ACCY 304: Homework for Session 19 due by 8AM on 11/2 (Th) John Drake / 8am In this session, we are learning about Balanced Scorecard (BSC), which was one of the most innovative thoughts in accounting in the past century. (Actually, R. Kaplan and D. Norton, the inventor of Balanced Scorecard, were awarded with the Notable Contribution to Management Accounting Award, and R. Kapan was inducted to the Hall of Fame in Accounting thanks to BSC.) After carefully reading the assigned part of the Bloomfield text as in the syllabus, practice constructing a balanced scorecard for Triple S-C Co. described below. In designing its balanced scorecard, list the four perspectives of BSC in the order described in the text, because the order of the perspectives matters. Also, try to ensure that the linkage among each perspective of the balanced scorecard you design makes senses, such that the TA grading your work can easily understand that your own balanced scorecard corresponds to important processes that Triple S-C should execute to implement its strategy. You may want to consider including 2-4 measures for each perspective. I would like to encourage you: (1) to firmly understand what BSC is about from the assigned article (i.e., the concepts of each perspective; the concepts of objectives, measures, targets, and initiatives in BSC) and (2) to try building a BSC that can align performance evaluation measures along with the firm's strategy. (For brevity, we do not include targets or initiatives in this HW.) Feel free to discuss with your colleagues about this HW, but never copy others' work. Synopsis: Traditionally, steel purchasers fall into one of two groups. Very large customers such as automobile and appliance manufacturers fall into the first category. These customers purchase steel from mills and have it delivered to processors for cutting to specification. They might also buy direct from one or more of the approximately 3,500 steel processors or from wholesalers (normally called service centers). In all three instances, the cut steel is delivered to the customer, often on a just-in-time basis. The second group comprises smaller-volume firms such as metal stampers and fabricators. Firms that make equipment, agricultural tools, and heating and air conditioning units also fall into the second group. These small to midsized companies, which purchase steel as both contract customers and spot buyers, but in relatively small quantities, also tend to have extensive needs for special alloy steels and odd sizes. For the past decade, the variety of the steel demanded has steadily trended up, while the average lot size has trended down. These trends, which partly reflect increased customization and the growth of the just-in-time philosophy, are expected to continue, if not accelerate. Triple S-C's founder, Remus Illies, worked at a major steel manufacturer (and was considered a rising star until he quit). Remus realized that the bulk of the distribution industry revolved around coordinating action. Managing information flow is key. Remus therefore set up Triple S-C, which does not own any warehouses or processing facilities. Instead, Triple S-C is a coordinator that buys the steel, has it processed, and has it delivered to the customer. In the process, Triple S-C might deal with as many as six separate entities. Triple S-C maintains an extensive list of firms in the steel supply chain. It has also negotiated prices and terms with many long-standing partners.
ACCY 304: Homework for Session 19 due by 8AM on 11/2 (Th) Because of its virtual nature and ability to put a deal together on the spot, Triple S-C has convinced its customers about the ease of ordering, processing, and delivery. While Triple S-C accepts orders by phone or fax, it encourages customers to order via electronic data interchange (EDI) or through the Web. Slowly but surely, Triple S-C has convinced its customers about the ease of ordering via the Web and the security of the transaction. Once logged in, customers can configure products on-line and immediately receive multiple quotes with different volume and service parameters. Order status is continually updated and accessible to customers on-line. Upon execution, Triple S-C automatically debits the customer's bank account per agreed terms. Triple S-C's advantage comes from leveraging technology to combine the orders of multiple customers to generate the volumes needed for discounts. The technology also allows Triple S-C to coordinate more effectively with processors to reduce scrap and waste. The firm also seeks to continually expand its list of processors to increase the flexibility it offers end customers. In this fashion, Triple S-C tries to build its ability to combine orders from two different customers into one processing order, which reduces the time and waste involved in loading a multitonne coil. The firm also uses its extensive database to identify trends, which enables it to lock in both supplies of alloy and steel and processing time at favorable rates. Remus's long-term goals are to deal in value-added products such as alloy steels rather than commoditized products such as carbon steel. Currently, Triple S-C operates out of a single office in Prague and employs just under 40 people. Its primary market area is Central Europe, although Remus is already thinking of westward expansion. Not surprisingly, Triple S-C's primary target market comprises small to medium-sized firms that lack the volume needed to deal with the steel mills directly and that need specialized processing. Perspectives: Objectives: Measures: Financial To deal with value-added products such as alloy steels rather than commoditized products such as carbon steel 1. Revenue of alloy steels in the upcoming years 2. Rate of growth over the years for demand from alloy steels Customer Expanding market to westward 1. Number of offices in westward 2. The amount of customers from westward Internal Processes To reduce the time and waste involved in loading a multitonne coil 1. The time it took to load multitonne coil 2. The amount of waste from loading multitonne coil
ACCY 304: Homework for Session 19 due by 8AM on 11/2 (Th) Learning and Growth Expand its list of processes to increase the flexibility it offers end customers 1. Customer satisfaction from S-C's products and services 2. Revenue growth from market expansion and the increased effectiveness of internal processes
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