General United Brad Lawrence, CEO of General United, a conglomerate consisting of a dozen companies in different industries, was wondering whether cycle time should be included in the Balanced Scorecards of his operating companies. Currently, the senior managers of each company were building Balanced Scorecards that would be used to assess their strategies and to measure their performance.

One company, GND Machinery, manufactured machinery for packaging companies.

GND's customers, the packaging companies, often had difficulty in estimating the demand from their customers, so they greatly valued suppliers who could provide equipment with short lead times. Lawrence felt that if GND Machinery could reduce the time it took to produce machinery to fulfill customer orders, then sales and market share would increase, perhaps dramatically.

At the other extreme, General's defense company, Bradley Aerospace, produced long-lead-time products and systems for government contracts. According to the contract terms, Bradley got no benefit from early delivery, and the contracts allowed for reimbursement of Bradley's inventory holding costs. ·

A third General United company, Harvest Unlimited, produced agricultural machinery.

Harvest's customers generally placed orders only at the beginning of the planting season, a two-month period during the spring. Currently, the lead time to produce 'Harvest's products was well in excess of two months, so virtually all production was based on sales forecasts, attempting to anticipate the volume and mix of customer orders. Often the forecasts were inaccurate, leading to high inventory and obsolescence of unordered machines, as well as shortages when demand for particular machines greatly exceeded the forecast.

If the production cycle time could be reduced below the two-month ordering window, Harvest could shift some of its production schedule from producing based on forecasts to producing based on actual customer orders.

Required What role should lead time play in the Balanced Scorecards of the three operating companies?