Business Process Re-engineering

Global Management Solutions

Learning outcome todayBusiness Process Re-engineering Definition, need and scope

Definition Business process reengineering (BPR) is the

analysis and redesign of workflow within an organization 

Business process reengineering transforms an organization in ways that directly affect performance.

It is an approach for redesigning the way work is done to better support the organization's mission and vision.

Contd…BPR aimed to help organizations

fundamentally rethink how they do their work in order to improve customer service, cut operational costs, and become world-class competitors.

It leverages technology and empowers people.

Top management commitment is required for BPR

Business process re-engineering-Objective

Aims at:- eliminating repetitive, paper-intensive,

bureaucratic tasks-reducing costs significantly-improving product/service quality.

BPR is Not?BPR may sometimes be mistaken for the

following tools:

1. Automation 2. Downsizing3. Outsourcing4. Continuous improvement

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Reengineering & Continuous Improvement--Differences

Reengineering Continuous ImprovementDifferencesLevel of change Radical IncrementalStarting point Clean slate Existing processParticipation Top-down Bottom-upTypical scope Broad, cross-functional Narrow, within functionsRisk High ModeratePrimary enabler Information technology Statistical control

What is a Business Process?A business process is an activity or set of

activities that will accomplish a specific organizational goal.

E.g.: Procurement, product development, customer service and sales.

The business process is divided into a no. of tasks, which often fall under different department.

Why Reengineer?Customers

DemandingChanging Needs

CompetitionLocalGlobal

Issues- BPRFollowing issues are considered the biggest

obstacles in the success of reengineering projects:

1) Lack of sustained management commitment and leadership

2) Unrealistic scope and expectations3) Resistance to change4) Not helping people think in terms of

business processes.5) Neglecting to align measures and rewards

Aspects of BPRRevolutionizing the way they were doing

business Radically redesigning or reengineering key

business activitiesExploiting IT to redesign the process

Development Methodology for BPR1- Develop vision and objectives2- Identify process for redesign3- Understand and measure existing

process4- Identify IT levels5- Pilot\ trial new process6- Develop supply solution7- Make new process operational8- On going continuous improvement

Hierarchy of Business Processes

Raw material

purchasingAccounts receivable

Facility Planning

Specify requireme

ntsSelect vendor

Issue Purchase

orderMake

payment

Secure approval

Verify need

Obtain estimate

Verify budget

Justify request

Business processes

Sub proces

ses

Tasks

Categorization of BPR work Activities Value adding activities : Refers to work or

activity for which the customer is willing to pay

Non-value adding activities: Refers to business activities that create no value for customers but are required in order to get the value adding done.

for example: reporting, checking, controlling etc.

Waste: Refers to the work that neither adds nor enables value either to the customer or to the organization.

AdvantagesBPR directly addresses non-value adding

activities in the form of administrative overheads.

BPR directly addresses business processes which are customer centric and non function centric

BPR offers four R’s to the organization, namely:- Revitalize- Restructure- Reposition- Renew

Implementation Cost Its is moderate to High at the initial stage Then low once it is implemented Initial expenses mainly go towards data

collection and analysis activities.The second major cost is towards

consultant’s fees, expenses relating to IT and related issues.

Implementation TimeGenerally long Typically, it may take 12-18 months for

large companies 60-80% of the time is taken to rationalize

the processes.The actual re-engineering takes just 20-

40% of the time.

Impact on OrganizationImpact of BPR is quite high in terms of : - Profitability - Customer Service

- Reduction in inventory - Reduction in

administrative overheads

BPR drastically improves the competitive

positioning of the company

Applicability/Adaptability