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What is the Balanced Scorecard?

In a previous post, I warned against being overly focused on financials to drive a business. The Balanced Scorecard is a tool to widen the scope of performance measurement and improve strategic insight. Like many business frameworks, the Balanced Scorecard is broken into four quadrants.

  1. Financial or Stewardship - this perspective includes an organization's financial performance and the effective use of resources. Goals and measurements in this area are typically the most developed of the four.

  2. Customer and Stakeholder - this perspective considers the value being provided to the customers or stakeholders the organization aims to serve. Metrics may include customer retention and customer satisfaction such as Net Promoter Score.

  3. Internal Process - this perspective is where Supply Chain Professionals directly deal with on an operational level. It is concerned with the efficiency of the organization and the quality of the product or service being provided.

  4. Organization Capacity (Learning & Growth) - looks into human capital, infrastructure, technology, culture, and other factors that enable the organization to meet its demands and improve upon or make breakthroughs in its performance.

For each of these perspectives, you should define specific goals and metrics that are well-understood and accountable by the entire organization. Managers tend to focus on a specific area while different areas of the organization are interdependent. Metrics have a strong psychological impact on the organization as Peter Drucker's famous quote "What gets measured get managed..." indicates. As a result, it is critical that what is measured is well aligned with strategic goals. Breaking function silos and strategic thinking are important themes in supply chain management.

For more information on the Balanced Scorecard visit


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