Business Process Reengineering

Concepts and Case Study

University of Wollongong, Dubai
2
nd
Jan.2002
Sunil Thawani
ASQ Country Councilor, UAE
thawanis@hotmail.com
Suppliers
Customers
Products
Services
Economic
Conditions
Competition
Regulatory
Requirements
Public
opinion
Environmental
Concerns
Enterprise Model
Organizational Objectives
and Goals
Strategies, Plans
and Policies
Processes
Procedures
Tools and
Technologies
Products
Organization
Services
Relationship Of Processes To The
Relationship Of Processes To The
Business
Business
Operating Objectives and Strategies
Processes
Subprocess
Procedures & Rules
Tools and
Technologies
Haphazard Process Flow between Functions
Haphazard Process Flow between Functions
Business
Management
Customer
Needs
Marketing
Engineering Operations Distribution
Finance
Customer
Satisfaction
Process Model
Process Model
Supplier
Customer
Work Activity
(Value added
over time)
Tasks, People, Facilities
Technology, Rules,
Repeatable, Controllable
Input Output
Processes in Traditional Organization
Processes in Traditional Organization
Orphans
Fragmented
Invisible
Unmanaged
Process Characteristics
Process Characteristics
Defy organization boundaries (cross functional)
Result oriented
They are at the very heart of every enterprise to
create value for customers
What Is Reengineering ?
Reengineering Background
Adam Smiths principle of Division of Labor, which
breaks down work into piecemeal tasks (220 year old).
Todays business built around Smiths central idea.
Next evolutionary step came in early 20th century - by
Henry Ford & Alfred Sloan.
Ford made jobs infinitely simpler - but made the
process of coordinating the people & combining the
results of their tasks far more complex.
Reengineering Background
.
Sloan created smaller, decentralized divisions that
managers could oversee by monitoring production and
financial number
Next evolutionary step after World War II to 1960s -
enormous economic expansion, determined what
business to be in, capital allocations, returns etc.
Today old ways of doing business simply wont work
anymore.
We are in 21st century with companies designed
during 19th century.
What Is BPR?
What Is BPR?
BPR means starting all over, from scratch i.e.
If I were recreating this company today given
what I know & given current technology, what
would it look like?.
BPR is about rethinking how work is done.
Design of work must be based not on
hierarchical management and the
specialization of labour but on end-to-end
processes and the creation of value for the
customer. - M.H. & J.C
Definitions of Reengineering
Definitions of Reengineering
Reengineering is the fundamental
rethinking & radical redesign of business
processes to achieve dramatic improvements
in critical, contemporary measures
performance , such as cost, quality, service,
& speed.
MH & JC
Expected Process Improvement Results
Cycle time reduction
Cost reduction
Quality improvement
Customer satisfaction
Components of Process Reengineering
Components of Process Reengineering
Business
Processes Business
Processes
People
and
Organization
Information
and
Technology
Performance Improvement Approaches
Performance Improvement Approaches
Quality
Team
Group
Issues
Process Improvement
Tasks/Flows/Tools
Techniques
Measures
Skills
Process
Reengineering
Processes
People
Organization
IT
Business
Reengineering
Products/Markets
Scope in value chain
Core Competencies
Partners/Linkages
Problems Processes Major Processes Entire Business
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Small-------------------------------Change Scope----------------------------Large
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BPR Methodology Vs. Traditional
Traditional
Nominal improvement
Internal orientation
Focus on particular
problems
Task/ functional optimization
Analysis by experts
Redesign by outsiders
BPR
Commitment to significant
change
Customer needs driven
Focus on key processes
Redesign entire process
across functional
Analysis by participants
Redesign by participants
Customer-based process
measures
Why Companies Reengineer?
Why Companies Reengineer?
Top four motivations
Top four motivations
0% 10%20%30%40%50%60%70%80%
To reverse declines in market share/profits
To build closer relationships with customers/suppliers
To get products/services to market faster
To fight increasing competition
Which Processes are being Reengineered ?
Which Processes are being Reengineered ?
0% 10% 20% 30% 40% 50% 60% 70% 80%
Industrial Companies
PRODUCTION
DISTRIBUTION/ LOGISTICS
CUSTOMER ORDERS
PROCUREMENT / MATERIAL MANAGEMENT
FINANICAL MANAGEMENT
MARKETING AND SALES
HUMAN RESOURCES
OTHER
Which Processes are being Reengineered ?
Which Processes are being Reengineered ?
0% 10% 20% 30% 40% 50% 60% 70%
Service Companies
FINANCIAL MANAGEMENT
MARKETING AND SALES
CUSTOMER ORDERS
DISTRIBUTION/LOGISTICS
PRODUCTION
PROCUREMENT/MATERIALS MANAGEMENT
OTHER
HUMAN RESOURCES
MIXED RESULTS
MIXED RESULTS
0% 10% 20% 30% 40% 50% 60% 70% 80%
Percentage of Companies Meeting Specific Objectives
Consolidated Product Lines
Consolidated Sales Lines
Outsourcing Functions
Offering New Products/ Services
Growing Markets
Speeding Products/ Services to Market
Managing Inventory Better
Eliminating Functions
Increasing Profitability
Eliminating Low Value Work
Cutting Costs
Increasing Productivity
Streamlining Business Processes
Reducing Head Counts
REENGINEERING WHOLE COMPANIES
Single Division
22%
Entire
Company
34%
Several
Divisions
44%
One
Proces
s
7%
Two to Four
Processes
38%
Five or more
Processes
55%
No. of Divisions Reengineered No. of Processes Reengineered
BPR Example
BPR Example

Ford Motor Company

Ford Motor Company

Before BPR
Before BPR
PURCHASE
DEPT.
ACCOUNTS
PAYBALE
VENDOR
P.O.
INVOICE
PAYMENT
G.R.N.
500 Head Count
Accounts Payable To Match 14 Items
Between P.O., G.R.N. & Invoice
RECEIPT
DEPT.
P.O.
BPR Example
BPR Example

Ford Motor Company

Ford Motor Company

After BPR
After BPR
User
VENDOR
P.O.
GOODS
PAYMENT
Automatic matching of 3 items (part no.,Unit of measure, supplier code)
between P.O. & G.R.N;
Faster, simpler, more accurate & efficient process;
75% reduction in head count
Invoice less processing
Stores/ User
Finance
DATABASE
BPR Example
BPR Example

Ford Motor Company

Ford Motor Company

Rules
Rules
1. We pay when we issue GRN
2. We pay when we receive goods
3. We pay when we use goods
What to Reengineer ?
What to Reengineer ?
Critical Assessment of Processes
Select processes for Reengineering
Selecting Critical Processes
Selecting Critical Processes
Dysfunction : Process deepest in trouble (Fragmented ,
inefficient , etc. )
Greatest impact on customer
Feasibility : Most susceptible to successful redesign
( High cost , wide scope )
Impacts - Cycle Time, Cost, Process Value, Key Issue, Supplier
performance & beats competition.
Planning for BPR
Planning for BPR
Selection of Process & Why this process ?
Process Scope ?
Team Leader ?
Team Members ?
Reengineering Study
Reengineering Study
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Roles
Roles
Team Members Represent entire scope of
process, knowledgeable about it, willing to
challenge, Team players, IT Participation
Team Leader Take team members along, ensure
project moves forward, resolve conflicting issues
Sponsor Responsible for successful
implementation of the project
Facilitator
Process Scope
Process Scope
Process has a definite start and end point
E.g. From Prepare Purchase Requisition to Receive
item or store the item or issue item or pay bills
Should be neither too short or too long
Guideline Include planning, Supplier & Customer
Thank You