Balanced Scorecard, business, Food and Related Products, Idaho, KPI, Lay, Montana, Potato, Potato chip, process improvement
One of the best ways for a company to improve its performance is to provide timely feedback to its employees and managers on how they are doing relative to their goals. The tool most often cited is called the “Balanced Scorecard”
To build a balanced scorecard, the organization determines its Key Performance Indicators (KPIs) and then begins measuring them against a desired standard.
For instance, in a potato chip sorting facility, one KPI might be number of green chips discovered by the packaging facility, which would indicate that the potato chip sorters had a point of failure.
Each chip might be considered a single point of failure, and if they process 1 million chips per day, we would say perhaps that no more than 30 green chips per day can be discovered at the packing facility.
In a 20th century style factory, each day, the number of green chips is counted at the packaging facility and reported back to the sorting facility. In some cases, the packaging facility may grow weary of writing daily green chip reports, and they may switch to a weekly or monthly reporting model.
The reports are then compared to the number of potato chips produced that day and a metric is developed.
Here are some imperfections in the 20th century method that we can definitely wipe out with the tools we have been given over the past two decades.
1. The delay in reporting means that the sorting facility is basing its grades on data that has aged a day, a week or even a month. It loses relevance the older it becomes.
2. There are five potato chip sorters, and we are grading them as a team. If one of the five is a slacker, he may drag down the overall number. The lead sorter may need to step up and take ownership for poor performance by her colleague.
3. The model measures performance, but it does not “heal” performance. In other words, the only way to improve performance is to grade the chip sorters and ask them to figure out how to improve the grade themselves.
4. This will inevitably lead to “grade grubbing” – it’s not our fault, and we want you to exclude this population of green chips because they all came from Montana instead of Idaho, and there were thirty-thousand green chips in the batch (although the true number may be quite a bit lower, it’s not measured). And besides, it’s not fair that you give me a bad grade just because Bill is slacking off on the job and taking coffee breaks at unscheduled hours, and, and and…
Here is a different way to approach the situation, based on 21st century principles:
1. There is an auto-detector for green chips now. We install one upstream and one downstream from the sorters.
2. The first auto detector reports the number of chips before it gets to the sorters, and the second auto detector reports the number of green chips that are in the batch after passing past the five sorters.
3. A tolerance level is set for the second counter. If it detects a number that lies outside of expected performance, it will automatically route the batch back through to be sorted again.
4. The team is graded on the number of recounts required, which slows down production, but increases product quality exponentially.
5. As the sorters get better at finding the green chips, you re-set the tolerance level for the second counter to a higher standard.
6. The scorecard is generated instantly, so that a manager with a dashboard can see within seconds when a batch of Montana green chips is coming down the line, and send it off the line to determine if the whole batch should be rejected.
7. The employees cannot grub for grades, because all the relevant information behind the KPI is now being measured and can be double checked.
8. Unreasonable workflows of thirty thousand green chips are treated as exceptions before they hit the sorting facility.
9. Feedback to the workers is instantaneous as well. If a manager sees three regular batches in a row being sent back for a second sort, he will know that there is something wrong in the sorting, and can effect corrective action immediately. “Bill is drunk at work again”
10. The reporting burden at the packaging facility is reduced or eliminated altogether. They need only report by phone or IM when an unreasonable number of green chips arrives, which will lead to an immediate corrective action at the sorting facility.
I dedicate this blog entry to my career services office at my undergraduate university, San Francisco State. It was there that I first took one of those career tests. There was a book that gave lengthy lists of what were the ideal jobs for people with my particular dimensions of traits. On a lark, I decided to look up the jobs that were perfect for someone with a diametrically opposed set of dimensions. The highest result was “Potato Chip Sorter.”