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Corporate Performance Management
By David F. Carr
2003-08-13
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Corporate Performance Management - ' REFERENCE' (
Page 2 of 2 ) : Performance Improvement Cycle">
Corporate Performance Management (CPM) is a formal term for the actions most successful companies are already taking. Below, we outline the distinct steps in the CPM life cycle.
Develop strategy; establish metrics.
- Forecast Market to grow 2%; competitors likely to cut prices.
- Goal Grow market share by 5% without hurting profits or quality.
- Budget Reduced by 5% to enable competitive price cuts.
- Tactics Cut manufacturing costs by 9%.
- Metrics Market share, operating costs, manufacturing costs.
Create goals for divisions; develop ways to meet them.
- Goal Reduce costs at factories.
- Programs Overtime Restriction; Early Quality-Assessment.
- Metrics Overtime at each factory, defect rate, cost per unit.
Analyze metrics using a methodology such as Six Sigma, Balanced Scorecard or Activity-Based Costing.
- Status Market share not growing due to slow growth of overall market.
- Outcome Overtime reduction beat plan in first quarter, but defect rate rose and customer satisfaction dipped.
Revise strategy, goals, metrics, then move on to MANAGE.
- Revised Forecast Market to grow 1%.
- Goal Same-grow market share 5% without affecting profits or quality.
- Strategy Balance cost-cutting against quality, customer satisfaction.
- Tactics End restriction on overtime; allow more if necessary to restore product quality; put emphasis on reducing cost of materials.
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