A Box Scorecard was prepared for a value stream:

Line Item DescriptionLast WeekThis Week

$(1/7/20$X$1)$Planned Future

State $(12/31/20$X$1)$Operational$$Units sold per person$150162175$On$-$time delivery$80\%85\%96\%$Dock$-$to$-$dock days$1098$First$-$time through$70\%73\%85\%$Average product cost$$100$$$99$$$97$Capacity$$Productive$35\%36\%37\%$Nonproductive$60\%67\%45\%$Available$15\%17\%38\%$Financial$$Weekly sales$$1,200,000$$$1,237,500$$$1,400,000$Weekly material cost$$480,000$$$495,000$$$570,000$Weekly conversion cost$$420,000$$$420,360$$$460,000$Weekly value$-$stream profit$$300,000$$$325,000$$$450,000$ROS$25\%26\%32\%$

Required:

$1.$ How many nonfinancial measures are used to evaluate performance?

$1.$ Seven: Units sold per person, on$-$time delivery, Dock$-$to$-$dock days, First$-$time through, Productive, Nonproductive, and Available.

$2.$ Seven: Units sold per person, on$-$time delivery, Dock$-$to$-$dock days, First$-$time through, Productive, Nonproductive, and Average product cost.

$3.$ Four: Units sold per person, on$-$time delivery, Dock$-$to$-$dock days, First$-$time through.

$4.$ Seven: Units sold per person, on$-$time delivery, Dock$-$to$-$dock days, weekly sales, Productive, Nonproductive, and Weekly conversion cost.

$1234$

$2.$ Classify the operational measures as time$-$based, quality$-$based, or efficiency$-$based. Discuss the significance of each category for lean manufacturing. If there is no effect select "Not applicable".

Operational measureAnswer$1.$ On$-$time delivery

Efficiency basedQuality basedTime basedNot applicable

$2.$ Dock$-$to$-$dock days

Efficiency basedQuality basedTime basedNot applicable

$3.$ Average product cost

Efficiency basedQuality basedTime basedNot applicable

$4.$ units sold per person

Efficiency basedQuality basedTime basedNot applicable

$5.$ First$-$time through

Efficiency basedQuality basedTime basedNot applicable

$6.$ Productive

Efficiency basedQuality basedTime basedNot applicable

$7.$ Weekly sales

Efficiency basedQuality basedTime basedNot applicable

Lean firms strive to supply the right quantity at the right price at the right quality at the time the customer wants the product. To supply the quantity needed at the time needed mandates

shorterlonger

cycle times. Quality mandates zero defects, and lower prices mean that a lean firm must reduce its costs and become more efficient.

$3.$ What is the role of the Planned Future State column?

The Planned Future State column sets targets for the various

financial and non financial measuresfinancial measuresnon financial measures

and thus encourages continuous and innovative improvements.

$4.$ Discuss the capacity category and explain the meaning of each measure and its significance.

The value stream $($processes within the value stream$)$ possesses a certain amount of capacity based on resources employed. Value$-$added use of the resources is productive use; using resources to produce waste is nonproductive use. Thus,

all nonvalue$-$added activitiesvalue added activities

are nonproductive use of value$-$stream capacity. As

wastecost

is reduced, resources become available for other productive uses.

$5.$ Discuss the relationship between the financial measures and the measures in the operational and capacity categories.

As quality, time, and efficiency increase, we would eventually expect all of this to convert into

financial gainswasteproduction

$.$ Typically, what happens is that elimination of waste is first expressed as available capacity. Financial gains are realized when the available capacity is either reduced by

reducingincreasing

resources needed or they are used elsewhere for other productive purposes.

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