Bottle-necks exist in any business. The case study below suggests an approach for dealing with the performance bottle-necks from the view point of the performance and Key Performance Indicators.
Case study details
Company background: Customs Broker Service Provider receives merchandise in the warehouse, inspects the merchandise, does the classification process, prepares the customs paperwork, pays duties, and sends it to the border crossing.
Goal of measurement: measure the time frame for each part of the process and generate KPIs so the company can improve the total transit time.
Required measure: time needed to process documents for customs clearance.
1. Let’s assume that there is a “bottleneck” part in the process. E.g. the part where business is limited in resources or where productivity of the unit is limited. In this particular case it might be something related to bureaucracy rather that to company’s own business.
2. The total performance of the system will depends on performance of the “bottleneck,” e.g. the business cannot perform better than the bottleneck part is performing.
3. A tricky situation here is that business should keep the performance of the parts before the bottleneck low (!), e.g. the part before the bottleneck should create results according to the speed that the bottleneck part can process these results, not faster. Otherwise business will face additional fees because of over production.
4. The business needs to improve total transit time, which in this case will depend a lot on the bottleneck element. It doesn’t make sense to improve performance of the other parts unless your bottleneck element is performing badly.
I would suggest to start with 1-2 KPIs for the bottleneck only!
Some typical KPIs that one can start with are:
- On-time delivery, %
- Total transit time
- Total costs
- Custom documentation acceptance rate, %
How to find the bottleneck in the business?
Draw the model of the business or business process by dividing it into linked blocks;
The bottleneck might be:
- The most time consuming part (if your goal is to reduce time); or
- Part with fixed performance (government officials)
Try playing with the job amount, try simulating the situation as if the business would need to process 100 clients, not 10. What will prevent you from doing this? Answering these questions will help you to find the bottleneck.
How can BSC Designer help?
With BSC Designer software it is possible to visualize business processes (including those related to the bottlenecks) as well as introduce required KPIs and align them with the visualized process.
- Access templates. Sign-up with a free account at BSC Designer for immediate access to 23 scorecard templates, including Customs Broker KPIs discussed in this article.
- Master skills. Check out free video tutorial for the Balanced Scorecard. Master your strategy planning and execution skills with Strategy Execution training.
- Automate. Learn what Balanced Scorecard software is and how it can make your life easier by automating strategy execution, KPIs, and strategy maps.