Reengineering

Mariela Alda

Karolina Tyra

Gerald Turner

Jared Gettinger

Ryan Garelick

What is reengineering?

• Improving business processes or activities to remain competitive in a growing competitive world

• Shedding outdated business processes and principles and creating new ones

• Often characterized by rapid, “breakthrough” change, not gradual, incremental change

Why BPR?

• Customers are demanding better services and products

• New technologies like the internet are making businesses more efficient, thereby strengthening competition and the need to improve processes

• The opening of world markets and free trade brings more companies to the marketplace and strengthens competition

Examples of Reengineering

• Ford Motor Company radically changed its accounts payable process and reduced the number of accounts payable clerks by 75%

• Mutual Benefit Life reengineered its insurance application process and increased its productivity by 60%

Seven Principles of Reengineering

• Organize around outcomes, not tasks

• Have those who use the output of the process perform the process

• Include information-processing work into the real work that produces the information

• Treat dispersed resources as if they were centralized

• Link parallel activities instead of integrating their results

• Put the decision point where the work is performed and build control into the process

• Capture information once and at the source

Organize around outcomes not tasks

• Compares responsibility and assigns it to one person (how one person performs all the steps in a process)

• Design that person’s job around an objective or outcome instead of a single task

Have those who use the output of the process perform the process

• Enable individuals who need the results of a process to do it themselves

• As a result, there is little need for the overhead associated with managing the process

Include information-processing work into the real work that produces information

• An organization that produces information should also be able to process it

• Ford’s reengineered accounts payable process now has receiving process information through a database, instead of sending information to accounts payable

Treat dispersed resources as if they were centralized

• Databases, telecommunications networks and standardized processing systems allow companies to control more efficiently decentralized resources

• Hewlett-Packard has separate purchasing departments for its units but coordinates these separate parts with a corporate unit that maintains a shared database with information on each unit’s vendor and performance

Link parallel activities instead of integrating their results

• The firm should have separate units performing the same function

• In essence this fundamental process says to forge the links between parallel functions and coordinate them while their activities are in process rather than after they are completed

Put the decision point where the work is performed and build control into the process

• The entire hierarchical management structure is built on the assumption that people who actually are physically doing the work are unable to monitor and control what they are doing and moreover, lack the knowledge to make decisions about it

• The people who do the work should make the decisions and that the process itself can have built in controls

Capture information once and at the source

• In the old days, information was difficult to transmit and therefore it was collected repeatedly.

• Nowadays, we can store information in databases or collect it in an electronic data interchange

Conclusion

• “The heart of reengineering is the notion of discontinuous thinking; recognizing and breaking away from the outdated rules and fundamental assumptions that underlie operations”

• The legacy left behind from the time of the Industrial Revolution, when work was organized as separate tasks, has ended with the dawn of business process reengineering