Process View of Organization

Prepared by: A.LATHA IT-FACULTY INC –VIJAYAWADA,GUNTUR

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What is a process? Let’s take for instance a grocery shop where you stand in a queue The process begins with you stepping into line, and ends with you receiving your receipt and leaving the store. You are the customer (you have the money and you have come to buy food), and the store is the supplier. So process steps are the activities that you and the store personnel do to complete the transaction

What is a business process?

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
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What is Business Process?
• A group of logically related tasks that use the firm's resources to provide customer-oriented results in support of the organization's objectives. It has beginning and end points, interfaces and organizational units. The three aspects of Business process are  Objects: physical or informational  Entities: process occur between organizational entities. they could be inter organizational ,inter functional or inter-personal  Activities: process encompasses two types of activies :Managerial and Operational

• •

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Many companies began business process improvement with a continuous improvement model. This model attempts to understand and measure the current process, and make performance improvements accordingly.

You begin by documenting what you do today, Establish some way to measure the process based
on what your customers want Do the process, measure the results

Identify improvement opportunities based on the data you colle You then implement process improvements, and
measure the performance of the new process This loop repeats over and over again
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In the present scenario the continuous improvement model does not work out effectively because of emerging new technologies. As a result, companies have sought out methods for faster business process improvement. Now they have to beat the business by using the following questions so as to competitive the business world like:

what should the process look like? What do my customers want it to look like? What do other employees want it to look like? How do best-in-class companies do it? What might we be able to do with new technology

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Business Process Reengineering (BPR)

It begins with defining the scope and objectives of your reengineering project, then going through a learning process (with your customers, your employees, your competitors and non-competitors, and with new technology). Given this knowledge base, you can create a vision for the future and design new business processes. Given the definition of the "to be" state, you can then create a plan of action based on the gap between your current processes, technologies and structures, and where you want to go. It is then a matter of implementing your solution.
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Reengineering
• Totally reinventing and rebuilding the structure of a corporation. • Deciding to reengineer a company is a major decision that has fair amount of risk attached to it. • An existing process may be completely changed or eliminated in favor of a new structure. • Large savings in terms of money and time
Example: 1.Hp, XEROX,IBM Distribute and Print to Print and distribute 2. case

study of canon.doc
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table of cannon.doc

Issues: » Understand why organizations opt for reengineering and restructuring » Understand and appreciate the intricacies of restructuring and reengineering processes » Understand the differences between reengineering and restructuring

In the mid-1990s, Japan's leading photocopier and camera manufacturer - Canon Inc (Canon) - embarked upon a massive reengineering program to turn itself into a truly global corporation. Fujio Mitarai, who took over as president in 1995, introduced many changes in the company's manufacturing and management processes. These changes were implemented in two phases - Excellent Global CorporationPhase I and Phase II. By reengineering its business processes, Canon was able to revive itself without adopting painful strategies like retrenchment. In 2002, Canon's total sales were ¥ 2,940,128 million, an increase of ¥ 381,901 million from 1996. Its net income increased from ¥ 94,177 million to ¥ 190,737 million during the same period. Analysts attributed the success of Canon to the farsightedness of its management led by Fujio Mitarai. Commented Hiroshi Kato, analyst at Tkegin Investment Management Co. (Japan-based investment firm), "Mitarai is taking Canon in the right direction."3

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The history of Canon dates back to 1933, when Saburo Uchida (Uchida) and Goro Yoshida (Yoshida) established Precision Optical Instruments Laboratory (POIL), at Roppongi, in the Azabu district of Tokyo. The lab was started to develop a camera to compete with the German Leica model C.4 In 1934, POIL introduced 'Kwanon,'5 Japan's first 35mm camera with a focal plane shutter. Priced at ¥195, Kwanon had a considerable price advantage over the Leica which was selling at ¥500. In 1935, POIL launched 'Hansa Canon', a 35mm focal plane-shutter camera and in the same year it also applied for 'Canon' as its trademark. In 1937, POIL was incorporated as a joint stock company under the name Precision Optical Industry, Co., Ltd (Precision), with a capital of ¥1 million. During the late 1930s, the company also started manufacturing accessories such as enlargers, filters, and special tanks for developers. In 1939, Precision began making camera lenses, and in 1940 production of X-ray cameras commenced In 1942, Takeshi Mitarai (Mitarai) an auditor with the company became Precision's first president. In 1945, Precision commenced production of midrange JII focalplane shutter cameras, and, in the following year, it opened the Ginza camera service station.

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In 1947, Precision changed its name to Canon Camera Co (Canon Camera). In 1949, the company's shares were listed on the Tokyo Stock Exchange, and it established a chemical division to provide solutions to problems related to camera materials. In the early 1950s, Canon Camera set up manufacturing plants at Shimomaruko, Ohta-ku in Tokyo district. It also forged alliances with research laboratories to develop new products. In 1954, the company along with NHK Science and Technical Research Laboratories,7 developed television cameras. In the mid-1950s, Canon Camera started setting up branches abroad. In 1955, it established an office in New York (USA). In 1957, Canon Europa the sole distributor in Europe was established in Geneva (Switzerland). During the same period, the company acquired Chichibu Eikosha Co., (optical components supplier) to establish Canon Electronics Inc. In 1958, Canon's chemical division was reorganized as a research division and the company started focusing on optical fibers and fixed lasers. In 1959, Canon Camera entered the micrographics market through a tie-up with a US-based company Documat Inc. In the same year, it entered the magnetic heads market and the Synchroreader8 - Canon's first audio visual product was launched. In 1961, it introduced Canonet - a 35mm camera with automatic exposure mechanism. Canonet was a highly successful product with one million units being sold in less than two years. In 1962, the company formulated its first five-year plan with an aim to enter the business machines market and expand its research activities. In the same year, the company established a product development section. In July 1963, it produced a prototype of the 10-key calculator,9 but the management was not keen on commercializing the product due to doubts about its success...
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When Fujio took over as president of Canon, the company was structured in different divisions based on the product lines with each product division working as separate entity. Though Canon had a wide range of products, it was not earning profits in all its product segments. The company was making losses in PCs, liquid crystal displays, optical memory cards, calculators and electric typewriters. There was no coordination among the different divisions in the company. So much freedom was given to each division that right from hiring people to setting up overseas plants, they acted independently and without coordinating with the other divisions.

In an interview with BusinessWeek, Fujio said, "These [profitable] divisions had become so independent, they didn't think in terms of what would benefit the entire company. It got to the point where divisions were building separate plants in China at the same time. If they had planned it centrally and moved to China together, they could have combined their costs. As it turned out, it cost Canon twice as much because these divisions...functioned like separate companies..."

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Why Reengineering?
• Customers  Demanding  Sophistication  Changing Needs Competition  Local  Global Change  Technology  Customer Preferences

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What does BPR do?
It REVIEW the past AND RELOOK into the present REPOSITION for the future. Everything is RE. This entire new approach is now known as Business Process Reengineering (BPR) REASSESSES – your business purpose REPOSITION -- for greater market penetration RECONFIGURE – for smoother workflow RESTRUCTURE – so that jobs match reality REVITALISE – for ongoing competitiveness

bpr case study.doc
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Enterprise-wide BPR for a Leading Indian Auto Manufacturer
Business Challenge Satyam helped a leading Indian automobile manufacturer of multiutility vehicles and light commercial vehicles (LCVs). The manufacturer had plants in four locations, an extensive supplier base and a distribution and service network across India. For decades, the client dominated its market. Recently, however, it has battled substantial competition in several product categories. As such, the company worried that its dominance would wane due to globalization, entry of manufacturers such as Toyota into the Indian market, import of second-hand vehicles under World Trade Organization (WTO) mandates, and more stringent emission, noise and safety norms. Consequently, the company engaged Satyam to analyze emerging scenarios and create a 5-year plan.

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Satyam Solution Satyam outlined three broad phases the client would undergo during a Business Process Reengineering (BPR)program. They were: * Long-term Business Strategy. Satyam helped the company identify suitable business opportunities and craft strategies to capitalize on them, enabling the client to achieve its business objectives, despite mounting competition. * Process-Centric Enterprise (PCE) Phase I – Preparation. Satyam created a plan for the client to migrate into a Process-Centric Organization. * Process-Centric Enterprise Phase II – Transformation. Satyam helped the client become a PCE by redesigning key business processes. As part of the Long-term Business Strategy, Satyam advised the client to establish new lines of business to mitigate risk. It also suggested that the client leverage its current capabilities in new markets.

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Satyam then assessed the client’s business functions and reconceived them as key business processes. Senior managers were made responsible for the end-toend performance of these business processes. Later, fixed process goals, derived from the corporate vision, were established. As part of this undertaking, Satyam folded competitiveness improvement initiatives into the business process framework, classifying them with the appropriate business process, and asking respective senior managers to own them. Satyam also suggested that management change its strategy slightly to sensitize employees to the need for change, as well as its business impact.

At the same time, Satyam produced a Gap Analysis and catalogued the company’s strengths and weaknesses for each involved business process. This enabled the team to identify the root causes for performance gaps, and gave it a better understanding of how to redesign the client’s process, structure, and performancemonitoring frameworks. It also helped Satyam identify the company’s core processes, which became the centerpieces of its operational excellence program. The core processes were identified as: Business Planning Responsible for creating business strategies, setting policy and outlining guidelines for operations and monitoring performance. • Product Management. Responsible for conceptualizing, designing, and developing new and upgraded vehicles, as well as setting up manufacturing facilities for their production.
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• Order Management. Responsible for converting orders for vehicles and spares into finished products. Also oversees purchasing, manufacturing, assembling and dispatching of finished goods. • Customer Management. Responsible for generating demand for vehicles and spares; resolving customer complaints and maintaining relationships with customers; and monitoring dealers and other intermediaries. • Vendor Management. Responsible for identifying and selecting vendors, monitoring their performance and helping them upgrade as necessary. Identifying these core processes allowed Satyam to focus its BPR during this company-wide transformation and gave the client a significant advantage over its competition.

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Benefits The BPR program produced dramatic benefits that affected every area of the company. In the Product Management process, the manufacturer reduced new product development time by 50 percent, from 72 months to 36, while eliminating launch delays by instituting upfront planning mechanisms. In Order Management, schedule adherence for vehicle dispatch improved from 70 percent to 95 percent. And, in the spare parts department, order-to-delivery cycle times were trimmed by more than 50 percent. Customer Management Processes were enhanced, too. Sales forecasting improved from 30 percent to 70 percent and a customer complaint redresses were reduced by 50 percent. Finally, in Vendor Management, the client reduced materials costs by six percent and vendor development time by 30 percent.

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Salient Features of Reengineering
• • • Reengineering is improvement and it could be done with individual process and on the whole. Leads to performance improvements by maximizing value added content and minimizing production level costs. It involves in  rewriting organization’s procedures.  reviewing reward system and internal competitiveness.  installing new measures of performance. It expects a total change in Organization culture.

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Stages of Reengineering
• Realization
 Identify the needs and threats  Identify the sustaining level  Leadership at all level of functions  Collective effort to resolve problems quickly

• Essentials
 Identifying key essentials for customer satisfaction  To establish key product and service performance indicators

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• Rethink
 Reexamining the existing process

• Redesign
 Understanding the substance, make-up, behavior, configuration and elements of work process.  Through appraisal of the entire system.  Individually evaluated for performance  The redesign should follow the three principles:
• Requirements of customers and organization is met • Job Satisfaction • To Eliminate all waste and enhance the organization competitive position.

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Retool  Identifying Competitive systems  Evaluating the effectiveness through • Mean Time to Failure • Mean Time to Repair • Mean Time to Dismantle • O/P determined  Reviewing the new tools for its weakness and effectiveness. Reevaluation  To check whether Retool and Redesign have achieved the goals.  Reevaluating the entire process through the factors like quality, productivity, customer satisfaction, market share, variation levels, profitability index, job satisfaction indexes and cost reduction savings.  Ensuring Quality and Performance.
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Initiating Reengineering
• Reengineering a Large Business  P & G – Reengineered towards Specialist Org. • 1st: Reorganized into three separate businesses • 2nd : Expedited the reengineering process  Goal: To increase Shareholder value. Managing a Large Reengineering Initiative  Analysis and Design  Identifying Critical Factors  Implementation Phase P&G identified a dedicative team called streams – Where each stream works towards their objective.
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• Managing Change in a Reengineering Initiative.
 Eliminate human Resource issues  Looking for feedback  Involvement  Identifying financial results  Maintaining Speed

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Forms of Reengineering
• Three basic forms  Systems reengineering
• Hardware reengineering • Software reengineering. – CAD, CAM, CIM

 Infrastructure
• Includes people, processes, technology and resources.

 Business Process Reengineering
• A methodical, regimented progressive move towards critical examination, rethinking, redesign and implementation.

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Business Process Reengineering
• A Process of changing the method of a task with the use of current technology and meeting the demand of current environment. • BPR seeks improvements of
 Cost  Quality  Service  Speed

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Key Characteristics
• Systems Philosophy • Global Perspective on Business Processes • Radical Improvement • Integrated Change • People Centred • Focus on End-Customers • Process-Based

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FEATURES OF BPR

Process Orientation: it helps the employee know how they
work with flexible/networked process.

Project Goal:

project plans must include assignments, responsibilities, deliveries, and schedule.

Rule Breaking : Creative Use of Technology Combining Several Jobs into One Decentralization of Decision-making Authority Multiple Versions of processes Checks and controls are reduced A single point of contact for a customer

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THE EFFECTS OF BPR

Changes in the nature of jobs Changes in roles Changes in the preparation for the job Changes in the focus of performance measures and
compensation

Changes in the criteria for promotion Changes in the values Changes in the responsibilities of managers Changes in the vertical organizational structure Changes in the horizontal organizational structure

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Problems of Functional Division
• • Process Departmentalization  It refers to purchasing, manufacturing and sales. Purpose Departmentalization  It refers to the arrangement of work around product geographic locations or specific customers.  The structure which focuses on the organizational output rather than on the processes is also known as “Divisionalized Organization”.

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• BPR and Functional Division
 According to philosophy hierarchical and functional structure leads to inflexibility of organizations. It makes slow, blamed for low productivity, long cycle times and high costs.  Common database  Customer interaction  Productivity  Goal congruence  Externalized

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Division of Labour
• Organization is concerned with division of labour within departments also. • Work is divided into smaller units and encourages specialization and high skills within functional area in turn increases the output. • Reduce communication delays • Improve decision making

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BPR and Division of Labour
• • • • BPR ensures integrity among members through its span of data among departments. Task force team solves inter-departmental problems. Enables decision making at the lower levels of hierarchy. It prescribes self-managing teams comprising empowered members as the solution to the problem.

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Technology as Process Enabler
• • • • • • • Using technology to reduce cost and increase quality of any process It reduces labour cost Improves quality Reduce waste and Scraps Increase the efficiency Reduce set-up and lead time Improve communication, interaction and coordination

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Technology as Process Enabler
 Using technology to reduce cost and increase quality of any
process

 It reduces labour cost  Improves quality  Reduce waste and Scraps  Increase the efficiency  Reduce set-up and lead time  Improve communication, interaction and coordination

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Failures
• Misuse of technology • Non understanding of the technology • No inclination towards change • Fear among employees

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Automation
• • • • • • • • • It is a technology enabled process. It performs tasks by programmed commands. Enables process without human intervention. Controls, monitors and execute manufacturing activities. It follows the rules and procedures without any deviation. Optimize the process Improve the reliability of the results Predicts unsafe or abnormal operations in advance Results in increased productivity, efficiency and safety.

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Applications with Automation Technology

Flexible Manufacturing System  A Form of flexible automation in which several machine tools are linked to the material-handling system. Robotics  Based on two related technologies – Numerical control (NC) and tele-operators. Automated Guided Vehicles (AGVs)  AGVs are remote controlled vehicles that transfer materials from stores to the workstations. Automated storage and Retrieval systems (ASRS)  ASRS are computer controlled systems that automate storage and retrieval of inventory.
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Advantages of Automation
• Improvement in productivity • Efficient use of materials • Improvement in work environment for the workers • Reduced factory lead time.

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Disadvantages of Automation
• Negative feedback • High initial investment • Requires high level of maintenance • Less flexible • Requirement of technical manpower

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Mapping Existing process

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Mapping an Existing Process
• Identify the breaks • Find the amount of time required by the activity to perform • Cost incurred • Justify the reengineering

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Process Redesign

• An integral part of BPR. • An Examination and plan of workflows and processes both in and between organizations. • It is an analytical study to bring improvements in the performance and increase customer satisfaction. • Goal is to simplify processes and to make organization more efficient and effective.

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New Process Validation
• Done by allowing the user to simulate the execution of a process. • Using a process model validation tool
 helps the user to answer queries about the state of process as it proceeds.  Offers declarative language for process specification.  Can simulate even when part of a specification is available.

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