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Standard PBL Metrics

Standard PBL Metrics. Tiger Team Meeting February 24, 2004. AGENDA. Tiger Team Goals Balanced Scorecard Discussion DoD Proposal Industry Alternative Proposal Subsequent Actions. Tiger Team Goals. DoD-Industry agreement on 5 or 6 common metrics

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Standard PBL Metrics

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  1. Standard PBL Metrics Tiger Team Meeting February 24, 2004

  2. AGENDA • Tiger Team Goals • Balanced Scorecard • Discussion • DoD Proposal • Industry Alternative Proposal • Subsequent Actions

  3. Tiger Team Goals • DoD-Industry agreement on 5 or 6 common metrics • A sort list of requirements that capture effectiveness • To be applied to all PBL contracts • Must tie back to DoD Balanced Score Card • Must incentivize contractor desire to achieve and execute • Must be fair to Government and Industry

  4. Discussion • Key points • DoD data systems to collect and analyze data are not adequate • Examine commercial and Industry-to-Industry PBL metrics for utility • Top level metrics include availability, reliability, cycle time, and total cost of ownership • Potential lower level metrics include turn around time, fill rate, perfect order fulfillment percentage, transaction cost and lead time. • Industry sees three different types of metrics: Govt/Contractor, Internal, and Supplier • Metrics measure value in the eyes of the customer and drive both behavior and cost

  5. DoD Proposal • Mr Kratz proposed: • Some measure of operational availability • Program specific measures of mission reliability • Cost per operational unit of performance • Perfect order fullfillment • Metrics must be tied to incentives and be appropriate for the contract pricing structure

  6. Industry Proposal • Many facets of weapon systems support not under contractor control; offered following alternatives: • Some measure(s) of operational and mission availability • Program specific measures of mission reliability • Cost per operational unit of performance • Standard definitions required plus basic assumptions broad enough to cover fielded systems and non-aerospace applications • Mr Kratz concurred with Industry’s proposal; resolved to carry the Joint Logistics Board

  7. Subsequent Action • Lou Kratz briefed Industry proposal • Mr. Berkson, AUSD L&MR (acting) • Joint Logistics Board • Industry metrics approved; additional guidance added: • Logistics Response Time • Footprint • Mobility • Only one metric for Operational Availability (not mission availability)

  8. Summary • PBL Approved metrics: • Operational Availability (Ao) • Cost per operational unit of performance • Logistics response time • Logistics footprint • Operational reliability

  9. Customer Perspective Financial Perspective Internal Business Process Perspective How do customers see us? How do we look to shareholders? What must we excel at? Balanced Scorecard The traditional balanced scorecard model translates an organization’s vision and strategy into a set of measures built around four perspectives: financial, customer, internal business processes, and innovation & learning. • The balanced scorecard is one of several tools for performance measurement and management. • The Kaplan and Norton model provides a more holistic approach by supplementing the traditional financial measures with three additional perspectives: customer, internal business process, innovation and learning: • FinancialPerspective - Is the organization creating value for its shareholders? • Customer Perspective - How is the organization performing from the perspective of those who purchase the organization’s products or services? Internal Business Process - How is the organization managing its internal business processes to meet its client’s expectations? Is throughput improving? Other processes include fulfillment, customer retention, and financial planning. Innovation & Learning Perspective - Is the organization improving its ability to innovate, improve, and learn? • It incorporates both leading and lagging indicators. • The emphasis is on balance across multiple dimensions of performance; ensuring that good performance in one area is not offset by poor performance elsewhere. • The strategy drives the choice of performance measures. A failure to meet targets could be because the strategy is wrong Vision and Strategy Innovation & Learning Perspective Can we continue to improve our employees’ skills and create value for our clients? Robert S. Kaplan and David P. Norton have developed what is considered to be the standard Balanced Scorecard template Source: Robert S. Kaplan and David P. Norton, “Using the Balanced Scorecard as a Strategic Management System,” Harvard Business Review (January-February 1996)

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