Business process reengineering
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Transcript of Business process reengineering
Business Process Reengineering
Presentation by:Eesha Mehta
Business Process Reengineering
Process
a collection of activities that takes one or more kinds of inputs and creates an output that is of value to a customer.
Business Process
a group of logically related tasks using the firm's resources to provide customer-oriented results to support organisation's objectives.
Definition of Process
A process is simply a structured, measured set of activities designed to produce a specific output for a particular customers or market.
-- Thomas Davenport Characteristics:
A specific sequencing of work activities across time and place A beginning and an end Clearly defined inputs and outputs Customer-focus How the work is done Process ownership Measurable and meaningful performance
Processes Are Often Cross Functional Areas“Manage the white space on the organization chart!”
M arketing& S ales
P urchase P roduc tion D is tribution A ccounting
C E O
Supplier
Customer/MarketsNeeds
Value-addedProducts/Services toCustomers"We cannot improve or measure the performance of a
hierarchical structure. But, we can increase output quality and customer satisfaction, as well as reduce the cost and cycle time of a process to improve it."
What is Business Process Reengineering? An organizational change method used to redesign an organization
to drive improved efficiency, effectiveness, and economy. Organizational change tools may include:
Activity based costing analysis Baselining and benchmarking studies Business case analysis Functionality assessment Industrial engineering techniques Organization analysis Productivity assessment Workforce analysis Others, as needed (e.g., human capital tools)
Business Process Reengineering Business Process Reengineering DefinitionDefinition BPR first introduced in 1990 in a Harvard Business BPR first introduced in 1990 in a Harvard Business
Review article by Michael Hammer: Review article by Michael Hammer: Reengineering Work: Don't Automate, Obliterate. Reengineering Work: Don't Automate, Obliterate.
Hammer/ChampyHammer/Champy Reengineering the Corporation (1993)Reengineering the Corporation (1993)
Provided this definition:Provided this definition: ““Reengineering is the Reengineering is the fundamental fundamental rethinking and rethinking and radicalradical
redesign of redesign of business processesbusiness processes to achieve to achieve dramaticdramatic improvements in critical, contemporary measures of improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed.”performance, such as cost, quality, service, and speed.”
Business Process Reengineering
“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.”
Key Words
Fundamental Why do we do what we do? Ignore what is and concentrate on what should be. Need to understand why an organization does what it does – Need to understand why an organization does what it does –
question all of the rules and assumptions that exist question all of the rules and assumptions that exist Radical
Business reinvention vs. business improvement Radical redesign means disregarding all existing structures and Radical redesign means disregarding all existing structures and
procedures, and inventing completely new ways of procedures, and inventing completely new ways of accomplishing work. Reengineering is about business accomplishing work. Reengineering is about business reinvention, begins with no assumptions and takes nothing for reinvention, begins with no assumptions and takes nothing for granted. granted.
Key Words
Dramatic Reengineering should be brought in “when a need
exits for heavy blasting.” Companies in deep trouble. Companies that see trouble coming. Companies that are in peak condition.
Not looking for marginal or incremental improvements Not looking for marginal or incremental improvements or modificationor modification
Goal is dramatic improvements in performance. Goal is dramatic improvements in performance.
Key Words
Business Process a collection of activities that takes one or
more kinds of inputs and creates an output that is of value to a customer.
Focus on the way the organization adds value Focus on the way the organization adds value – through cross-functional business – through cross-functional business processesprocesses
Move away from function view; task based Move away from function view; task based thinking thinking
GOAL OF REENGINEERING
Reengineering is typically chartered in response to a breakthrough goal for rapid, dramatic improvement in process performance.
Continuous improvement activitiespeak; time to reengineer process
BreakthroughImprovement
Continuous improvementrefines the breakthrough
Competitive Forces Model
Threat of newmarket
entrants
Bargainingpower ofsuppliers
Bargainingpower of
customers
Threat ofsubstitute
products &services
The firmIntra-
industrycompetitors
Why BPR Is Necessary
The Virtual Organization: Three C’s Driving Change Customers take charge.
Mass market v. a “market of one” Backward integration Informed consumers Demanding Sophistication Changing Needs
Competition intensifies. More and different kinds Local Global Big is not better Technology changes the nature of competition.
Why BPR Is Necessary
Change becomes constant. reduced product cycles reduced time to develop new products more environment scanning Technology Customer Preferences
“Companies created to thrive on mass production, stability, and growth can’t be fixed to succeed in [such] a world.”
Integrate people, technology, & organizational culture to Respond to rapidly changing technical & business environment and customer’s needs to achieve Big performance gains
Customer Demands
expect us to know everything to make the right decisions to do it right now to do it with less resources to make no mistakes expect to be fully informed
Four Revolutions Affecting Business Today
NewCompetitors
New Rules ofCompetition
NewTechnologies
NewWork Force
The C’s related toOrganization Re-engineering Projects
The 3C’s of organization Re-engineering:
Customers Competition Change
The 4C’s of effective teams:
Commitment Cooperation Communication Contribution
Some of the BPR Objectives
Improve Efficiency e.g reduce time to market, provide quicker response to customers
Increase Effectiveness e.g deliver higher quality
Achieve Cost Saving in the longer run Provide more Meaningful work for employees Increase Flexibility and Adaptability to change Enable new business Growth
Spectrum of Change
Automation
Rationalization of
procedures
Reengineering
Paradigm shift
Spectrum of Change
Automation- refers to computerizing processes to speed up the existing tasks, improves efficiency and effectiveness.
Rationalization of Procedures-refers to streamlining of standard operating procedures, eliminating obvious bottlenecks, so that automation makes operating procedures more efficient,improves efficiency and effectiveness.
Spectrum of Change
Business Process Reengineering- refers to radical redesign of business processes.
Aims at eliminating repetitive, paper-intensive, bureaucratic
tasks reducing costs significantly improving product/service quality.
Paradigm Shift-refers to a more radical form of change where the nature of business and the nature of the organization is questioned, improves strategic standing of the organization.
RISKS & REWARDS
BPR is Not?
BPR may sometimes be mistaken for the following five tools:
1. Automation is an automatic, as opposed to human, operation or control of a process, equipment or a system; or the techniques and equipment used to achieve this. Automation is most often applied to computer (or at least electronic) control of a manufacturing process.
2. Downsizing is the reduction of expenditures in order to become financial stable. Those expenditures could include but are not limited to: the total number of employees at a company, retirements, or spin-off companies.
3. Outsourcing involves paying another company to provide the services a company might otherwise have employed its own staff to perform. Outsourcing is readily seen in the software development sector.
4. Continuous improvement emphasizes small and measurable refinements to an organization's current processes and systems. Continuous improvements’ origins were derived from total quality management (TQM) and Six Sigma.
Reengineering & Continuous Improvement--Similarities
16
Reengineering Continuous ImprovementSimilaritiesBasis of analysis Process ProcessPerformance measurement Rigorous RigorousOrganizational change Significant SignificantBehavioral change Significant SignificantTime investment Substantial Substantial
17
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 controlType of change Cultural and structural Cultural
Key Steps
Select The Process & Appoint Process Team
Understand The Current Process
Develop & Communicate Vision Of Improved Process
Identify Action Plan
Execute Plan
1. Select the Process & Appoint Process Team Two Crucial Tasks
Select The Process to be Reengineered
Appoint the Process Team to Lead the Reengineering Initiative
Select the Process
Review Business Strategy and Customer Requirements
Select Core Processes
Understand Customer Needs
Don’t Assume Anything
Select the Process
Select Correct Path for Change
Remember Assumptions can Hide Failures
Competition and Choice to Go Elsewhere
Ask - Questionnaires, Meetings, Focus Groups
Appoint the Process Team
Appoint BPR Champion
Identify Process Owners
Establish Executive Improvement Team
Provide Training to Executive Team
Core Skills Required
Capacity to view the organization as a whole
Ability to focus on end-customers Ability to challenge fundamental
assumptions Courage to deliver and venture into
unknown areas Ability to assume individual and collective
responsibility
Use of Consultants
Used to generate internal capacity Appropriate when a implementation is
needed quickly Ensure that adequate consultation is
sought from staff so that the initiative is organization-led and not consultant-driven
Control should never be handed over to the consultant
2. Understand the Current Process Develop a Process Overview Clearly define the process
MissionScopeBoundaries
Set business and customer measurements Understand customers expectations from the
process (staff including process team)
2. Understand the Current Process Clearly Identify Improvement Opportunities
Quality Rework
Document the Process Cost Time Value Data
Carefully resolve any inconsistencies Existing -- New Process Ideal -- Realistic Process
3. 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
4. Identify Action Plan
Develop an Improvement Plan Appoint Process Owners Simplify the Process to Reduce Process
Time Remove any Bureaucracy that may hinder
implementation Remove no-value-added activities
4. Identify Action Plan
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
5. Execute 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
Common Problems with BPR
Process Simplification is Common - True BPR is Not
Desire to Change Not Strong Enough Start Point the Existing Process Not a Blank
Slate Commitment to Existing Processes Too
StrongREMEMBER - “If it isn’t broke …”
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
How to Avoid BPR Failure
To avoid failure of the BPR process it is recommended that: BPR must be accompanied by strategic planning, which
addresses leveraging Information technology as a competitive tool.
Place the customer at the centre of the reengineering effort, concentrate on reengineering fragmented processes that lead to delays or other negative impacts on customer service.
BPR must be "owned" throughout the organization, not driven by a group of outside consultants.
Case teams must be comprised of both managers as well as those who will actually do the work.
How to Avoid BPR Failure
The Information technology group should be an integral part of the reengineering team from the start.
BPR must be sponsored by top executives, who are not about to leave or retire.
BPR projects must have a timetable, ideally between three to six months, so that the organization is not in a state of "limbo".
BPR must not ignore corporate culture and must emphasize constant communication and feedback.
Case Example: Kodak In 1987
Kodak’s arch-rival, Fuji came up with a new 35mm single-use camera
Kodak has no competitive offering Kodak’s Traditional Product Development
ProcessSlow: would take 70 weeks to produce a
rival to Fuji’s camera! Result: the new process, “Concurrent
Engineering”Reduce turnaround time to 38 weeks
Case Example: Kodak Key Redesign Strategy
Apply innovative use of CAD/CAM + integrated product design database
Allow engineer to design at computer workstations
Database collect each engineer’s work and combines into overall design
Each morning, problems are resolved immediately
Manufacturing can begin tooling design just 10 weeks into product design instead of 28 weeks in the past
Ford Motor CompanyFord Motor CompanyAccounts Payable functionAccounts Payable function500 people500 peopleMost work on mistakes betweenMost work on mistakes between
PurchaseOrders
ReceivingDocuments Invoices
Ford (cont)Ford (cont)
Ford (cont)Ford (cont)
WHY DOES REENGINEERING FAIL?
Trying to fix a process instead of changing it Ignoring everything except the process design Quitting too early Reengineering from the bottom up Neglecting people’s values and beliefs Being willing to settle for minor results Assigning someone who does not understand
reengineering to lead the effort
FOUR STAGES OF CHANGE
Shock
Anger
Denial
Acceptance
Think about the transition from shock to acceptance and how an organization may overcome them.
Shock- usually the first reaction once a change has been announced. " Where in the world did this come from?" "Why?"
Anger- if change is viewed in a negative way, people may react in anger. They blame other persons and begin to not accept or support the change. "It wont work and I will not accept this." This can be very damaging to a process and needs to confronted.
Denial- this person begins to make excuses as to why he or she should not be held accountable for anything that may go wrong. " Dont blame me if this doesn't work, it wasn't my idea."
Acceptance- this is the goal an organization needs to get all employees to. This person has accepted the change and begins to invision his or her role in the new situation. "How can I help my organization in this process."
HOW TO IMPLEMENT
3 steps to transition of change
1. Discontinuation of the old way of doing business
2. Migration
3. Starting the new way of doing business
Conclusion
BPR is a multi-discipline approach for strategic change
Methodology provides missing “how to” that must follow the “why”
BPR must be managed as a project BPR must be owned by the organization, not
driven by consultants BPR requires constant communication and
feedback