PQCDSM Vs Balanced Scorecard: Evaluating the best option for Manufacturing organizations (2024)

As a performance management consultant, I help my client organizations design and implement a performance eco system that aligns their operational and strategic objectives and ensures continuous improvement. One of the common questions I get from my clients is how to choose between PQCDSM and the Balanced Scorecard approach for measuring and managing their performance? Which one is more suitable? They also want to know if they can use both approaches simultaneously, especially in their manufacturing organisation.

In this article, I will compare and contrast these two frameworks and offer some insights basis my experience on their suitability for implementation in manufacturing organizations, and how they can be integrated in a complementary way.

Performance management is a crucial aspect of any organization, particularly in the manufacturing sector, where the quality and efficiency of manufacturing processes and products are vital for achieving the organizational goals.

There are different approaches to measuring and improving performance, and one of the most popular ones is the Balanced Scorecard (BSC). The Balanced Scorecard is a strategic management tool that aligns the vision, strategy and measures of an organization across four perspectives: financial, customer, internal process, and learning and growth. The Balanced Scorecard is more comprehensive and aims to balance the short-term and long-term objectives, as well as the financial and non-financial (qualitative and quantitative) measures of performance.

The other popular approach used across manufacturing industry is PQCDSM. It is an acronym stands for Productivity, Quality, Cost, Delivery, Safety and Morale. The framework is more operational and tactical and focuses mainly on key performance indicators (KPIs) that are quantitative, simple and relevant for measuring the manufacturing process and outcomes.

However, there are some differences between the two approaches that may affect their suitability for different contexts.

PQCDSM is more focused on operational excellence and continuous improvement, while Balanced Scorecard is more strategic and balanced and harmonized.

PQCDSM uses mainly quantitative indicators that are easy to measure and monitor, while Balanced Scorecard incorporates both quantitative and qualitative measures that reflect the organization's vision and mission.

PQCDSM is more suitable for process-oriented organizations that have standardized and stable operations, while Balanced Scorecard is more adaptable for dynamic and complex environments that require innovation and learning.

Both approaches have their advantages and disadvantages. PQCDSM is more specific and easier to communicate and implement for shop floor manufacturing process, but it may not capture or neglect the broader aspects of organizational performance such as customer satisfaction, innovation and employee engagement and culture etc.

On the other hand, the Balanced Scorecard is more holistic and strategic, It requires more data collection and analysis, as well as a clear alignment of the organization's vision, mission and strategy with its internal processes and external stakeholders. But it may be more complex and difficult to implement and communicate for the manufacturing process.

Hence, there is no definitive answer to which approach is better or if they can be used together. The choice is not universal. but rather context-specific and objective-oriented. Each approach has its strengths and limitations, and each can serve different purposes for different organizations. Some organizations may prefer to use PQCDSM for its simplicity, practicality and flexibility, while others may opt for Balanced Scorecard for its comprehensiveness, strategic alignment and long-term orientation. However, some general guidelines are:

- If organisation operates in a dynamic and complex environment, has a clear vision and strategy, and wants to align its performance with them, the Balanced Scorecard may be more suitable.

- If the organisation is process driven, has stable and standard operations and a clear focus on operational excellence, improving its manufacturing efficiency and effectiveness, PQCDSM may be more suitable.

it may be possible to implement both PQCDSM and the Balanced Scorecard in the same organisation, if they are integrated and aligned with each other. For example, PQCDSM can be used as a subset of the internal process perspective of the Balanced Scorecard, or as a complementary tool to monitor the operational performance. However, this requires careful planning and coordination to avoid confusion, duplication or conflict among the different measures and initiatives. Many manufacturing organizations in India have successfully combined the PQCDSM and Balanced scorecard framework to leverage the advantages of both the approaches.

In conclusion, PQCDSM and the Balanced Scorecard are two different approaches to performance management that can be applied in manufacturing organizations. However, there is no one-size fits all solution and the suitability for implementation depends on various factors such as context and objectives, maturity of processes and resources, willingness to focus the performance of intangible assets, ability to generate, interpretate and usages of the data and information and performance culture in each organisation.