The QFD-based Decision-making Approach for Strategic BPR
Yonghua Zhou Yuliu Chen
Depamnent of Automation, Tsinghua University
Beijing 100084, P. R. China
Abstract
Quality function deploymm utilizes the house of quality to
translate the voice of customers into product design and
manufacturing requirements. In this paper, the modified
house of quality is presented for the purpose of
decision-making of reengineering objectives. The chance
constraint programming model is developed to determine the
minimal striving largeCS to realize the business strategy. The
genetic algorithm is employed to solve the chance constraint
programming problem The 0-1 integer programming model
based on the modified house of quality is derived to make the
top-level decision-making strategy take both satisfying the
requiremenb of external customen and settling the internal
problems into acwunt. The case study demonstrates the
detailed application of the systematic decision-making
methodology.
1 Introduction
Reengineering business process using advanced information
technology is a very challenging task to improve production
efficiency for small and medium-size enterprises (SMEs).
However, an enterprise would not invest on BPR and CIM
only based on confidence [I]. There should be convincing
data to justify an inveshllent decision. BPR is the
fundamental rethinking and radical redesign of business
process to achieve dramatic improvemens in critical,
contemporary measures of performance, such as wst, quality,
service and speed [Z]. Reengineering fustly needs to find out
existing problem and contraventions through modeling and
analyzing. After deliberation, the concerted conclusion
should be reached by leaden that those problem and
contraventions must be tackled. Consequently, BPR is
0 2002 IEEE SMC
"PI03
undertaken from bottom to top level, fmm small to large
scale under the guidance of global and holistic planning.
Ultimately, the computektion of business processes and
systems integration are realized [3]. The problem lies in that
where BPR starts by what reasons and with what results.
Solving those chronically accumulated problems and
conmventions requires taking advantage of advanced
information technology. An enterprise could not reengineer
only for reeigineering at all costs only for plotting good
reputation. To the best of the authors' knowledge, the
quantitative methodology for strategically reengineering has
been discussed rarely in literature. It is necessary to establish
the relationship between reengineering objectives and
effectiveness, costs and benefits. This paper will present a
quantitative model based on the modified house of quality
for the strategic decision-making of reengineering objectives.
The model is an integrative approach to satisfy external
customer requirements and solve internal problems and
contraventions, and thus the reengineering decision is not
only customer-oriented but also profitable, not only
effect-distinctive but also risk-preventative.
2 The Modified House of Quality
It is reported that QFD using the house of quality (HOQ) as a
planning twl has been applied to industrial practices in Japan
and US and outsranding quality improvements have been
witnessed [4]. Some models about fuzzy evaluation and cost
engineering centered around HOQ have appeared in the
references [S, 61, which makes QFD a powerlid multisriteria
decision-making tool.
For BPR, the modified HOQ is shown in Fig. I , and the
notations are explained as follows:

A each reengineering objective with regard to those
:'t
Fig. 1. The modified house of quality
tE: the customer's evaluation target vector with m elements
p: the customer's preference vector for tE, on which the
customer depends to buy a company's product
E the customer's evaluation matrix with regard to t E for I
wmpanies, the first column of which is defaulted as the
reengineering wmpany's evaluation vector
t: the target vector related to tE that the reengineering
company will strive towards
s: the scale-up factor vector, the ith element of which y =
f j l e j , ,i = I , ...,rn
WE: the weight vector of evaluation targets, the ith element
m
ofwhich w w = s i t i I ~ s , t i, i = l , , , , , m
j.1
tR: the reengineering objective vector witi n elements
C the reengineering correlation matrix describing the
effects of reengineering an objective on other
reengineering objectives
wc: the weight vector describing the total reengineering
correlation effect of each reengineering objective, the
ith element of which is the total sum of effects of
reengineering the ith objective on other reengineering
objectives
R the relationship matrix between the evaluation targets
and the reengineering objectives, describing how much
each reengineering objective will support each
evaluation target
fi the vector describing the total supportive strength of
evaluation
m
tysets,
fj= x w w r 8 , j = I , ..., n
kl
the jth element of which
B the benchmar!?ing matrix with regard to reengineering
objectives for I companies
the target vector related to tR that the reengineering
company will plan to strive towards
WU: the weight vector describing the urgency of each
reengineering objective
WR: the weight vector describing the degree of realizability
of each reengineering objective
w: the weight vector of reengineering objectives, the jth
elementofwhich,, = wCIwuiw% , j = I, ___,
n.
The rating scale is the differentiation granularity to an
evaluation target. Define 5 grades for the evaluation of p, E,
B,t', wu and wR,i.e., (least, less, medium, more, most} = ( I ,
3, 5, 7, 9). For different evaluation objects, the value has
different linguistic terms. For example, 9 for p means most
prefer and for E the best, while 1 for p means least prefer
and for E the worst. Define 3 grades for the evaluation of C
and R, i.e., (weak, medium, strong) = (1, 3, 9). The
asymmetric rating scales match the practical status of
relationship, either directly or indirectly or little related.
3 The Model for Strategic Reengineering
In order to know p and E related to tE, the questionnaire is
carefully prepared. Three questions, but not limiting to, are
recommended in this paper:. (I) give your preferen?
priorities of the factors (tE)effecting your decision to buy a
product of a certain wmpany; (2) evaluate these companies
with respect to those factors; (3) which company's product
you would like to buy, no matter which company's product
you are now possessing. The three questions are embedded
with consistence check i.e., if a customer decides to buy j
company’s product, these inequalities pTe, > p’e, (i = 1, ..., reengineering objectives selected, with sg denoting whether
j-l,j+l, ..., r) should hold. “be customers’answers passing at least one of these reengineering objectives is selected (se
consistence check are utilized for statistical analysis. E is the = 1) or not (se = 0) and nF the kind number of fixed coss

average value of all investigated customers’ evaluation for I
companies. According to the answer on the third question,
customers’ preference vectors can be categorized into I
groups, i.e. NI,M, ...,NI. Suppose preference vectors in NI,
N, ..., N, have normal distribution, i.e., N , @ , , a , ) ,
c, is the revised cost incurred by some reengineering
objectives selected simultaneously, with ,s denoting the
revision coefficient and nRthe kind number of revised cost;
rAis the allocation rate of reengineering cost;
rI is the yearly investment rate for reengineering; and

N z @ 2 , a z ) , ..., N , b I + , ) where @ , , a , )
I . P i s the price ofthe product.
@ ,a z ) I _.
.. (p I ,a I ) are determined by mean value and
standard deviation of preference vectors in NI, M, ..., Nh 4 Case Study
respectively. Given the present market occupation rates
(MORS) al. n2, .., a, of products for I companies and the
,

future MOR a,* for the reengineering company, the

determination o f t can be formulated as:

Min 1‘
s.t

P r b T t > p T e Z ,prt>pTe,, ..., prt>prel)>a,’

PE { NI,Y, ..., I )
?,>e,,, i = l , ..., m
where, the first constraint denotes the probability of buying
the reengineering company’s product is not less than a:. and
the second consmint expresses the reengineering company’s
loyally to its own customers. Given the future yearly sales
quantity N of the same type of products produced by the I
companies, the above cbance-consmined programming
problem can be solved by the genetic algorithm [7]. Given
the decision vector x = [x,, q, ...,xJT. denoting whether a Fig. 2. The modified house of quality of the A company
reengineering objective is selected (x, = I ) or not (x, = 0). the
objective function is descnied as: There are A, B, C three nation-owned companies producing
the same kind of product. A is the reengineering company,
and B, C are competitors. The modified house of quality of
the A company is shown in Fig. 2, and the diagnosis data in
s.t. A company is obtained from checklist. At present, the MORS
aA, a,, 0~ of A, B and C’s products are 10.7%, 46.6% ,
42.7%, respectively. A company plans to apply modern
information technique to solve the legacy problem so that
where, production efficiency can be improved, the future MOR a:
cvj is the variable cost of reengineering objective i; can be increased by 20%, and thus A company will become
ce is the fixed cost incurred by at least one of some one of leading companies to produce that type of product.
Given the !%tun yearly sales quantity N = 12500, at least aAN, The solution of this problem is x = [I 0 0 0 1 I 1 0 0IT.In
a& and %N preference vectors have normal other words, the A company will reengineer the following
distribution N,$ A ,aA ) , N,k B.a8 ) and N, $ c . c~) , four aspects in the near five years:
respectively, with ( I ) Establish company web pages to benefit advertising with
low cost, feeding back customers' complaints about product
p,,=(L9 46 26 7.7 45f h 4 6 8 16 45 49 5$
quality promptly, and filling in customers' orders
conveniently. The clerks in marketing and sales department
k=[18 66 62 44 4 q a,SU 27 18 17 2$
will devote a part of energy to the networked business
process. In a period of time, the conventional and elec*onic
0,421 24 27 28 Z$ 0,424 24 26 27 2$
business modes will coexist, and organizations besides
As shown in Fig. 3, by genetic algorithm, the optimal t marketing and sales should adapt to this mixed business.
approaches [6.2 8.5 7.2 4.5 7.71' afler about 80 (2) Establish material management system to seengih the
generations. information interchanging with design, produdon planning
and task allocation so that the product designers can
IO conveniently obtain the material stock information resulting
8 in cost reduction, the planning department can keep informed
+lead time
of material preparation sfstlls at any moment, and the shop
--quality
+price floor will on line put up material requirement plan. However,
2 the first step to accomplish it is to standardize material codes.
0 Some organizations will gradually shifl towar& infra-net
0 25 50 75 100 125 IS0
based business.
Cycle Time
(3) Establish equipment management system to record
equipment maintenance status for quality improvement and
Fig. 3. The convergent process o f t by genetic algorithm operation state for production planning and task allocation.
The work capacity modeling of equipment is a knotty
The A company analyzed its business problems from 9 problem depending upon the proficiency of operators and the
aspects and presented the possible solutions and costs degree of process complexity. No matter what, production
incurred, as shown in Table 1. Suppose the A company planning and deploymnt process will manage to get rid of
decide to withdraw its investment in 5 years at the yearly the condition at a loss or the empiricism at will.
invesment rate 0.2. The cost constraint of the 0-1 integer (4) Establish quality management system to track the quality
programming model is: information of parts of products, which makcs the real-time
quality statistics and monitoring become possible. It is
necessary to dispose of the trade-off between precaution.
appraisal costs and internal, external costs, and the quality
where, check points should be set up again along the production
process to reduce quality cost to a great extent. The quality
check plan should be harmonized with production plan and
I. I , + x " + r , L I process. Establish effective and efficient quality assurance
= (0, el=
architecture to e n w e all clerks have strong quality

2. I, + I, + x9' = 3 consciousness and decrease quality contingencies as much as

possible.
0. CIY
5 Conclusion
Making the best of advanced information technology to
reengineer business processes and tackle the problems always
intent to be solved is the characterization of enterprise
information and process integration. It is very important to
identify the start points to reengineer for SMEs facing too
many problems but shortage of finds. On the other hand, it is
still worth thinking over the investment decision on
information technology for an enterprise even if having
sufficient funds, because a large scale of information and
process integration requires to be implemented step by step.
Decision for leaders at the top level oflen falls short of the
guide of systematic methodology. This paper presents the
reengineering decision-making methodology to solve extemal
and internal contradictions synchronously, i.e., to reengineer
objectives, (I) catering for the customer requirements; (2)
maximizing the realization of striving targets; (3) closely
related to the settlement of other objectives; (4) reflecting the
voices of leaders in various departments; ( 5 ) easily to be
realized; (6) taking finance into account: and in sum,
resulting in dramatic improvements of performance measures
thmugh continuous reengineering.
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