Kasper Industries produces custom molds that are used by producers of molded products (e.g., ski boots and snowboards). Many of its customers use just-in-time (JIT) manufacturing, and on-time delivery of the molds is critical because production is halted if the molds are not available when needed. In the past managers (including Maria Patterson, the vice president of operations) at Kasper have been rewarded based on financial performance. This has led to actions that are not consistent with maximizing shareholder value. Near the end of each quarter, Maria evaluates expected profit in relation to the company's profit goal. If expected profit is below the goal, she rushes into production customer orders that have a high profit margin, even if the orders are not due for two or three weeks. Thus, deliveries of high-profit-margin jobs are often early and deliveries of low-profit-margin jobs (displaced in Kasper's production schedule) are often Late. The company has not performed well on a dimension of performance that is critical for long-run success.
Required:
a. A consultant to Kasper Industries has suggested that the company use a balanced scorecard. Suggest a customer measure and an internal process measure that will help the company track its performance with respect to on-time delivery and other improvements that meet the needs of customers.
b. Suppose that Maria Patterson continues to manage production to meet short-run profit goals. Explain how her actions will be detected by the customer and internal process measures you suggested in part a.