inayat abbas malla

1. Business Process Engineering
Process

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BPR & The Organization

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What is BPR?
• Reengineering is the fundamental rethinking
and redesign of business processes to
achieve dramatic improvements in critical,
contemporary measures of performance,
such as cost, quality, service and speed.
(Hammer & Champy, 1993)

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BPR is Not?
• Automation
• Downsizing
• Outsourcing

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BPR Versus Process Simplification
Process Reengineering
Radical Transformation
Vision-Led
Change Attitudes & Behaviors
Director-Led
Limited Number of Initiatives
Process Simplification
Incremental Change
Process-Led
Assume Attitudes & Behaviors
Management-Led
Various Simultaneous Projects
(Source Coulson-Thomas, 1992)

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BPR Versus Continuous Improvement
Process Reengineering
Radical Transformation
People & Technology Focus
High Investment
Rebuild
Champion Driven
Continuous Improvement
Incremental Change
People Focus
Low Investment
Improve Existing
Work Unit Driven

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What is a Process?
• A specific ordering of work activities across
time and space, with a beginning, an end, and
clearly identified inputs and outputs: a
structure for action.
(Davenport, 1993)

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What is a Business Process?
• A group of logically related tasks that use the
firm's resources to provide customer-oriented
results in support of the organization's
objectives

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Why Reengineer?
• Customers
– Demanding
– Sophistication
– Changing Needs
• Competition
– Local
– Global

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Why Reengineer?
• Change
– Technology
– Customer Preferences

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Why Organizations Don’t Reengineer?
• Complacency
• Political Resistance
• New Developments
• Fear of Unknown and Failure

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Performance
• BPR seeks improvements of
– Cost
– Quality
– Service
– Speed

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Origins
• Scientific Management. FW Taylor (1856-1915).
• Frederick Herzberg - Job Enrichment
• Deming et al - Total Quality Management and
Kaizen
• In Search of Excellence (Peters and Waterman)
• Value-Added Analysis (Porter).

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Key Characteristics
• Systems Philosophy
• Global Perspective on Business Processes
• Radical Improvement
• Integrated Change
• People Centred
• Focus on End-Customers
• Process-Based

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TransformationInputs Outputs
Feedback
Environment
Systems Perspective

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Process Based
• Added Value
– BPR Initiatives must add-value over and above the
existing process
• Customer-Led
– BPR Initiatives must meet the needs of the
customer

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Radical Improvement
• Sustainable
– Process improvements need to become firmly
rooted within the organization
• Stepped Approach
– Process improvements will not happen over night
they need to be gradually introduced
– Also assists the acceptance by staff of the change

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Integrated Change
• Viable Solutions
– Process improvements must be viable and practical
• Balanced Improvements
– Process improvements must be realistic

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People-Centred
• Business Understanding
• Empowerment & Participation
• Organizational Culture

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Focus on End-Customers
• Process improvements must relate to the needs
of the organization and be relevant to the end-
customers to which they are designed to serve

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BPR Symbols

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Business Process Flowchart Symbols
An Activity
A Document
A Decision
Data (input as outputs)

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Business Process Flowchart Symbols
A Predefined Process
The Start of a Process
The End of a Process
Representing a Relation
Start
End

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Business Process Flowchart Symbols
Continuation of the process at the same page
at an equal symbol with the same number. Used
when a relation arrow crosses another relation arrow
Off-Page Connector - Process will continue on the
next page
Integration Relation - A relation to another module is
identified and described

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Data Flowchart Symbols
An Activity
A Document
A Decision
Flat Data File (input as outputs)

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Data Flowchart Symbols
Manual Data Item
A Database File
Representing a Relation
Continuation
Off-Page Connector

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Rules For Data Symbols

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Rules For Data Symbols
Start
End
Generate
Purchase
Order
OK? Yes
No
Symbol used to identify the start of a business
process
Activities must be described as a verb
Decisions have only two possibilities (Yes & No)
Crossing lines are not allowed
If one side of the decision has no further
processes defined this symbol has to be used

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Rules For Data Symbols
Purchase
Order
Posting
of Bonus
I
A
Continuation symbol within the same number
must be present twice on the same page
Name the document
Off- Page Connector is used to continue a
process at the next page or to let the process to
flow over at the previous to the next page. If
more than one is needed use A, B, C, D …
Name the data

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Rules For Data Symbols
Sub-Process
Delivery
BC 4.04
Predefined Processes always have a relation to
level and stream by a number in the line below a
sub-process description
A predefined process must be described in a
different flowchart. To make the relation clear
between the predefined process and the
belonging flowchart a unique alpha numeric
number should be assigned to this predefined
process.

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Version Management
• For different versions of a business process or
data flow some mandatory information must be
on the flowchart.
– Name of the business process
– Unique number of the business process
– Revision number
– Date of last change
– Author
– Page number with total pages

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Implementing a BPR Strategy

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Key Steps
Select The Process & Appoint Process Team
Understand The Current Process
Develop & Communicate Vision Of Improved Process
Identify Action Plan
Execute Plan

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Select the Process & Appoint Process Team
• Two Crucial Tasks
– Select The Process to be Reengineered
– Appoint the Process Team to Lead the
Reengineering Initiative

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Select the Process
• Review Business Strategy and Customer
Requirements
• Select Core Processes
• Understand Customer Needs
• Don’t Assume Anything

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Select the Process
• Select Correct Path for Change
• Remember Assumptions can Hide Failures
• Competition and Choice to Go Elsewhere
• Ask - Questionnaires, Meetings, Focus Groups

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Appoint the Process Team
• Appoint BPR Champion
• Identify Process Owners
• Establish Executive Improvement Team
• Provide Training to Executive Team

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Core Skills Required
• Capacity to view the organization as a whole
• Ability to focus on end-customers
• Ability to challenge fundamental assumptions
• Courage to deliver and venture into unknown
areas

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Core Skills Required
• Ability to assume individual and collective
responsibility
• Employ ‘Bridge Builders’

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Use of Consultants
• Used to generate internal capacity
• Appropriate when a implementation is needed
quickly
• Ensure that adequate consultation is sought
from staff so that the initiative is organization-
led and not consultant-driven
• Control should never be handed over to the
consultant

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Understand the Current Process
• Develop a Process Overview
• Clearly define the process
– Mission
– Scope
– Boundaries
• Set business and customer
measurements
• Understand customers expectations
from the process (staff including
process team)

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Understand the Current Process
• Clearly Identify Improvement
Opportunities
– Quality
– Rework
• Document the Process
– Cost
– Time
– Value Data

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Understand the Current Process
• Carefully resolve any
inconsistencies
– Existing -- New Process
– Ideal -- Realistic Process

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Develop & Communicate Vision of Improved Process
• Communicate with all employees so that they
are aware of the vision of the future
• Always provide information on the progress of
the BPR initiative - good and bad.
• Demonstrate assurance that the BPR initiative
is both necessary and properly managed

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Develop & Communicate Vision of Improved Process
• Promote individual development by indicating
options that are available
• Indicate actions required and those responsible
• Tackle any actions that need resolution
• Direct communication to reinforce new patterns
of desired behavior

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Identify Action Plan
• Develop an Improvement Plan
• Appoint Process Owners
• Simplify the Process to Reduce Process Time
• Remove any Bureaucracy that may hinder
implementation

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Identify Action Plan
• Remove no-value-added activities
• Standardize Process and Automate Where
Possible
• Up-grade Equipment
• Plan/schedule the changes

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Identify Action Plan
• Construct in-house metrics and targets
• Introduce and firmly establish a feedback
system
• Audit, Audit, Audit

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Execute Plan
• Qualify/certify the process
• Perform periodic qualification reviews
• Define and eliminate process problems
• Evaluate the change impact on the business
and on customers
• Benchmark the process
• Provide advanced team training

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Information Technology & BPR

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Benefits From IT
• Assists the Implementation of Business
Processes
– Enables Product & Service Innovations
– Improve Operational Efficiency
– Coordinate Vendors & Customers in the Process
Chain

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Computer Aided BPR (CABPR)
• Focus
– Business Processes
– Process Redesign
– Process Implementation

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BPR Challenges

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Common Problems
• Process Simplification is Common - True BPR
is Not
• Desire to Change Not Strong Enough
• Start Point the Existing Process Not a Blank
Slate
• Commitment to Existing Processes Too Strong
– REMEMBER - “If it ain’t broke …”
• Quick Fix Approach

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Common Problems with BPR
• Process under review too big or too small
• Reliance on existing process too strong
• The Costs of the Change Seem Too Large
• BPR Isolated Activity not Aligned to the
Business Objectives
• Allocation of Resources
• Poor Timing and Planning
• Keeping the Team and Organization on Target

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Summary
• Reengineering is a fundamental rethinking and
redesign of business processes to achieve
dramatic improvements
• BPR has emerged from key management
traditions such as scientific management and
systems thinking
• Rules and symbols play an integral part of all
BPR initiatives

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Summary
• Don’t assume anything - remember BPR is
fundamental rethinking of business processes

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BPR
•PART -2

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Definition of Reengineering
The fundamental rethinking
and radical redesign of
core business processes to
achieve dramatic improvements in
critical performance measures such
as quality, cost, and cycle time.
Source: Adapted from Hammer and Champy, Reengineering the Corporation, 1993

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What Business Reengineering Is Not?
• Automating: Paving the cow paths.
(Automate poor processes.)
• Downsizing: Doing less with less. Cut
costs or reduce payrolls.
BPR involves innovation: Creating new
products and services, as well as positive
thinking are critical to the success of
BPR.

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A Cow Path?

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Reengineering Is ...
• Obliterate what you have now and
start from scratch.
• Transform every aspect of your
organization.
Source: Michael Hammer, “Reengineering Work: Don’t Automate, Obliterate,”
Harvard Business Review, July-August, 1990, pp. 104-112.
Extremist's View

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Definition of Process
• A process is simply a structured, measured set
of activities designed to produce a specific
output for a particular customers or market.
-- Thomas Davenport
• Characteristics:
– A specific sequencing of work activities across time
and place
– A beginning and an end
– Clearly defined inputs and outputs
– Customer-focus
– How the work is done
– Process ownership
– Measurable and meaningful performance

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Processes Are Often Cross Functional Areas
Marketing
& Sales
Purchase Production Distribution Accounting
CEO
Supplier
Customer/
Markets
Needs
Value-added
Products/
Services to
Customers
"Manage the white space on the organization chart!"
"We cannot improve or measure the performance of a
hierarchical structure. But, we can increase output quality
and customer satisfaction, as well as reduce the cost and
cycle time of a process to improve it."

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BPR Examples
• Ford: Accounts Payable
• Mutual Benefit Life: New Life Insurance Policy
Application
• Capital Holding Co.: Customer Service Process
• Taco Bell: Company-wide BPR
• Others

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Ford Accounts Payable Process*
Accounts
Payable
Vendor
GoodsReceiving
Payment
Invoice
Receiving
document
Purchasing
Purchase order
Copy of
purchase
order
PO = Receiving Doc. = Invoice *Source: Adapted from Hammer and
Champy, 1993
? ?

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Trigger for Ford’s AP Reengineering
• Mazda only uses 1/5 personnel to do the same AP.
(Ford: 500; Mazda: 5)
• When goods arrive at the loading dock at Mazda:
– Use bar-code reader is used to read delivery data.
– Inventory data are updated.
– Production schedules may be rescheduled if
necessary.
– Send electronic payment to the supplier.

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Ford Procurement Process
Accounts
Payable
Vendor
GoodsReceiving
Payment
Goods
received
Purchasing
Purchase order
Purchase
order
Data base

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Ford Accounts Payable
Before
After
• More than 500 accounts payable clerks matched
purchase order, receiving documents, and invoices and
then issued payment.
• It was slow and cumbersome.
• Mismatches were common.
• Reengineer “procurement” instead of AP process.
• The new process cuts head count in AP by 75%.
• Invoices are eliminated.
• Matching is computerized.
• Accuracy is improved.

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• 30 steps, 5 departments, 19 persons
• Issuance application processing cycle time:
24 hours minimum; average 22 days
• only 17 minutes in actually processing the application
Department A
Step 1
Department A
Step 2
Department E
Step 19
. . . .
Issuance
Application
Issuance
Policy
New Life Insurance Policy Application Process at
Mutual Benefits Life Before Reengineering*
*Source: Adapted from Rethinking the Corporate Workplace: Case Manager at
Mutual Benefit Life, Harvard Business School case 9-492-015, 1991.
Mutual Benefits Life Before Reengineering*

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The New Life Insurance Policy Application Process
Handled by Case Managers
Case Manager
Underwriter
Physician
Mainframe
LAN
Server
PC
Workstation
• application processing cycle time:
4 hours minimum; 2-5 days average
• Application handling capacity double
• Cut 100 field office positions

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Capital Holding Co. - Direct Response Group*
• A direct marketer of insurance-life, health, property,
and casualty-via television, telephone, and direct mail.
• In 1988, DRG president Norm Phelps and other senior
executives decided that for our company, the days of
mass marketing were over.
• Need to strengthen DRG's relationships with existing
customers and target our marketing to those potential
customers whose profiles matched specific company
strategies.
• A new vision for DRG: The company needed to be
exactly what most people didn't expect it to be an
insurance company that cares about its customers and
wants to give them the best possible value for their
premium dollar. *Source: Adapted from Capital Holding Corporation-Reengineering the
Direct Response Group, Harvard Business School case 192-001, 1992.

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Capital Holding Co.: Vision
Caring, Listening, Satisfying... one by one
Each of us is devoted to satisfying the financial concerns
of every member of our customer family by:
• Deeply caring about and understanding each member’s
unique financial concerns.
• Providing value through products and services that
meet each member’s financial concerns.
• Responding with the clear information, personal
attention and respect to which each member is entitled.
• Nurturing an enduring relationship that earns each
member’s loyalty and recommendation.

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New Business Model: A Conceptual Breakthrough
Target & Segment
of Aggregate Market
Use Individual
Information
Use Group
Information
Prospects
Customers
Sell &
Renew
Capture Individual
Information
&
Personalized
Service
“I Think I Know.”
“I Know for Sure.”
Market Management
Customer Management

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A High-Level Service Process Model Today
CSR Life A&H Micro- Data Letter- System
Customer Corres. Policy film Entry shop
Change
What’s your
policy #’s?
Challis 3
Life 70 Micro-film
Request
Action
Request
Day 1
Micro-film
Response Day 5
• Increase my A&H coverage
• Give me information about my Life Policy beneficiaries
Action
Request
Day 2
Input
Requested
Change
Day 5
A&H change
confirmation letter
mailed to customer
System
Update
Life Policy
beneficiaries letter
mailed to customer
Day 6
Day 6
(Batch)
Day 8
Customer
receives
two separate
responses

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Customer Management Team (CMT):
A Flavor of How DRG Service Process Will Change
Immediate
Response to
Customer
Day 1
Answers
Day 3-4
Day 1-2
Day 1
Send written
acknowledgment
• Increase my A&H coverage
• Give me information about my
Life Policy beneficiaries
Customer
CMT:
Teleservice
Representative
System:
Client-server
architecture
Outbound
Paper

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Taco Bell*
• “We were going backwards - fast ... If
something was simple, we made it complex. If
it was hard, we figured out a way to make it
impossible.” - Taco Bell CEO, John E. Martin
• Customer buy for $1 are worth about 25 cents.
75 cents goes into marketing, advertising, and
overhead.
• Reengineering from the customer’s point of
view. “Are customer willing to pay for these
‘value-added’ activities?”
*Source: Adapted from Hammer and Champy, 1993

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Taco Bell
• Corporate Vision: “We want to be number one in
share of stomach.”
• Slashed kitchen:
Kitchens : Seating capacity
70% : 30%  30% : 70%
• Eliminate district managers. Restaurant managers are
given profit-and-loss responsibility.
• Moving cooking of meat and bean outside.
• Boost peak serving capacity at average restaurant from
$400 an hour to $1,500 a hour.
• $500 millions regional company in 1982 to $3 billion
national company in 1992.

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Reengineering Example
Which line is
shorter and
faster?
Cash Lane
No more than
10 items

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Reengineered Process
Key Concept:
• One queue for multiple
service points
• Multiple services
workstation

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BPR Principles
• Organize around outcomes, not tasks.
• Have those who use the output of the process
perform the process.
• Subsume information-processing work into the
real work that produces the information.
• Treat geographically dispersed resources as
though they were centralized.
• Link parallel activities instead of integrating
their results.
• Put decision points where the work is
performed and build controls into the process.
• Capture information once and at the source.
Source: Michael Hammer, “Reengineering Work: Don’t Automate, Obliterate,”
Harvard Business Review, July-August, 1990, pp. 104-112.

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A BPR Framework
Organization
– Job skills
– Structures
– Reward
– Values
Technology
– Enabling technologies
– IS architectures
– Methods and tools
– IS organizations
Process
– Core business processes
– Value-added
– Customer-focus
– Innovation

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Business Process Reengineering Life Cycle
Define corporate
visions and business
goals
Identify business
processes to be
reengineered
Analyze and
measure an
existing process
Identify enabling IT &
generate alternative
process redesigns
Evaluate and
select a process
redesign
Implement the
reengineered
process
Continuous
improvement of
the process
Visioning
Identifying
Analyzing
Redesigning
Evaluating
Implementing
Improving
Manage change and stakeholder interests
BPR-LC 
Enterprise-wide engineering
Process-specific
engineering

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TI Semiconductor Business Process Map
Manufacturing Capability Development
Strategy
Development
Product
Development
Customer
Design &
Support
Order
Fulfillment
Concept
Development
Manufacturing
Market
Customers
Customer Communication
Source: Adapted from Hammer and Champy, 1993, p. 119.

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Using Value Chain to Identify High-Level Processes
Added
Value
Corporate Infrastructure
Inbound
Logistic Operation Outbound
Logistic
ServiceSales
and
Marketing
Primary
Activity
Supporting
Activity
Human Resource Management
Procurement
Technology Deployment

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Criteria for Selecting Processes
• Broken
• Bottleneck
• Cross-functional or cross-organizational units
• Core processes that have high impacts
• Front-line and customer serving - the moment
of the truth
• Value-adding
• New processes and services
• Feasible

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Process Data
• Basic Overall process data:
– Customers and customer requirements
– Suppliers and suppliers qualifications
– Breakthrough goals
– Performance characteristics: Cost, cycle time,
reliability, and defect rate.
– Systems constraints: Budgetary, business, legal,
social, environmental, and safety issues and
constraints.
• Measure critical process metrics
– Cycle time
– Cost
– Input quality
– Output quality
– Frequency and distribution of inputs

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Phase 4: Redesigning
Identify enabling IT & generate
alternative process redesigns
Information
Technology
Business
Reengineering
How can IT support
business processes?
How can business
processes be
transformed using IT?
Source: Thomas H. Davenport and James E. Short, “The New Industrial Engineering: Information technology and
Business Process Redesign,” Sloan Management Review, Summer 1990, pp. 11-26.
Technology-drivenBusiness-pulled

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Evaluation Criteria
• Costs
– Design and implementing the business process
– Hire and train employee
– Develop supporting IS
– Purchase of other equipment and facilities
• Benefits
– Customer requirements
– Breakthrough goals
– Performance criteria
– Constraints
• Risk
– Technology availability and maturity
– Time required for design and implementation
– Learning curve
– Cost and schedule overrun

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Enabling IT to Consider
• Client/server technology
• Groupware and collaboration technologies
• Mobile computing (wireless LAN, pen-based computing,
GPS, iPhone)
• Data capturing technology (scanner/barcode reader/RFID)
• Telephony: Integration of computer and telephone
systems; VoIP; Unified communications
• Web services and Service-Oriented Architecture (SOA)
• Imaging technology, work flow management systems,
Business Process Management (BPM)
• Decision support systems, Data warehouse, Business
intelligence, Data mining, Digital dashboard
• ERP, CRM, SCM
• Electronic Data Interchange (EDI), Electronic Commerce,
WWW, and Internet
• Web 2.0 ….

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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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End-to-End Processes
Customer
Manufacturing Inventory Mgmt.
Shipping
Marketing/
Sales
Account
Receivable

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Order Management Cycle
1. Order Planning
2. Order Generation
3. Cost estimation and pricing
4. Order receipt and entry
5. Order selection and prioritization
6. Scheduling
7. Fulfillment
– Procurement
– Manufacturing
– Assembling
– Testing
– Shipping
– Installation
8. Billing
9. Returns and Claims
10. Postsales Services

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Empowered Customer-Focus Processes
Values and Quality
delivered to
Customers timely
Empowered
Font-line
worker
Customer-facing Process
Manager as Coach
Teamwork

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Think from the Customer Back
The Customer
Management
Organization
Functions/Processes
Activities/Tasks
Define
Outcomes
Redesign
Outputs
Determine
Activities
Define
Job Responsibilities
Develop
Organization Structure
* Adapted from The Price
Waterhouse Change
Integration Team, Better
Change, Irwin, 1995, p. 163.

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The Business Context of Business Networking
Company Customer
Customer's
Customer
Suppliers/
Partner
N C N C N C N C
N: Needs and Perceived Needs
C: Capabilities
Source: Adapted from Charles M. Savage, "The Dawn of the Knowledge Era," OR/MS Today, pp. 18-23.
Virtual Enterprising
Competitor
Share:
• Costs
• Skills
• Market access
• Technology

98. - 98 -© Minder Chen, 1993-2011
Standard Flowchart Symbols
Activity
Movement/
Transportation
Decision Point
Paper
document
Delay
Storage
Connector
Begin/End
Annotation
Direction of
process flow
Transmission

99. - 99 -© Minder Chen, 1993-2011
Functional Flowchart (Process Mapping)
Customer
Service
Credit
Checking
Inventory Shipping
Begin Enter
Order
Check
Credit
Yes
Order
Processing
Update
Inventory
Ship
orderEnd
P
R
O
C
E
S
S

C
Y
C
L
E

1 2
1 1 1
2 0.1 4
3 0.2 1
4 ... ...
...
A
C
T
I
V
I
T
Y
Wait for
shipping
No
Customer

100. - 100 -© Minder Chen, 1993-2011
Process
order
Allocate
inventory
Ship
order
Billing
Receive
payment
Actual flow of information (i.e., data flow)
Logical flow of operational data (i.e., workflow)
Flow of physical objects
Money flow
Legend:
Warehouse
Customer
OLTP
Database
Workflows, Data Flows, and Physical Flows
Account Receivable

101. - 101 -© Minder Chen, 1993-2011
Islands of Automation & Fragmented Processes
Order
processing
Inventory
management
Shipping &
distribution
Accounts
Receivable
IBM/MVS
DB2
UNIX
Informix
Windows/NT
SQL Server
Netware
Oracle

102. - 102 -© Minder Chen, 1993-2011
Flow of Problem Tracing vs. Data Flow
Order processing
Inventory
management
Shipping &
distribution
Accounts
Receivable
FlowofProblemTracing
DataFlow

103. - 103 -© Minder Chen, 1993-2011
Front-End Integration
Order processing
Inventory
management
Shipping &
distribution
Accounts
Receivable
 Process Owner
 Front-line Worker
Front-end integration:
A single-system view of
the process and the
customer

104. - 104 -© Minder Chen, 1993-2011
The Reengineering Diamond
Business
Processes
& Functions
Management &
Measurement
Systems
Jobs , Skills, &
Organizational
Structures
Values and
Beliefs
Enlighten
Entail Demand
Foster
Culture
Customers
&
Info. Tech.
Competitors
Markets
Customers &
Suppliers