2. Questions!!!
ďś For you what is TQM? BPR? BSC?
ERP?
ďś Who do you think that develop BPR?
ďś Who develop BSC?
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
3. Types of change
There are mainly four ways to changes. These four ways are
defined in two dimensions â the extent of the change
and the speed with which the change is to be achieved.
⢠Transformation: entails changing an organization's
culture. It is a fundamental change that cannot be
handled within the existing organizational paradigm.
⢠Realignment: does not involve a fundamental reappraisal
of the central assumptions and beliefs.
⢠Incremental change: can take a long period of time, but
results in a fundamentally different organization once
completed.
⢠Big Bang: change is likely to be a forced, reactive
transformation using simultaneous initiatives on many
fronts, and often in a relatively short space of time.
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
4. Types âŚ. Contâd
⢠Change can be classified by the extent of the change required
and the speed with which the change is to be achieved:
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
5. Types âŚ..Contâd
⢠Stace and Dunphy (2002) distinguish a number of levels of
change on a continuum:
Level 1 â Fine tuning: Addressing and improving the fit
between strategy and the organizations people, processes
and structure, for example, policy and process changes;
continuous improvement teams. Refining, clarifying,
interpreting group norms and operating procedures.
Level 2 â Incremental adjustment: Relatively modest
changes around the organization in the light of external
drivers for change. Changes involving strategy, structure
and management process.
â Shifting the scale and scope of the operation; changing the
product or service mix; addressing production inefficiencies.
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
6. Types âŚ..Contâd
Level 3 â Modular transformation: Major restructuring
and realignment â focusing specific parts of the
organization rather than the organization in its
entirety. For example, a restructuring of the
marketing department around distribution channels
rather than product lines, or a decentralization of the
HR department into business units.
Level 4 â Corporate transformation: Fundamental shift
in organizational business strategy involving new
statement of vision, mission and/or values; major
restructuring that changes the power bases within
the organization; radical changes to structure,
systems and processes across the whole
organization; key appointments recruited from
outside the organization.Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
7. 4.1. Planned vs. unplanned change
⢠Planned changed: is an effort to move an
organization to a higher level.
⢠Occurs when deliberate decisions are made in an
organization.
⢠Occurs with successful implementation of a
Strategic Plan, plan for reorganization, or other
implementation of a change of this magnitude.
⢠Unplanned change: happens when pressures of
external factors are so overwhelming that resistance
to change is unavoidable. is a result of unforeseen
occurrences.
⢠Unplanned change might occur when significant
public relations problems occur, poor product
performance quickly results in loss of customers, or
other disruptive situations arise.Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
8. 4.1. Evolutionary and Revolutionary Change
4.1.1. Evolutionary Change
ď Is gradual, incremental, and narrowly
focused.
ď Is not dramatic or sudden but, rather, is
a constant attempt to improve, adapt,
and adjust strategy and structure
incrementally to accommodate to
changes taking place in the
environment.
Example: Total quality management
and organizational developmentAbdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
9. Total Quality Management
ďśIs a philosophy that involves every one in an
organization in a continual effort to improve quality,
drive down cost and achieve customer satisfaction.
ďśCommitment to quality throughout organization
⢠Principles of TQM
â Customer-oriented
â Leadership
â Strategic planning
â Employee responsibility
â Continuous improvement
â Cooperation
â Statistical methods
â Training and education
Strategic implications of
TQM
⢠Strong leadership
⢠Goals, vision, or mission
⢠Operational plans and
policies
⢠Mechanism for feedback
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
10. Steps to Successfully Implement TQM
ďśBuild organizational commitment to quality.
ďśFocus on customers: TQM see customers as the
starting point. It requires to identify what customers
want, what the company actually provides to
customers, quality gap, and formulate a plan for
closing the quality gap.
ďśFind ways to measure quality
ďśSet goals and create incentives
ďśSolicit input from employees: Quality circle
ďśIdentify defects and trace them to their sources
ďśDesign for ease of production
ďśBreak down barriers between functionsAbdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
11. TQM principles from the Japanese Kaizen
Technique
⢠Kaizen- defines the managements role in
continuously encouraging and implementing
small improvements in the individual &
organization.
⢠Break the complex process into sub-processes
and then improve the sub-processes.
⢠Continuous improvements in small increments
make the process more efficient ,controllable
and adaptable.
⢠Does not rely on more expense, or
sophisticated equipment and techniques.
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
12. Role of Employees in Quality Improvement
⢠Participative problem
solving
â employees involved in quality-
management
â every employee has
undergone extensive training
to provide quality service.
⢠Kaizen
â involves everyone in process
of continuous improvement
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
13. Quality Circles and QITs
⢠Quality circle: group
of workers and
supervisors from same
area who address
quality problems
⢠Process/Quality
improvement
teams (QITs): focus
attention on business
processes rather than
separate company
functions
Presentation
Implementation
Monitoring
Solution
Problem results
Problem
Analysis
Cause and
effect
Data collection
and analysis
Problem
Identification
List
alternatives
Consensus
Brainstorming
Training
Group
processes
Data collection
Problem
analysis
Organization
8-10 members
Same area
Supervisor/moderato
r
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
14. Quality Attributes in Services
⢠Principles of TQM apply
equally well to services and
manufacturing
⢠Timeliness
â how quickly a service is
provided?
⢠Benchmark
â âbestâ level of quality
achievement in one company
that other companies seek to
achieve
âquickest, friendliest, most
accurate service available.â
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
15. 4.1.2. Revolutionary Change
ďź Is a rapid, dramatic, and broadly focused
change.
ďź It involves a bold attempt to quickly find new
ways to be effective.
ďź Is a radical shift in ways of doing things, new
goals, and new structure for the organization.
Example: Reengineering, restructuring, and
quantum innovation
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
16. 4.2. Business Process Reengineering
ď Is the fundamental rethinking and radical redesign of
business process to achieve dramatic improvements in
critical, contemporary measures of performance, such as
cost, quality, service, and speed.
ďąFundamental Rethinking: Why do we do what we do?
Why do we do it the way we do it?
ďąRadical redesign: Throwing the existing system and starting
with a clean slate and redesign.
ďąDramatic improvement: It is about achieving quantum
performance growth.
ďą Business process: An organized group of related activities
that together create value to customers.
ďą Reengineering is not downsizing, not restructuring, not
automation, and not outsourcingAbdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
17. Why Reengineering?
ďśCustomers
- Demanding
- Sophistication
- Changing Needs
ďśCompetition
- Global
- Local
ďśChange
- Technology
- customer preferences
ďśResistance
ďśNew developments
ďśFear of failure Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
18. Aspects TQM BPR
Level of change Incremental Dramatic and Radical
Starting points Existing process Clean slate
Frequency of
change
Continuous One-time
Time required Long Short
Risk Moderate High
Participation Bottom-up Top-down
Typical scope Narrow, within
functions
Broad, cross
functional
TQM vs. BPR
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
19. Who need BPR?
ďś Companies that find themselves in deep trouble.
E.g. costs are higher than business sales and
competitors;âŚ..
ďś Organizations that are not yet in trouble, but
whose management has the foresight to see trouble
coming.
ďś Organizations in peak condition. They have no
discernible difficulty, either now or in the horizon,
but their management is ambitious and aggressive.
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
20. 4.2.1. Stages to Reengineering
Stage One: Preparation For Change/Planning
Stages/
Stage Two: Understanding the Current Business
Process (As-Is)
Stage Three: Redesigning the Business Process
Phase Four: Successful Implementation and
Building Process Centered Organization
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
21. Preparation For Change/Planning Stages/
Reengineering in this phase requires the following:
ď§ Assessing the preconditions for change: There must be
real pain, either current or anticipated.
ď§ Leadership commitment: Strong, committed, executive
leadership is the absolute since essential condition for
reengineering.
ď§ Identifying the business process: The major criterion of
choosing this process are: Dysfunctional-processes,
Important processes, and Feasibility.
ď§ Forming organizational structure: include: Design team,
Team leader or facilitator, Subject matter experts, Steering
team, Process owner.
ď§ Preparing TOR (terms of reference): specify the objective
and methodology of the reengineering, and Have concrete
action plan indicating what to do, when, how and by whom.
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
22. Understanding the Current Business Process (As-Is)
The goal is to get a high level view of the existing
process in order to produce superior business process
from a clean sheet of paper.
In this stage, the reengineering team should be able to:
ďźUnderstand the customersâ need with the processes
output.
ďźShow where the process begins and ends.
ďźDescribe the specific inputs and outcomes of the
process.
ďźMap the current process-gives a picture of how work
flows through the organization.
ďźShow sub-process (if there is): when a process is too
large or complex to compute, sub-process is needed.
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
23. Redesigning the Business Process
ďś Establish the desired outcomes:
ďź Identify the key customers and/or stakeholders:
ďźChoose a way of learning about
customers/stakeholdersâ needs and expectations.
ďźInterview or survey customers/stakeholders to
determine desired outcomes.
ďźCompare and analyzed data from
customers/stakeholders, synthesizing desired
outcomes.
ďź Decide whether you are ready to move on to
the next design step.
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
24. Redesigning......Contâd
ďśSetting stretched objectives: Reach far beyond what
process currently produces.
ďź Review customers/stakeholders needs and expectation.
ďź Identify the needs and expectations that form the
foundations of stretch objectives.
ďź Brainstorm possible stretched objectives:
ďźDecide whether you are ready to move on to the next
design step
ďś Breaking old assumptions
ďś Design from clean sheet: The purpose of designing
the new process from a clean sheet is to help the team
come up with ideas that lead to a dramatically
improved process. Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
25. Successful Implementation and Building Process
Centered Organization
ď§ The business system diamond will be realized.
Business process
Job and structure values and belief
Management and measurement systemsAbdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
26. Successful Implementation.....Contâd
ď Effective implementation of the newly redesigned
process requires the following:
ďąPrepare implementation plan: spells out the work
that needs to be done with time frames,
milestones, training, workforce issuesâŚ..
ďą Pilot testing:
ďź Evaluate the soundness of the proposed process
ďź Identify and correct problems with the new process
ďź Refine performance measures and generate support
ďą Adjust goals and develop improvement plan
ďą Implement and monitor the progress
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
28. 4.3.1. Balanced scorecard (BSC)
⢠Traditionally, performance management systems were uni-
dimensional â focused entirely on financial measures such
as: return on capital, economic value added, earnings per
share and price/earnings ratio etc.
⢠They are insufficient in modern organizations where it is
recognized that relationships with employees, customers,
suppliers and other stakeholders are crucial aspects of how
the organization is performing.
⢠They cannot evaluate factors such as; Innovation,
Employee engagement, Employee relations,
Levels of customer satisfaction and employee satisfaction.
⢠They are lagging indicators because they reflect past
results.
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
29. ⢠Balanced: The task of developing a comprehensive
strategy demands systematic consideration and integration
of various perspectives. We have to balance between
ďFinancial versus Non-financial measures
ďTangible versus Intangible assets
ďLong-term versus Short-term Goals
ďInternal versus External Perspective
ďLagging & leading indicators
⢠Scorecards : Scorecards record performance related to a
set of Key Performance Indicators (KPIs). In effect, they
are report cards on the organizationâs performance. For
example, they can show sales per square meter in a
store, comparing actual with targets and analyzing
trends.
4.3.1. Balanced scorecard (BSC)
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
30. ⢠Introduced by Robert Kaplan & David Norton
(1992) is a conceptual framework for translating
the strategic plan into a set of performance
indicators distributed among four perspectives:
Financial, Customer, Internal business process, Learning
and growth
⢠BSC is a performance management system that
can be used in any size organization to:
â Align vision and mission with customer
requirements and day to day work,
â Manage strategy,
â Monitor operational efficiency,
â Build organization capacity, and
â Communicate progress to all employees.
4.3.1. Balanced scorecard (BSC)
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
31. MISSION
VISION
STRATEGY
Learning
and
Growth
FINANCIAL
Internal
Business
Processes
To succeed financially,
how should we appear
to our shareholders?
To satisfy our share
holders and
customers, what
business processes
must we excel at?
Do we continue to
improve and create
value?
To achieve our vision,
how should we appear
to our customers?
Customer
BSC Strategic Perspectives
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
32. Four Perspectives
1. Financial: The strategy for growth, profitability, and
risk viewed from the perspective of the shareholder.
2. Customer: The strategy for creating value and
differentiation from the perspective of the customer.
Enables companies to align their core customer
outcomes such as loyalty, retention, acquisition, and
profitability- to targeted customers and market
segment
3. Internal Processes: The values added to customers,
such as delivery, production, distribution, etc. The
strategic priorities for various business processes,
which create customer and shareholder satisfaction.
4. Learning & Growth: The people, systems, and
organization that enable processes. The priorities to
create a climate that supports organizational change,
innovation, and growthAbdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
33. Connecting the Four Perspectives
⢠A strategy map provides a visual representation of the linkages
in the four perspectives of the BSC.
Financial Perspective Return on Investment
Customer
Perspective
Customer Loyalty
On-Time Delivery
Internal Perspective
Learning & Growth
Perspective
Process Quality Cycle Time
Employeesâ Process Improvement Skills
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
34. 4.3.2. Enterprise resource planning (ERP)
⢠ERP: attempts to integrate all data and processes of an
organization into a unified system using multiple
components of computer software and hardware to
achieve the integration.
⢠A key ingredient of most ERP systems is the use of a unified
database to store data for the various system modules.
⢠Some organizations choose to only implement portions of
an ERP system and develop an external interface to other.
⢠This is very common in the retail sector, where even a mid-
sized retailer will have a discrete Point-of-Sale (POS)
product and financials application.
⢠ERPs are cross-functional and enterprise wide. All
functional departments that are involved in operations or
production are integrated in one system.Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
35. Ideally, ERP delivers a single database that contains all
data for the software modules, which would
include:
ď¨Manufacturing: Engineering, Bills of Material,
Scheduling, Capacity, Workflow Management,
Quality Control, Cost Management, Manufacturing
Process, Manufacturing Projects, Manufacturing
Flow.
ď¨Supply Chain Management: Inventory, Order Entry,
Purchasing, Product Configurator, Supply Chain
Planning, Supplier Scheduling, Inspection of goods,
Claim Processing, Commission Calculation.
ď¨Data Warehouse: and various Self-Service
interfaces for Customers, Suppliers, and Employees.
4.3.2. Enterprise resource planning (ERP)
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
36. Advantages
⢠People in different departments all see the same
information and can update it.
⢠Computer security is included within an ERP system to
protect against both outsider and insider crime.
⢠ERP systems tie together varied processes using data
from across the company.
⢠It standardized and reduced the number of software
specialties previously required.
⢠ERP systems allow companies to replace multiple
complex computer applications with a single integrated
system.
⢠Eliminate the need for external interfaces previously
required between systems and provide additional
benefits that range from standardization and lower
maintenance to make reporting capabilities easier.Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
37. Disadvantages
ď¨Cost
ď¤Implementing ERP is very expensive.
ď¤ERP vendors can charge a license renewal fee annually.
ď¤Consultants may need to be used for installation or to
maintain.
ď¤Employees may need to be trained, which takes time and
cost.
ď¨Expertise
ď¤Success of ERP depends on the skill level, experience and
training of the work force.
ď¤Enterprises view cutting training funds as a way to cut costs.
This means their ERP system is often operated by personnel
with inadequate education in ERP and the ERP vendor package
being used.
ď¤New employees must be trained before they can properly start
working because of the ERP system
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University
38. Disadvantages
⢠Flexibility
â ERPâs can be very rigid and may not fit the business
flow of the company trying to use it.
â Companyâs may need to customize their ERP package
which isnât allowed by most ERP vendors.
⢠Change
â Employees may be needed to change the way they
work to become more efficient. They may feel
resistant to change which can be a negative.
⢠Bugs!
Abdella K., Department of
Entrepreneurship & Bus. Mgt, Kotebe
Metroplitan University