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1. Business process reengineering for flexibility and
innovation in manufacturing
Qingyu Zhang
Department of Economics and Decision Sciences, Arkansas State University,
Jonesboro, Arkansas
Mei Cao
Department of Information Systems, Marketing, E-commerce and Sales,
University of Toledo, Toledo, Ohio
Introduction
Global competition, rapid market change,
shorter product life cycles, advance in
manufacturing and information technology
force corporates to change; the typical
responses include investments in
manufacturing and information technology
such as robots, FMS, CAD, CAM, which often
focused on improving part of the production
process, not an integrated whole
(Vonderembse et al., 1997; Cypress, 1994;
Grover, 1995). These substantial efforts
helped some firms to increase product
quality, cut delivery lead-time, and lower
cost, but why have some firms been unable to
catch competition? One answer may be that
companies fail to examine the structure of
the production system and the managerial
and organizational factors that support it and
redesign the basic business process, which
shape their competitive position (Burgess,
1998; Barua et al., 1996; Caron et al., 1994;
Chatfield and Bjorn-Anderson, 1997; Huizing
et al., 1997).
Is it possible for an organization to capture
both flexibility and efficiency? The
investment in manufacturing and
information technology has resulted in an
island of automation that improves specific
tasks, but system-wide benefits remain
unattainable. Organizations must
understand the ``whole'' that is represented
in each part of the manufacturing system in
order to obtain system-wide benefits, with
this holistic view of value chain and with
eyes continuously focused on the customer
(Vonderembse et al., 1997; Jarrar and
Aspinwall, 1999; Kettinger et al., 1997).
To compete in today's global marketplace,
products and services of firms must be on
target the first time, every time. The firm's
objective is not only to beat the competition
but also to grow the profit and wealth;
therefore firms should redesign their
business process (Davenport and Stoddard,
1994; Hammer and Champy, 1993) for greater
flexibility and innovation.
BPR review
BPR 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 (Hammer
and Champy, 1993).
Achieving competitive advantage can be
done in two major ways. First it can occur
through a systematic incremental
improvement program, that is, life-cycle
reengineering (Malhotra, 1996); the second
approach is to completely change the manner
in which business is done, that is business
process reengineering (see Table I).
Why do we advocate BPR rather than
continuous improvement to beat the
competition? As Paul O'Neill, chairman of
ALCOA, said:
I believe that we have made a major mistake
in our advocacy of the idea of continuous
improvement. Let me explain what
I mean.
Continuous improvement is exactly the
right idea if you are the world leader in
everything you do. It is a terrible idea if you
are lagging in the world leadership
benchmark. It is probably a disastrous idea if
you are far behind the world standard . . . we
need rapid, quantum-leap improvement. We
cannot be satisfied to lay out a plan that will
move us toward the existing world standard
over some protracted period of time ± say 1995
or the year 2000 ± because, if we accept such a
plan, we will never be the world leader.
Incremental improvements provided by
automation, computerization, method
improvements, incentive programs, and
other productivity and quality programs that
were very useful in the past have proven to
be, in the 1990s and beyond, only a temporary
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[ 146 ]
Industrial Management &
Data Systems
102/3 [2002] 146±152
# MCB UP Limited
[ISSN 0263-5577]
[DOI 10.1108/02635570210421336]
Keywords
BPR, Outsourcing, Value chain,
Flexibility, Innovation,
Management
Abstract
In response to an increasingly
global and competitive
environment, the flexibility to
adapt to changing market needs
and develop innovative cross-
functional processes is
quintessential to success.
Emphasizes that, in order to
succeed in BPR, the firm must
make the organizational structure
change from a hierarchical to a
flat form, management goals must
change from being functional sub-
optimized to global-optimization,
process-oriented measurement,
and employees' work must change
from being fragmented to team-
oriented. It is important that the
firm combine core business
process reengineering and holistic
outsourcing and rethink its
business from an integrated,
systematic ``whole'' and value
chain viewpoint to beat
competition with flexibility and
innovation.

2. relief in many cases (Settles, 1993; Robson,
1996). Once the improvements have been
executed, additional environmental changes
result in new problems. So the only solution
may be to reengineer the organization (for
reengineering type, see Table II).
Indeed, much of the challenge in
constructing a BPR program is to select the
type of BPR approach that is best suited to a
specific situation, taking into account the
organization's objectives, capabilities, and
competitive or economic environment
(Kettinger et al., 1997).
Despite the difference in focus and results,
BPR and CI programs should be compatible
and complementary in firms' improvement
process. It is logical to expect to see
organizations conduct multiple BPR efforts
within and alongside a CI program. This
occurs because the two approaches share
many of the same tools and techniques, but
differ in how these tools are used (Robert,
1993; Riggins and Mukhopadhya, 1994;
Melliou and Wilson, 1995; Braithwaite, 1994).
Usually BPR and CI alternatively are used by
firms (see Figure 1).
Process orientation in
manufacturing control system
JIT manufacturing is a unified philosophy
that calls for a total reorganization of
operations activities in order to minimize
wasted, non-value-adding activities, align
operations and balance operations to
demand. It utilizes technical enablers of pull
systems and focuses heavily on lead-time
reduction.
TQM seeks to create an atmosphere in
which ``doing it right the first time'' becomes
the goal, where quality is designed and built
into each activity rather than being
inspected-in after the fact. The focus is the
changes in organizational culture to drive
the entire effort to reduce the cost of quality
(Sia et al., 1997; Braithwaite, 1994).
Both JIT and TQM seek to install a
continuous improvement mindset. BPR seeks
radical rather than merely continuous
improvement (Stoddard and Jarvenpaa,
1995). It escalates the efforts of JIT and TQM
to make process orientation a strategic tool
and a core competence of the organization.
Because the functional approaches fail to see
how operational excellence cuts across
almost every activity not only within a
business but across almost all its suppliers
and customers, BPR concentrates on core
business process and uses specific
techniques within the JIT and TQM
``toolbox'' and other information technology
as enablers to focus on external measures of
success, where everyone understands the
ultimate goals, the ways of getting there, and
the way the success will be measured; where
everyone regards working in cross-
functional teams as the norm; where
everyone understands and appreciates the
Table I
BPR vs continuous improvement
BPR Continuous improvement
Change Abrupt, volatile Gradual,constant
Effects Immediate, dramatic More subtle
Involvement A few champions From few to everybody
Investment High initially, less later Low initially, high to sustain
Orientation Technology and people People
Focus Processes and profits Processes
Table II
BPR types
Type 1 Type 2 Type3
Functional improvement Process redesign Business rethinking
Department/functional orientation Cross-functional participation (including
customer)
Focus on redefining the business mission and vision
Focus on reducing unnecessary tasks and
streamling workload
Focus on redesigning workflow,
technology and people components of
processes
Dramatic change in products, services, channels,
markets
Three to six months' duration Six to 12 months' duration One to three years' duration
Incremental improvement in productivity Order of magnitude improvement in
process performance
New level of process innovation measured by the value
set of cost, quality, lead time, delivery reliability and
product function
By cutting costs By divestment, delayering and downsizing
[ 147 ]
Qingyu Zhang and Mei Cao
Business process
reengineering for flexibility
and innovation in
manufacturing
Industrial Management &
Data Systems
102/3 [2002] 146±152

3. value others add to the organization; where
everyone knows that the key goal is to
produce a service or product that the
marketplace perceives to be the best (Couger,
1994; Crawford, 1994).
Product development and process
integration
In order to secure and sustain competitive
advantage in the face of intense competition
and a rapidly expanding global market,
continuous product innovation and
flexibility are necessary (Cooper, 1979;
Revelle, 1995). Traditionally product
development processes have been linear in
nature, involving sequential hand-offs
between functional areas such as R&D,
manufacturing and marketing. These
processes might involve translation from one
functional language to another, politics of
resource ownership, and functional
suboptimization rather than global
optimization. These processes often involve
backtracking across the functional
boundaries through a maze of bureaucracy
± thereby driving up costs, increasing delays,
and creating inefficiency.
The evolution of quality function
deployment (QFD) in 1983 to concurrent
engineering (CE) in 1990 to integrated
product and process development (IPPD) in
1992 resulted from recognition that each
preceding methodology was incomplete in its
ability to deal with the full spectrum of
challenges associated with the efficient and
effective transformation of the customer
voice into a viable product or service in the
marketplace.
The necessity was established for creating
the IPPD process as well as high-level
cross-function teams, both of which are used
to help achieve organizational goals. These
teams are rarely capable of independent
existence, i.e. they require considerable
attention and support by senior
management. It has become quite clear that
management's roles and responsibilities
include the provision of the three ``E''s:
enablement, empowerment, and
encouragement.
The reengineering of product and process
design is primarily responsive to external
voices (e.g. customers, users, etc.) and
internal voices (e.g. management,
engineering, technology, manufacturing,
quality, material, etc.); its model structure is
demonstrated in Figure 2.
The model reflects a heavy emphasis on
cross-functional coordination and
communication linkages as an integral part
of the framework, fostering a global
viewpoint and reducing the chances of
functional suboptimization that plagues
traditional processes. Product development
becomes a team-oriented endeavor that
focuses continuously on customer needs. The
focus shifts away from a functional
orientation and goals to a business process
orientation, where team building, shared
learning and common goals drive activities
(Janz et al., 1997; MacIntosh and MacLean,
1999). Process integration and automation
are pulled into the manufacturing process by
customer requirement rather than to satisfy
narrow technical objectives or solely for cost
minimization. Emphasis on integration and a
system-wide perspective enables firms to
utilize a different set of factors to justify
investments, such as:
. order to delivery time (Stalk and Hout,
1990);
. ability to offer a variety of products
(Gerwin, 1993);
. product quality (Braithwaite, 1994); and
. cost or efficiency.
In order to remain competitive with
innovation and flexibility, the
manufacturing group should not only foster
Figure 1
BPR vs cl
Figure 2
A framework of product development and
process integration
[ 148 ]
Qingyu Zhang and Mei Cao
Business process
reengineering for flexibility
and innovation in
manufacturing
Industrial Management &
Data Systems
102/3 [2002] 146±152

4. inter-personal and cohesive, symbiotic
relationships that can facilitate the process of
concurrent design, but also apply the newest
of manufacturing techniques and
technologies such as CAD, CAM, CAE.
Organizational structure design
and work change
As BPR takes place in the context of people
and the organization, the risk of failure
would be great, if it proceeds without
appropriate plans for organizational changes
(Kettinger et al., 1997; Grover, 1995).
Two new organizational designs are
emerging. The first, mass customization, in
competes under dynamic product change and
stable process change. The mass
customization combines the product variety
of the invention designer with the production
efficiency of the mass producer. The second
organizational design, continuous
improvement (CI), competes under
conditions of stable product change and
dynamic process change. The synergy
between mass customization and CI, referred
to as dynamic stability, may define the basis
of competition into the new century. The
basic dimensions of organizational change
are as shown in Table III.
One thing about structural dimension is to
reduce physical coupling and to enhance
information coupling; the central principle of
management dimension is careful
calibration of process performance goals,
linking to external objectives such as
delivery time and customer satisfaction; it is
important to realize that the performance
gains from organizational change stem not
only from a more ``rational'' process with
fewer steps, but also from motivated
employees who attach more meaning to their
team work. BPR causes changes work, as
shown in Table IV.
Outsourcing (beyond BPR)
To succeed, corporations need streamlined
and globally integrated operations. Above all,
they need an absolute focus on their core
business. That is when it may become
important to outsource certain ``non-core''
requirements. Outsourcing is not a cure-all,
however; it is a facilitator for changing the
process. Outsourcing allows companies to
become partners with experts. They gain
access to the technology they need to beat the
competition, while continuing to focus on
what they do best.
Each firm in the network can progress
individually by focusing ever more closely on
its core business process, and the network as
a whole can optimize its virtual companies'
core business processes (Settles, 1993; Teng et
al., 1996).
Core business processes after a
reengineering effort should function
without capacity limitation. This enables a
business that has moved beyond BPR and
joined a holistic network to enter virtual
companies with ease and evolving through
interaction with the environment. Often the
business will have stripped itself back to only
its core competencies to achieve greater
capacity flexibility. So outsourcing has the
following advantages (see Table V).
Conclusion
The focus is on understanding the key cost
and performance drivers, by which time to
delivery, the simplicity of doing business,
flexibility of production, product quality,
product cost, and customer service are all
examined in a holistic fashion, when looking
at the value chain. By looking at order
fulfillment as a process, the entire flow was
mapped out from customer request to
customer receipt, and the company was able
to show that only one-quarter of total lead
time was attributed to the shopfloor. The
remainder was taken by order checking,
product configuration, reviewing precinct. It
is apparent that no single department could
significantly reduce lead-time experienced by
the customer. Only a company-wide effort to
refine the company's procedures and
eliminate bottle-necks could make the kind of
difference needed to compete (Teng et al.,
1996).
The main changes in business
reengineering, most of which are enhanced
by IT, are as follows:
. several jobs are combined into one;
. employees make decisions, which
becomes part of the job;
. steps in the business process are
performed in a natural order, and several
jobs get done simultaneously;
. process has multiple versions, which
enables the economies of scale that result
from mass production, yet allows
customization of products and services;
. work is performed where it makes the
most sense, including at the customers' or
suppliers' sites; thus work is shifted
across organizational and international
boundaries;
. controls and checks and other non-value
added work are minimized;
. reconciliation is minimized by cutting
back the number of external contact
[ 149 ]
Qingyu Zhang and Mei Cao
Business process
reengineering for flexibility
and innovation in
manufacturing
Industrial Management &
Data Systems
102/3 [2002] 146±152

5. points and by creating business alliance;
and
. a hybrid centralized/decentralized
operation is used.
With respect to BPR and outsourcing, in
order to gain innovation and flexibility,
organizational structures should change as
shown in Figure 3. The organization can
achieve efficiency and flexibility
simultaneously by exploring the
process-oriented core activities and holistic
outsourcing.
In the new stage, the pattern of thinking
needs to change from linear and sequential to
parallel, integrative and systemic. Customer
needs become the centerpiece. Working
together in teams, cutting across department
boundaries, integrating across the
production chain, flat organization,
automation, where value is added to the
customer, are the hallmark. So new
management precepts espouse mass
customization, cross-functional integration
of business processes, employee
empowerment, self-managed work teams, the
networked organization, and zealous
customer focus. As JIT attacked the
foundations of functional Taylorism and
taught us to think of continuous flow
Table V
The advantage of outsourcing
Advantage Explanation
Leverage True synergy is achieved by combining the best capacity of many operations
Speed Decision making is streamlined and, thus, there are no layers of management
Shared risk Because of several nodes from outsourcing network, there are shared risk and reward
Independence In spite of a great deal of cooperation, there is also a sought-after sense of
independence
Flexibility Coupled with speed is the ability to change the service or product capacities to
match rapidly changing market requirements
Sustainable customers Because of good flexibility and response, customers are willing to pay a premium for
the service
Less capital requirement Because each node only uses equipment that is specific to its core business
Enhanced capacity Increased ability to deal with inevitable change
Table III
Dimensions of organizational change with BPR
Past (serial insulated) Future (parallel collaborative)
Structural dimension Hierarchical organization based on function/products
Rigid bureaucracy
Organizational integration through structure
Networked organization based on cross-functional teams
Flexible adhocracy
Organization integration through information
Management dimension Management by internal objectives
Function-wide sub-optimization
Management by external objectives
Organization-wide global optimization
People dimension Fragmented tasks performed by individuals
Functional specialists
Expertise as a functional speciality
Holistic process accomplished by teams
Case manager and process manager
Knowledge as organizational resource
Table IV
Changes in the world of work
From conventional To BPR
Functional departments Process teams
Simple task Empowered employee
Controlled people Multidimensional work
Training of employees Education of employees
Compensation for skill and time spent Compensation for results
Advancement based on ability Advanced base on performance
Protective organizational culture Productive organizational structure
Managers supervise and control Managers coach and advise
Hierarchical organizational structure Horizontal (flat) structure
Executives as scorekeepers Executives as leaders
Separation of duties and functions Cross-functional teams
Linear and sequential processes Parallel processes
Mass production Mass customization
[ 150 ]
Qingyu Zhang and Mei Cao
Business process
reengineering for flexibility
and innovation in
manufacturing
Industrial Management &
Data Systems
102/3 [2002] 146±152

6. synchronized with real demand, BPR gave us
the wherewithal to think of a
defunctionalized organization that always
focused on the customer or the customer's
customer and to realign it in a process
orientation. The progress of BPR is following
a predictable pattern, an innovation that
would confer competitive advantage,
multiply profitability, improve flexibility
and the like.
In summary, although BPR may differ in
scope (incremental vs radical changes), depth
(procedural vs organizational changes), as
well as breadth (intrafunctional to
interfunctional and interorganizational), no
dimension of a firm's strategy, structure,
processes, technology, or culture can be
applied effectively in isolation; each must
understand the impact and interrelationship
of the other vis-a
Á-vis the value chain and
focus on business processes.
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Business process
reengineering for flexibility
and innovation in
manufacturing
Industrial Management &
Data Systems
102/3 [2002] 146±152

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Johansson, H.J. (1993), Business Process
Reengineering: Breakpoint Strategies for
Market Dominance, Wiley, New York, NY.
[ 152 ]
Qingyu Zhang and Mei Cao
Business process
reengineering for flexibility
and innovation in
manufacturing
Industrial Management &
Data Systems
102/3 [2002] 146±152