buhayan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CUSTOMER PERSPECTIVE

Performance Measure Desired Change

Customer Satisfaction +

Market share +

Product returns -

Percentage of New Customer retained from last period +

Number of New Customer +

INTERNAL BUSINESS PROCESS PERSPECTIVE

Performance Measure Desired Change

Throughput time -

Manufacturing Cycle efficiency +

Quality Cost +

Administrative expense -

Waste from production -

Time to introduce new product +

Percentage of sales from new products +

Equipment capacity +

Delivery cycle time -

Defect free units as percentage of completed units +

Unfavorable standard cost variance -

On time deliveries +

Percentage of sale from improved products +


LEARNING AND GROWTH

Performance Measure Desired Change

Manufacturing Learning +

Employee turnover -

Suggestions per employee +

Technology and leadership +

Hours of training per employee +

MASON PAPER COMPANY


Balanced Scorecard

1. Contrast MPC’s previous manufacturing strategy with its new manufacturing


strategy.

The previous manufacturing strategy of the Mason Paper Company (MPC)


targeted on the high-volume production of a limited range of paper grades, which
could lead them to net operating losses for the last two years. Before, one
amongst the goals of their strategy is to stay the machine running within the
production in order that it might maximize the tons created. Also, changeovers
were eluded because they can cause lowered equipment utilization in the
production. Therefore, expand tons created and diminish changeovers helped the
production to spread the high fixed cost of paper producing across a lot of units of
output. Now, based on the conversation of the MPC management team, they
created a new strategy to save the company from impending bankruptcy. Instead
of focusing on the high-volume production of a limited range of paper grade, the
new strategy is to focused on the low-volume production of a wide range of a
product.
The new goal of the management team is to increase the number of paper
grade manufactures, lessen those changeovers times and increase yield across
non-standard grades. While Wendy Chen, the Chief Financial Officer (CFO),
noticed that the new strategy will destroy the equipment utilization, but Tom
Andrews, the VP of Marketing, said that it will still strive to optimize the utilization
of its high fixed cost resources within the confines of flexible production. Therefore,
the previous and new marketing strategy is way different from each other as the
old strategy focused on the economies of scale while the new one is on
economies of scope.

2. Generally speaking, why would a company that changes its strategic goals
need to change its performance measurement system as well? What are some
example of measures that would have been appropriate for MPC prior to its
change in strategy? Why would those measure fail to support MPC’s new
strategy?

Employees specialized in improving those measures that are used to appraise


their performance. Same goes for college students, they specialize in queries that
may be employed in the examination. Therefore, strategically-aligned performance
can channel worker effort towards rising those aspect of performance that are
most significant to getting strategic objectives. If a corporation changes its
strategy, but continues to judge worker performance exploitation measures that
don’t support new strategy, it will be motivating it’s staff to create selections that
promote the previous strategy, not the new strategy. And if staffs create selections
that promote the new strategy, their performance measures can suffer.
Some performance measures that would be appropriate for MPC’s old
strategy are as follows: Equipment utilization percentage, Number of tons of
paper produced, and Cost per ton produced. Also, These performance measures
would not support MPC’s new strategy due to the reason that they would
discourage increasing the range of paper grades produced, increasing the
number of changeovers performed, and decreasing the batch size produced per run.

4. What hypothesis are built into MPC’s balance scorecard? Which of these
hypothesis do you believe are most questionable and why?

If the amount of staff trained to support the flexibility strategy will increase,
then the common transmutation time can decrease and also the range of
various paper grades made and also the average producing yield can increase.
If the common transmutation time decreases, then the time to fill associate
order can decrease. If the amount of various paper grades made will increase,
then the client satisfaction with breadth of product offerings can increase. If the
common producing yield will increase, then the contribution margin per ton can
increase. If the time to fill associate order decrease, then the amount of recent
customers non-heritable, sales, and also the contribution margin per ton can
increase.

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