Reengineering is new, and it has to be done. -Peter F.

Drucker

 Reengineering

is a 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. Hammer and Champy (1993)

 Fundamental:

Changing the way work is done Radical : Break away from out-dated, patched, obsolete arrangements and regular practices of work Dramatic : Don't just make incremental changes or marginal improvements. Find breakthrough in performance in terms of cost quality service and time compression Processes : Redesign the core activities

specific ordering of work activities across time and space, with a beginning, an end, and clearly identified inputs and outputs: a structure for action. (Davenport, 1993)

 Business

processes are simply a set of activities that transform a set of inputs into a set of outputs (goods or services) for another person or process using people and tools

Process

in context of reengineering is:

 BPR

seeks improvements in 4 areas:

Four

major areas can be identified as being subjected to change in BPR:

Cost Quality Service Speed

Organization Technology Strategy People

 Customers
Demanding Sophistication Changing

Needs Customer Preferences

Competition
Local Global

Change
Technology

 We

can only reengineer the processes not the organization, functions, departments. Case study Ford Companys Account Payable System HP ( Hewlett & Packard)

different independent databases: Purchasing, Receiving & Account's Payable 3 different documents issued lead to mismatching of orders After re-engineering: Integrated database

 50

manufacturing units decentralized purchasing system HP was unable to negotiate quantity discounts After re-engineering: Organized a corporate purchasing department that created database of approved vendors Results: 75% reduction in failure rates 105% improvement in time deliveries 50% reduction in lead times

 PROJECT

STEPS Begin organizational change Introduction to BPR Identification of Business Processes Selection of Business Processes Understanding the selected Business Processes Re-design the selected Business Processes Implementation of the Re-designed Business Processes

 Process

under review is too big or small Reliance on existing process is too strong The cost of change seems too large Poor timing and Planning Desire to change not strong enough / Keeping team and organization on target