Group of related tasks that together create a value for a customer
Example: Receiving the order, entering into the computer, checking the customer credit, picking the goods out of stock, packing, loading into the truck and so on. None of these activities is of any value or interest to the customer. Customer is only interested in the end result of these tasks ie, DELIVER GOODS.
Reduce non value added activity in the organization
Increased customer satisfaction
One of the best known models of business is the ‘Value Chain’ framework developed by Harvard Business School professor Michael porter who referred to processes as chains. Porter defined two types of activities in which the firm engage in : primary activities and support activities . Primary activities are those activities through which a company ‘adds value’ to its input for their customers who are prepared to pay for its output .
One of the Finance company found that it took 22 days to process an application for insurance, even though it was worked on for just 17 min.! In an ideal world the customer would need to wait only a few minutes, not even the full 17 minutes.
BPR is an important philosophy. It aims to achieve step improvements in performance by redesigning the processes through which an organization operates, maximizing their value-added content and minimizing everything else. This approach can be applied at an individual process level or to the whole organization.
The prerequisite for business optimization is an integrated information system. This system allows the business engineer to explore every pathway where value is added within a company and to design business processes that maximize value while minimizing cost. Using this the management can continuously realign business operations with company objectives.