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Business process reengineering


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Business process reengineering

  1. 1. Business Process Reengineering By:- Neel Kamal
  2. 2. Introduction• In today’s ever-changing world, the only thing that doesn’t change is ‘change’ itself. In a world increasingly driven by the three Cs: Customer, Competition and Change,• companies are on the lookout for new solutions for their business problems[4]. Recently, some of the more successful business corporations in the world seem to have hit upon an incredible solution: Business Process Reengineering (BPR).• Some of the recent headlines in the popular press read, “Wal-Mart reduces restocking time from six weeks• to thirty-six hours.”” Hewlett Packard’s assembly time for server computers touches new low- four minutes.”• The reason behind these success stories: Business Process Reengineering!
  3. 3. What is reengineering?• “Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service and speed”.• BPR advocates that enterprises go back to the basics and reexamine their very roots. It doesn’t believe in small improvements. Rather it aims at total reinvention.• BPR focuses on processes and not on tasks, jobs or people.
  4. 4. What to reengineer? :• “A business process is a series of steps designed to produce a product or a service. It includes all the activities that deliver particular results for a given Customer(external or internal)”.• Talking about the importance of processes just as companies have organization charts, they should also have what are called process maps to give a picture of how work flows through the company.
  5. 5. Why Reengineer?• Historical ‘reality’ for organizations: – High level of demand: organizations are order takers – Management (and IT!) focus – efficiency and control of operations• Modern ‘reality’ since 1990s: – Hyper-competiveness – Globalization – Very demanding customers – Management and IT focus: Innovation, responsiveness/speed, quality and service.
  6. 6. Ford Motor Company• Accounts Payable function• 500 people• Most work on mistakes between Purchase Orders Receiving Invoices Documents
  7. 7. Ford (cont)
  8. 8. Ford (cont)
  9. 9. BPR Principles• Organize around outcomes, not tasks.• Have those who use the output of the process perform the process.• Subsume information-processing work into the real work that produces the information.• Treat geographically dispersed resources as though they were centralized.• Link parallel activities instead of integrating their results.• Put decision points where the work is performed and build controls into the process.• Capture information once and at the source.
  10. 10. Process of BPR
  11. 11. • Activity #1: Prepare for Reengineering:• “If you fail to plan, you plan to fail”. Planning and Preparation are vital factors for any activity or event to be successful, and reengineering is no exception. Before attempting reengineering, the question ‘Is BPR necessary?’ should be asked?• There should be a significant need for the process to be reengineered.• A cross-functional team is established with a game plan for the process of reengineering.• Another important factor to be considered is to understand the expectations of your customers and where your existing process falls short of meeting those requirements.• Having identified the customer driven objectives, the mission or vision statement is formulated.
  12. 12. Activity #2: Map and Analyze As-Is Process• Before the reengineering team can proceed to redesign the process, they should understand the existing process.• The important aspect of BPR (what makes BPR, BPR) is that the improvement should provide dramatic results.• A large manufacturer spent six million dollars over a period of one year in a bid to develop a parts-tracking system and was all set to go online. Only then did he realize that he had totally overlooked a small piece of information – ‘the mode of transmission of information between the scheduling staff and the shop floor was through a phone call.’
  13. 13. Activity #2: Map and Analyze As-Is Process• The main objective of this phase is to identify disconnects (anything that prevents the process from achieving desired results and in particular information transfer between organizations or people) and value adding processes.• This is initiated by first creation and documentation of Activity and Process models.• Then, the amount of time that each activity takes and the cost that each activity requires in terms of resources is calculated through simulation and activity based costing(ABC).
  14. 14. Activity #3: Design To-Be process• The objective of this phase is to produce one or more alternatives to the current situation, which satisfy the strategic goals of the enterprise.• The first step in this phase is benchmarking. “Benchmarking is the comparing of both the performance of the organization’s processes and the way those processes are conducted with those relevant peer organizations to obtain ideas for improvement”• Having identified the potential improvements we perform simulation and ABC to analyze factors like the time and cost involved.
  15. 15. Activity #3: Design To-Be process• The several To-Be models that are finally arrived at are validated. By performing Trade off Analysis the best possible To-Be scenarios are selected for implementation. Activity #4:Implement Reengineered Process:•The implementation stage is where reengineeringefforts meet the most resistance and hence it is by farthe most difficult one.•The question that confronts us would be,’ If BPRpromises such breath taking results then why wasn’tit adopted much earlier?’
  16. 16. Activity #4:Implement Reengineered Process:•requirements for the construction of the To-Becomponents can be added and the result organizedinto a Work Breakdown Structure (WBS).•The benefit here is that we can now define the causaland time sequential relationships between theactivities planned.•Using prototyping and simulation techniques, thetransition plan is validated and it’s pilot versions aredesigned and demonstrated.• Training programs for the workers are initiated andthe plan is executed in full scale.
  17. 17. Activity #5: Improve Process Continuously:• A process cannot be reengineered overnight.• very vital part in the success of every reengineeringeffort lies in improving the reengineered processcontinuously.• Two things have to be monitored – the progress ofaction and the results.• The progress of action is measured by seeing howmuch more informed the people feel, how much morecommitment the management shows and how well thechange teams are accepted in the broader perspective ofthe organization.•As for monitoring the results, the monitoring shouldinclude such measures as employee attitudes, customerperceptions, supplier responsiveness etc
  18. 18. New Life Insurance Policy Application Process at Mutual Benefits Life Before Reengineering* Department A Step 1 Department A Step 2 .... Issuance Application Mutual Benefits Life Before Reengineering* Department E Issuance Step 19 Policy• 30 steps, 5 departments, 19 persons• Issuance application processing cycle time: 24 hours minimum; average 22 days• only 17 minutes in actually processing the application*Source: Adapted from Rethinking the Corporate Workplace: Case Manager at Mutual Benefit Life, Harvard Business School case 9-492-015, 1991.
  19. 19. The New Life Insurance Policy Application Process Handled by Case Managers Mainframe PhysicianUnderwriter LAN Case Manager Server PC Workstation • application processing cycle time: 4 hours minimum; 2-5 days average • Application handling capacity double • Cut 100 field office positions
  20. 20. Enabling IT to Consider• Client/server technology• Groupware and collaboration technologies• Mobile computing (wireless LAN, pen-based computing, GPS, iPhone)• Data capturing technology (scanner/barcode reader/RFID)• Telephony: Integration of computer and telephone systems; VoIP; Unified communications• Web services and Service-Oriented Architecture (SOA)• Imaging technology, work flow management systems, Business Process Management (BPM)• Decision support systems, Data warehouse, Business intelligence, Data mining, Digital dashboard• ERP, CRM, SCM• Electronic Data Interchange (EDI), Electronic Commerce, WWW, and Internet
  21. 21. IT Enabling Effects Dimensions & Type Examples IT Enabling Effects Organization Entity • Interorganizational Order from a supplier Lower transaction costs Eliminate intermediaries • Interfunctional Develop a new product Work across geography Greater concurrency • Interpersonal Approve a bank loan Integrate role and task Objects Manufacture a product • Physical Increase outcome flexibility Control process • Informational Prepare a proposal Routinize complex decision Fill a customer order Activities • Operational Reduce time and costs Develop a budget Increase output quality • Managerial Improve analysis Increase participationAdapted from: Davenport, T. H. and Short, J. E., "The New Industrial Engineering: Information Technology and Business Process Redesign," Sloan ManagementReview, Summer 1990, p. 17.
  22. 22. The Reengineering DiamondCustomers & Competitors Values andSuppliers Beliefs Enlighten Foster Customers Management & Business Processes & & Measurement Functions Info. Tech. Systems Entail Demand Jobs , Skills, & Organizational Culture Structures Markets
  23. 23. Conclusion:• An intense customer focus, superior process design and a strong and motivated leadership are vital ingredients to the recipe for the success of any business corporation. Reengineering is the key that every organization should possess to attain these prerequisites to success.