Introduction to BPR and TQM, their difference, statistical tools and their application

1. 1
UNIVERSITY OF PETROLEUM & ENERGY STUDIES
DEHRADUN
BPR vs. TQM
Business Process Reengineering
(MBCG 749)
Submitted to:
Professor - Dr. NEERAJ ANAND
CoMES
Submitted by: Anupam Biswas
R600214019
Arpit Jha
R600214020
Roll No. R600214019
MBA (LSCM) Sem III
Batch 2014-16

2. 2
Contents
Sr. no. Topics Page no.
1 Introduction to TQM 3
2 Elements of TQM 4
3 TQM Flowchart 7
4 Introduction to BPR 7
5 BPR Methodology 9
6 BPR & IT 11
7 BPR Project Classification 12
8 BPR Flowchart 13
9 Difference b/w BPR & TQM 14
10 Statistical Tools 15
11 Applications 18
12 References 20

3. 3
What is TQM?
Total quality management (TQM) is a management philosophy practiced in many organizations,
focusing on continuously improving the quality of its products and services in order to fulfill the
customer expectations without influencing the ethical values. Therefore, everybody who is related
to the organization from top to bottom has a huge responsibility in providing
quality products or services.
In order to achieve TQM by fulfilling the requirements of the customers, one needs to be
thoroughly concerned about the following principles.
• Necessity of producing quality output in the first time.
• Focusing on satisfying the customer expectations.
• Following a strategic approach for continuous improvements.
• Encouraging mutual respect and teamwork.
Benefits of TQM
Using the TQM philosophy ensures the following results:
• Organization becomes more competitive.
• Helping to establish a new culture which enables growth and long-term success.
• Creates a productive working environment in which everyone can succeed.
• Helps to reduce stress, waste and defects.
• Helps to build partnerships, teams and co-operation.

4. 4
To be successful implementing TQM, an organization
must concentrate on the eight key elements:
Ethics Integrity Trust Training Teamwork Leadership Recognition
Communication
I. Foundation
TQM is built on a foundation of ethics, integrity and trust. It fosters openness, fairness and
sincerity and allows involvement by everyone. This is the key to unlocking the ultimate potential
of TQM. These three elements move together, however, each element offers something different
to the TQM concept.
1. Ethics – Ethics is the discipline concerned with good and bad in any situation. It is a two-
faceted subject represented by organizational and individual ethics. Organizational ethics
establish a business code of ethics that outlines guidelines that all employees are to adhere to in
the performance of their work. Individual ethics include personal rights or wrongs.
2. Integrity – Integrity implies honesty, morals, values, fairness, and adherence to the facts and
sincerity. The characteristic is what customers (internal or external) expect and deserve to
receive. People see the opposite of integrity as duplicity. TQM will not work in an atmosphere of
duplicity.
3. Trust – Trust is a by-product of integrity and ethical conduct. Without trust, the framework of
TQM cannot be built. Trust fosters full participation of all members. It allows empowerment that
encourages pride ownership and it encourages commitment. It allows decision making at
appropriate levels in the organization, fosters individual risk-taking for continuous improvement
and helps to ensure that measurements focus on improvement of process and are not used to

5. 5
contend people. Trust is essential to ensure customer satisfaction. So, trust builds the cooperative
environment essential for TQM.
II. Bricks
Basing on the strong foundation of trust, ethics and integrity, bricks are placed to reach the roof
of recognition. It includes:
4. Training – Training is very important for employees to be highly productive. Supervisors are
solely responsible for implementing TQM within their departments, and teaching their
employees the philosophies of TQM. Training that employees require are interpersonal skills, the
ability to function within teams, problem solving, decision making, job management
performance analysis and improvement, business economics and technical skills. During the
creation and formation of TQM, employees are trained so that they can become effective
employees for the company.
5. Teamwork – To become successful in business, teamwork is also a key element of TQM. With
the use of teams, the business will receive quicker and better solutions to problems. Teams also
provide more permanent improvements in processes and operations. In teams, people feel more
comfortable bringing up problems that may occur, and can get help from other workers to find a
solution and put into place. There are mainly three types of teams that TQM organizations adopt:
A. Quality improvement teams or excellence teams (QITs) – These are temporary teams with the
purpose of dealing with specific problems that often recur. These teams are set up for period of
three to twelve months.
B. Problem solving teams (PSTs) – These are temporary teams to solve certain problems and
also to identify and overcome causes of problems. They generally last from one week to three
months.
C. Natural work teams (NWTs) – These teams consist of small groups of skilled workers who
share tasks and responsibilities. These teams use concepts such as employee involvement teams,
self-managing teams and quality circles. These teams generally work for one to two hours a
week.
6. Leadership – It is possibly the most important element in TQM. It appears everywhere in
organization. Leadership in TQM requires the manager to provide an inspiring vision, make
strategic directions that are understood by all and to instill values that guide subordinates. For
TQM to be successful in the business, the supervisor must be committed in leading his
employees. A supervisor must understand TQM, believe in it and then demonstrate their belief
and commitment through their daily practices of TQM. The supervisor makes sure that
strategies, philosophies, values and goals are transmitted down throughout the organization to
provide focus, clarity and direction. A key point is that TQM has to be introduced and led by top
management. Commitment and personal involvement is required from top management in
creating and deploying clear quality values and goals consistent with the objectives of the
company and in creating and deploying well defined systems, methods and performance
measures for achieving those goals.

6. 6
III. Binding Mortar
7. Communication – It binds everything together. Starting from foundation to roof of the TQM
house, everything is bound by strong mortar of communication. It acts as a vital link between all
elements of TQM. Communication means a common understanding of ideas between the sender
and the receiver. The success of TQM demands communication with and among all the
organization members, suppliers and customers. Supervisors must keep open airways where
employees can send and receive information about the TQM process. Communication coupled
with the sharing of correct information is vital. For communication to be credible the message
must be clear and receiver must interpret in the way the sender intended.
There are different ways of communication such as:
A. Downward communication – This is the dominant form of communication in an organization.
Presentations and discussions basically do it. By this the supervisors are able to make the
employees clear about TQM.
B. Upward communication – By this the lower level of employees are able to provide
suggestions to upper management of the effects of TQM. As employees provide insight and
constructive criticism, supervisors must listen effectively to correct the situation that comes
about through the use of TQM. This forms a level of trust between supervisors and employees.
This is also similar to empowering communication, where supervisors keep open ears and listen
to others.
C. Sideways communication – This type of communication is important because it breaks down
barriers between departments. It also allows dealing with customers and suppliers in a more
professional manner.
IV. Roof
8. Recognition – Recognition is the last and final element in the entire system. It should be
provided for both suggestions and achievements for teams as well as individuals. Employees
strive to receive recognition for themselves and their teams. Detecting and recognizing
contributors is the most important job of a supervisor. As people are recognized, there can be
huge changes in self-esteem, productivity, quality and the amount of effort exhorted to the task at
hand. Recognition comes in its best form when it is immediately following an action that an
employee has performed. Recognition comes in different ways, places and time such as,
 Ways – It can be by way of personal letter from top management. Also by award banquets,
plaques, trophies etc.
 Places – Good performers can be recognized in front of departments, on performance boards
and also in front of top management.
 Time – Recognition can be given at any time like in staff meeting, annual award banquets, etc.

7. 7
TQM Flowchart
What is BPR?
Business Process Re-engineering (BPR) results in changes among the structures and processes
within the business environment. Therefore, there may be technological advancements and human
resource replacements with the automation techniques which will increase the efficiencies and the
productivity of the organizations. These would result in increasing the flexibility and adaptability
to the rapid changes in the competitive business environment.
Business processes can be divided into three elements as inputs, process and outputs. The BPR is
related to the processing element in order to reduce the cost and improve the delivery time.
According to Hammer Champy in 1993, BPR is the fundamental rethinking and radical design of

8. 8
the business processes to achieve improvements within performances, cost, quality, service and
speed.
Objectives of BPR
The main objectives of BPR include the following factors:
• Customer focus -The main objective of BPR is to increase the level of customer satisfaction.
• Speed – With the use of advanced technologies, the processing speed is expected to be
improved as most of the tasks are automated.
• Compression – It explains the ways of reducing the cost and capital invested in primary
activities, throughout the value chain. It can be done by combining the interrelated activities or
by performing parallel activities in a particular process.
• Flexibility – It is an out the adaptive processes and structures used to changing conditions and
competition. By being closer to the customer, the company would be able to develop the
awareness mechanisms to tackle the areas that require improvements.
• Quality – The level of quality can always be maintained with the expected levels of standards
and can be monitored by the processes.
• Innovation – Leadership through innovation provides changes in the organization to achieve
competitive advantage.
• Productivity-It can be improved drastically with effectiveness and efficiency.

9. 9
BPR as an organizational change includes:
Activity based costing analysis – Baselining and benchmarking studies – Business case analysis
– Functionality assessment – Industrial engineering techniques – Organization analysis –
Productivity assessment – Workforce analysis – Others, as needed (e.g., human capital tools)
BPR methodology:

10. 10
Seven Principles of Reengineering
Hammer and Champy felt the design of workflow in most large corporations was based on no-
longer-valid assumptions about technology, people and organizational goals. They also outlined
seven reengineering principles to streamline the work process and thereby achieve significant
levels of improvement in quality, time management and cost:
 Organize around outcomes, not tasks.
 Identify all the processes in an organization and prioritize them in order of redesign urgency.
 Integrate information processing work into the real work that produces the information.
 Treat geographically dispersed resources as though they were centralized.
 Link parallel activities in the workflow instead of just integrating their results.
 Put the decision point where the work is performed, and build control into the process.
 Capture information once and at the source.
In evaluating Hammer and Champy’s principles of BPR, one must note that BPR is not
reorganizing, restructuring, downsizing, automation or cost-cutting – although these results are
often part of a well thought-out, well planned, and well-executed reengineering project. A
successful BPR project can be more identified with the following success factors identified in
Prosci’s study “1998-1999 Reengineering Best Practices:”
 Proven methodology
 Compelling business case for change
 Effective change management
 Strategic alignment
 Line ownership
 Top management sponsorship
 Reengineering team composition
Prosci’s success factors directly map to tenants of Six Sigma:
 Executive management support
 Willing participation and buy-in of all associates involved in the redesign
 Focus on value-add and customer-focused processes

11. 11
BPR and Information Technology
Business Process Re-engineering has rapidly developed towards a new management
philosophy. The inherent business process orientation changes the perspective of
international management from a structural to that of a process view. The re-engineering
of business processes is only one aspect of the management of business processes. In
particular, the re-engineering of international business processes needs special attention,
because the multi-faceted structure of multinational corporations increases the complexity
of business processes, there by influencing the options for redesign. Business Process Re-
engineering has rapidly developed towards a new management philosophy based upon
predecessors like Total Quality Management, Overhead Value Analysis, Kanban or Just-
In-Time-Management. Business processes can be re-engineered by redesigning the steps, by
changing the logical and temporal sequence of the steps, or by changing any other
characteristics of the process. The role of IT is discussed in contradictory way. Advocates
of information systems favor the view that the new technology is an enabler of process re-
engineering. IT has to be monitored constantly to determine whether it can generate new
process designs or contribute to the performance of a business process. The breakthrough
of BPR is closely connected with IT, which opens new dimensions of process
reorganization. Moreover, those who take the initiative in process improvement/redesign,
influence the role of IT. If the data processing department initiates the process change, then
IT will have more of a generator function for new process redesigns. If on the other hand,
the top management sets off the change process, then the process will be first restructured
and later optimized through IT.

12. 12
BPR Project classification
Streamlining
Process
Improvement
"Cost-Reduction"
Re-engineering
Achieving Best-
In-Class
"Competitive
Parity "
Re-inventing
Break-Point
"Rewriting the
Rules"
Pro
Example 1.1:
Eliminate costly
paper work by
introducing an e-
mail system to
internal
communication.
Example 1.2.:
Reengineer the
sourcing
process to
ensure that the
lowest cost
suppliers are
being selected.
Example 1.3.:
A company uses a
digital voice
recording system
to streamline its
acquisition
process, and to
improve
communications
Example: 2.1:
A bank has
created a
simplified, one
page form for
loan applications
for those
customers,
seeking up to
US$ 60k.
Example 2.2.:
Introduce self-
directed work
teams to the
order
management
process in a
manufacturing
company.
Example 2.3.:
A bank dissolves
all existing 120
branches, and
introduces an
extremely user-
friendly direct
banking system on
the Internet.
Example 3.1:
Link up with one
particular vendor
for cost saving
purposes in
product design
and parts delivery
(single source
concept).
Example 3.2.:
Reengineering
the delivery
process
between a
german machine
manufacturer
and all its
European
automotive parts
suppliers (just-
in-time
processes).
Example 3.3.:
An automotive
company
externalizes all
employees, except
a staff of thirty
people. Former
employees turn
into entrepreneurs
and form a network
of suppliers
together with other
vendors.
SCOPE
Intra-functional
Projectsare aimedat single and
isolatedtasks, activitiesor
single function.
Inter-functional
Projectstargetcross functional
business processes,butarecontained
withinabusiness unit.
Inter-organizational
Projectsbridge betweentwoormore
business units,such asthecompany
and itscustomersandsuppliers.

13. 13
BPR Flowchart
What is the difference between TQM and BPR?
• TQM and BPR have a cross-functional relationship. TQM is concerned about improving
productivity through quality improvements while BPR is about making process improvements
through radical redesign and use of advanced technologies.
• TQM is focusing on continuous improvements while BPR is concerned about product
innovations.
• TQM emphasis on the use of statistical process control while BPR emphasis on the use of
information technology.
• Both top down and bottom up approaches can be used in implementing TQM, but BPR can be
implemented only through a top-down approach.

14. 14
Difference:

15. 15
Statistical tools
1. Pareto Analysis
Pareto principle suggests that most effects come from relatively few causes. In quantitative
terms: 80% of the problems come from 20% of the causes (machines, raw materials, operators
etc.); 80% of the wealth is owned by 20% of the people etc. Therefore effort aimed at the right
20% can solve 80% of the problems. Double (back to back)
Pareto charts can be used to
compare 'before and after'
situations. General use, to
decide where to apply initial
effort for maximum effect.
The 80/20 rule can be applied to almost anything:
 80% of customer complaints arise from 20% of your products and services.
 80% of delays in the schedule result from 20% of the possible causes of the delays.
 20% of your products and services account for 80% of your profit.
 20% of your sales-force produces 80% of your company revenues.
 20% of a systems defects cause 80% of its problems.

16. 16
2. Cause and Effect/Fishboneanalysis:Ishikawa
This tool is used to:
Discover the root cause of a problem.
Uncover bottlenecks Add to My Personal Learning Plan in your processes.
Identify where and why a process isn't working.
Schematic representationofFishbone:
Third-party agents/
Internal Staff Customers Subcontractors
Lack of preparation
Staff input Unclear bookingorder Cargo status
wronginformation No standardformat Delayed Booking
HAWB problems Too many paper documents Lack of contract CCP
Misunderstanding, no Bookingorder is missing Incomplete ld
Standardformat Non IT booking Booking
Delayed No Forecast Lack of Contract
Or inaccurate pre-alert Late booking
Lack of Contract
Order Booking Problems
No IT order booking Use longer processing
Too much time Natural problems
Rely on email/call Softwares are out-of-date IT system problems
Limited local IT Lack of care NSS
Development Lack of maintenance
Communication Gap Fax/Printer work down Management flaw
Lack of followup No proper maintenance/old
Methods Systems Management

17. 17
3. Control chart
Control charts, also known as Shewhart charts (after Walter A. Shewhart) or process-behavior
charts, in statistical process control are tools used to determine if a manufacturing or business
process is in a state of statistical control.
The control chart is a graph used to study how a process changes over time. Data are plotted in
time order. A control chart always has a central line for the average, an upper line for the
upper control limit and a lower line for the lower control limit. These lines are determined from
historical data.
Interpreting the chart: The most standard display actually contains two charts (and
two histograms); one is called an X-bar chart, the other is called an R chart.
In both line charts, the horizontal axis represents the
different samples; the vertical axis for the X-bar chart
represents the means for the characteristic of interest; the vertical axis for the R
chart represents the ranges. For example, suppose we want to control the diameter of piston rings
that we are producing. The center line in the X-bar chart would represent the desired standard
size (e.g., diameter in millimeters) of the rings, while the center line in the R chart would
represent the acceptable (within-specification) range of the rings within samples; thus, this latter
chart is a chart of the variability of the process (the larger the variability, the larger the range). In
addition to the center line, a typical chart includes two additional horizontal lines to represent the
upper and lower control limits (UCL, LCL, respectively); we will return to those lines shortly.
Typically, the individual points in the chart, representing the samples, are connected by a line. If
this line moves outside the upper or lower control limits or exhibits systematic patterns across
consecutive samples, a quality problem may potentially exist.
0
10
20
30
40
50
60
1 2 3 4 5 6 7 8 9 10 11 12

18. 18
Application:
BPR

19. 19
Application:
TQM

20. 20
Application:
References:
1. http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.307.9409&rep=rep1&type=pdf
2. http://www.slideshare.net/?ss
3. http://www.differencebetween.com/difference-between-tqm-and-vs-bpr/
4. http://www.yourarticlelibrary.com/business/comparison-between-business-process-
reengineering-and-total-quality-management/21147/