Management And Accounting Web

Clinton, B. D. and H. Ko-Cheng. 1997. JIT and the Balanced Scorecard: Linking manufacturing control to management control. Management Accounting (September): 18-24.

Summary by Ken Wombacher
Master of Accountancy Program
University of South Florida, Fall 2000

Balanced Scorecard Main Page | JIT Main Page

The purpose of this paper is to illustrate how linking the Balanced Scorecard to a JIT manufacturing system can increase the effectiveness of both.

The Problem: After defining the balanced scorecard and just in time manufacturing Clinton states the problem as follows: US companies implemented Japanese JIT systems with only mixed success. Radical changes in the manufacturing process were made, but traditional performance measurement systems were maintained . Result: inconsistent performance evaluation and dysfunctional behavior.

The Solution: Integrating the Balanced Scorecard with the JIT system.

Step 1: Identify Manufacturing Control Activities. Management first formulates a strategic plan. Next the business is subdivided into the various activities that support the plan.

Step 2: Map these activities to their related drivers (metrics). Drivers (metrics) are identified which are used to measure and manage the activity.

Step 3: Time sequence each measure in its linkages to other measures. Identify if the activity is short term, intermediate or long-term. This helps to insure a clear purpose for the activity.

Step 4: Link the metrics together so that they are both reinforcing and supportive of strategic objectives. The value of specific activities can be assessed by linking them all the way from their short-term drivers through their intermediate indicators and ultimately to their long-term validation (see figure 1).

Step 5: Establish a Value-Chain linkage to facilitate an overall management assessment of value creation across functional categories. (See figure 2.) Analysis of value chain allows managers to identify the phase where the primary drivers of results occur.

Figure 1: Time linkages
Short-term Drivers Intermediate Indicators Long-Term Validator
Number of employee complaints Employee Satisfaction Employee Turnover
Number of customer complaints Customer Satisfaction Market Share
Percent of activities non-value added Process Quality Cash flow ROI

Figure 2: Value Chain linkages
Development/Design Production Distribution Service
# of new products Process reliability % On time delivery # of warranty claims


Activity drivers of the JIT system become metrics in the Balanced scorecard. Big picture analysis can be provided by the Balanced scorecard which takes into account the activity linkages, the time linkages and the value chain phases. More relevant performance measures are available to manage the JIT system. Companies can benefit from a systematic way to analyze and control operations in a timely and relevant manner.


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