Business process reengineering module 2

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Unit II: Relation between BPR and IT-New Industrial Engineering-Enablers of BPR-Role of
technology in reengineering-agile-lean-collaborative manufacturing-collaborative e-commerce- Steps
BPR implementation-tools that support BPR
• Business Process Reengineering (BPR) is also called as ‗core process redesign‘, „new
industrial engineering‘ or ‗working smarter‘.
• All of them imply the same concept that focuses on integrating both business process redesign
and deployment of information technologies (IT) to support the reengineering work.
Relation between BPR and IT
• Information Technology(it) Is the central implementation vehicle of BPR
• Building an effective IT infrastructure is a vital factor in successful BPR implementation.
• An adequate understanding of technologies for redesigning business processes is necessary for
proper selection of IT platforms.
• Effective overall system architecture, flexible IT infrastructure and proper installation of IT
components all contribute to building an effective IT infrastructure for business processes.
• Recognition of IT capabilities provides alternatives for BPR.
• The potential enabler of BPR is information technology (IT). IT makes it possible to obtain
improvements in BPR. Enterprises can make their tasks easier, redesign their organization,
change the way they work, and achieve spectacular improvement using, among other enablers,
IT.
• Working together, BPR and IT have the potential to create more flexible, team-oriented,
coordinative, and communication-based work capability.
• IT is more than a collection of tools for automating or mechanizing processes. It can
fundamentally reshape the way business is done and enable the process design.
• BPR and IT are natural partners, whose relationships have not been fully explored.
IT ENABLING EFFECTS
Dimensions & Type Examples IT Enabling Effects
Order from a supplier
Develop a new product
Approve a bank loan
Manufacture a product
Prepare a proposal
Fill a customer order
Develop a budget
Lower transaction costs
Eliminate intermediaries
Work across geography
Greater concurrency
Integrate role and task
Increase outcome flexibility
Control process
Routinize complex decision
Reduce time and costs
Increase output quality
Improve analysis
Increase participation
Adapted from: Davenport, T. H. and Short, J. E., "The New Industrial Engineering: Information Technology and Business Process Redesign," Sloan Management Review, Summer 1990, p. 17.
Organization Entity
• Interorganizational
• Interfunctional
• Interpersonal
Objects
• Physical
• Informational
Activities
• Operational
• Managerial

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New Industrial Engineering
Industrial engineering is an inter-disciplinary profession that is concerned with the optimization of
complex processes, systems, or organizations by developing, improving and implementing integrated
systems of people, money, knowledge, information, equipment, energy and materials.
Industrial engineers use specialized knowledge and skills in business administration, management,
mathematics, physical sciences, social sciences and methods of engineering analysis and design are
used to specify, predict, and evaluate the results obtained from systems or processes. From these
results, they are able to create new systems, processes or situations for the useful coordination of man,
materials and machines and improve the quality and productivity of systems, physical or social.
Depending on the sub-specialties involved, industrial engineering may also overlap with, operations
research, systems engineering, manufacturing engineering, production engineering, management
science, management engineering, financial engineering, ergonomics or human factors engineering,
safety engineering, or others, depending on the viewpoint or motives of the user.
• Business Process Reengineering (BPR) is ALSO called as ‗new industrial engineering‘.
• Application of Taylor's mechanizing vision in industry gave industrial engineering.
• New industrial engineering is applying the capabilities of information technology to redesign
business processes.
• information technology–the capabilities offered by computers, software applications, and
telecommunications–and business process redesign–the analysis and design of work flows and
processes within and between organizations
• These tools have the potential to create a new type of industrial engineering, changing the way
the discipline is practiced and the skills necessary to practice it.
• IT is used in industrial engineering as an analysis and modelling tool.
• IT uses in manufacturing include process modelling, production scheduling and control,
materials management information systems, and logistics.
• IT should be viewed as more than an automating or mechanizing force; it can fundamentally
reshape the way business is done.
• Business should be viewed as more than a collection of individual or even functional tasks;
instead it should be broken into processes that can be designed for maximum effectiveness, in
both manufacturing and service environments.
BPR requires broader view of both IT and business activity, and relationships between them.
• IT — more than an automating or mechanizing force: to fundamentally reshape the way business is
done.
• Business activities — more than a collection of individual or even functional tasks.
IT and BPR have a recursive relationship. IT capabilities should support business processes, and
business processes should be in terms of the capabilities IT can provide.
o Business processes represent a new approach to coordination across the firm
o IT impact is as a tool for reducing the costs of Coordination. Awareness of IT capabilities can
– and should – influence process design.

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How IT capabilities affect the organisation – 1
1. Transactional — can transform unstructured processes into routinised transactions
2. Geographical — can transform information with rapidity and ease across large distances
3. Automational — can replace or reduce human labour in a process
4. Analytical — can bring complex analytical methods to bear on a process
How IT capabilities affect the organisation – 2
1. Informational — can bring vast amounts of detailed information into a process
2. Sequential — can enable changes in the sequence of tasks
3. Knowledge Management — allows capture and dissemination of knowledge
4. Tracking — allows detailed tracking of task status
5. Disintermediation — can be used to connect two parties within a process that would
otherwise communicate through an intermediary
 IT and BPR have a recursive relationship, as Figure 1 illustrates
• Each is the key to thinking about the other.
• Thinking about information technology should be in terms of how it supports new or
redesigned business processes, rather than business functions or other organizational entities.
• And thinking about business processes and process improvements should be in terms of the
capabilities information technology can provide.
• Broadened, recursive view of IT and BPR is referred to as the new industrial engineering.

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Enablers of BPR
Factors found to be positively associated with successful implementation of BPR are:
 top management supports, change management, centralization of decision making,
formalization of procedure, organizational culture, customer involvement and different
information technologies such as— EDI (electronic data interchange) and Internet.
The factors are:
 teamwork and quality culture
 quality management system and satisfactory rewards
 effective change management
 less bureaucratic and participative
 information technology/information system
 effective project management
 Adequate financial resources.
KEY Enablers:
Love and Gunasekaran [1997] consider four enablers:
1. IT- Information and technology
2. Total Quality Management
3. Human Resources
4. Organization
a. Organizational enablers
Organizational enablers are grouped within two categories:
1) Structural
2) cultural.
Structural enablers:
Structural enablers Structural enablers are used to demand a change in human resources management,
mainly in training areas and reward systems Mainly, there are three major structural enablers: 1) Self
managing work teams drive themselves and do not need a formal leader. 2) Cross-functional teams

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involve several functions, so their members collaborate among themselves to get a result. 3) General-
purpose problem-solving teams are formed by persons from the same department and are in charge of
solving different matters in a periodic way.
cultural enablers:
cultural enablers cultural enablers include those norms, values, and beliefs about how things should be
done. In a company with a rigid culture where everything must be specified and suggested by a
superior, process change would be much more difficult.
b. Human Resource enabler:
Human Resource enabler A third group of enablers is human resources. If a company needs motivated
employees who accept changes, propose ideas, share, and are able to vary their style of working, then
half of the effort should be centered around human resource management it would be necessary for
workers to gain knowledge in team work and development of new tasks the company must motivate
its employees through incentive systems and by allowing their involvement in the decision-making
process
c. Information Technology enabler:
Information Technology enabler IT enabler is a facilitator Its role is crucial because it allows a
company to alter processes in two ways: collaboration grade increase and mediation grade decrease
through the implementation of shared databases and communication technologies. IT may help
companies to obtain important improvements on variables such as costs, quality, and delivery time
Role of technology in Reengineering

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Information Technology for BPR
Most BPR theorists and practitioners consider IT as being the essential enabler for any reengineering
effort, even if there is a pessimistic view, that reengineering can be done without concerning IT.
However, it can be stated that IT plays a major role in the majority of BPR projects. Using IT as
change agent does not mean to throw computers on the problem. They will, in most cases, speed up
work and lead to temporary improvements. The root cause of the problem will not be removed, but
temporarily covered. Even though information technology can be an enabler, if used innovatively, it
must not necessary drive change.
IT opportunities should be monitored in terms of business applicability and process support and
improvement. Information technology is no self-purpose, but a mean to achieve a better competitive
position by yielding purposeful application on business problems.
The definition given by Hammer and Champy is ―Business Process Reengineering is
the fundamental rethinking and radical redesign of business process to achieve dramatic improvement
in critical contemporary measures of performance such as cost, quality, service and speed‖.
Whisler defines information technology as the technology of sensing, coding
transmitting, translating and transforming information. Hammer and Champy says that information
technology is an integral part of reengineering as an enabler since it permits companies to reengineer business
process. Davenport & Short say that Information technology and BPR have a recursive relationship. IT
capabilities should support business processes, and business processes should be in terms of the
capabilities IT can provide. Broadbent, Weill, and St Clair say that IT plays an important role by either
enabling or constraining successful BPR.
ITcanalsobecomeaninhibitorofReengineeringiftheorganization‘sITInfrastructureisinadequateorinflexible.
The role of IT is to make a new process design possible. If nothing changes about the way work is
done and the role of IT is simply to automate an existing process, then economic benefits are likely to
be minimal.

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The roleofITinReengineeringisnottoautomatethebusinessprocess.
The application of IT to reengineering requires inductive thinking, which is the ability to first
recognize a powerful solution and then seek the problems that it might solve. Hammer and Champy
says that a company that looks at problems first and then seeks technology solutions cannot
reengineer. This is where inductive thinking helps. A fundamental error that most companies commit
when they look at technology is to see how a new technology will help in solving problems in their
existing process. The companies have to think how a technology can help them to do things that they
are not doing in the current process. Hammer and Champy say, ―Reengineering is about innovation. It
is about exploiting the latest capabilities of technology to achieve entirely new objectives‖.
THE ROLE OF TECHNOLOGY IN REENGINEERING:
The central theme of reengineering is technology. From the pages of the history it is a
known that the technological advances such as the steam engine, IC engines, the telephone, the
transistor, the computer, the internet, and the optic fiber cable made possible the radical changes in
production and business processes. In particular Information Technology (IT) that encompasses the
computer work stations that are linked to inter and intra networks enabled both production and
business processes to get automated and fundamentally got restructured in the activities such as
information collection, storage, processing, and retrieval and reporting. However technology in itself
does not provide the complete the solution.
The companies with different functional areas within the organisation are to be more
cautious while using IT strategy for reengineering which otherwise may experience typically
disastrous results. In such cases IT systems that are incompatible with each other results in great loss.
In India, the IT intensive sectors such as banking, insurance, travel reservation etc. are using the
latest IT solutions, of course reportedly to the minimal extent. Many companies are establishing new
computer systems have achieved the automation of existing processes. However these companies may
look at reengineer the existing IT hardware using latest IT solutions
Benefit of IT-Enabled BPR
IT, when accompanied with BPR efforts, can provide business with a number of benefits such as cost
reductions, time elimination and error minimization. However, there are other benefits that are mostly
related to IT enabled process orientation. These can be summarized in the following.
Enabling parallelism: Moving from a sequential structure of process into a parallel one reduces the
process cycles time, problem resulting from delays, process disruptions, and handoffs.
For example, a well – designed database that is linked to Computer - Aided Software Engineering
(CASE) tools enables the exchange of design specifications to be used in redesigning process
concurrently
Facilitating integration: Moving from the division of labor approach into the ―case management‖
approach eliminates unnecessary tasks and improves communication and quality of services.
Enhancing decision making: Reducing the number of levels in an organization‘s hierarchies
enhances the decision-making process. For example, the Ford Motor Company shifted the payment-
authorization task from the accounts payable to the receiving dock, resulting in an enormous reduction
of workers from 500 to just 125
Minimizing points of contact: BPR, when combined with IT, eliminates intermediaries at different
levels and reduces time and distance in the exchange of information required in any process. Human

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mediation is an inefficient component that can be discarded and replaced with new IT-based,
structured workflow processes. The use of conferencing technology and the Internet also enables an
instantaneous exchange of business information around the globe.
IT Capabilities and Reengineering
IT has penetrated the office and services environment since the 1978. The shift from mainframe to PC
based technology is breaking down communication barriers between employees and customers. Now
managers and employees from various departments are designing and controlling complex business
information systems. IT capabilities involve improving information access and coordination across
organizational units. It is so powerful that it can actually create new process design options, rather than
simply support it.
IT roles can be categorized into three phases: before the process is designed, while the
process design is underway, and after the design is complete.
Phase 1: before the process is designed (as an enabler)
BPR is a strategic action and requires a clear understanding of customers, market, industry and
competitive directions. Furthermore, like any other strategic action, it requires consistency between the
company‘s business strategy and vision. Defining business strategy and developing a strategic vision
requires understanding the company‘s strengths and weaknesses, and the market structure and
opportunities.
IT capabilities can provide good insight into the existing conditions. IT is one of several
enablers, including human resources and organizational change, that all must be considered together to
bring about change in business processes. Many companies ignore IT capabilities until after a process
is designed. An awareness of IT capabilities can and should influence process design.
IT can play important roles in this phase of BPR efforts as follows:
1. The opportunity IT provides is to utilize newer and better technology to develop a strategic vision
and to help improve the business process before it is designed. For example, an important Wal-Mart
vision was to eliminate unnecessary distribution steps and cost and to provide value to customers. To
accomplish this, Wal-Mart developed a strategy that included linking its suppliers to its retail stores.
IT, eventually enabled Wal- Mart to implement this strategy. An enterprise-wide information system
was developed that directly connected all retail locations, distribution warehouses, and major supplies.
2. The capabilities of IT to track information and break down geographic and organizational barriers
are useful in understanding the company‘s strengths and weaknesses, and market structure and
opportunities. Communication technology helps to overcome geographic barriers and thus enable
broader acceptance of the process change.
3. The focus is on finding different approaches to manage a process. These approaches can be found
and be adapted from practices of companies outside of the industry. The organization should
benchmark against other industries and combine it with the experience and expertise of the team
members to adopt an entirely new process technology.
Phase 2: while the process is being designed (as a facilitator)

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This stage involves two activities: technical and social design. During the technical phase, information
is consolidated, alternatives are redefined, and process linkages are re-examined, and controls are
relocated prior to applying technology. The social design focuses on human aspects and involves
employees who will affect corporate changes: defining jobs and teams, defining skills and staffing
needs, and designing incentives are considered carefully. This stage also requires development of test
and rollout plans. After the objectives are identified, the existing processes are mapped, measured,
analyzed, and benchmarked, and then are combined to develop a new business process. Development
of people, processes, and technology are integrated.
During the process design, accountability for development, testing and implementation must be clearly
defined. Real benefits to the business result when IT becomes involved with more fundamental
changes to the business process itself.
The crucial roles that IT plays in this phase of BPR efforts are:
1. IT can facilitate the reengineering design process through the use of project management tools.
These help identify, structure, and estimate BPR activities and help to control contingencies that arise
during the process. Project management tools along with electronic communication; enable ongoing
communication of the reengineering process between users and facilitators.
2. Gathering and analyzing information about the performance and structure of a process is an
important step in identifying and selecting process for redesign. Mapping or flowcharting the existing
process and then measuring the results in terms of cost, quality and time are the most successful. IT
can facilitate this step with the use of tools that provide modeling and flow simulation, document
business processes, analyze survey data, and perform structuring evaluation. Technologies such as
computer-aided systems engineering (CASE) are designed primarily to draw process models.
3. Computing technologies have facilitated a process- oriented approach to system development where
a database is shared in different functional units participating in the same business process.
4. Telecommunication technologies such as LANs, groupware, etc. have improved collaboration
among personnel of different functional units in their efforts to accomplish a common business
process.
5. Making data digital from the start can provide a whole range of positive results. When figures are in
electronic form, employees can look at them in any detail or in any view they desire, can study them
and pass them around for collaboration
6. Input from employees and information on customer requirements is essential in reengineering. IT
applications allow organizations to build a data base to track customer satisfaction, analyze
complaints, and obtain employee‘s feedback for ways to improve customer satisfaction.
7. IT capabilities are used for information exchange and to improve inner organizational collaboration.
8. IT can also be used to help identify alternative business processes. IT can help companies to achieve
multiple objectives in redesigning processes. Expert systems and technological databases can provide

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information on current and future capabilities of technology, human resources and organization
change.
Phase 3: after the design is complete (as an implementer)
The bulk of the reengineering efforts lie in this phase. The reengineering efforts include planning and
managing people, processes, and technology and driving the implementation toward the business
vision. The objectives of this stage are to pilot test the new approach, to monitor the results, and to
provide extensive retraining of employees etc.
IT can facilitate the following processes in this phase:
1. Implementation of the new process through the use of project management and process analysis
tools. These help identify structure and estimate all associated activities. They facilitate tracking and
managing employee‘s expectations against commitments. Contingencies and problems that arise
during the implementation phase can be handled and controlled.
2. Electronic communications enable ongoing and real time communication of the process between
users and facilitators. IT helps to overcome geographic barriers. Evaluating the potential investments
and returns of the reengineering efforts is absolutely essential. The reengineering team or management
should have enough information to determine the value the new process contributes to the overall
performance.
IT can be an enabler for reengineering by enabling the organization to reengineer. IT
allows the organization to do business process more efficiently. IT can also become an inhibitor of
reengineering if the organization's IT Infrastructure is inadequate or inflexible. IT infrastructure
capability includes both the technical and managerial expertise required to provide reliable physical
services and extensive electronic connectivity within and outside the firm.
Information technology (IT) has historically played an important role in the reengineering
concept. It is considered by some as a major enabler for new forms of working and collaborating
within an organization and across organizational borders
Early BPR literature identified several so called disruptive technologies that were supposed to
challenge traditional wisdom about how work should be performed.
· Shared databases, making information available at many places
· Expert systems, allowing generalists to perform specialist tasks
· Telecommunication networks, allowing organizations to be centralized and decentralized at the same
time
· Decision-support tools, allowing decision-making to be a part of everybody's job
· Wireless data communication and portable computers, allowing field personnel to work office
independent

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· Interactive videodisk, to get in immediate contact with potential buyers
· Automatic identification and tracking, allowing things to tell where they are, instead of requiring to
be found
· High performance computing, allowing on-the-fly planning and revisioning
• In the mid 1990‘s workflow management systems were considered as a significant contributor to
improved process efficiency.
• INFORMATION technology (IT) is the key enabler of BPR.
• The major advantage of IT in reengineering lies in its disruptive power. IT has the power to break the
rules and make people think inductively and give the company a competitive advantage. The company
that used the disruptive power of IT to break all rules and gain competitive advantage was
Amazon.com. Amazon.com broke the existing rules and sold books without a physical presence for its
customers, through Internet.
• IT provides project management skills and experience, which is a key ingredient in successfully
implementing reengineering.
• One main objective of BPR is to use IT to support radical change.
• Properly implementing IT can improve the competitive position of organizations. But inappropriately
implementing IT may create barriers to responding to the rapidly changing business environment
• IT system helps in process automation, integration of multiple processes and ensures consistency,
thereby improving productivity and quality of the processes and reducing the cost.
• IT enabled BPR ensures achieving larger target, reducing the risk and providing measures in
sustaining results over a longer time.
• The future role of IT has been identified into three main categories.
• Participate as a member of the reengineering team, but do not take control of the project
• Define technology solutions to enable new business processes and take time to educate
operational managers about new technology.
• Implement technology needed to support the new business processes. Be sure to set
expectations and define deliverables clearly
AGILE MANUFACTURING
Agile manufacturing is essentially an approach a manufacturing company takes to manufacture
products. It looks at the processes, tools and training the company is using in order to respond to
customer needs and market changes. An agile manufacturing strategy would use processes, tools and

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training, which enables it to respond to these needs and changes rapidly without jeopardizing the cost
and quality of the product.
The focus of agile manufacturing lays on the response time and the aim is to react to customer needs
quickly. Therefore, agility and speed become the competitive advantages of agile manufacturing.
Agile manufacturing is a term applied to an organization that has created the processes, tools, and
training to enable it to respond quickly to customer needs and market changes while still controlling
costs and quality. Agility literally means: Quick in movement; Speed of reaction • Responsive to change •
Rapid processing
i.e. This term refers to a methodology in the manufacturing industry that emphasizes the importance of
responding to a customer or client’s needs in a timely manner, as well as making changes to adapt to
the market.
 Agile manufacturing is a method for manufacturing which combine our organization, people
and technology into an integrated and coordinated whole.
The processes, tools and training are often supported by a highly integrated information technology
system. The products tend to be highly customizable and modular. The technology is used to allow
different players (marketers, designers, the production team) to share data and to use it to solve
problems that might slow down the process otherwise. The emphasis is on correcting quality issues
and implementing changes at the earliest point in the manufacturing process, as this is considered
cheaper and quicker than corrective actions later on.
This requires agile manufacturing organizations to be structured differently compared to traditional
manufacturers. These organizations tend to have flatter hierarchical structures, as employees need to
react quickly to customers‘ needs. This also requires the organizations to have high levels of
communication to ensure changes are implemented swiftly.
An enabling factor in becoming an agile manufacturer has been the development of
manufacturing support technology that allows the marketers, the designers and the production
personnel to share a common database of parts and products, to share data on production capacities
and problems particularly where small initial problems may have larger downstream effects. It is a
general proposition of manufacturing that the cost of correcting quality issues increases as the problem
moves downstream, so that it is cheaper to correct quality problems at the earliest possible point in the
process.
Agile manufacturing is seen as the next step after lean manufacturing in the
evolution of production methodology. The key difference between the two is like between a thin and
an athletic person, agile being the latter. One can be neither, one or both. In manufacturing theory,
being both is often referred to as leagile. According to Martin Christopher, when companies have to
decide what to be, they have to look at the customer order cycle (COC) (the time the customers are
willing to wait) and the lead time for getting supplies. If the supplier has a short lead time, lean
production is possible. If the CDC is short, agile production is beneficial.

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Agile manufacturing is an approach to manufacturing which is focused on meeting the needs of
customers while maintaining high standards of quality and controlling the overall costs involved in the
production of a particular product. This approach is geared towards companies working in a highly
competitive environment, where small variations in performance and product delivery can make a
huge difference in the long term to a company's survival and reputation among consumers.
This concept is closely related to lean manufacturing, in which the goal is to reduce
waste as much as possible. In lean manufacturing, the company aims to cut all costs which are not
directly related to the production of a product for the consumer. Agile manufacturing can include this
concept, but it also adds an additional dimension, the idea that customer demands need to be met
rapidly and effectively. In situations where companies integrate both approaches, they are sometimes
said to be using "agile and lean manufacturing". Companies which utilize an agile manufacturing
approach tend to have very strong networks with suppliers and related companies, along with
numerous cooperative teams which work within the company to deliver products effectively. They can
retool facilities quickly, negotiate new agreements with suppliers and other partners in response to
changing market forces, and take other steps to meet customer demands. This means that the company
can increase production on products with a high consumer demand, as well as redesign products to
respond to issues which have emerged on the open market.
Markets can change very quickly, especially in the global economy. A company which cannot adapt
quickly to change may find itself left behind, and once a company starts to lose market share, it can
fall rapidly. The goal of agile manufacturing is to keep a company ahead of the competition so that
consumers think of that company first, which allows it to continue innovating and introducing new
products, because it is financially stable and it has a strong customer support base.
Fig1:development of agile manufacturing system fig:2 agile manufacturing framework
 KEY ELEMENTS
There are four key elements for agile manufacturing:

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 Modular Product Design (designing products in a modular fashion that enables them to serve
as platforms for fast and easy variation)
Agile manufacturing tends to create products, which allow modification and variation quickly.
This is best achieved by the Modular Product Design approach, which means products are
designed in a modular fashion. Modular products are typically built from a number of different
pieces, allowing fast and easy variation.
For example, instead of creating the product from a single piece of material, the
manufacturer would create smaller pieces that fit together to create the product. If you‘d want to
change a specific aspect of the product, you wouldn‘t need to change the whole process. You could
simply make design changes to an individual piece, while still changing the overall look or
function of the product.
 Information Technology (automating the rapid dissemination of information throughout the
company to enable lightning fast response to orders)
Agile manufacturing also involves the use of information technology, especially in order to
improve internal and external communication. This is essentially about dissemination of
information throughout the organization to ensure employees are up-to-date and able to respond
quickly.
Proper implementation of information technology allows employees to make decisions
quicker in terms of product design. Furthermore, it allows a rapid response time to customer
queries, as information is disseminated quickly across the different platforms.
 Corporate Partners (creating virtual short-term alliances with other companies that enable
improved time-to-market for selected product segments)
On the contrary to the traditional model of manufacturing, the agile manufacturing model aims to
leverage relationships with other companies. Short-term partnerships and co-operative projects are
encouraged, as they can help the company to enter and adjust to new or changing markets quicker.
The company will be better suited to improve time-to-market for
products by working closely with companies that are already present in these markets. For
example, introduction to a new market can be quicker by using an existing supplier in this market
prior to establishing your presence there.

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 Knowledge Culture (investing in employee training to achieve a culture that supports rapid
change and ongoing adaptation)
Finally, agile manufacturing relies heavily on the creation of a knowledge culture. This means
agile manufacturers invest in employee training to ensure rapid change and adaptation are
understood and supported throughout the organization.
When a company is considering implementing agile manufacturing, creation of
knowledge culture will be key to success. Switching to agile manufacturing is not always easy and
appropriate training should be provided to support employees during the process.
 4 principles within agile manufacturing:
1. consumer enrichment
2. competitive enhancement
3. organization
4. leveraging impact
 Consumer Enrichment
While lean is more waste oriented, agile is more customer oriented. One of the most important
principles within agile is enriching the customer through various factors such as identification,
monitoring, and understanding factors such as Quality Function Deployment. Satisfying consumer
demands is a key component within agile manufacturing.
 Competitive Enhancement
Having all departments on board for agile methodology can ensure for a much more efficient and
competitive atmosphere. This is by partnering with firms that have the same ideas and mindset about
the production. This is how you can set yourself a step above competitors and adopt a much more
flexible and adaptable supply chain.
 Organization
Proper organization within the operation is one of the most important aspect of an agile manufacturing
operation. This is due to swift changes in circumstances such as consumer preference, demand, and
production. This allows production to be flexible and be prepared for a change at a moment‘s notice.
 Leveraging Impact
People are essential within agile operations, which is why it is important to constantly monitor the
impact of human capital. This is because humans possess skill, information, and the drive to enhance
productivity and improve the manufacturing process. Locating potential leaders that can take
production in the right direction can bring extreme benefit to an agile operation. It is also extremely
important to keep up with current manufacturing trends and advancements in technology, which can
improve your manufacturing operation tremendously.
 THE BENEFITS OF AN AGILE MANUFACTURING PLAN (Why is agile
manufacturing an Effective strategy?)

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 Provides consumers with an instant gratification – Consumers appreciate speed and are clearly
ready to pay extra for fast service. Consider, for example, the popularity of next day delivery services.
Big online retailers have invested resources to provide consumers faster deliveries. Amazon, for
instance, has even started testing its same day delivery in a number of cities.
 Allows consumers to choose – Agile manufacturing guarantees consumers can obtain personalized
products without compromising the quality or service speed. Consumers appreciate the ability to make
a choice and the ability to tweak a product can make it seem more valuable to the consumer.
Your organization is not only able to provide more choice in terms of current customization, but you‘ll
also be more flexible in changing the product around to suit future trends.
 Furthermore, an organization can also enhance its ability to change. Consumers are fickle. Their
interests shift and move in unpredictable ways.
 THE DISADVANTAGES OF AN AGILE MANUFACTURING PLAN
1. Like any other manufacturing process and methodology, it isn‘t perfect in its responsiveness to
different demands.
2. If the new product creates a large spike in demand, agile manufacturing might find it difficult to
respond quickly, as it doesn‘t always focus on large inventory creation. On the other hand, a drastic
drop in demand of high production products could result in unsold products. Both instances can
present huge challenges to the business in terms of customer service and financial cost.
3. Since knowledge culture is the key to agile manufacturing, the cost of educating employees will be
significantly higher than in the traditional manufacturing model. You‘ll need a highly skilled
workforce, which requires quite an investment in terms of training.
4. Costs are also an issue when it comes to implementing an agile manufacturing plan in an already
existing production line.
5. The complexity of new technologies can come with other issues such as increased production
downtime, as maintenance can be more complicated.
 Business Environment for Agility
Four elements of the external infrastructure for agile manufacturers, when combined symbiotically
with their internal operations, can create considerable competitive advantage (see Figure 2).

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In short:
 Agile manufacturing is manufacturing that responds quickly to customer desires, market changes and
input through a highly integrated information technology communication system to produce high-
quality, highly customizable modular products while still controlling costs and quality.
 Agile manufacturers use information technology in machine control and production planning, and
to leverage decision making skills and faster flow of information among all departments.
 It places an extremely strong focus on rapid response to the customer – turning speed and agility into a
key competitive advantage. An agile company is in a much better position to take advantage of short
windows of opportunity and fast changes in customer demand.
 If the Customer Order Cycle (the time customers are willing to wait) is short, agile production is
beneficial.
 Agile is effective because it directly acknowledges the realities of the modern marketplace and
transforms them into a competitive advantage.
 Agile is of particular value for manufacturers in countries with large, well-developed local markets
and high labor costs (e.g. the United States). It leverages proximity to the market by delivering
products with an unprecedented level of speed and personalization, which simply cannot be matched
by offshore competitors. It turns local manufacturing into a competitive advantage.
LEAN MANUFACTURING
Lean manufacturing or lean production, often simply "lean", is a systematic method for waste
minimization (Muda) within a manufacturing system without sacrificing productivity, which can cause
problems. Lean also takes into account waste created through overburden (Muri) and waste created

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through unevenness in workloads (Mura). Working from the perspective of the client who consumes a
product or service, "value" is any action or process that a customer would be willing to pay for.
 Lean manufacturing is a methodology that focuses on minimizing waste within manufacturing
systems while simultaneously maximizing productivity.
 Also known as lean production, or just lean, the integrated socio-technical approach is based
on the Toyota Production System and is still used by that company, as well as myriad others,
including Caterpillar Inc. and Nike.
 Flexible Manufacturing system (FMS) is another name for Lean manufacturing system and it
draws its name from its ability to manufacture with very rapid and quick changes over the time
from one model/product to another. The FMS is capable of manufacturing multi-modal product
flow, which can run variety of product types at the same time.
For many, lean is the set of "tools" that assist in the identification and steady elimination of waste. As
waste is eliminated quality improves while production time and cost are reduced.
A non exhaustive list of such tools would include: SMED, value stream mapping, Five S,
Kanban (pull systems), poka-yoke (error-proofing), total productive maintenance, elimination of time
batching, mixed model processing, rank order clustering, single point scheduling, redesigning working
cells, multi-process handling and control charts .
There is a second approach to lean manufacturing, which is promoted by Toyota, called The Toyota
Way, in which the focus is upon improving the "flow" or smoothness of work, thereby steadily
eliminating unevenness through the system and not upon ―waste reduction' per se. Techniques to
improve flow include production leveling, "pull" production (by means of kanban) and the Heijunka
box.
Lean manufacturing is originally based on production systems used by Toyota. Being lean means
having the ability to quickly respond to customer demands. It also means working with limited
inventory, waste elimination, and reacting on-the-fly to changing conditions. The emphasis lies in the
reduction of throughput times. The result is a significant reduction in operating expenses, and
increased customer satisfaction and retention.
Most Japanese companies were early embracers of lean manufacturing, but global manufacturing
leaders today are implementing it through BPR. Manufacturers that have embraced the concepts of
lean manufacturing have found that significant gains can be achieved from putting process issues first
and technology second.
 Five principles of lean manufacturing
They are value, the value stream, flow, pull and perfection. These are now used as the basis for lean
implementation.
1. Identify value from the customer's perspective. Value is created by the producer, but it is defined
by the customer. In other words, companies need to understand the value the customer places on their
products and services, which, in turn, can help them determine how much money the customer is
willing to pay.

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The company must strive to eliminate waste and cost from its business processes so that the customer's
optimal price can be achieved at the highest profit to the company.
2. Map the value stream. This principle involves recording and analyzing the flow of information or
materials required to produce a specific product or service with the intent of identifying waste and
methods of improvement. The value stream encompasses the product's entire lifecycle, from raw
materials through to disposal.
Companies must examine each stage of the cycle for waste -- or muda in Japanese. Anything
that does not add value must be eliminated. Lean thinking recommends supply chain alignment as part
of this effort.
3. Create flow. Eliminate functional barriers and identify ways to improve lead time to ensure the
processes are smooth from the time an order is received through to delivery. Flow is critical to the
elimination of waste. Lean manufacturing relies on preventing interruptions in the production process
and enabling a harmonized and integrated set of processes in which activities move in a constant
stream.
4. Establish a pull system. This means you only start new work when there is demand for it. Lean
manufacturing uses a pull system instead of a push system.
With a push system, used by manufacturing resource planning (MRP) systems, inventory
needs are determined in advance and the product is manufactured to meet that forecast. However,
forecasts are typically inaccurate, which can result in swings between too much inventory and not
enough, as well as subsequent disrupted schedules and poor customer service.
In contrast to MRP, lean manufacturing is based on a pull system in which nothing is bought
or made until there is demand. Pull relies on flexibility and communication.
6. Pursue perfection with continual process improvement, or kaizen. Lean manufacturing rests
on the concept of continually striving for perfection, which entails targeting the root causes of
quality issues and ferreting out and eliminating waste across the value stream.
 The eight wastes of lean production
The Toyota Production System laid out seven wastes, or processes and resources, that don't add
value for the customer. These seven wastes are:
 unnecessary transportation; (moving products that are not actually required to perform the
processing
 excess inventory; (all components, work in process, and finished product not being processed)
 unnecessary motion of people, equipment or machinery; (people or equipment moving or
walking more than is required to perform the processing)
 waiting, whether it is people waiting or idle equipment; (waiting for the next production step,
interruptions of production during shift change)
 over-production of a product; (production ahead of demand)

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 over-processing or putting more time into a product than a customer needs, such as designs that
require high-tech machinery for unnecessary features; (resulting from poor tool or product
design creating activity)
 Defects, which require effort and cost for corrections.
Although not originally included in the Toyota Production system, many lean practitioners point to
an eighth waste:
 Waste of unused talent and ingenuity.
Goals are:
 Improve quality: To stay competitive in today‘s marketplace, a company must understand its
customers' wants and needs and design processes to meet their expectations and requirements.
 Eliminate waste: Waste is any activity that consumes time, resources, or space but does not add
any value to the product or service.
 Reduce time: Reducing the time it takes to finish an activity from start to finish is one of the
most effective ways to eliminate waste and lower costs.
 Reduce total costs: To minimize cost, a company must produce only to customer demand.
Overproduction increases a company's inventory costs because of storage needs.
The following steps should be implemented to create the ideal lean manufacturing system
 Design a simple manufacturing system
 Recognize that there is always room for improvement
 Continuously improve the lean manufacturing system design
Seven lean manufacturing tools and concepts
Other important concepts and processes lean relies on include:
Heijunka: production leveling or smoothing that seeks to produce a continuous flow of production, releasing
work to the plant at the required rate and avoiding interruptions.
Kanban: a signal -- either physical, such as tag or empty bin, or electronically sent through a system -- used to
streamline processes and create just-in-time delivery.
Jidoka: A method of providing machines and humans with the ability to detect an abnormality and stop work
until it can be corrected.
Andon: A visual aid, such as a flashing light, that alerts workers to a problem.
Poka-yoke: A mechanism that safeguards against human error, such as an indicator light that turns on if a
necessary step was missed, a sign given when a bolt was tightened the correct number of times or a system
that blocks a next step until all the previous steps are completed.
5S: A set of practices for organizing workspaces to create efficient, effective and safe areas for workers and
which prevent wasted effort and time. 5S emphasizes organization and cleanliness. 5S visual management is
defined as an improvement process originated by the Japanese to create a workplace that supports company-
wide integration of workplace organization, standardization, visual control, visual display, and visual metrics
Cycle time: How long it takes to produce a part or complete a process.

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5 essential lean tools
 Sort (eliminate that which is not needed)
 Set In Order (organize remaining items)
 Shine (clean and inspect work area)
 Standardize (write standards for above)
 Sustain (regularly apply the standards)

Ppt notes:
• Lean Manufacturing is a manufacturing approach that focuses on minimizing costs.
• It means there is a minimal amount of money invested in raw materials and inventory at all
times.
• It follows a demand-based flow style. It is driven by a mindset that there is always room for
improvement, and regularly measures how well facilities, materials, and time are being
utilized. Commonly used metrics for this are overall equipment effectiveness. The design
itself is viewed through a lens of continual improvement.
• Lean manufacturing can probably best be summed up by the phrase “Work smarter not
harder”.
• Lean manufacturing is a management philosophy derived mostly from the Toyota Production
System (TPS) (hence the term Toyotism is also prevalent) and identified as "lean" only in the
1990‘s.
• First mentioned in James Womack's 1990 book, "The Machine That Changed the World,"
Lean Manufacturing is a theory that can help you to simplify and organize your working
environment so that you can reduce waste, and keep your people, equipment, and workspace
responsive to what's needed right now.
• The Lean approach is based on finding efficiencies and removing wasteful steps that don't add
value to the end product.
• Waste is anything that doesn't add value to the end product. There are eight categories of waste
that should be monitored
• The first seven sources of waste were originally outlined in the Toyota production system, and
were called "muda." Lean Manufacturing often adds the eighth "workforce" category.
• Kanban is a Japanese word that means card or signal. This is an important tool for improving
production from a push to a pull system. At the core of pull production, upstream operations
signals the prior operation to deliver what is needed, in the quantity needed, and when needed.
• By using a pull system you:
• Integrate all processes into one another and connects the value stream to your customer
demand.
• Improve flexibility to respond to customer demand.
• Simplify the procurement process.

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• Uncover hidden waste in processes.
• Empower employees to produce based on customer demand.
• improve production scheduling.
• Eliminate unnecessary paperwork.
• Eliminate overproduction.
• Reduce inventory for finished goods, raw materials, and subassemblies.
•
• Mistake proofing (also called poka-yoke) is defined as an improvement technology that uses
a device or procedure, to prevent (or eliminate) defects or equipment malfunction during
normal processing.
• Level mix production schedules daily production of various types of products such that it
evens out the peaks and valleys of those production quantities. Companies that achieve level
mix can respond to customer shifts in demand quantity and product mix.

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• One piece flow means production of the product moves from one stage to the next stage one
piece at a time.
• Standard work means there is a set of work procedures that effectively combine people,
materials, processes, technology, and machines to maintain quality, efficiency, safety, and
predictability.
• Value stream mapping is a visual diagram that represents the activities to produce a product
or service through the design, source, make, and deliver functions. Creating a value stream is
the first step required in any lean improvement initiative.
• FMEA (Failure Mode and Effects Analysis):FMEA model prioritize potential defects based
on their severity, expected frequency, and likelihood of detection.
• Overall equipment effectiveness represents the percentage of process capacity entitlement:
• SMED(Single Minute Exchange of Dies) was devised by Shigeo Shingo. It is a key
component of rapid changeover. The SMED changeover time is the time between the end of
the previous run last value added step to the beginning of the first value-added step of the next
run
 Lean Manufacturing Process
• The process has three key stages:
 Stage 1 – Identify Waste
 According to the Lean philosophy, waste always exists, and no matter how good your
process is right now, it can always be better. This commitment to continuous
improvement is known as Kaizen.
 One of the key tools used to find this waste is a Value Stream Map . This shows how
materials and processes flow through your organization to bring your product or service
to the consumer. It looks at how actions and departments are connected, and it
highlights the waste.
 Stage 2 – Analyze the Waste, and Find the Root Cause
 For each waste you identified in the first stage, figure out what's causing it by using
Root Cause Analysis. If a machine is constantly breaking down, you might think the
problem is mechanical and decide to purchase a new machine. But Root Cause
Analysis could show that the real problem is poorly trained operators who don't use the
machine properly. Other effective tools for finding a root cause include
Brainstorming and Cause and Effect Diagrams.
 Stage 3 – Solve the Root Cause, and Repeat the Cycle
 Using an appropriate problem-solving process, decide what you must do to fix the
issue to create more efficiency.

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Agile Manufacturing vs Lean Manufacturing
Lean is by definition ―fast, flexible, flow" the very things that agile manufacturing tries to achieve.
Agile is an attempt to rebrand Lean Manufacturing because of many organizations failure in the past to
focus across the entire value stream when applying lean manufacturing. Too many people in the past
have used a lean definition that concentrates purely on waste reduction and have created anorexic
processes that fail as soon as customers demand changes. Agile tries to address this weakness by
focusing across the supply chain.
Collaborative Manufacturing
Collaborative manufacturing is also referred to as e-manufacturing. This is about rethinking
traditional processes and relationships with suppliers and customers, and enhancing them with
technology in order to collaborate with trading partners in real time. Sharing accurate real-time data is
at the heart of e-manufacturing, which is the essence of business-to-business e-commerce.
Manufacturing partners must be willing to agree on a set of business practices to share information,
and to compete as if they are one vertically integrated company. This is enabled by technologies like
that of the Internet, which help share information. While supply chain visibility and event management
focus on order fulfillment activities, e-manufacturing looks at all of the processes involved in getting a
product to the market.
Key processes that can benefit from collaborative manufacturing currently are listed in the following
lines and could be considered candidates for BPR (to varying degrees depending on relative process
maturity and strategic goals of manufacturers):
 Planning and scheduling: This includes forecasting and positioning of material for demand
fulfillment and capacity management.

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 Product design: This includes mechanical design, electrical design, test design and design for
supply chains.
 New product introduction: This includes bill of materials management, prototyping, design
validation testing, and production validation testing.
 Product content management: This includes change generation, change impact assessment,
product change release, and change cut-in/phase-in.
 Order management: This covers all activities from order capture to order tracking and
exception management.
 Sourcing: This includes approved vendor management, strategic sourcing, and supplier
selection.
The prime emphasis of collaborative manufacturing is on reacting to demand in real time. This entails
that infrastructure issues need to be fixed first, and other internal core business processes like
inventory control need to be streamlined in advance.
Ppt notes:
 Collaborative manufacturing can be defined as sharing information between business
processes across internal or external partners in the value chain network.
 Collaborative Manufacturing is a strategy by which all appropriate individuals and
organizations – both internal and external to the legal enterprise – work together
 In a collaborative arrangement, participants contribute something for the betterment of the
whole. As a result, the rules governing the relationship change, from those traditionally
employed in business to ones based on mutual trust. These new rules are enhanced by
performance and contribution.
 There are four basic types of collaborative manufacturing strategies: product lifecycle
management, inventory/production synchronization, distribution order fulfilment, and
manufacturing enterprise collaboration.
 Product lifecycle management: Included in this type of strategy is real-time information
sharing on product tracking and product genealogy throughout the life of the product. This
data could include: complete product design history, from initial concept to product disposal;
quality assurance data; and use and repair information throughout the useful life of the product
to disposal or recycle.
 Inventory/production synchronization: here the intent is to synchronize inventories across
supply chain partners.
o This means removing the inventory buffers that most companies put in place to protect
their ability to provide products to customers when unanticipated adverse events impact
the production plan.
o In addition, production plans are based on a demand forecast that is shared between
supply chain partners.

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o Included in this strategy is the growing requirement for mass customization to meet
individual customer desires.
Inventory management is a crucial element in accomplishing individualized unit production without a
major adverse cost impact. The key to inventory management is to produce to actual, rather than
anticipated or forecast, demand.
• Distribution order fulfilment:
 The most successful implementation of collaboration to date appears to be
Collaborative Planning, Forecasting, and Replenishment (CPFR)- a model
developed by the Voluntary Inter industry Commerce Standards Association.
 the CPFR model stops with order affirmation. The inclusion of the CPFR model and
collaborative relationships across the extended manufacturing enterprise, along with the
use of real-time process information and the concept of a virtual inventory, all provide a
broader view of the opportunities of collaboration in manufacturing.
• Manufacturing enterprise collaboration:
 information systems applications have matured with increased amounts of information.
unfortunately, we have constructed walls around and between business processes. these
walls exist between departments within companies and between supply chain network
partners.
 In manufacturing enterprise collaboration the idea is to share information because it
better supports the everyday business processes that people work with.
 Collaborative manufacturing methods use systems as network nodes that are linked to
retrieve or exchange information that can be interpreted and passed to interested parties
and/or other systems.
 example : quality assurance data from within the manufacturing execution system can
be linked with a supply chain management system to monitor yield information and
broadcast results to internal or external recipients.
 An additional step might be to provide that information to the planning and scheduling
system for an automatic response to the actual yield quantity, and to revise the schedule
accordingly.
 To further extend we might inform downstream partners of the quality assurance data,
the resulting yield, the revised schedule, and current shipment information as developed
in the logistics management system.
 This type of collaboration may be as simple as information transfer through email to
designated receivers and browser access, or as sophisticated as on-line computer
information sharing with internal and or external users.

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Important considerations for collaborative manufacturing
• Only accurate, timely, available, and real-time information gives everyone the ability to react
in the interest of the supply chain network.
• The purposes and objectives for collaboration should be consistent, and mutually aligned
among all partners across the supply chain.
• There should be high visibility and accuracy of all data sources.
• Reliability is a key factor in collaborative network performance and there is no substitute.
• Consistent allocation and commitment of resources.
• The ability to make delivery promises must be based on sound data and resource allocation.
• All partners must buy into the ideas, methods, and objectives.
• There must be a simple, well defined data transfer methodology.
• There must be consistent and shared performance benchmarking standards that are measured
and shared on a regular basis.
• Companies in a supply chain can hardly work at opposing ends. They must work together as an
aligned team; they must collaborate.
• Chain partners must reduce or eliminate the adversarial tone among them. Supply chain
partners must be seen as departments of the extended enterprise with the common objective of
enhanced supply chain performance.
• Using effective information technologies toward the focused objective is a must.

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Collaborative e-commerce
Collaborative Commerce (C-Commerce)/Collaborative e-commerce is considered to
be the replacement of E-Commerce and hence the next stage in the development of electronic
business solutions. It is defined as ´―an application of an inter organization information system for
electronic collaboration between business partners and organizational employees‖. Among all parties
that are participants of the Value chain (customers, suppliers and trade partners), a C-Commerce
solution forms a joint platform to design, create, manage and administrate real-time data. A goal of
collaborative commerce is for a business to move away from production and sales, shifting towards
the integration of various businesses.
Collaborative commerce (C-commerce) is the use of digital technologies by different
business parties for sourcing products, making transactions or completing similar interactive business
processes. It is a subcategory of e-commerce.
It is a business-to-business (B2B) transaction involving a trading community or a segment
of an industry. To allow collaboration between the business parties, the buyers and sellers use
compatible software tools in their distribution and supply chain. Hence, C-commerce is sometimes
viewed as an aspect of supply chain management.
Here organizations coordinate with each other to maximize their efficiency and
profitability. Companies may use or share the same technological platforms or transact business with
each other and at times may integrate vertically to some degree. Collaborative commerce involves
companies transacting business with other companies through electronic channels.
Example of Collaborative Commerce
For example, XYZ Company has been producing and marketing widgets for decades. Recently, ABC
Company revolutionized the widget industry and can now make them cheaply and more efficiently.
XYZ Company decides to collaborate with ABC Company and starts marketing, selling and servicing
ABC Company's widgets. XYZ Company is able to increase its profitability because it no longer has
to pay for all of the expenses to manufacture its own widgets. Instead, it focuses on the higher margin
business of marketing, selling and servicing another company's product. ABC Company's revenue
benefits also because of the massive number of widgets XYZ Company sells on their behalf.
Advantages and Disadvantages:
Companies that are willing to implement C-Commerce will experience streamlined business
processes, new cost efficiencies, greater customer satisfaction and loyalty, and greatly expanded
revenue potential. On the other hand this means that companies are obliged to share
databases, Intellectual capital, and Core competencies.
A desired result is full transparency which allows improving business processes and the
development and implementation of cost saving measures. This however requires a Paradigm
change in the company`s culture.
Another very important aspect that needs to be taken into consideration is the massive changes
that need to occur within the organisation. The human factor and the necessary change management
methods are to be planned carefully. Supply Chains that are very complex require a substantial effort
in integrating the suppliers. Not all suppliers perform accurately and meet the requirements. A failure

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has a strong effect on the entire value chain (Bullwhip Effect). Data sharing comes along with
advantages but also bears risks of sharing intellectual information which gives other companies the
opportunity to look into your company.
Methodological Approach of BPR
In order to improve the understanding of how BPR works, a methodological approach known as
PRLC - Process Reengineering Life Cycle, as it has been described by Guha et. al. is discussed below.
The methodology consists of 6 stages. 4 A graphical description of the PRLC approach is as below in
figure 2.2)
2.4.1. Envisioning New Processes
Due to the radical structure and the overall character of BPR, organizations require absolute support
from the top management. The organization's leaders start with an examination of how they would run
their business without any constraints whatsoever. This process does not address the question of how
current work can be improved, but how it should be done to achieve maximum performance in all
measures. This stage even involves the aspect of aligning the reengineering effort with the corporate
strategies and organizational goals. Nevertheless, if these strategies show out to be obsolete or
inappropriate, a reexamination and redefinition might be necessary in order to adopt new externalities
to the organization.
a. Secure Senior Management Support
It is substantial, that top management is willing to support reengineering projects. This involves the
chief executive officer (CEO), as well as the heads of departments in the reengineering effort which is
a necessary presumption for anchoring BPR throughout the entire organization. A critical success
factor in this concern is convincing management of the necessity of disregarding existing constraints
and abandoning existing procedures and methods.
b. Identify Reengineering Opportunities
Business consists of a large number of processes and the crucial matter is to identify those of them
being adequate for reengineering efforts. This task requires firstly a commonly accepted definition of
what a business process means, secondly genuine knowledge about the changing needs of customers
and processes' potential for customer value addition.
c. Identify Enabling Technology

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The rapid pace of information technology development has removed many constraints in information
handling. However, it is important to remember, that using IT is no self-purpose, but a way of
supporting the activities within the business processes to be performed. Keeping this in mind,
companies can use IT for achieving gains in speed and productivity.
d. Aligning With Corporate Strategy
This step includes the examination of internal and external strategies related to the reengineering
opportunities and enabling technologies being identified. The reengineering direction is determined
according to the organization‘s strategic market intentions and reengineering potentials without
strategic significance are removed.
2.4.2. Initiating Change
In this stage, the reengineering project is prepared for performance. The reengineering team is
assembled from a multiplicity of units within the organization and external change agents are, if
necessary, allocated to the project. At the same time, the reengineering route is staked out and
performance goals are defined and set.
The Reengineering Team
Due to the multifunctional character of processes, the reengineering team has to be assembled from a
various number of departments. An overall project may involve people from all departments, while
minor projects may consist of members from the affected departments only. A result responsible team
leader is assigned by top management and this team leader is then, in turn, assigning roles to the other
members of the team.
b. Performance Goals
The desired performance for the new processes is determined in this step. There are four areas where
potential benefits can be realized. These are, financial success, customer satisfaction, internal
processes, organizational learning.
2.4.3. Process Diagnosis
On the basis of the performance goals to be accomplished the reengineering is able to perform an in-
depth analysis of the processes to be reengineered. Existing processes are described and hidden
pathologies are uncovered. This stage is critical for the further success of the reengineering efforts due
to its importance to process redesign.
a. Describing Existing Processes
A presumption for business process redesign is to gain genuine understanding how existing processes
work, their span, linkages and bottlenecks. The following factors are important for consideration in
process documentation:
• Description of the entire process.
• Identification of process elements and resources.
• Current process performance.
• Analytic decomposition of processes.
b. Uncovering Pathologies
The pathologies of processes may have different nature, as there may be inefficient work-flows and
sequences of activities, high costs and insignificant value addition for customers. These inadequacies
have to be detected and documented. For this, quantitative as well as qualitative methods should be
applied, depending on the nature of pathologies.
2.4.4. Process Redesign

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Several dimensions are available as measures for redesigning business processes, as there are time,
cost and productivity, quality and capital commitment.
Using a single dimensional approach would lead to sub-optimization of processes, so a consideration
of multiple dimensions is to be used. However, some of the performance measures are concurrent, a
fact that requires the definition of preferences.
a. Alternative Process Designs
Obviously, several design alternatives exist for every process under concern. This step includes the
exploration of alternative designs and their possible implementations in order to identify and
determine the most appropriate process structure and enabling technologies.
b. New Process Design
Designing new processes is a task of constantly questioning the necessity of performing a certain
activity and how, it should be performed. Several factors are critical for the design of processes and
have to be dealt with for success. Some of the most critical factors are,
• Break patterns and disregard "common sense".
• Align processes with strategies and performance goals.
• Assign people to processes instead of single tasks.
• Dismiss hierarchical structures.
• Eliminate pathologies.
• Improve productivity by integrating fragmented work.
• Appraise enabling technology.
c. Designing the Human Resources Architecture
It can be assumed that there is a common agreement on the claim, that no organization is better than
the individuals working in it. This makes the design of the human resources architecture being a most
critical task within the reengineering effort, especially as major change in the human resource area
along with reengineering. The following aspects are important for a successful restructuring of the
human resources architecture:
• Redefinition of work descriptions, titles and positions.
• Application of team based management techniques.
• Encouraging organizational learning.
• Performance evaluation on team basis instead of individuals.
• Reward structures based on group performance.
• The double role of managers as team members and superiors.
• Continuous reengineering communication with employees.
d. Prototyping
Prototyping provides an instant feedback to the reengineering on the progress and acceptance of the
reengineering effort. It provides opportunities for simulating and evaluating reengineering potentials
within the organizational, as well as the system development area. Continuous prototyping enables the
reengineering team and management to make necessary adjustments before a final process design is
chosen.
e. Selection of IT Platform
The IT platform has to be chosen based on its ability of supporting the new designed processes. Other
aspects to be taken under consideration should be the adaptability to changing processes and new
technologies. The information system architecture has to be chosen with respect to actual and future

32
information requirements. Several alternatives are available and the choice of the IT platform should,
in the spirit of reengineering, be performed without regarding constraints, whether they may come
from the computer department, organizational actors, or any other interest group.
2.4.5. Reconstruction
This stage includes implementing change and anchoring it in the organization and addresses the
organization‘s ability of adopting change. Failure during change implementation may result in costly
project failure and potential future in confidence of employees.
a. Installing IT
Using IT as an enabling technology for implementing change and supporting processes is one of the
steps within the reconstruction stage. Depending on the radicalism of change and the adaptability of
the existing information technology, the existing systems may be changed, or replaced entirely. While
the first alternative involves software engineering without affecting the hardware, the second way
often includes overhauling the current systems totally, including a new technical platform.
b. Reorganizing Activities
Adapting the organizational structure to make it fit the new defined processes is a crucial task. The
changes in the human resources architecture have to be realized carefully in a new organizational
structure without more than marginal disturbances of the motivation of the individuals being affected.
While employee empowerment, reorganization and job rotation often can be achieved without major
disruptions probably surfaced due to the reduction of staff.
2.4.6. Process Monitoring
The identified and implemented process has to be monitored in the continuous process in order to scan
their performance and contribution to quality improvement.
This includes, that reengineering projects are not handled in the conventional way of being initiated,
performed and finished. But reengineering is an ongoing process of permanent improvement.
a. Performance Measurement
For determining the reengineering efforts' success, or failure, the new processes' performance must be
measured and compared to the processes being replaced. This performance measuring is performed in
terms of the following aspects:
• Process performance: Cycle times, customer value addition, quality.
• IT performance: Information rates, system use etc.
• Productivity: employees, production, service operations.
b. Links to Quality Improvement
Reengineering is closely related to quality improvement and should be linked with quality programs.
However, there is a major difference in focus between reengineering and approaches like TQM (Total
Quality Management): While reengineering is concerned with abrupt changes and improvement, TQM
is concerned with continuous improvement. Nevertheless, quality improvement is a major concern for
reengineering as well.
Steps in BPR Implementation
The common steps to be taken for BPR implementation are as follows:

33
Phase 1: Beginning organizational change
Phase 2: Building the reengineering organization
Phase 3: Identifying BPR opportunities
Phase 4: Understanding the existing process
Phase 5: Reengineering the process
Phase 6: Blueprinting the new business system
Phase 7: Performing the transformation
Phase 1: Beginning Organizational Change
Activities:
 Assessing the current state of the organization
 Explaining the need for change
 Illustrating the desired state
 Creating a communications campaign for change
The first step is to take a long, hard look at how the organization operates. The focus of this
examination is on the operating procedures and the bottom-line results that are generated by the
organization. The purpose of performing the analysis is to determine whether dramatic change by
doing BPR is really necessary. It may be that only marginal change (which is the result of Continuous
Process Improvement, Total Quality Management, and other similar programmes) is needed. This will
expose the change initiative and the organization to much less risk.
Aspects of the business that need to be evaluated are: how things are currently done, what changes
may be occurring, and what new circumstances exist in our business environment. Next, a look at how
certain operating procedures within the organization have caused, or will cause, irreparable damage to
the company‘s livelihood, is a must.
Finally, the proper future direction of the organization should be decided. The future Vision‖ of how
the business must operate will serve as a clear and concise guide with measurable goals for employees
to focus on. If an organization wishes to change the way it operates, it must turn to its people to make
it happen. People are the agents of change. Creating business plans and strategies are important, but
they are only tools to guide the actions of people.
Because BPR can potentially require significant changes throughout an organization, it must begin
with a communications campaign to educate all those who will be impacted by this change.
Communication to all levels of personnel must remain active from start to finish keeping everyone
involved and working towards a common goal. Without a common understanding about what is
happening, confusion and uncertainty about the future can result in resistance which can be strong
enough to stop any reengineering effort. BPR is most effective when everyone understands the need
for change, and works together to tear down old business systems and build new ones.
In order for change to be embraced, everyone must understand where the organization is today, why
the organization needs to change, and where the organization needs to be in order to survive.

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Phase 2: Building Reengineering Organization
Activities:
 Establishing a BPR organizational structure
 Establishing the roles for performing BPR
 Choosing the personnel who will reengineer
An infrastructure must be established to support reengineering efforts. Although this phase consists of
only a few tasks, it has a tremendous impact on the success of a BPR endeavour. Who are the people
that will be chartered to reengineer the business? What will be their responsibilities? Who will they
report to? These are the questions that must be answered as the reengineering staff is gathered together
to communicate, motivate, persuade, educate, destroy, create, rebuild, and implement.
One of the most important members of the reengineering effort is the executive leader. The leader
must be a senior executive who has the authority to make people listen, and the motivational power to
make people follow. Without the commitment of substantial time and effort from executive-level
management, most BPR projects cannot overcome the internal forces against them, and will never
reach implementation.
A process owner is responsible for a specific process and the reengineering effort focused on it. There
should be a process owner for each high-level process being reengineered. Allocating the
responsibility of a process to a specific person ensures that someone is in charge of how that process
performs. Process owners are usually appointed by the executive leader.
The process owner convenes a reengineering team to actually reengineer the process. The team
dedicated to the reengineering of a specific process should be made up of current insiders, who
perform the current process and are aware of its strengths and weaknesses, along with outsiders who
can provide objective input to spark creative ideas for redesign. The team should be small, usually of
five to ten people.
In some BPR initiatives it is helpful to institute a steering committee. Especially in larger or multiple
reengineering projects, a steering committee can control the chaos by developing an overall
reengineering strategy and monitoring its progress. Lastly, a reengineering specialist can be an
invaluable addition to the overall effort. A reengineering specialist can assist each of the reengineering
teams by providing tools, techniques, and methods to help them with their reengineering tasks.
Phase 3: Identifying BPR Opportunities
Activities:
 Identifying the core or high-level processes
 Recognizing potential change enablers
 Gathering performance metrics within industry
 Gathering performance metrics outside industry
 Selecting processes that should be reengineered
 Prioritizing selected processes

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 Evaluating preexisting business strategies
 Consulting with customers for their desires
 Determining customer‗s actual needs
 Formulating new process performance objectives
 Establishing key process characteristics
 Identifying potential barriers to implementation
It starts by dividing the entire organization into high-level processes rather than the usual vertical
business areas such as marketing: production, finance, etc. These processes, usually less than a dozen,
are the major or core processes of the organization. This activity is not a time consuming task, but it is
difficult because it requires a shift in how we think of ourselves. One goal here is to identify the
process boundaries (where the process begins and where it ends), which will help set the project scope
for those processes that are to be reengineered. In many cases, seeing the company from the
customer‘s point of view can help identify what these high-level processes might be.
Once the major processes have been defined, we need to decide which of our high level processes
needs to be reengineered. The most objective and accurate way is to compare the performance of our
high-level processes, identified earlier, with the performance of our competitors as well as
organizations outside of our industry. Even if a business outperforms its direct competition, there may
be companies in other industries which may be much more effective in performing a similar task-such
as order fulfillment or product development. If the organization fulfils orders in six months, while a
competitor fulfills orders in two weeks, the organization may consider this a process that needs to be
reengineered. Typically, organizations use the following three criteria: Dysfunction (which processes
are the most ineffective), Importance (which processes have the greatest impact on our customers),
and Feasibility (which processes are at the moment most susceptible to a successful redesign, or which
ones are the ‗low hanging fruit‖ as many experts call them). Prioritizing the processes chosen to
reengineer guides the organization in scheduling the order of reengineering of these processes.
Going after the highest priority process first, the organization should assess the preexisting business
strategy which governed its component tasks. Most likely, this existing business strategy is not
focused on driving a process; therefore, it will have to define a new process strategy to reflect our new
strategic goals for the process. Process customers are an important source of information to help set
the new direction.
The organization must consult with them to not only discover their desires, but also to find out what
they actually need by watching what they do with the output. Process goals and objectives can be
determined by combining customer needs with competitor benchmarks and ―best of industry‖
practices (metrics on the best performers of a similar process in other industries). In addition to goals
and objectives, the need to complete the conception of the new process by identifying key
performance measures, key process characteristics, critical success factors, and potential barriers to
implementation.
Phase 4: Understanding Existing Processes

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Activities:
 Understanding why the current steps are performed
 Modelling the current process
 Understanding how technology is currently used
 Understanding how information is currently used
 Understanding the current organizational structure
 Comparing current process with the new objectives
Modelling the current process is an important part of this phase. It not only helps you to better
understand the existing process, but also helps with planning the migration from the old to the new
process and executing the physical transformation of personnel, organizational structures, information
requirements, and how technology is used. Information that should be included in the models are
process inputs (such as task times, data requirements, resources, demand, etc.) and process outputs
(such as data outputs, cost, throughput, cycle time, bottlenecks, etc.).
Understanding how and why the current processes use information is also important. Can staff
members access essential information? Are some business areas wasting time and effort by creating
duplicate information when it can be shared across organizational boundaries? Why is technology used
to support some tasks but not others? How effective are the current interfaces? Thus we need to end up
with an estimate of the current cost, robustness, and functional value of each technology and
information systems currently being used.
Phase 5: Reengineering Processes
Activities:
 Ensuring the diversity of the reengineering team
 Questioning of current operating assumptions
 Brainstorming through change levers
 Brainstorming through BPR principles
 Evaluating the impact of new technologies
 Considering the perspectives of stakeholders
 Using customer value as the focal point
During this phase, the actual ―reengineering‖ begins. You have moved from strategy and analysis
phases into the redesign phase. The reengineering team that was formed to take part in the
reengineering sessions should consist of designers and implementers, including people well versed in
technology. These team members should come from both inside and outside the existing process. The
―inside‖ perspective may reveal information about the existing process that was not uncovered in
Phase 4: Having people who will be the future process owners, or those responsible for the new
process, is a critical component of the Team.
Including the future owners will help to ensure that the reengineered process succeeds once it is
implemented. Equally important is the ―outside‖ perspective of someone who will look at the process
with a ―fresh eye‖ and raise questions about operating assumptions that may not be obvious to the
insider who might be too close to the process to see this.
Lastly, a technologist will provide insight as to how technology can be applied in new and innovative
ways. In other words, the technologist will help to visualize how the process can be performed outside

37
the boundaries of the current implementation. Including both outsiders and technologists in the Team
will help spark ―out-of-box‖ thinking.
The reengineering team is now tasked with brainstorming to create new process ideas. According to
Hammer, brainstorming sessions are most successful when BPR principles are considered. These
principles are:
o Several jobs are combined into one
o Workers make decisions
o The steps in a process are performed in a natural order
o Processes have multiple versions
o Work is performed where it makes the most sense
o Checks and controls are reduced
o Reconciliation is minimized
o A case manager provides a single point of contact
o Hybrid centralized/decentralized operations are prevalent
Phase 6: Blueprinting New Business Systems
Activities:
 Defining the new flow of work
 Modelling the new process steps
 Modelling the new information requirements
 Documenting the new organizational structure
 Describing the new technology Specifications
 Recording the new personnel management systems
 Describing the new values and culture required
Blueprints are detailed plans required to build something in accordance with the designer‘s intentions.
In BPR, blueprints must be created to identify all the necessary details of the newly reengineered
business system and ensure that it will be built as intended. This phase of the project takes up the
reengineered process developed in the previous phase, and provides the details necessary to actually
implement it. Blueprinting involves modelling the new process flow and the information required to
support it. Just as we modelled the ―as is‖ process and information requirements in Phase 4, we need
to create ―to be‖ models to illustrate how the workflow will be different. The information models or
data models will indicate where the new process will use information that is shared across the
functional areas of the business.
The blueprints should also contain models of the redesigned organizational structure. Instead of the
traditional organization chart, a different kind of chart is needed. This chart will show the new process
flow along with the process team members, the process owners, the case managers, and the process
facilitators. The chart should also indicate parts of the organization which interact with the process
personnel.
In addition, detailed technology specifications required to support the new process should be defined.
Although minor changes or fine-tuning adjustments to the technical configuration will probably occur
during the implementation phase, an initial physical description of the technologies used and their
physical specifications should be recommended in this phase, to set the stage for rapid application
development.

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Included in the blueprints should be the new management systems and values or belief systems of this
redesigned area of the business. New management strategies, along with new performance
measurements, compensation systems, and rewards programmes should be outlined. The reengineered
process may require a change in the values or belief systems of the company. The redesign may
require an entirely different culture, or atmosphere from what is prevalent in the organization
currently. It is critical to have these areas, and their responsibilities, defined as we go into the
implementation phase.
Phase 7: Performing transformations
Activities:
 Developing a migration strategy
 Creating a migration action plan
 Developing metrics for measuring performance during implementation
 Involving the impacted staff
 Implementing in an iterative fashion
 Establishing the new organizational structures
 Assessing current skills and capabilities of the workforce
 Mapping new tasks and skill requirements to the staff
 Re-allocating the workforce
 Developing a training curriculum
 Educating the staff about the new process
 Educating the staff about the new technology used
 Educating the management on facilitation skills
 Deciding how new technologies will be introduced
 Transitioning to the new technologies
 Incorporating process improvement mechanisms
This is the phase where all of the previous efforts are combined into an actual business system-
something you can see, feel, and use to enable your organization to meet the market demands of today
and tomorrow.
The first step in transforming the organization is to develop a plan for migrating to the new process.
You need a path to get from where the organization is today, to where the organization wants to be.
Migration strategies include a full cutover to the new process, a phased approach, a pilot project, or
creating an entirely new business unit. An important point to consider is the integration of the new
process with other promos If only one process is reengineered, then it must interact with the other
existing processes. If multiple processes are slated for reengineering, then the new process must not
only integrate with existing processes, but also with the newly reengineered processes that will come
online in the near future; therefore, the implementation of the new process must be flexible enough to
be easily modified later on.
Successful transformation depends on consciously managing behavioral as well as structural change,
with both sensitivity to employee attitudes and perceptions, and a tough-minded concern for results.
BPR implementation requires the reorganization, retraining, and retooling of business systems to
support the reengineered process.

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The new process will probably require a new organization, different in structure, skills, and culture.
The new management structure should result in the control paradigm being changed to the facilitation
paradigm. The new process team structure should result in the managed paradigm being changed to
the empowered paradigm. Once the new structures are established, we should map tasks in the process
to functional skill levels, and ultimately to workers.
Transforming the workforce will require an array of activities. It begins with assessment of the current
skills or capabilities of the workforce to include soft Skills Operational skills, and technical skills. This
inventory may require personal evaluation; (including areas of interest), peer evaluations, and
supervisor evaluations. Feedback should be provided to all personnel to ensure accuracy of current
skills and interests for all staff. With the help of an assessment of new process skill requirements and a
current skills inventory, the gaps can be assessed. An educational curriculum needs to be established to
get all employees educated on the business and, most importantly, on how their jobs relate to the
customer.
An educational pyramid is an effective way to transfer knowledge of team building Self-mastery, and
subject-matter knowledge. System training is essential for understanding the use of new information
systems and how to take advantage of their Capabilities. Process training may be needed to help
employees think beyond a linear process to a more holistic interdependent process. Facilitation
training for management is critical to develop their abilities to listen, allow mistakes, handle disputes
among process experts, and transit to a coach/facilitator role. Education may be necessary for Total
Quality Management (TQM), Statistical Process Control (SP0), or Continuous Process Improvement
(CPI), if these mechanisms are designed into the new processes. Finally, a structured on-the-job
training (OJT) programme is instrumental in providing continuity of the new process during periods of
personnel turnover.
Transforming information systems to support the new process may involve retooling the hardware,
software, and information needs for the new process. One approach to this transition could be a
controlled introduction. The method would ensure that each part of the system is operational for a
segment of the business before going on to the next module to implement. Although the risk may be
low while the bugs in the new system are ironed out, it may be difficult to integrate the hybrid old or
new systems in a stepwise manner. The flash cut approach is where the entire system is developed in
parallel to the existing system, and a complete transition occurs all at once. This may put the
organization at a higher risk if the systems do not function properly at first, but it is the more common
approach due to the ―all-or-nothing‖ nature of BPR. Most reengineered processes function in an
entirely different manner from existing processes; thus, a stepwise introduction would, most likely, not
be fully functional until all steps were introduced anyway. An important reason to justify the flash cut
approach is that the reengineering benefits can be realized much sooner than with a controlled
introduction
Transitioning the information used to support the old process to become useful in the new process
involves reducing some requirements while expanding others. Usually 30 to 40 percent of the old
information can be discarded, because it was administrative data needed to tie the old disjointed, linear

40
processes together. 0n the other hand, the old systems may have poor data integrity, incorrect data, or
insufficient data to support the new business needs. In these cases the data must be expanded to fill the
gaps in the existing data and supply the new information requirements of the reengineered process.
The information blueprints help manage the development of the new information systems.
Tools that support BPR
BPR TOOLS AND TECHNIQUES
Following are some of the tools and techniques for the successful application of reengineering.
1. Process Visualization: For a process to be reengineered the ―end state‖ is to be visualized in prior
to the defining and establishment of the systems needed to implement the new innovation. The
development of the vision of a process is the key to the successful reengineering.
2. Process mapping/operational method study: Operational method study is one of suitable tool to
reengineering. It involves the systematic investigation of the present way of doing a particular job with
an aim of doing the same job in a better way at reduced cost and/or time.
A process map is a planning and management tool that visually describes the flow of work.
Using process mapping software, process maps show a series of events that produce an end result. A
process map is also called a flowchart, process flowchart, process chart, functional process chart,
functional flowchart, process model, workflow diagram, business flow diagram or process flow
diagram. It shows who and what is involved in a process and can be used in any business or
organization and can reveal areas where a process should be improved.
Purpose of process mapping

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