Balanced Scorecard Approach to Break into a New Market
Southern Gardens Citrus (SGC), located in Clewiston, Florida, currently produces more than 50 percent of the private label, not-from-concentrate orange juice in America. A subsidiary of United States Sugar Corporation, it’s now the world’s largest supplier of 100 percent pure, not-from-concentrate orange juice to the private label industry and to major brands. The company owns more than 2.5 million orange trees, and processes their product in the state’s most modern facility.
In the mid-1990s, SGCwanted to break into the private-label market for not-from-concentrate orange juice. To do so, they needed to tighten operations, reduce product costs and motivate employees to align their performance with the company’s core values. The Balanced Scorecard approach allowed them to carefully monitor their operations, reduce product costs and deliver excellent customer service, resulting in a phenomenal leap from owning no market share to becoming the top supplier of private-label products.
In 1995, SGC was a small business of 150 employees. With a new VP and General Manager taking the helm, it was the right time for the company to establish a strong corporate culture and move towards becoming a more dynamic and responsive organization. The not-from-concentrate orange juice market was crowded with competitors, and SGC wanted to break into the market for private-label product and become a top-rated supplier. To do so, the company needed to keep its product costs low and product quality high while providing service excellence. They needed a framework that would allow them to carefully monitor organization-wide performance, motivate employees to support strategic goals, and uncoveroperational areas requiring improvement.
SGC decided that the Balanced Scorecard approach would allow them to develop the best framework for motivating employeesto support the company’s core values by calibrating employee compensation to measurable achievement in these areas. The Balanced Scorecard would also help them to set ambitious goals and carefully monitor their progress.
SGC developed a tandem Balanced Scorecard approach, with a corporate Scorecard for overall organizational alignment and strategic integrity, and a Bonus Scorecard, which linked employee bonuses to the support and fulfillment of the corporate strategy. Five perspectives were captured in the Scorecards: financial, customer, internal, innovation and learning, and core values. Each of these perspectives was aligned with the company’s strategic goals, each of which was set at a specific number or percentage increase or decrease:
- Increase sales of not-from-concentrate juice.
- Secure a greater portion of fruit supply on a long-term basis.
- Reduce the integrated cost of product
- Continuously improve processes and products, and lower costs.
- Continue to improve HR, technical, and operational skills as a competitive advantage.
SGC organized its employees into 10 operating teams tasked with taking ownership of the Balanced Scorecard elements relevant to their operational area. Teams defined what should be measured in their area, and team managers connected with one another regularly to ensure that area efforts complemented and reinforced each other.
While clear strategic goals and a cross-functional team structure ensured organizational co-ordination and support, the Bonus Scorecard encouraged individual employees to align their efforts with the overall corporate goals by tying compensation into the achievement of those goals. Employees in each organizational area were rewarded with one of three compensation levels according to how well they had met the goals for their area. For instance, those in customer service were expected to measurably contribute to specific departmental targets for loading cycle times, customer satisfaction rates and the percentage of shipments that were shipped within specification. Support for the company’s core values and the employee’s commitment to innovation and learning were also taken into account.
In the six years since implementing the Balanced Scorecard approach, SGC achieved outstanding results. Employees have risen to the challenge, with all major work units reporting the highest measurable levels of adherence to the company’s core values of safety, attitude, teamwork, productivity and quality.
Most impressively, the company has surged ahead as a competitive supplier. Before the company implemented the Scorecard, they supplied none of the not-from-concentrate orange juice to the private label market, and ranked last among suppliers. In the years following Scorecard implementation, SGC grew this area of their business, eventually supplying 60 percent of the private label market and becoming the acknowledged leader among bulk not-from-concentrate suppliers. At the same time, the costs per pound for their juice product have declined steadily from the first year they implemented the Scorecard. The company is now the lowest-cost supplier of not-from-concentrate orange juice in the industry.
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