Performance Management: Finding the Missing Pieces (to Close the Intelligence Gap)

305 Pages·2004·3.616 MB·English

by  Gary Cokins

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PERFORMANCE MANAGEMENT
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PERFORMANCE MANAGEMENT
FINDING THE MISSING PIECES
(TO CLOSE THE INTELLIGENCE GAP)
GARY COKINS
John Wiley & Sons, Inc.
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This book is printed on acid-free paper. ∞
Copyright ©2004 by John Wiley & Sons, Inc. All rights reserved.
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Library of Congress Cataloging-in-Publication Data:
Cokins, Gary.
Performance management : finding the missing pieces (to close the intelligence gap) /
Gary Cokins.
p. cm.
Includes bibliographical references and index.
ISBN 0-471-57690-5
1. Organizational effectiveness—Measurement. 2. Performance—Measurement.
3. Industrial productivity—Measurement. I. Title.
HD58.9 .C643 2004
658.4’012—dc22 2003021215
Printed in the United States of America
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CONTENTS
About the Author vii
About the Web Site ix
Preface xi
1 Why the Need for Performance Management as a System? 1
PART ONE
Performance Management Process 19
2 Integrating a Suite of Proven Methodologies 21
3 Support from Fact-Based Data and Information Technology 31
PART TWO
Strategy Maps and Balanced Scorecards:
The Link between Strategy and Successful
Execution by Operations 39
4 Measurement Problems and Solutions 41
5 Strategy Maps and Scorecards as a Solution 48
6 Strategic Objectives’Drive Gears: Cascading Measures 53
7 ARecipe for Implementation 58
8 The Human Side of Collaboration 68
9 Fact-Based Management Accounting Data 75
10 Scorecards and Strategy Maps: Enablers for
Performance Management 80
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vi CONTENTS
PART THREE
Leveraging Financial Analytical Facts and Truths 83
11 If Activity-Based Management Is the Answer,
What Is the Question? 85
12 Activity-Based Management Model Design and Principles:
Key to Success 98
13 Operational (Local) Activity-Based Management for
Continuous Improvement 110
14 Strategic Activity-Based Management for Customer and
Channel Profitability Analysis 117
15 Predictive Costing, Predictive Accounting, and Budgeting 131
16 Activity-Based Management Supports Performance Management 142
PART FOUR
Integrating Performance Management
with Core Solutions 145
17 Customer Intelligence and Customer Relationship Management 151
18 Supplier Intelligence: Managing Economic Profit across
the Value Chain 173
19 Process Intelligence with Six Sigma Quality and Lean Thinking 194
20 Shareholder Intelligence: Return on Whose Investment? 214
21 Employee Intelligence: Human Capital Management 237
PART FIVE
Performance Management, Business Intelligence,
and Technology 247
22 Data Management and Mining with Performance Management 249
23 Final Thoughts: Linking Customers to Shareholders 262
Index 273
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ABOUT THE AUTHOR
Gary Cokins is a strategist in Performance Management Solutions with SAS
(parent of the acquired ABC Technologies, Inc.), the world’s largest privately
owned software vendor. He is an internationally recognized expert, speaker, and
author in advanced cost management and performance improvement systems.
He received a B.S. in Industrial Engineering/Operations Research from Cornell
University in 1971 and was a member of both the Tau Beta Pi and Alpha Pi Mu
honor societies. He received his MBAfrom Northwestern University’s Kellogg
School of Management in 1974 and was a member of the Beta Gamma Sigma
professional society.
He began his career as a strategic planner with FMC Corporation. With FMC’s
Link-Belt Division he served as Financial Controller and then Production Manager,
which exposed Gary to the linkages between cost information, strategy, operations,
performance measurements, and results. In 1981 Gary began his management con-
sulting career with Deloitte & Touche. There he was trained by Eli Goldratt and
Robert Fox and implemented Theory of Constraints (TOC) OPT software. Gary
then joined KPMG Peat Marwick, where he implemented integrated business sys-
tems and ultimately focused on cost management systems, including activity-based
costing (ABC). At KPMG Peat Marwick, Gary was trained in ABC by Professor
Robert S. Kaplan of the Harvard Business School and Professor Robin Cooper.
Next, Gary headed the National Cost Management Consulting Services for Elec-
tronic Data Systems (EDS). He joined ABC Technologies in 1996.
Gary was the lead author of the acclaimed An ABC Manager’s Primer(1992,
ISBN 0-86641-220-4), sponsored by the Institute of Management Accountants
(IMA) and the Consortium for Advanced Manufacturers International (CAM-I).
In 1993 Gary received CAM-I’s Robert A. Bonsack Award for Distinguished
Contributions in Advanced Cost Management. Gary’s second book, Activity-
Based Cost Management:Making it Work(New York: McGraw-Hill, 1996), was
judged by the Harvard Business School Press as “read this book first.” His 2001
book,Activity-Based Cost Management:An Executive’s Guide(New York: John
Wiley & Sons, 2001) regularly ranked as the #1 best-seller by book distributors
of over 150 books on the topic.
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viii ABOUT THE AUTHOR
Gary is Certified in Production and Inventory Management (CPIM) by the
American Production and Inventory Control Society (APICS). Gary serves on
several performance management committees, including CAM-I, APICS, the
Supply Chain Council, the Council for Logistics Management (CLM), the Insti-
tute of Management Accountants (IMA), the American Society for Quality
(ASQ), the Society of Manufacturing Engineers (SME), and the American Insti-
tute of CPAs (AICPA). Gary was the coeditor of CAM-I’s 2001 Glossary of
ABC/M Termsand is a member of the Journal of Cost ManagementEditorial Ad-
visory Board. He is an instructor for the Institute of Industrial Engineers (IIE),
the Purchasing Management Association of Canada (PMAC), and the American
Society for Quality (ASQ). Gary can be contacted at [email protected] or
[email protected].
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ABOUT THE WEB SITE
As a purchaser of this book, Performance Management: Finding the Missing
Pieces (to Close the Intelligence Gap), you have access to the supporting Web site:
http://www.wiley.com/go/performance
The Web site contains files for:
Appendix A Performance Management Process Cycle
Appendix B Customer Value Measurement Using Customer Lifetime Value
Appendix C Was the Total Quality Management Movement a Fad?
Appendix D Categorizing Quality Costs: Key to Measuring Progress
Appendix E Rank-Ordered Capital Efficiency of Product and Customer
Combinations
These appendices expand on portions from the book for those who would like a
little more depth on a topic. In the book there are references to the associated ap-
pendix at appropriate location.
Appendix Aexpands on Part Two. It describes a how-to-implement approach
to strategy maps and balanced scorecards. Appendix B expands on a section
from Chapter 17 on customer relationship management. It specifically describes
the emerging measurement concept of customer lifetime value that treats each
customer as if they are a financial investment. Appendixes C and D go into more
detail on material in Chapter 19. Appendix C provides some historical back-
ground on how the “total quality management” movement progressed into six
sigma methodologies. Appendix D describes how to measure the cost of quality.
Finally, Appendix E expands on a more advanced methodology for measuring
changes in economic value as was described in Chapter 20.
The password to enter this site is: management
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