Process Redesign


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The Nitty Gritty On Redesigning Business Processes

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Process Redesign

  1. 1. Process Redesign The Nitty Gritty On Redesigning Business Processes
  2. 2. <ul><li>When redesigning business processes, there are some rules that can be applied to achieve the desired outcome. These rules help in the decision-making process on the options available that will meet the objectives of the redesigning exercise. </li></ul><ul><li>To help the Business Process Improvement (BPI) team conceptualize ideas for how to achieve its goals, start initially by investigating ways to reduce the following: </li></ul><ul><li>Number of steps in the process </li></ul><ul><li>Types of steps </li></ul><ul><li>Valueless steps </li></ul><ul><li>Number of control points </li></ul><ul><li>Number of database sources </li></ul>Redesigned Process
  3. 3. <ul><li>The rules of process redesign provide the BPI team battle-proven ways to overcome process hurdles. These rules include: </li></ul><ul><li>Eliminate tasks </li></ul><ul><li>Parallel tasks </li></ul><ul><li>Integrate tasks </li></ul><ul><li>Centralize or decentralize tasks </li></ul><ul><li>Create multiple versions of processes </li></ul><ul><li>Reduce input or output sources </li></ul><ul><li>Decide early or late </li></ul><ul><li>Decrease or increase choices </li></ul><ul><li>Shift work to customers or suppliers </li></ul><ul><li>Think BIG </li></ul>Rules Of Redesign
  4. 4. Do not simply automate existing processes and tasks; try to remove them entirely. This will reduce cycle time, resources, cost, and opportunities for error. Eliminate Tasks Before After X X
  5. 5. Consolidate tasks in groups so that each group may consume the same elapsed time: Undertake both activity streams in parallel. Create hybrid parallel and sequential processes: Use a combination of parallel and sequential tasks to create a hybrid process. This strategy reduces cycle time and improves integration. Parallel Tasks Before After
  6. 6. Arrange for the tasks to be undertaken by one individual: Compress all steps into one function and one individual’s job. This strategy eliminates the traditional concept of specialized labor, functional specializations, and the assembly-line mentality. This will result in improved throughput and cycle time, and broadened job responsibilities. Integrate Tasks Before After
  7. 7. Centralize information and knowledge management to standardize products and services. Give greater responsibility to staff closest to the customer. Decentralize to create a higher quality of service availability to users. However, this can create redundancy, bureaucracy, and missed opportunities of scale. Create hybrid centralized and decentralized processes: Combine centralized and decentralized processes to provide flexibility. Centralize Or Decentralize Tasks Of Processes Before After
  8. 8. Create multiple versions of the same process to increase service and satisfaction. Michael Hammer said, “Traditional processes were intended to provide mass production for a mass market. All inputs were handled identically so companies would produce uniform and consistent outputs. In a world of diverse and changing markets that logic is obsolete. To meet the demands of today’s environment, we need multiple versions of the same process, each one tuned to the requirements of different markets, situations, or inputs. What’s more, these new processes must have the same economies of scale that result from mass production. Processes with multiple versions usually start with a ‘triage’ step to determine which version works best in a given situation.” Create Multiple Versions After Best Process Michael Hammer & James Champy (1993) Re-Engineering The Corporation – A Manifesto For Business Revolution, Nicholas Brealey Publishing, Page 55.
  9. 9. Where there are a large number of inputs or outputs, decrease or combine them. Give responsibility to staff who produce information to also process it, reducing the need for outputs to go to another function. These strategies result in consistency, fewer errors, improved service, and shorter cycle times. Reduce Input Or Output Sources Before After
  10. 10. Aim for where the business will be when the products or services delivery is scheduled: Deliver what customers want next year, not what they want today. This uses resources more efficiently and eliminates waste. For example, an organization may attempt to develop innovative products that are ahead of demand. It manufactures these in large quantities, taking advantage of economies of scale, and distribute them throughout the world. This means that the consumer gets the very latest advances and is assured of delivery. However, if the forecasting process is not sufficiently efficient, there can be problems. If they have incorrectly anticipated needs and have overestimated levels of demand, there can be stock surpluses, leading to inventory write-offs or reduced profit margins during sales. Decide Early After Before ? Before Sale!
  11. 11. Establish a flexible process that allows decisions to be made close to the time of service delivery, when market conditions are better known. For example, an organization used to make T-shirts in all different colors, trying to anticipate market demand for the season. But often, their stores did not sell them because the fashion changed during the season and a color that had not been foreseen became popular. To reduce returns, they decided to stock semi-finished goods and finished them as orders were received. They made up lots of white T-shirts and at the last moment, when the fashion trend was apparent, they would finish them in the most popular colors. Decide Late Before After Changing Conditions Changing Conditions
  12. 12. Create bundles of inputs or outputs to reduce decision-making time and errors: Bundle items together into larger groups to reduce the number of inputs that have to be considered. For example, offer a ‘Family Package’ on the menu, which combines a number of items into one easy-to-remember item for ordering. Decrease Choices Before After ? A
  13. 13. Increase the range of options to provide greater flexibility and choice. Increasing alternatives enables customization, which improves responsiveness, resulting in greater customer satisfaction. For example, a fast food joint can enable the customers to choose their burger and tailor it to their likes by adding different pickles. Increase Choices Before After ? A+
  14. 14. Where possible, transfer the work to the customer. This reduces cost and overhead, and can also improve the perceived level of service, especially for busy individuals. Examples include customers entering their own product orders on the Internet, ATM banking, and self-service petrol stations. Shift Work To Customers Before After
  15. 15. Shift to suppliers work that adds no value to the business (or is a cost), but which could benefit the suppliers. For example, Just-In-Time (JIT) logistics inventory management and distribution where the supplies for manufacturing processes are received just before they are needed, straight on the factory floor, instead of into inventory. This strategy saves warehouse costs and enables suppliers to better manage their goods. However, it requires accurate forecasting or tight integration between the manufacturer and supplier via electronic commerce and enterprise systems. Shift Work To Suppliers Before After Wait
  16. 16. Change everything to match the process. Thinking BIG means not just changing the process; it means changing the business paradigm, which is the mental model by which a business is managed. Change the model, the organization, and the culture to match the new process; this is the paradigm shift. Think BIG Supplier After Manufacturer Distributor Retailer Consumer Supplier Before Manufacturer Distributor Retailer Consumer Information Flow Cash Flow
  17. 17. Applying different rules will achieve different results. Select the rules you need to achieve your goals. Results        Error      Satisfaction       Rework          Use Of Resources            Cycle Time        Service Quality       Cost Think BIG  Shift Work To Suppliers Shift Work To Customers Increase Choices Decrease Choices  Decide Late  Decide Early Reduce Input / Output Of Sources Create Multiple Versions Of Processes  Centralize / Decentralize Tasks Integrate Tasks Parallel Tasks Eliminate Tasks Demand / Supply Tools
  18. 18. The End