An Individual Report on Clinton & Ko-Cheng. Jit and the Balanced Scorecard

The Optical Group Ltd, 16 September 2015.

To: The Chief Executive Officer (CEO)

From: Student

Dear CEO,

This report represents the case of applying ‘Balanced Scorecard’ model (BS) in our company. The report follows up on your request of July 09 to examine the positive and negative effects of adopting BS as a management control system in order to support the “Just-in-Time” (JIT) manufacturing system which our company will implement from the next year.

Executive Summary

According to Clinton and Ko-Cheng (1997), transformation traditional manufacturing methods to JIT creates significant impact on the whole company. Therefore, the modernisation of manufacturing processes shall be followed by changes in management control system (MCS). Application JIT principals requires from the MCS to control over as financial as no-financial factors, highly related with company’s goals and strategy, shall provide time perspective. From this perspective, using of BS will help with the problem of low management control, provide reliable tools for performance measurements, support needs to understand success drifters and plane actions as for short as for long run.

Background

Because of the differences between traditional and JIT approaches, performance evaluation methods shall be revised (Clinton & Ko-Cheng, 1997). The traditional system presents the success of a company by using financial measures, however, with JIT non-financial criteria’s are used. That is because JIT sees success as meeting customers’ needs, in time, with right quantity and quality. Moreover, JIT is focused on company goals, strategy and future perspectives, therefore past events are less important.

According to the article, there are three main areas, in which the loss of managerial control is highly possible and new performance measures shall be applied.

Firstly, there are differences in organisation and control of the manufacturing process. Traditionally the process is fixed when it settled up,...