Linking strategic objectives with results was one of the goals behind Hudson’s Bay Company’s (HBC) implementation of a balanced scorecard and the strategic management software to support it, said one of the retailer’s metrics experts.
In a presentation at BetterManagement Live, a conference for company decision-makers, Craig Stevens, HBC’s Toronto-based logistics services director, detailed the daunting challenge the company had faced when it came to interpreting its data.
“We were inundated with data. There was tonnes of it but we couldn’t take much action on it,” he told the audience. “We had legacy systems that spit out forests of paper…but most of that data was just ‘nice to know,'” he said. Bits and pieces of data related to picking, shipping and packing were being recorded without anyone really linking them together to find how they were related to the overall corporate strategy. “They were informative but…they didn’t really call you to action.”
Stevens told ComputerWorld Canada in a separate interview that the firm’s balanced scorecard efforts “really kicked off” when his boss raised the question of how to make the HBC Logistics strategy match up with the metrics they were already getting.
Stevens’ boss had a binder that contained all the strategies for HBC Logistics – which included getting an accurate view of how the people, processes, services and financials of the company were related to one another. But there was nothing being done to connect the metrics.
“The problem was that the binder was a piece of shelfware half the staff hadn’t seen yet,” Stevens said. “There was no relation between all the metrics we were already getting, and the numbers in that binder…We wanted to take what was the binder and turn it into a dynamic tool – translate it into a living, breathing document that would be updated on a consistent basis.”
HBC had previously derived its metrics in a “functionally focused” way, Stevens said. The logistics side of the business was divided into three functions: import, warehouse and transportation. There were metrics for how each of these functions was doing – for example, the warehouse side had metrics for when the items were placed on warehouse shelves or packed for shipping.
The challenge was to move to a more “process-oriented” approach to metrics, Stevens said. That meant finding a way of measuring everything involved in replenishing an order in one of HBC’s stores, from start to finish – following the process of how the stock on the shelf translates back through the different functions at HBC.
Process-focused metrics required that HBC be able to measure what happens at the touch points between the different functions – looking at what goes on during the “handoff” of both the physical product and the information behind it, when the product moves from the warehouse to transportation, or from transportation to the store shelves, he added.
A few years back, HBC had already implemented activity-based analytic management software from ABC Technologies, which Cary, N.C.-based business intelligence vendor SAS Institute Inc. acquired last year. SAS was already going to fold the functionalities of ABC’s software in with its own products, so HBC decided to leverage the tools it already had in place by implementing SAS’s Strategic Performance Management (SPM) software. “SAS said to us, ‘Why don’t you migrate to the SPM tool, since it’s what ABC will ultimately look like?'” Stevens explained.
SPM allowed HBC to calculate the value of intangible assets like employee morale and technology, and correlate those measures with tangible information such as financial results, Stevens said. The software also helped link the balanced scorecard’s financial, customer, process and people-related perspectives into a multi-dimensional view that showed how HBC’s strategy was affecting the final results.
In his presentation Stevens said HBC has not formally documented the benefits and results, “but we have seen dramatic results in our financials.”