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  • 1. Introduction Business process The majority of organisations have a reengineering in a traditional hierarchical structure. In this British company: a case structure, each department has its own workspace, and interactions usually occur study intra-departmentally. It has been found that within a company whose structure is of such a A. Gunasekaran traditional form much of the work being executed is non-value-adding. By this, a Walter W.C. Chung and significant number of the tasks which are K. Kan carried out are performed more out of procedure than necessity and, had they have been removed, effective output and the general running of the company would not suffer. On the contrary, in fact, to remove such tasks may be beneficial to the company. The authors Over a decade ago, a few companies had been A. Gunasekaran is Associate Professor in the seen to be aware of this and consequently Department of Management, University of restructured their organisation to address this Massachusetts, North Dartmouth, Massachusetts, USA. matter (Balkwill and Freeman-Bell, 1996). Walter W.C. Chung is Associate Professor in the The definition given by Hammer and Department of Manufacturing Engineering, The Hong Champy (1993), is as follows: ``Reengineering Kong Polytechnic University, Hong Kong. is the fundamental rethinking and radical K. Kan is a graduate from the Department of redesign of business processes to achieve Manufacturing and Engineering Systems, Brunel dramatic improvements in critical, Univesrity, Uxbridge, UK. contemporary measures in performance, such as cost, quality, service and speed.'' Keywords BPR is about making a company more BPR, Logistics, Case studies customer-focused and process-based, instead of the traditional procedure-focused and Abstract function-based. A ``process'' can be defined as a sequential group of events or activities, which A case study conducted in a British company (Company A) performed together in series (or occasionally in on reengineering business processes is presented. It gives parallel), produce an output which contributes an example on how a case study ought to be written in to achieving a significant part of the company's order to go beyond the standard for writing an industrial mission statement. More often than not, this report to one that is acceptable by academic peers. A good means being of value to the customer. By case study ought to contain information that readers can doing so, it looks to speed up processes use in replicating the experiences gained and lessons learnt considerably, reduce costs and overheads in future endeavours under similar settings. When a substantially, and greatly increase efficiency. collection of good case studies is available to a practitioner Being function-based ties in with the mass or researcher he could formulate his plan for the future and production era, where workers tended to be avoid ``re-inventing the wheel''. This is most important to less skilled, but specialised in one specific task. research in operations management because it lends a Nowadays, as products are becoming more hand in the building up of a theory in POM to make an impact in its natural settings. The authors are grateful to the Industry and Technology Development Council, Industry Electronic access Department of The Government of the Hong Kong Special Administrative Region for its The current issue and full text archive of this journal is sponsorship in the Manufacturing Information available at Systems Research (MISR) project. Without its vision, the workshop with a speaker from overseas in benchmarking experiences of implementing manufacturing information systems to make Logistics Information Management organizational innovations to local small to Volume 13 . Number 5 . 2000 . pp. 271±285 # MCB University Press . ISSN 0957-6053 medium enterprises would not have been possible. 271
  • 2. Business process reengineering in a British company: a case study Logistics Information Management Volume 13 . Number 5 . 2000 . 271±285 A. Gunasekaran, Walter W.C. Chung and K. Kan are then given. Based on the lessons learnt customised, flexibility is required to complete from the case study, together with the in a global market environment (Coulson- literature, a framework for reengineering is Thomas, 1996). Deakins and Makgill (1997) claim that the developed. The conclusions and lessons learnt are summarised at the end. majority of BPR initiatives fail due to the lack of attention paid to change and people issues. It was identified from the literature they researched that the number of articles Background for the research published on change management and human resource issues totalled to less than 7 percent. In this section, some of the literature available Further more, over half of this percentage were on BPR is discussed to provide the merely comments and opinions, as opposed to background for the research. Hammer and hard facts, research or case studies. Champy (1993) provide a good foundation It is important to deal with these issues: for gathering information on what BPR is, change management because this is the since they brought the subject to light. They underlying issue if improvements are to occur; talk little of the actual transition phase of and people management, because employees BPR, and only briefly mention that before are a major differentiating factor from actually using the new processes companies company to company. After all, a company should run a test lab. This can be considered can invest in the technology that competitors impractical, as it would be very difficult to utilise, unless maybe it was developed within fully simulate the interactions between all that company through R&D. It is the people departments involved, especially human that cannot be replicated. Thus to make a behaviour, and disasters cannot be predicted. difference, and give a company a leading edge, Hammer and Champy (1993) tend to dissect aside from investing to keep up with the most successful BPR projects, whilst briefly effective technological enablers, inputting time skimming over unsuccessful ones. into people issues should prove to give However, Hammer and Stanton (1995) list satisfying results. Change relates to people, as the top ten mistakes in BPR and suggest they are the ones who have to adapt. remedies for them. Bititci and Muir (1997), Throughout the stages of change, meetings are concerned with a method of identifying should be held regularly to inform people of processes. It looks at how strongly each what is happening and why. Opportunities activity is linked, then, from this information, should also be given for people to ask decides whether they should be regarded as questions and air their views (Burnes, 1992). being in the same process. In addition, other points to consider include There are no hard and fast rules to applying reward and recognition, and developing a ``no- BPR. Every company has its own unique blame culture'' thus allowing employees to situations. Different situations require input 100 percent without the fear of being different tools, and the tools used may also blamed if things do not run to plan, increasing depend on personal judgement and ideas. As job satisfaction, encouragement and a result, there are many ways to go about motivation. Inspiration from other companies' BPR. However, there are a few common, policies may also be useful. However, there are general features of reengineered companies not many case experiences reported in the that include: function-based companies, poor literature on reengineering. Realizing the inter-departmental communication, and importance of such experiences on the complexity in terms of products and processes concepts such as reengineering, an attempt has (Fitzgerald and Murphy, 1996). been made to present the results of a case In traditional companies, the workers at the study. The aim of this paper is to present a bottom of the hierarchical structure have no case experience that would be helpful for other power. Every problem they come across, firms in reengineering their business processes. however simple and trivial, needs to be The organization of the paper is as follows. brought to the attention of their boss, if not The following section presents the background further up through the chain. This is, in many for the research on BPR. A framework for cases, time-consuming and unnecessary. The reengineering a business process is then method by which BPR overcomes this is by presented. The details of a case study giving all employees the relevant level of conducted on reengineering business processes empowerment (Bititci and Muir, 1997). 272
  • 3. Business process reengineering in a British company: a case study Logistics Information Management Volume 13 . Number 5 . 2000 . 271±285 A. Gunasekaran, Walter W.C. Chung and K. Kan As information within a company has a formed on a voluntary basis, after having been educated on BPR, and informed about what is tendency to travel up and down the required from them as individuals. However, it hierarchical structure, instead of simply must be noted that reengineering a company traversing various departments, a lot of time is will affect all of its employees, so co-operation is wasted in the handovers yet another reason needed from everybody, and all ideas should be why a process-based structure is more welcomed (Khoong, 1996). practical. This has, in the past, led to the To maximise work and information flow, middle managers being squeezed out. It is not communication within a company needs to be that BPR aims to reduce the head-count, at an optimum. There are many ways in which more that it aims to reduce (or totally get rid communication can be aided or improved. of) unproductive and unnecessary work. First, there are the more common forms: Generally, less workload means fewer telephoning, facsimile, electronic mailing, and employees are required. Since those at the meetings. There are also more sophisticated bottom of the hierarchical structure offer the forms such as video-conferencing. The actual value-providing work, it makes sense to applicability of this would depend on the size keep them on. This misunderstanding makes and global spread of the company, both certain people, especially middle managers, internally and externally. Having one common wary and sceptical of BPR. They do not give database throughout the company will BPR a chance for fear that they will end up eliminate information duplication and unemployed (Conti and Warner, 1994). discrepancies. It would also increase the speed Change of this nature will take a little getting of information access, as there would no longer used to initially, and inevitably not everyone be the reliance upon multiple other people. will be comfortable with what is happening. It Conflicts may also be identified earlier, as should be expected that there will be resistance having one database means that concurrency to change. Rather than forcing them to will be made possible, with several people participate unwillingly, it would be a better working on the same document, or design, approach to try to overcome it. It is impossible simultaneously. Introducing or reinforcing to reengineer activities, only processes. company-standard formats and layouts will get Hammer and Stanton (1995) claim that rid of time delays of having to convert from and companies have in the past attempted to understand other formats (Davenport, 1993). ``reengineer activities'', which not surprisingly Although an implementation on its own, ended up in disaster. This not only BPR is sometimes linked with other business demonstrates the lack of understanding of concepts. These can be seen as support tools, BPR concepts, it has increased the figures for or indeed in some cases, BPR can be seen as supposed BPR implementation failures, thus support tools for these: total quality acting as a deterrent for other companies who management (TQM) has been implemented may have wished to carry it out. within a company before BPR is introduced. BPR is a top-down initiative. This is because Companies that start off with a TQM initiative managers have a better overview of the company before BPR tend to achieve better results than than the bottom-line workers, and are therefore those which have not, maybe because they have less likely to be blinkered by departmental a clearer analysis on the company (Zairi, 1997). barriers. As BPR addresses processes, it is Computer integrated manufacturing (CIM) essential that they are looked at from end to end, brings efficiency due to information sharing, not focussing on any one specific activity. The and possibly resource sharing between project co-ordinator role should therefore be departments. Just in time (JIT) is a highly adopted by a senior manager or director, who, efficient method of organising inventories. as any other project co-ordinator should, Benchmarking means that the methods, possesses the following personal qualities: practises, policies, etc. of the company are perseverance and determination; . compared with that of other companies, and commitment; . ways of improvements worked out from doing motivation and be motivating; . so. The concurrent engineering (CE) principle friendliness and approachability; and . ties in very well with BPR as it looks at team reliability (Grundy, 1993). . working and communication all the way down Due to the level of motivation and commitment the line, thus eliminating hand-overs, the confusion caused by this, and the time wasted required for reengineering, the team should be 273
  • 4. Business process reengineering in a British company: a case study Logistics Information Management Volume 13 . Number 5 . 2000 . 271±285 A. Gunasekaran, Walter W.C. Chung and K. Kan in doing so. Activity based costing (ABC) helps processes are run so as to obtain a feel of to identity value adding and non-value adding how vast improvement can be achieved. activities. Staff training is important for Establish an order of priority based upon reengineering not only to facilitate the which processes are costing too much, involvement of employees, but also to improve outputting too low, and from which their skills in multi-skilling and team working. processes the company will gain most This would lead to increased job satisfaction benefit from BPR (i.e. ones that need to be and drastic improvement that makes BPR reengineered, and ones which can just do distinct from other improvement initiatives. with a bit of improvement). For those which As can be seen, there are many facets to are to be reengineered, collate the following BPR. This is what makes the implementation data: all the stages (activities) within the so difficult, and hence risky. There is not a set process; time taken for each stage; total time of rules which adhering to ensures success. It taken; cost of each stage (if applicable); total is appropriate to develop a framework for the cost; number of separate people/teams implementation before venturing into the case involved (hence the number of hand-overs); study. The purpose of the study is to and any non-value adding activities. investigate the potential of reengineering in a Activity 4. Determine measures for each . real life situation. process. For each process, identify the inputs and outputs, then use these to make a realistic estimate of potential improvements on the time and cost of A framework for the implementation of process after BPR. Also identify other BPR appropriate forms of measure (e.g. increased productivity for processes In this section, a framework to reengineer a which currently have a high percentage of business process in a company is discussed. A faulty outputs), and again make a realistic network diagram is presented in Figure 1 to estimate on potential improvement. indicate the various steps involved in BPR. Activity 5. Reengineer the process. Have Reengineering the entire organisation in one . one team working on the process from go would be more risky than reengineering end to end, to minimise time consumed each process at a time, but it would also be in changeovers. Introduce relevant quicker, and more clear cut. Various steps in empowerment, and coaches or team reengineering, as indicated in Figure 1, are leaders instead of managers. briefly discussed below. Activity 6. Training staff for reengineering Activity 1. Teaching employees about . . business processes is important as they BPR. This includes holding meetings, should understand what they are going to giving out printed information, and do and its purpose, and how they should holding question and answer sessions. participate in the process. Activity 2. Choose the team. This allows . Activity 7. Simulation can be used to test time for volunteers to come forward . the reengineering options. This helps to (working in conjunction with activity 1), avoid any risk related with loss of team-building exercises, sharing the vision, and establishing roles. production while testing the various Activity 3. Identify processes. Distinguish options of reengineering. . between core processes and support Activity 8. The final activity of the . processes. Analyse the way in which current reengineering process is the Figure 1 A network diagram to reengineer a business process 274
  • 5. Business process reengineering in a British company: a case study Logistics Information Management Volume 13 . Number 5 . 2000 . 271±285 A. Gunasekaran, Walter W.C. Chung and K. Kan implementation of various strategic options each other sell a small range of their products and methods of reengineering. This from their respective distribution offices. The requires the team to be responsible for organizational structure of the Company A is reengineering, planning and control of the presented in Figure 2. various planned reengineering activities. Identification of business processes Zairi (1997) suggests that SmithKline There have been some changes during the Beecham ``has recognised that it will take past few years that have helped to improve many years (at least five) to become a fully efficiency within the company. process-orientated organisation''. Another First, half of the company's headquarters factor that will affect the time scale is the size used to be approximately 20 miles away from of the company. Needless to say, the larger its current location in Hertfordshire. the company, the more time it will take. As Electronic mail had not yet been introduced, can be seen from Figure 1, the part which is there were two rounds of internal post daily, estimated to take the longest is activity 5, that and excessively frequent trips for face-to-face is the analysis and seeing how each process contact would have proved time-consuming can be reengineered and fitted together. and expensive. Communication forms were There are three main forms of measures, therefore slow and limited, as the only which are cost, time and quality. It is alternative was by telephone. The move to necessary to prioritise these three criteria for e-mail communication increased the ease of each process. This ranking would depend on team working, and speeded up the general the purpose of the process and possibly its flow of work. To deal with this change, current state. The reengineering of Company Company A has provided a coach to take its A is discussed with this framework in mind. employees, residing in the old location, to and from work. This has meant that the company was able to keep many of its skilled workers, Reengineering in Company A: despite the change in location. This in turn a case study has brought minimal disruption to the everyday running of the company. A case study is presented in this section using Since the summer of 1995, the Continuous the framework presented in the previous Improvement Facilitator co-ordinated a new section. For commercial reasons, the original suggestion scheme. This scheme would identity of the company is concealed. involve any employee who had a contribution to make, to fill out the form provided, sections The company of which included description of the current Previously a GEC owned company, Company situation or system, the proposed idea, and A has recently been taken over by an American the expected benefits to be generated. company. It is a manufacturing company based Suitable prizes were offered as incentives. in Hertfordshire, with two other service centres The main processes which have been in the UK, and many smaller sales offices world- continuously scrutinised in order to seek wide. Its turnover fot the last financial year was improvements are the manufacturing about £85million. Company A is a traditional processes. It seems that the emphasis lies at company, with a hierarchical structure and the the stage of mounting the components onto many hand-overs, and consent signatures within the bare printed circuit board (PCB). I-base, processes that inevitably come with this. Their a software package developed by the major product is electronic test equipments company, is used here. This is a product sold which includes signal sources, microwave test to customers, and keeps a history of faults sets, power meters, spectrum analysers, encountered by each part. This not only helps telecommunications and radio communications. to track recurring problems with components Company A also used to make a lot of their own or systems, but also speeds up the process of components but have now outsourced many of faultfinding because there is the part history them. Examples of this include the instrument data to hand. Weekly results and progression chassis, crystal oscillators and printed circuit graphs are printed out and put up around the boards. Company A has also established a PCB population area, so that staff can see relationship with three other electronic manufacturing companies, whereby they help how they, as a department, are improving. 275
  • 6. Business process reengineering in a British company: a case study Logistics Information Management Volume 13 . Number 5 . 2000 . 271±285 A. Gunasekaran, Walter W.C. Chung and K. Kan Figure 2 The organizational structure of ``Company A'' The layout of the manufacturing shop floor is For companies who are reengineering to keep partially cellular. There is one area for all the themselves afloat, the processes to target may PCBs to be populated, after which they are be obvious. However, Company A does not fall passed on to the appropriate cells as they are under this category, so processes it is advisable needed. to look at those which have a direct impact on Figure 3 illustrates the paths of processes the external customers first, since it is between functional departments within the important to keep them satisfied. In this case, company. A complete diagram would enable us these will be the ones involving design and/or to see all interdepartmental interactions and manufacture. They could then be prioritised reveal which departments are more closely according to how much non-value adding work linked. In carrying out the actual reengineering, is involved, and hence how much improvement if any department only had links to one other could be achieved. Then there are the department, merging the two departments in processes that have a direct impact on the question would be strongly considered. success of the company, but an indirect effect on the customers, e.g. advertising and R&D. Figure 3 Process flow diagram for Company A Again, these can be ranked according to how inefficient they currently are. Finally, there are those processes which have the most indirect effect on the customers. The prioritisation will be in this order, but if any one process is seen to be consuming more capital or time than benchmarking and analysis would predict, then this may be moved up in the ranking. Recruitment process The procedure of the recruitment process is shown in the flowchart in Figure 4. Staffing levels are set using two criteria. These are the headcount and the budget. The previous holding company's system has limited the company to take on a set number of people. This may change before long due to the taking over by the American firm. However, as it stands, the company cannot increase the headcount, so recruiting staff is more of a replacement of leaving staff, unless the company is deliberately looking to expand, or the excess is temporary, such as fulfilling contract work. Due to the headcount limitation, there are no job sharers or part- timers within the company. 276
  • 7. Business process reengineering in a British company: a case study Logistics Information Management Volume 13 . Number 5 . 2000 . 271±285 A. Gunasekaran, Walter W.C. Chung and K. Kan These processes are illustrated in Figures 5-7 Figure 4 Process flow chart for recruitment respectively. When an order comes in at sales, it is logged onto a computer where a bill of materials (BOM) and a schedule is generated. All this information is then automatically transferred to production. Here a job card is created, which is like a label that follows the part through its lifecycle within the company. In the PCB area, there are many different machines and therefore assembly lines. There are boards with solely surface mount components, boards with a mix of surface mount components and the older, larger components with leads for connection, and boards with no surface mount components on. For each of these types, there are single- sided and double-sided machines. The older components are mounted semi- automatically. The programme corresponding Figure 5 Process flow chart for order preparation For this reason, this process is often stopped after the second stage: filling out the recruitment requisition form. The departmental manager has access to the relevant information and may see that the headcount limit will not be exceeded. Figure 6 Process flow chart for order processing in cells However, if this is not the case and it gets past this stage, the checking of the departmental manager, it then has to be checked by the senior manager. Next the personnel manager is responsible for checking to see if it fits within the policy boundaries, and the final signing is from the managing director. Last, there is the actual recruitment part. This will consist of advertising the vacancy, usually internally before externally, sailing through applications, interviewing, and the final decision. Order fulfilment process The order fulfilment process is illustrated in Figures 5-7. The business process here is the order fulfilment process which includes three stages of sub-processes: (1) order preparation; (2) order processing in the cell; and (3) the testing of products. 277
  • 8. Business process reengineering in a British company: a case study Logistics Information Management Volume 13 . Number 5 . 2000 . 271±285 A. Gunasekaran, Walter W.C. Chung and K. Kan be noticed and replaced by the corresponding Figure 7 Process flow chart for testing reels from stores. A blue disc is also used to indicate no stock. The C-boards are usually made to order, though occasionally they are made to make up the numbers in a batch. The A-boards are being made regularly. B-boards are batch built: not being made regularly, but when they are, enough to form a medium-sized batch are made. Once all the components are in place, the board goes through the flow solder machine, then tested. Those that require no reworking go to the cells, where further work is performed. At the cells, the chassis and populated PCBs are assembled together. A simple test is then conducted on them, just to check that all the connections have been made, and the power supply is working. Next is a more in- depth test, where voltages, currents and other such parameters are checked. Each instrument then has to be placed under extreme temperatures for three days. This ages the silicone inside the chips and speeds up the time taken to reach stability. A test is performed to see if it has survived this, then it is calibrated. The RF Levelling and M&P tests (see Figure 7 above) can be carried out in either order, just so long as both are passed through. Thus far, all the tests made have been by computer, via a GPIB (a standard bus that allows communication between the instrument and the computer). The last test is a manual test, where all its functions are tested via the user interface. Having passed to the board number is loaded onto the Contax this, the instrument then goes to the finished machines, which prompts the operator about goods stores, and is then delivered at the which component should slot into which appropriate time, according to its schedule. location. The legs is bent round automatically. Analysis of the current recruitment and The mounting of the surface mount order fulfilment processes components is fully automated, except for The analysis of the process before loading the programme up to begin with. The reengineering and after reengineering has reworking is performed manually, but this is been discussed and presented in this section. aided by the recent use of i-base, as mentioned before. The classification of boards is divided Recruitment process into ``A-boards'', ``B-boards'', and ``C-boards'', The two limits that this process is subjected to with A being the most utilised, and C the more (budget and headcount), actually contradict one economical than being made to order since another. This is because of the different pay there will undoubtedly be a need for them rates depending on the different positions. Of before long. Company A uses a kanban system the two restrictions, the budget is the more for the reels of surface mount components. logical, well-reasoned one. It is advantageous to Each type of component is given a number keep the headcount low because less workers (other than its part number) so that it may have cost less to keep, this minimises the financial a specific location on the rack. There are two work involved sorting out the extra pay reels of each type, and when one reel runs out, packages, keeps the personnel files to a a red disc is put in its place in order that it will minimum, and increases the profit per head, 278
  • 9. Business process reengineering in a British company: a case study Logistics Information Management Volume 13 . Number 5 . 2000 . 271±285 A. Gunasekaran, Walter W.C. Chung and K. Kan as easily reached. What tends to happen is thus reflecting well on the company. This would all be very well, but if work is there to do, and that the form is left in the in-tray, until the more people are needed, then lack of funds senior manager in question has the time to should be the only thing stopping it. Often sign it. Discussion here is rare, and is contractors are taken on, as this does not add to therefore more likely to be knocked back. the headcount. As a short-term answer, this The next stage is for the personnel manager would be fine. However, in the long-term, the to sign. The purpose of the personnel company should seriously consider hiring them manager's involvement is to check that the as proper employees. This decreases the chances request details conform to company policies. of this person leaving, along with the skills they Although an important point, it is not totally gained that are useful to the company. It also necessary to involve yet another person in the encourages better work from the individual and process. As this gets ``further'' from the less reluctance from management to train them originator, the sense of urgency lessens and so further as is appropriate. the unreliability increases. The managing The recruitment process is a classic example director's participation has no apparent of what is called ``paper-pushing''. There are reason, other than company political reasons. numerous amounts of paper work involved This will therefore be regarded as non-value- which travel from one place to another, while adding. The final activity is the main part of the originator awaits the outcome, and may the process. Up to this stage, activities have not even be able to keep track of it. If the been preparation and build-up for the actual request for recruitment is rejected, it could be finding and hiring a suitable person. a while before the originator finds out. Order fulfilment process Breaking down the process into the stages Orders, which are made to the sales shown in Figure 4, we can identify any non- department or a sales office, are entered into value-adding work. The recruitment request their computer system. This is networked to form consists of entering information such as those in production, where, for every order a job title, department, salary range, benefits (if bill of materials is generated, with information applicable), justification (details of the included about its schedule. A job card is also employee to be replaced), job specification created. This not only details a BOM and (responsibilities), skills, experience, and schedule, it includes which instruments have qualifications required. This form, although been ordered, and which options are chosen. not completely value-adding, may prove to be There are numerous options for almost all valuable for documentation and clarification of the instruments; only a very small number purposes. Instead of adhering to this standard of the older instruments do not have options form, perhaps a modified, cut-down version available. That is to say there is only one would be more appropriate. The next stage, version of them that can be purchased. obtaining a signature of the departmental Having options allows Company A to have manager, has two perspectives. It could be modular build. Each basic instrument has a viewed as advantageous because the certain combination of PCBs. For every departmental manager has an overview of the option taken, this will mean more, or at least a department and may be able to reallocate slightly different combination of, PCBs. This existing people, consequently distributing the modular build allows a degree of flexibility workload more evenly and ridding the need whilst saving on design time, since customers for extra work force. On the other hand, to choose what has been designed, instead of keep its budget down, he may dismiss the idea having to design what customers choose. This without giving it deserved consideration. Also means there will not be the problem of to backup the latter point of view, why should exceeding the time or budget for reaching a the departmental manger care that the staff suitable design, and it validates the boards are overworked, just so long as the work is being assembled in batches, not individually. completed? In which case, why should the Ideally, when an order is transferred from decision lie with him? This stage will not sales, the suppliers will be automatically always be as black and white. It is likely that contacted and the required parts ordered in. there will be verbal, undocumented Although this works for the instrument communication regarding the matter. It is the chassis, it is not so straightforward for the next signature that may not be so easy to obtain. The senior manager is unlikely to be electronic components because not all of the 279
  • 10. Business process reengineering in a British company: a case study Logistics Information Management Volume 13 . Number 5 . 2000 . 271±285 A. Gunasekaran, Walter W.C. Chung and K. Kan failed boards can be rectified, and some Of the boards that have passed the test, some await on the shelves, while others are components may themselves be faulty. It is forwarded to cells where they are needed. therefore impossible to predict how many Only boards that are needed are forwarded on ``spare components'' will be required. Also, as at this point; because they are usually not surface mount components come in reels, unique to one cell there are numerous cells they cannot be ordered individually. they could be used in. Ideally, the flow is Currently, when component stocks run low continual and there is no inventory build up. and more need to be purchased, a form is filled Aside from tying up capital and taking up out, signed by one of the persons with space, the boards will be prone to damage. authorisation to do so, then taken to an area of The gathering of dust may damage some the shop floor where ordering parts (solely for components irreparably, due to the static- production purposes) is dealt with. Obtaining sensitivity of the PCBs. However, achieving a signature should not be necessary, because it this zero inventory status would increase the is not difficult to identify when the stock is lead-time drastically because effectively, running low, provided the storage system is instead of being the time taken for Figure 6, it comprehensible. In any case, storage should be will be that of Figures 6 and 7. It is necessary kept to a minimum, preferably none at all. The to maintain a trade-off between having too filling in of forms is again time-consuming, much inventory build up and none at all. This unnecessary and some consideration should be is especially so for A-boards as there is a made for it to be disregarded. As the sales greater chance they will be needed; hence a figures do not follow an obvious trend, it greater chance they will hold up assembly at would be inaccurate if stock replenishment the cells. Components are moving from the were left to the suppliers to predict. Stock older type with leads, to the smaller surface replenishment is obviously value-adding. mount type. Not only are surface mount Hence, one possible improved alternative for components more space economical, they are ordering would be to create a database, more suited for automated assembly, as there whereby a search on the entered component(s) is not the hassle of bending the legs around by is automatically performed, the supplier(s) the right amount, threading them through the identified and informed through a networking holes, and the awkwardness of their size. of computer systems, thus allowing an order to The job card created is picked up at be made. This means that anyone can make production, and goes to the applicable cell the order. Information on orders made will be where it starts to be assembled. In each cell, retained until payment has been cleared. there is a supply of the appropriate chassis, or The current kanban system is described else they have to be ordered in. PCBs have to be earlier. It means that components in the actual either taken from the shelves or more have to be working area are kept to a minimum, but there made immediately. At this stage of assembly, are more components in the larger storage the instrument is assembled entirely manually. room. Following the earlier idea, the orders Testing is done electronically, however the set can be made automatically when the level of up requires operators to connect them up. reels reach one or two, again depending on the All the transportation is manual, with the popularity of the component, and bearing in help of trolleys if needed. Here, it is possible to mind that deliveries are made daily. Operators introduce the use of AGVs or conveyors. As should be able to override if necessary, to this is identified as a useful stage of work, and a accommodate any change in usual demand fair amount of transportation takes place, levels. On the delivery being made, the automation seems applicable. There are two contacts are separated, and the order aspects which would suggest that automation confirmed ready for billing. be a bad idea. The first is the ``constant'' BPR tries to get rid of stages of checking, changing of the shop floor layout, as the AGV because problems should be solved at the track or conveyor would need to be changed roots and it should not be part of the process too. In the past three years, the shop floor to check and fix it. However, this is more layout has been modified twice. Reasons for aimed at the commercial side of the company. doing this need to be investigated. If this was For the case of the shop floor, this theory is merely a result of haphazard continuous not feasible, because many things can improvement, then this should be looked into, and an optimum solution sought. If, however, potentially go wrong with electronic circuits. 280
  • 11. Business process reengineering in a British company: a case study Logistics Information Management Volume 13 . Number 5 . 2000 . 271±285 A. Gunasekaran, Walter W.C. Chung and K. Kan this was due to changing product ranges or those discussed below. The exact and final names should be chosen, and voted on, by all demands, then this complicates issues those working in the company. Even though somewhat. The second point is that the this structure is process-based and eliminates necessity of this is questionable. The shop floor many hand-overs, there will still be the need is of quite a modest size, and the introduction to interact with other departments, as of AGVs may be viewed as cumbersome and explained below. The difference is that therefore not worth the expense. Though what although interactions are beneficial, there is is of more concern is the layout; the not the dependency there was before, and so transportation methods can be dealt with after. the holding up of work is less likely. The current layout is shown in Figure 8. Department 1: Order fulfilment. For this Once the instruments are built and all the . department, there would be the entire tests have been passed, the next step is for them production area, plus the sales people. to be moved into the finished goods stores Grouping these together means that the where they are packaged and eventually people receiving the orders know the delivered. The finished goods stores is situated likelihood of being able to deliver in a in building 4 and again transportation is suggested time, so the rate of on-time manual. It would be helpful to shorten this deliveries will be increased. Being in touch journey, since there is no apparent reason for the with just production may not provide the stages being so far apart. If there were a reason, knowledge to answer some technical first, the use of AGVs should be taken advantage questions posed by customers, for which of, to save on time and resource. Second, the reason it would be advantageous to keep packaging should be done before transportation close links with those from customer rather than after, to provide protection. The support or design and development. Finished Goods Stores has quite a large Currently, one of the tasks of the capacity. This could be cut down by a half or production engineering department is to maybe even more, by accurate planning and produce step-by-step, illustrated scheduling, thus only allowing each instrument instructions for assembly of the individual to spend a minimal amount of time there. products. These are only useful when the instrument is new, though makes for good Reengineering the recruitment and order documentation, and takes a lot of time and fulfilment processes effort to prepare. By bringing some of the To avoid confusion after the implementation manufacturing experts form the Design and to make it clearer, it is proposed that a and Development department to the shop complete restructuring, to reflect the floor to act as coaches, the instructions can processes, be made. This means redefining be dropped altogether. Once the coaches titles and roles, and changing functional have shared their knowledge, they can departments to process departments. The return to their original department. new structure would be departments such as Department 2: Design and development. . This is where the bulk of the engineering Figure 8 Current layout takes place, which includes circuitry design, PCB design, prototyping, faultfinding and testing. People in this department will consist of designers and manufacturers. There may be subdivisions within this department, because instruments that cover frequencies beyond a certain level are dealt with by microwave design engineers, otherwise they are dealt with by RF design engineers. Unfortunately they are not interchangeable, as to be an expert takes many years of in-depth education and training. However they can still work together with each other and with the manufacturers. 281
  • 12. Business process reengineering in a British company: a case study Logistics Information Management Volume 13 . Number 5 . 2000 . 271±285 A. Gunasekaran, Walter W.C. Chung and K. Kan This transition is very simple to perform Also this department would be compared with the others since all that is responsible for writing the data sheets and required is for everyone to know the updating the company products procedure and how to access the budget catalogue, since these workers have the information (and possibly headcount). knowledge about the specifications and Assuming things run smoothly, the bulk of capabilities. This is currently the the time taken is dedicated to the interviewing responsibility of the technical and selection. To get to this stage takes at publications department. least a week. With the reengineered process, Department 3: Customer services. Currently . the same part would take no more than a day, there is a department called ``through life since all information is readily available and engineering''. They deal with existing all persons involved are in the immediate products, from the customer requiring vicinity. Those involved in interviewing and minor additional features to any products, selection know the levels of skills required and to inconveniences experienced by are the ones in need of extra staff, so will tend production. For example, finding to be more efficient. This was not the case alternatives for components that are going before. In total, the estimated time taken will obsolete, and any production difficulties be approximately 50-60 percent less. which would require a modification in design. After reengineering, there would Order fulfilment process be no need for the latter example, because A recommended layout is shown in Figure 10. it would be the responsibility of the new The storage room has been removed, keeping design and development process to ensure inventory to a minimum. Instead, there will those types of problems are solved at their be the racks they have now, with the kanban early stage. system. Arranging the reels in part number order would mean that the suppliers would Recruitment process know where to put the reels, which is another For a process which is not constantly less chore for the company employees. This happening, it would be a waste to form a team would of course require minimising the around it. Instead the proposed idea for this number of suppliers to the company, then process is for each department to manage developing a strong relationship with them. recruitment for themselves as and when Another issue that this layout addresses is needed. The input to this process is the need that the cells are closer to the hot room, some for extra staff. The output is the hiring of extra even directly next to it, and so nullifying the staff. The most direct way to get from one to the other is to check that the budget stretches Figure 10 Recommended layout to employing another worker, discuss this need with others in the department, agree on the job description that goes out, and finally interview. The process is illustrated in Figure 9. This takes out all the unnecessary paper work, and extra people involved. Originally, the involvement of the personnel officer was to ensure that the requirements conformed to company policy. The whole company should be made aware of any specific rules to adhere to, not just those in personnel. Those dealing with the matter are those who want to hire the worker, so it is more likely to be completed quicker. The maximum headcount limit should be abolished. However, as this is imposed by the holding company, it may be more complex. Figure 9 Reengineered recruitment process 282
  • 13. Business process reengineering in a British company: a case study Logistics Information Management Volume 13 . Number 5 . 2000 . 271±285 A. Gunasekaran, Walter W.C. Chung and K. Kan justification of AGVs, as does the moving of though they were taken as two separate the finished goods stores onto the shop floor. processes, the strong link has been taken into The sales department should be as close to account by the cross-functional teaming and the shop floor as possible, with many regular interchanging of manufacturing interactions between the two areas. Moving experts from the new design and development the finished goods stores has saved roughly a and order fulfilment departments. third of the floor space. If other processes The conclusion reached in deciding to take could mirror this, then it is highly probable them as two separate processes, was that it that one less building will be required. As would not affect the reengineering potentials, some of the buildings are leased, this would since either way, all the non-value-adding lead to significant savings: about a quarter of work will be removed, and the most direct that currently spent on leasing. way from input to output will be taken. The lead-time will only decrease marginally as a result of the reengineering. The drastic Analyzing the processes increase will be apparent in the amount of The case study has shown the necessity of work being done, and perhaps the number of prioritising the processes and finding people required, since workers are more appropriate measures. It is not necessarily the multi-skilled and the work to be carried out case that it is more beneficial to reengineer the will be limited to assembly, test, reworking core processes first. With Company A, order and packaging. The stocktaking, ordering and fulfilment is a core process, yet the results stock-replenishing no longer needs attention. from this one process alone are not that This cutting out of non-value-adding work is amazing. This is because the manufacturing estimated to halve the shop floor's activities, processes are reasonably efficient as they are, without affecting productivity. The new due to the continuous improvement they layout allows transportation to be more than undergo. It is the recruitment process that halved. Morale, which cannot be measured, yielded the greater results. The amount of will have increased greatly, which itself work required by the process has more than improves working conditions and staff halved, as has the number of people required satisfaction, hence efficiency of labour. and the time taken. What a company needs to do after identifying the processes, is to see which ones show a greater potential in being reengineered, then make a comparison so as A generic framework for the to do the more advantageous ones first. implementation of BPR Reengineering The purpose of this section is to present a The most difficult process to reengineer was modified framework, which encompasses the the one involving manufacturing, partly lessons learnt from the case study. because of its current level of efficiency, and partly because it is not as simple as identifying Identifying the processes the inputs and outputs then finding the most Although there is quite a clear definition of direct route. To fully extract the greatest ``process'', there was initially some confusion results would need an in-depth study on as to how far some of the processes stretched. manufacturing practices alone, then detailed For example, is product design a process analyses to determine the most apt procedure alone or should it incorporate the for Company A's manufacturing manufacturing stage too? After all, a design environments. This would involve the on its own is of no use to the customer. The sequencing, scheduling and methods used. end decision was to keep them separate. This Once the processes are identified and may not have been the decision that everyone structured around, the reengineering ideas for would have taken. However, it should be some of the processes fall out obviously, such noted that the entire company's processes will as the purchasing and recruitment processes. have links in one way or another, as they do The main aspect stopping these from being follow common goals, namely the corporate run efficiently at the moment is the objectives. Hence in order to pinpoint the hierarchical structure, and the fact that people separate processes, it was necessary to draw are not empowered enough to make and carry the line somewhere. As the designing and out their own decisions; hence the need for manufacturing are so heavily dependent, even 283
  • 14. Business process reengineering in a British company: a case study Logistics Information Management Volume 13 . Number 5 . 2000 . 271±285 A. Gunasekaran, Walter W.C. Chung and K. Kan back-up and consent from bosses and has been offered for the two processes studied, managers. By creating a central information yet this can still be further improved by the full pool accessible by all, and introducing co-operation and discussion with those who empowerment, processes such as the are more familiar with the policies and recruitment process can be performed without procedures. The literature researched had all the unnecessary work like hand-overs. warned against the difficulty incurred by lack Empowerment requires trust. It is of senior management support. This project impossible to tell how the newly empowered has further backed this up. Due to the people will react. Will they abuse their new hierarchical structure, it is mainly the senior privileges, for example? This will not be as easy management who hold the relevant as introducing a policy or rule to adhere to, information. This made it very difficult to since many decisions will be made on a gather all the necessary procedures and data. subjective basis. For example, if a department However, mainly due to the high failure rate is contemplating purchasing a piece of new of BPR implementation, it is highly unlikely software, maybe one person will view this as that Company A will be considering such a being a worthwhile investment, while another drastic change. The fact is that Company A is believes it to be a waste of money. One already well inside the top 20 manufacturing possible way of overcoming this is for the companies of electronic test equipment. The departmental co-ordinator to initially take on a risk incurred in taking up this challenging, yet coach-cum-manager role to begin with. That rewarding, move could be far greater than the means that although eventually he will take a resulting achievement. If benchmarking less dictatorial role, just after the revealed that this had been a common implementation it is recommended that he act practice amongst competitors, it may prove to as a guide for decisions such as purchasing. be enough an incentive. However, taking After a while, the newly empowered employees Hewlett Packard (HP) as an example, even will have more of an idea, and be able to make though HP in America has been successful in better decisions on their own. This also takes BPR (Hammer and Champy, 1993), its into account the ``kid with a new toy'' British operating arm has not made such an enthusiasm that many of us no doubt have. attempt. It seems that BPR is much more The primary processes still need to be popular in the origin of its ``founder'' distinguished from the secondary processes. Hammer, America, than elsewhere. The latter should be reengineered in such a Needless to say, there is still more work to way as to act as support for the former. This do in order to reengineer the company. Firstly allows the concentration to be focused on the all processes need to be identified, then the actual profitable processes, not the support map can be completed. Benchmarking would ones. indicate how good the processes could Identifying the processes and (assuming you potentially be. This requires much have the correct managerial support) collating investigation, as no company likes to reveal its the data are the easy stages. Even reengineering techniques. However, once investigated as far the processes is quite straightforward. In fact as is possible, there is a need to consider BPR is a very straightforward concept. The risk which aspects can be used and how to adapt comes in the uncertainties: how the new them to Company A's own situations. Once processes will run together, how the employees the reengineered processes have been done, it will react, how they will handle adapting to needs to be seen how they fit together. their new roles. These risks cannot be There are many pieces of software available eliminated from the onset, however they can be that may be of use. This would have to be minimised by tight monitoring throughout, looked into in order to see the most apt one. thus noticing straight away when the first tell- Using computer simulation would provide tale signs of risk occurs such as personnel quite an accurate insight to how all the reaction to the changes. processes would work together as one company. More suitable measures need to be defined. Again, this requires more knowledge about the company: the areas that need Summary and conclusions improvement in each process, the current situation of each process in terms of cost, time It has been shown that Company A can benefit and any other measure deemed suitable. from implementing BPR. One such approach 284
  • 15. Business process reengineering in a British company: a case study Logistics Information Management Volume 13 . Number 5 . 2000 . 271±285 A. Gunasekaran, Walter W.C. Chung and K. Kan All transformation, just like the order Grundy, T. (1993), Implementing Strategic Change. A Practical Guide for Business, Kogan Page Ltd, fulfilment process, is to be limited to one London. weekend, with everyone given sufficient Hammer, M. and Champy, J. (1993), Reengineering the update so as to know exactly what they will be Corporation: A Manifesto for Business Revolution, doing come the week after. Some sort of post- HarperCollins Publishers Inc., New York, NY. implementation evaluation should be carried Hammer, M. and Stanton, S.A. (1995), The Reengineering out. This will consist of finding out how Revolution, The Handbook, HarperCollins Manufacturing, Glasgow. employees feel the productivity has changed, Khoong, C.M. (1996), ``Culture-sensitive, strategy-level how their own feelings about the workplace reengineering'', INFOR, Vol. 34 No. 1, pp. 43-55. have changed, and the change in cash flows, Zairi, M. (1997), ``Business process management: a etc. Any points found to be worse than before boundary-less approach to modern competitiveness'', need to be looked into and rectified, although Business Process Management Journal, Vol. 3 No. 1, if significant it is expected they will have been pp. 64-80. detected before implementation. Finally, a continuous improvement scheme should be introduced which invites any employee to Further reading comment or contribute. Abeysinghe, G. and Phalp, K. (1997), ``Combining process modelling methods'', Information and Software Technology, Vol. 39 No. 2, pp. 107-24. References Brockhoff, K.K., Koch, G. and Pearson, A.W. (1997), ``Business process re-engineering: experiences in Balkwill, J. and Freeman, B.G. (1996), Management in R&D'', Technology Analysis and Strategic Engineering, Prentice-Hall, London. Management, Vol. 9 No. 2, pp. 163-78. Bititci, U.S. and Muir, D. (1997), ``Business process Davidson, F.J. (1994), The New Project Management: definition: a bottom-up approach'', International Tools for an Age of Rapid Change, Corporate Journal of Operations & Production Management, Reengineering and Other Business Realities, Jossey- Vol. 17 No. 4, pp. 365-74. Bass, San Francisco, CA. Burnes, B. (1992), Managing Change, Pitman Publishing, Jacobson, I., Ericsson, M. and Jacobson, M. (1995), The London. Object Advantage. Business Process Reengineering Conti, R.F. and Warner, M. (1994), ``Taylorism, teams and with Object Technology, Addison-Wesley, technology in `reengineering' work-organisation'', Wokingham. New Technology, Work and Employment, Vol. 9 Keeble, P. (1995), ``A new methodology for business No. 2, pp. 93-102. process re-engineering'', INFOR, Vol. 33 No. 4, Coulson-Thomas, C. (1996), Business Process pp. 234-47. Reengineering: Myth and Reality, Kogan Page Ltd, Koenig, M.E.D. and Wilson, T.D. (1996), ``Productivity London. growth: the take-off point'', Information Processing Davenport, T.H. (1993), Process Innovation. Reengineering and Management, Vol. 32 No. 2, pp. 247-54. Work Through Information Technology, Harvard Ould, M.A. (1995), Business Processes. Modelling and Business School Press, Boston, MA. Analysis for Reengineering and Improvement, John Deakins, E. and Makgill, H.H. (1997), ``What killed BPR? Wiley & Sons, Chichester. Some evidence from the literature'', Business Plowman, B., ``The cost of the customer'', The TQM Process Management Journal, Vol. 3 No. 1, Magazine, Vol. 9 No. 1, pp. 54-60. pp. 81-107. Slack, N., Chambers, S., Harland, C., Harrison, A. and Fitzgerald, B. and Murphy, C. (1996), ``Business process Johnston, R. (1995), Operations Management, reengineering: putting theory into practice'', INFOR, Vol. 34 No. 1, pp. 3-13. Pitman Publishing, London. 285