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Common Points Business Objectives Inadequate Systems Rethinking and Reengineering .
You need it so long as the tasks remain fragmented and do not become a business process. .The Crisis Part Optimization No Single Responsibility Center Growing bureaucracy and middle management Customers have choices Competitors are global Bureaucracy is the glue that makes the current fragmented tasks come together to produce a result.
Ford Accounts Payable Process* Purchasing Purchase order Vendor Receiving Copy of purchase order Goods Accounts Payable Receiving document Invoice PO = Receiving Doc. = Invoice ? ? Payment *Source: Adapted from Hammer and Champy. 1993 .
• When goods arrive at the loading dock at Mazda: – Bar-code reader is used to read delivery data. – Inventory data is updated. – Production schedules may be rescheduled if necessary. – Send electronic payment to the supplier.Trigger for Ford’s AP Reengineering • Mazda only uses 1/5 personnel to do the same AP. .
Purchasing Ford Procurement ProcessVendor Purchase order Receiving Goods Purchase order Goods received Data base Accounts Payable Payment .
Invoices are eliminated. receiving documents. Accuracy is improved. After • • • • • Reengineer “procurement” instead of AP process.Before Ford Accounts Payable • More than 500 accounts payable clerks matched purchase order. The new process cuts head count in AP by 75%. . • It was slow and cumbersome. and invoices and then issued payment. Matching is computerized. • Mismatches were common.
July-August.BPR Principles • Organize around outcomes. “Reengineering Work: Don’t Automate. • Treat geographically dispersed resources as though they were centralized. • Put decision points where the work is performed and build controls into the process. 1990. • Have those who use the output of the process perform the process. Source: Michael Hammer. • Link parallel activities instead of integrating their results. • Subsume information-processing work into the real work that produces the information. not tasks. • Capture information once and at the source. . 104-112. Obliterate.” Harvard Business Review. pp.
• Processes may have multiple versions. and special cases. Give front-line workers the responsibility to make decisions.BPR Principles . Inc. • Provide mechanism in the process to encourage individual. Combine several process steps into one.. Reengineering the Corporation: A Manifesto for Business Revolution. team. Remove complex. and organizational learning Source: Derived from Michael Hammer and James Champy. • Empower human potentials. exceptions. HarperCollins Publishers. Integrate subprocesses. • Design for parallel subprocesses whenever possible to reduce waiting time between tasks. 1993 .Derived • Redesign process steps such that they are perform in a correct order.
JIT. • Design processes with centralized and decentralized operations. supplier shelf management. • Strive for “doing things right the first time”. • Eliminate multiple external contact points. Eliminate rework and iteration. . • Minimize reconciliation. ==> Use case managers to provide a single point of contact for customers. buffers.BPR Principles . One-stop customer service or customer service center. continuous replenishment. • Coordinate inventory.Derived (Continued) • Perform the work where it makes sense. ==> Build in feedback mechanisms at each steps to minimize the need for the checkpoints and control. • Reduce controls and checks. and other assets by sharing data cross organization boundaries.
Define corporate visions and business goals Business Process Reengineering Life Visioning BPR-LC Cycle Identify business processes to be reengineered Analyze and measure an existing process Identifying Enterprise-wide engineering Analyzing Redesigning Evaluating Identify enabling IT & generate alternative process redesigns Evaluate and select a process redesign Process-specific engineering Implement the reengineered process Continuous improvement of the process Implementing Improving Manage change and stakeholder interests .
– Expand the scope of a process been analyzed . • Guidelines: – 2~5 business processes at a time – Identify owners of business processes. – High-impact & intuitive approach: Use facilitated workshops or extensive interviews involving senior management.Methods & Guidelines in Selecting Processes • Identify processes to be redesign: – Systemic & exhaustive approach: Information engineering can be used to identify critical business processes using activity-data matrix.
Criteria for Selecting Processes • • • • • Broken Bottleneck Cross-functional or cross-organizational units Core processes that have high impacts Front-line and customer serving .the moment of truth • Value-adding • New processes and services • Feasible .
The 9-Grid Model for Selecting Processes to Reengineer High Risky business Pick low hanging fruits Pick low hanging fruits Process Impacts Medium Bark up the wrong tree Good for a serious pilot project Pick low hanging fruits Woof! Low Bark up the wrong tree High Fruitless Effort Medium Fruitless Effort Low Implementation Difficulty .
• Reveal hidden time and nonvalue-added activities. Avoid analysis paralysis by conducting preliminary analysis at fairly high level. • Surface purpose and assumptions of the process (Ask WHY?). • Develop a high-level AS-IS baseline process model (work flow model). Analyze and Measure an Existing Process .Phase 3: Analyzing • Conduct preliminary scoping. and customer type. product. • Measure profitability in terms of task. • Perform activity-based costing: costs can be assigned based on actual activities and productivity. • Measure cycle-time and quality.
Process Model • Process decomposition • Process dependency or work flow • ICOM of a process as defined in IDEF – Inputs: information and materials – Outputs: Products and services – Controls: Policy. tools. . and timing – Mechanism: Resources including people. specification. and facility.
Analyzing a Process • Why? What are the underlying assumptions? – How do the assumptions affect process structure? – Are the assumptions still valid? Can you make them invalid? – How would changing the assumptions affect the work and its value? – Are you assuming that a specialist must do the work? – Are you assuming that one group must finish (collecting all data) before another group can begin? – Are you assuming that decision must be made at the headquarters? – Are you assuming that local inventory is required for good service? • Who does the work? • When? What is the flow of the work? • Where is the work performed? • What resources are required? .
Summer 1990.” Sloan Management Review. pp. Davenport and James E. .Phase 4: Redesigning Identify enabling IT & generate alternative process redesigns How can business processes be transformed using IT? Business Reengineering Business-pulled Technology-driven Information Technology How can IT support business processes? Source: Thomas H. “The New Industrial Engineering: Information technology and Business Process Redesign. 11-26. Short.
– A reengineered process often crosses functional boundaries. . • Automation: – Usually accompanies nontechnical redesign of organization structures and procedures. – It offers opportunity for eradicating interdepartmental redundancies and restructuring the organization.sources of funding for technology investments are frequently cost savings generated by organizational change.Three Steps in Redesigning Processes • Simplification: – Task: Change business rules or procedures of a specific task – Workflow: A process chain is simplified by elimination of nonvalue-adding activities • Integration: – Redesign tasks into a logical and effective process. – All reengineering costs and benefits can be projected into a model. – Reengineering often pays for itself .
Phase 5: Evaluating • Develop criteria of evaluating alternatives of redesigned processes • Evaluate design alternatives • Select and recommend a reengineered process Evaluate and select a process redesign .
Evaluation Criteria • Costs – – – – – – – – Design and implementing the business process Hire and train employee Develop supporting IS Purchase of other equipment and facilities Customer requirements Breakthrough goals Performance criteria Constraints • Benefits • Risk – – – – Technology availability and maturity Time required for design and implementation Learning curve Cost and schedule overrun .
Phase 6: Implementing • • • • Plan IT implementation Plan organization implementation Conduct a pilot project Develop a prototype system – Technical Design – Social Design • Evaluate results from the pilot project and the prototype • Prepare large-scale roll out Implement the reengineered process .
Phase 7: Improving • Develop performance measurement and reward systems in the reengineered process • Monitor process performance constantly • Improve the process on a continuous basis Improve the process continuously .
who convenes a REENGINEERING TEAM.” (Hammer and Domain Experts IS Experts Champy. 1993) .BPR Team Structures BPR Leader (Champion) BPR Czar BPR Steering Commitee Methodologist Tools Experts Change Master BPR Team BPR Team BPR Team “The LEADER appoints the PROCESS Process Owner OWNER. with Team Leader assistance from the BPR CZAR and BPR Experts under the auspices of the BPR STEERING COMMITTEE.