Bpr - Erp Unit 4 - Ppt

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ERP enabled Business Process Re-engineering

• Learning Objectives of the unit : -

• Explain the role of Business Process Reengineering (BPR) within the organization

• Understand the origins and key characteristics of BPR

• ERP & BPR, Work Flow Management.

• FIVE STAGE – AS IS / TO BE ANALYSIS.

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What is BPR ?

• Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed.

(Hammer & Champy, 1993)

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• Customers (know what they want and are willing to pay for it)

• Competition (Continuous increase will result in changes to price, quality, selective service, and delivery)

• Change (continues to occur in people & culture, organizational structures, policies & procedures, and technology)

The Need for BPR

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The Need for BPR

• Techniques lag behind technology (Technologically capable, but not functionally operational)

• Significant gap between the actual and desired results, creating a business Problem.

• Fragmented piecemeal systems (focus on vertical functions, with the existence of redundancies of effort and actions).

• Integration across departmental and organizational boundaries (information and operations are needed).

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BPR is Not?

• Automation

• Downsizing

• Outsourcing

• Process improvement projects / activities

• Continuous Improvement Activity

• Reorganizing

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BPR Versus Process Simplification

Process Reengineering

Radical TransformationVision-Led

Change Attitudes & BehaviorsDirector-Led

Limited Number of Initiatives

Process Simplification

Incremental ChangeProcess-Led

Assume Attitudes & BehaviorsManagement-Led

Various Simultaneous Projects

(Source Coulson-Thomas, 1992)

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BPR Versus Continuous Improvement

Process Reengineering

Radical TransformationPeople & Technology Focus

High InvestmentRebuild

Champion Driven

Continuous Improvement

Incremental ChangePeople Focus

Low InvestmentImprove ExistingWork Unit Driven

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4-

T Q M and Reengineering

• Rate of change

• TQM: continuous improvement

• Reengineering: dramatic improvement

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TQM versus Reengineering

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What is a Process?

• A specific ordering of work activities across time and space, with a beginning, an end, and clearly identified inputs and outputs: a structure for action.

(Davenport, 1993)

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What is a Business Process???

• A collection of activities that take one or more inputs and turn that into a product that adds value to a customer

• A group of logically related tasks that use the firm's resources to provide customer-oriented results in support of the organization's objectives

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Why Organizations Don’t Reengineer?

• Complacency

• Political Resistance

• New Developments

• Fear of Unknown and Failure

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Performance

• BPR seeks improvements of

– Cost– Quality– Service– Speed

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Key Characteristics

• Systems Philosophy

• Global Perspective on Business Processes

• Radical Improvement

• Integrated Change

• People Centred

• Focus on End-Customers

• Process-Based

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Key Characteristics

• Several jobs are combined into one

• Employees are empowered to make decisions

• Steps in business process: natural order

• Process may have multiple versions

• Work is performed where it makes the most sense

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Key Characteristics

• Controls, checks, other non-value-added work is minimized

• Reconciliation is minimized - minimize external contact points

• Hybrid centralized / decentralized operation is used

• A single point of contact is provided for the customer

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TransformationInputs Outputs

Feedback

Environment

Systems Perspective

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Process Based

• Added Value– BPR Initiatives must add-value over and above the

existing process

• Customer-Led – BPR Initiatives must meet the needs of the customer

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Radical Improvement

• Sustainable– Process improvements need to become firmly rooted

within the organization

• Stepped Approach– Process improvements will not happen over night

they need to be gradually introduced– Also assists the acceptance by staff of the change

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Integrated Change

• Viable Solutions– Process improvements must be viable and practical

• Balanced Improvements– Process improvements must be realistic

• Enterprise integration– Departments are consolidated– Several jobs are combined into one job

– \

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People-Centred

• Business Understanding

• Empowerment & Participation

• Organizational Culture• Worker empowerment

– There is both horizontal and vertical reorganization– Handoffs are eliminated– There are fewer rules and less coordination is

required

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Focus on End-Customers

• Process improvements must relate to the needs of the organization and be relevant to the end-customers to which they are designed to serve

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Re-engineering

• Redesign of processes (Fundamental change in business processes)

• From mass production to mass customization (Mass production of the same products --- Mass production of different products)

• Cycle time reduction (Change in the time it takes to complete a process from start to end; time can provide competitive advantage

• Restructuring organizations (May need to restructure the entire organization to reap the benefits of BPR)

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BPR Symbols

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Business Process Flowchart Symbols

An Activity

A Document

A Decision

Data (input as outputs)

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A Predefined Process

The Start of a Process

The End of a Process

Representing a Relation

Start

End

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Continuation of the process at the same page at an equal symbol with the same number. Usedwhen a relation arrow crosses another relation arrow

Off-Page Connector - Process will continue on the next page

Integration Relation - A relation to another module is identified and described

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Data Flowchart Symbols

Manual Data Item

A Database File

Representing a Relation

Continuation

Off-Page Connector

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Rules For Data Symbols

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Start

End

Generate Purchase

Order

OK? Yes

No

Symbol used to identify the start of a business process

Activities must be described as a verb

Decisions have only two possibilities (Yes & No)

Crossing lines are not allowed

If one side of the decision has no further processes defined this symbol has to be used

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PurchaseOrder

Posting of Bonus

I

A

Continuation symbol within the same number must be present twice on the same page

Name the document

Off- Page Connector is used to continue a process at the next page or to let the process to flow over at the previous to the next page. If more than one is needed use A, B, C, D …

Name the data

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Sub-ProcessDelivery

BC 4.04

Predefined Processes always have a relation to level and stream by a number in the line below a sub-process description

A predefined process must be described in a different flowchart. To make the relation clear between the predefined process and the belonging flowchart a unique alpha numeric number should be assigned to this predefined process.

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Version Management

• For different versions of a business process or data flow some mandatory information must be on the flowchart. – Name of the business process– Unique number of the business process– Revision number– Date of last change– Author– Page number with total pages

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Implementing a BPR Strategy

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Key Steps To BPR

Initiation - Select The Processes

Documenting the processes

Understand The Current Process – AS IS

Develop & Communicate Vision Of Improved TO BE Processes

IMPLEMENTATION of ERP enabled BPR

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Initiation - Select the Process

• Crucial Tasks

– Persuasive – Case for Action – WHY BPR ?– Select the Processes to be Reengineered– Sponsorship / budget established– Appoint the Project Team to Lead the Reengineering

Initiative committed (full time Core team with extended team for support).

– Develop Project scope, plan and milestones– A communication plan – information flow

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Select the Process

• Review Business Strategy and Customer Requirements

• Select Core Processes

• Understand Customer Needs

• Don’t Assume Anything

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Appoint the Process Team

• Appoint BPR Champion

• Identify Process Owners

• Establish Executive Improvement Team

• Provide Training to Executive Team

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Core Skills Required

• Capacity to view the organization as a whole

• Ability to focus on end-customers

• Ability to assume individual and collective responsibility

• Ability to challenge fundamental assumptions

• Courage to deliver and venture into unknown areas

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Documenting the Current Processes

• Document a Process using Michael Porter’s Value Chain

Michael E. Porter

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The Porter’s Value Chain

Supportactivities

Primary activitiesInbound logistics Materials receiving, storing, and distribution to manufacturing premisesOperations Transforming inputs into finished products.Outbound logistics Storing and distributing productsMarketing and Sales Promotions and sales forceService Service to maintain or enhance product valueCorporate infrastructure Support of entire value chain, e.g. general management planning,

financing, accounting, legal services, government affairs, and QMHuman resources management Recruiting, hiring, training, and developmentTechnology Development Improving product and manufacturing processProcurement Purchasing input

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Competitive Advantage

Inbound Logistics

SIS: Automated

Just-in-Time Warehousin

g

Administrative Coordination and Support ServicesSIS: Collaborative Work Systems

Human Resources ManagementSIS: Employee Skills Database Systems

Technology DevelopmentSIS: Computer-Aided Engineering and Design

Operations

SIS: Computer-

Aided Flexible

Manufac-turing

Outbound Logistics

SIS: Online Point-of-Sale and

Order Processing

Marketing and Sales

SIS: Interactive Targeted

Marketing

Customer Service

SIS: Help Desk Expert

System

Procurement of ResourcesSIS: Electronic Data Interchange with Suppliers

SupportProcesses

PrimaryBusinessProcesses

Porter’s Value Chain

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Primary Activities: • Inbound Logistics: ‘Inbound’ activities to receive, store and

distribute inputs to the product, such as material handling, inventory control, warehousing and contact with suppliers.

• Operations: Production activities to create the product such as machining, packaging, printing and testing.

• Outbound Logistics: ‘Outbound’ activities to store and distribute the product to customers, including warehousing, order processing and vehicle scheduling.

• Marketing and Sales: Activities associated with providing a means by which buyers can purchase the product and be included to do so (advertising, selling, pricing, merchandising and promotion).

• Service: Activities for providing service or maintaining product value, including installation and training.

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Support Activities:

• Procurement: Purchasing input.

• Technology Development: Not just machines and processes but also expertise, procedures and systems.

• Human Resource Management: Activities involved in recruiting, training and staff development.

• Infrastructure: General management, finance, planning and quality assurance. Infrastructure supports the whole value chain.

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SUPPLIERVALUECHAINS

FIRMVALUECHAIN

CHANNELVALUECHAINS

BUYERVALUECHAINS

Porter’s Value SystemPorter’s Value System

In the “value system” supplier, firm, distributor, and buyer value chains overlap.

The supplier’s outbound logistics is the firm’s inbound logistics. TheDistributor’s inbound logistics is the firm’s outbound logistics, etc.

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IT managers care about these models -

The models provide a “map” to help managers

•Find where they are •Find where they should go

You are here

Goal

The road to competitive advantage

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Stage 3 – Focus on AS – IS Processes

• Develop a Process Overview• Clearly define the process

– Mission– Scope– Boundaries

• Set business and customer measurements • Understand customers expectations from the process

(staff including process team) • Carefully resolve any inconsistencies

– Existing -- New Process

– Ideal -- Realistic Process

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• Clearly Identify Improvement Opportunities– Quality

– Rework

• Document the Process (PROCESS MAPS)– Cost

– Time

– Value Data

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• PROCESS ASSESSMENT

LOOK FOR ELIMINATING REDUNDANCY, BUREAUCRACY, NON-VALUE ADDING ACTIVITIES, ERRORS / DEFECTS, REDUCE CYCLE TIME,

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Develop & Communicate Vision of Improved Process

• Communicate with all employees so that they are aware of the vision of the future

• Always provide information on the progress of the BPR initiative - good and bad.

• Demonstrate assurance that the BPR initiative is both necessary and properly managed

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Develop & Communicate Vision of Improved Process

• Promote individual development by indicating options that are available

• Indicate actions required and those responsible

• Tackle any actions that need resolution

• Direct communication to reinforce new patterns of desired behavior

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Identify Action Plan

• Develop an Action Plan

• Appoint Process Owners

• Simplify the Process to Reduce Process Time

• Remove any Bureaucracy that may hinder implementation

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Identify Action Plan

• Remove no-value-added activities

• Standardize Process and Automate Where Possible

• Up-grade Equipment

• Plan/schedule the changes

• Construct in-house metrics and targets

• Introduce and firmly establish a feedback system

• Audit, Audit, Audit

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IMPLEMENT Plan

• Qualify/certify the process

• Perform periodic qualification reviews

• Define and eliminate process problems

• Evaluate the change impact on the business and on customers

• Benchmark the process

• Provide advanced team training

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ERP & BPR

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Benefits From ERP

• Assists the Implementation of Business Processes– Access to Global Best Practices for various

processes which are proven and standardized.– Provides integrated approach enhancing the focus on

customer requirements / fulfillment– Improve Operational Efficiency– Coordinate with Vendors & Customers in the Process

Chain– ERP & BPR go hand in hand. ERP to be used to

Innovate.

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ERP IN MODELLING BUSINESS PROCESSES

• Focus– Business Processes– Process Redesign– Process Implementation

Integration of all functions / across divisions

Information flow – accurate & on-time

MIS reports for facilitating decision making/actions

Used to automate transactional and laborious business processes.

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WORK FLOW MANAGEMENT SYSTEM IN ERP

• Work Flow (Routing) system in ERP is an automated organizational process facilitating communication of work content, coordination between departments / people and control of processes.

• WFM integrates :

– Technology

– Organization / divisions

– Methodology (processes)

– Collaboration of Business processes.

– Communication within / outside using SCM / CRM etc.,

– Human interaction reqd. to meet customer requirements.

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TASKS of the Re-engineering team

• 1) determine measures of performance• 2) install measures of performance• 3) delineate entire existing process in all its

gory detail• 4) perform process value analysis and

activity-based costing• 5) benchmark processes by comparison with

other processes

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Cont’d

• 6) design re-invented process• 7) simulate re-invented process• 8) prepare report with recommendations• 9) install re-invented process• 10) measure improvements

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BPR Challenges

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Continuous Evaluation

• Is reengineering truly transformational?

• Will reengineering improve customer relations?

• Has reengineering cut across the organization?

• Is information technology playing an integral role in the reengineering solution?

• Does it hurt?

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Common Problems

• Process Simplification is Common - True BPR is Not

• Desire to Change Not Strong Enough

• Starting Point is the Existing Process & Not a Blank Slate

• Commitment to Existing Processes Too Strong

• Quick Fix Approach

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Common Problems with BPR

• Process under review too big or too small

• Reliance on existing process too strong

• The Costs of the Change Seem Too Large

• BPR Isolated Activity not Aligned to the Business Objectives

• Allocation of Resources

• Poor Timing and Planning

• Keeping the Team and Organization on Target

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Managerial Issues

• Ethical issues (BPR projects may lead to the need to lay-off, retrain, or transfer employees)

• BPR implementation (Few organization-wide BPR effort)

• Incremental improvement programs• BPR tools (Often uses existing tools rather than

creation of new tools)• Role of IT (IT should be a supportive, not lead role in

BPR projects)• Failures (Big projects tend to increase failure rates)

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Summary

• Reengineering is a fundamental rethinking and redesign of business processes to achieve dramatic improvements

• BPR has emerged from key management traditions such as scientific management and systems thinking

• Rules and symbols play an integral part of all BPR initiatives

Bpr - Erp Unit 4 - Ppt

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