Peach Steel Company has been profitably making steel siding for industrial buildings, but recently their sales have shrunk as customers are looking for a supplier who can provide a broader range of products. In order to survive, the company management must come up with a new strategy for increasing sales and returning to profitability. The new plan is to reduce the company's focus on being a low-cost, high-volume producer and place a higher value on "manufacturing flexibility" where they make a wider variety of products in smaller batches. ? One required improvement will be the ability to switch between one paint color and another. The average time to clean the machine and start a new color is 4 hours. Peach Steel must be able to make this change quickly because their ability to deliver products to customers on-time depends on the quick changeover. ? Peach Steel's product line must expand with new specialty items. They must become the supplier that can provide all of the steel products needed by customers so they won't have to work with multiple suppliers. ? Peach Steel's manufacturing processes must be fine-tuned to reduce waste. Their yield (tons of quality product/total tons processed) must be high or their direct materials cost will increase to unprofitable levels. Rather than continuing to focus on measuring the volume of steel produced per machine-hour, the new focus of Peach Steel will be just-in-time deliveries of smaller quantities of a wide range of steel construction products. The plan is to reduce the time from when a customer places an order to when the order is delivered and to expand steel construction products offered. If those two items can be accomplished, then existing customers will buy more products (increasing sales) and Peach Steel will win new customers. If Peach Steel can successfully become a one-stop, dependable, topquality shop, then customers will be willing to pay a higher price for the products. With the significant changes, there will have to be significant re-training of both factory/production and office/sales staff. As part of this training, management wants to introduce a Balanced Scorecard to help employees understand the new strategic plan, how they fit into the plan, and what their focus should be. Required: Using the list of key performance indicators (performance measures), construct a balanced scorecard for Peach Steel Company following the example provided in the assignment on Blackboard, which is slightly different from the example in your text.

1. Set up the four perspectives.

2. Arrange the KPIs within the relevant perspective.

3. Use arrows to show cause-and-effect links. Remember that these links can cross categories.

4. Indicate with a + or - whether the KPI should increase or decrease to indicate improvement.

5. Indicate whether each KPI is a lead indicator or lag indicator.

? Average change over time

? Average manufacturing yield

? Contribution margin per ton

? Customer satisfaction with breadth of product offerings

? Number of different steel products produced

? Number of factory/production employees trained in new strategy

? Number of new customers acquired

? Number of office/sales employees trained in new strategy

? Time to fill an order

? Sales

EXHIBIT 11-5 A Possible Strategy at Jaguar and the Balanced Scorecard Financial Residual income + Contribution margin per car Customer Number of cars sold Customer surveys: Satisfaction with + options available Internal Business Processes Number of Time to install options available an option Learning and Growth Employee skills in installing options +