Sanjivani College of Engineering, Kopargaon

Department of MBA

205 Enterprise Performance Management

Unit No.1 Conceptual Framework of
Performance Management

Presented By:
Prof.Pooja.S.Kawale
MBA(Financial Management), B.com(Cost & Works
Accounting)
Assistant Professor, Dept. of MBA
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 Contents
• Performance Management- Concepts, Components
• Performance, Productivity and Efficiency
• Financial Performance Analysis
• Supply Chain Management
• Customer Relationship Management (CRM)
• Customer Profitability Analysis
• Total Productivity Management
• Total Quality Management- PDCA

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 Enterprise Performance Management
• Enterprise Performance Management (EPM) is a set of processes and
methodologies that organizations use to manage and improve their performance,
specifically in the areas of financial management, operational efficiency, and
strategic planning.
• EPM involves a range of activities, including planning, budgeting, forecasting,
monitoring, and reporting. It is typically carried out by a team of professionals,
including finance and accounting professionals, business analysts, and executives.
• The goal of EPM is to help organizations align their resources and activities with
their strategic objectives, and to enable them to make informed decisions about
resource allocation, investment, and risk management. EPM also helps
organizations to track progress against their goals, identify areas for improvement,
and continuously optimize their performance.
• EPM systems typically involve the use of software tools and technologies to
facilitate data collection, analysis, and reporting, and may also involve the use of
business intelligence and analytics tools to support decision-making.

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 Performance Management- Concepts, Components

• Performance management is a process that organizations use to align their resources

and activities with their strategic objectives, and to continuously monitor and improve
their performance. It involves a range of activities, including goal setting, performance
measurement, feedback and coaching, and performance evaluation. Here are some
key concepts and components of performance management.
• Goal setting: Performance management starts with setting clear and specific goals for
employees or teams. These goals should be aligned with the organization's overall
objectives and should be measurable and achievable.
• Performance measurement: Once goals have been set, performance must be
measured and tracked against those goals. This may involve collecting and analyzing
data on key performance indicators (KPIs) or other metrics that are relevant to the
organization's objectives.
• Feedback and coaching: Providing regular feedback and coaching to employees is an
essential component of performance management. This helps employees understand
how they are performing against their goals and where they need to improve.

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 Performance Management- Concepts, Components

• Performance evaluation: At regular intervals, performance should be evaluated

against the goals that were set. This evaluation may involve formal performance
reviews or other types of assessment, such as 360-degree feedback.
• Continuous improvement: Performance management is a continuous process of
improvement. Organizations should use the data and feedback they collect to identify
areas where they can improve performance and make changes to their processes,
policies, or procedures to drive better results.
• Performance-based rewards: Rewarding employees for good performance is an
important part of performance management. This may involve bonuses, promotions,
or other types of incentives that are tied to achieving specific goals or KPIs.

Overall, performance management is a holistic approach to managing and improving

organizational performance, and it involves a range of different concepts and components
that must work together to drive the results .

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 Performance, Productivity and Efficiency

Performance, productivity, and efficiency are all related concepts that are important for
organizations to understand and optimize in order to achieve their goals. Here is a brief
explanation of each.
• Performance: Performance refers to the extent to which an individual or organization
achieves its objectives or goals. Performance can be measured in a variety of ways,
depending on the specific objectives or goals in question. For example, performance
could be measured by revenue growth, customer satisfaction, or employee engagement.
• Productivity: Productivity refers to the amount of output that an individual or
organization produces in relation to the amount of input that is required to produce that
output. Productivity can be measured in terms of time, money, or other resources, and is
often used as a measure of efficiency .
• Efficiency: Efficiency refers to the extent to which an individual or organization uses
its resources (such as time, money, or labor) to achieve its objectives. A highly efficient
organization or individual can achieve its objectives with minimal waste or excess
effort, and is able to optimize the use of its resources to achieve the best possible
results.

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 Performance, Productivity and Efficiency
Performance, productivity, and efficiency are all related concepts that are
important for organizations to understand and optimize in order to achieve
their goals. Here is a brief explanation of each.
Performance: Performance refers to the extent to which an individual or organization
achieves its objectives or goals. Performance can be measured in a variety of ways,
depending on the specific objectives or goals in question. For example, performance
could be measured by revenue growth, customer satisfaction, or employee engagement.
Productivity: Productivity refers to the amount of output that an individual or
organization produces in relation to the amount of input that is required to produce that
output. Productivity can be measured in terms of time, money, or other resources, and it
is often used as a measure of efficiency.
Efficiency: Efficiency refers to the extent to which an individual or organization uses
its resources (such as time, money, or labor) to achieve its objectives. A highly efficient
organization or individual can achieve its objectives with minimal waste or excess
effort, and is able to optimize the use of its resources to achieve the best possible
results.

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• In practice, performance, productivity, and efficiency are all closely related, and
organizations that are able to optimize all three are likely to be more successful in
achieving their goals. By setting clear objectives and goals, measuring performance
against those goals, and continually improving productivity and efficiency,
organizations can achieve better results and improve their overall performance over

time.

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 Financial Performance Analysis
• Financial performance analysis is a key component of enterprise performance analysis
that focuses on evaluating an organization's financial health and performance. It involves
the analysis of financial statements, such as the income statement, balance sheet, and
cash flow statement, in order to assess an organization's profitability, liquidity, solvency,
and overall financial health.
• The process of financial performance analysis typically involves a range of techniques
and tools, such as ratio analysis, trend analysis, and benchmarking, that help to identify
strengths, weaknesses, and areas for improvement in an organization's financial
performance. Financial performance analysis can help to answer important questions
such as.
• How profitable is the organization?
• How well is the organization managing its cash flow?
• How much debt does the organization have, and how is it being managed?
• How efficient is the organization at generating revenue and managing expenses?
By conducting financial performance analysis, organizations can gain valuable insights into
their financial performance and identify areas where they can improve their financial
management practices. This can help to support better decision-making, improve financial
planning and budgeting, and ultimately lead to better overall performance and success.
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 Supply Chain Management
Supply chain management (SCM) is the process of managing the flow of goods, services,
and information from the point of origin to the point of consumption. In terms of enterprise
performance management, effective supply chain management is critical to the overall
success of an organization, as it can impact a wide range of key performance indicators
(KPIs), such as revenue, cost, quality, and customer satisfaction.
• The goal of supply chain management is to optimize the flow of materials and
information throughout the supply chain, with the aim of improving efficiency, reducing
costs, and enhancing the overall customer experience. SCM involves a range of
activities, such as planning, sourcing, production, logistics, and distribution, and it often
involves collaboration with suppliers, partners, and customers to ensure that the supply
chain is aligned with the organization's strategic objectives.

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 Supply Chain Management
Effective supply chain management can have a range of benefits for
organizations, including;
• Reduced costs: By optimizing the supply chain, organizations can reduce costs
associated with production, transportation, and inventory management.
• Improved efficiency: Supply chain management can help to streamline
processes, reduce waste, and improve overall efficiency.
• Enhanced quality: Effective supply chain management can help to ensure that
products and services meet the required quality standards, which can improve
customer satisfaction and reduce the risk of product recalls or other quality
issues.
• Increased agility: An optimized supply chain can help organizations to respond
quickly to changes in demand, supply, or market conditions, which can help to
improve overall agility and competitiveness.
Overall, effective supply chain management is an important component of enterprise
performance management, and organizations that are able to optimize their supply chain
processes are likely to see improved performance across a range of key metrics.

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 Customer Relationship Management (CRM)

• Customer Relationship Management (CRM) is a strategy for managing and analyzing

interactions and relationships with customers and potential customers. In terms of
enterprise performance management, CRM is an important component of a customer-
focused business strategy that aims to improve customer satisfaction, loyalty, and
retention, while also driving revenue growth and profitability.
• The goal of CRM is to improve the overall customer experience by providing
personalized, timely, and relevant communications and services across all customer
touchpoints, such as sales, marketing, customer service, and support. This requires a
customer-centric approach to business operations, with a focus on understanding
customer needs and preferences, anticipating their needs, and delivering personalized
experiences that meet or exceed their expectations.

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 Customer Relationship Management (CRM)

Effective CRM can have a range of benefits for organizations, including:

Increased customer satisfaction and loyalty: By delivering personalized
experiences and building strong relationships with customers, organizations
can improve customer satisfaction and loyalty, which can lead to repeat
business, positive word-of-mouth, and increased revenue.

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Customer Relationship Management (CRM)

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 Customer Profitability Analysis
• Customer profitability analysis (CPA) is a tool used in enterprise performance management to
determine the profitability of a company's individual customers or customer segments. It involves
evaluating the revenue generated from a particular customer or customer group and comparing it to
the costs associated with serving that customer.
• The goal of CPA is to identify which customers or customer segments are most profitable and which
ones are not. This information can then be used to make strategic decisions about marketing, sales,
and service delivery to optimize profits and increase the overall financial performance of the
company
• CPA involves analyzing various factors such as customer acquisition costs, product or service
pricing, sales volume, customer retention rates, and marketing expenses. It helps businesses
understand how their resources are allocated and how they can improve the efficiency of their
customer acquisition and retention processes.

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 Total Productivity Management
Total Productivity Management (TPM) is a comprehensive approach to enterprise performance
management that aims to optimize the productivity and efficiency of an organization as a whole. It
involves improving the performance of all aspects of the business, including
• production processes,
• supply chain management,
• customer service, and
• administrative functions.
TPM is focused on the continuous improvement of all processes within an organization, and it
emphasizes the importance of involving all employees in the improvement process.
The goal of TPM is to create a culture of continuous improvement and to empower employees to
identify and eliminate waste, reduce costs, and improve efficiency.
TPM is based on the idea that productivity and profitability are closely related and that improving
productivity can lead to improved financial performance. To achieve this, TPM incorporates a range of
tools and techniques, including Lean manufacturing, Six Sigma, and Kaizen.
One of the key benefits of the TPM is that it promotes a holistic approach to performance management,
rather than focusing on individual departments or functions in isolation. By optimizing the performance
of the entire organization, TPM can help business achieve long- term success and sustainable growth

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Lean manufacturing

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 Six Sigma

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 Kaizen

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Total Quality Management

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EPM Model

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 Assignment Questions
1. Explain the concepts and components of performance management. How can effective performance
management contribute to organizational success?
2. Discuss the differences between performance, productivity, and efficiency. What are some strategies
organizations can use to improve each of these measures?
3. Describe the key components of financial performance analysis. How can financial analysis be used
to evaluate an organization's performance and identify areas for improvement?
4. Analyze the importance of supply chain management in today's business environment. What are
some best practices for effective supply chain management?
5. Discuss the concept of customer relationship management (CRM). What are some benefits of
effective CRM, and how can organizations use CRM to improve customer satisfaction and loyalty?
6. Conduct a customer profitability analysis for a hypothetical organization. What are the key drivers
of profitability, and how can organizations use this information to improve their bottom line?
7. Explain the principles and practices of Total Productivity Management (TPM). How can TPM help
organizations improve their productivity and efficiency?
8. Describe the Plan-Do-Check-Act (PDCA) cycle of Total Quality Management (TQM). How can
organizations use this model to continuously improve their processes and products?
9. Explain the Enterprise Performance Management (EPM) model. How can the EPM model be used to
align an organization's strategy, planning, and performance management processes?
10. Evaluate the benefits and challenges of implementing an EPM system in a large organization. What
are some best practices for successful EPM implementation and adoption?
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Thank You
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