BPR Business Process Reengineering QQ
BPR Business Process Reengineering QQ Reengineering Means. Starting all over again - a new beginning. Starting from scratch without any assumption.
Jan 13, 2016
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
BPR
Business Process Reengineering
Reengineering Means. Starting all over again - a new
beginning. Starting from scratch without any
assumption. Forgetting the past. Abandoning outdated rules. Inventing better ways of doing work. Delivering value to the customer. Search for new models for organizing
work.
Reengineering Does Not Mean.
Incremental changes. Patch work. Downsizing. Restructuring. Rebuilding obsolete system with new
one. Reorganizing or producing a flatter.
organization. TQM.
Fundamental principles of BPR.
Customer alone, is responsible for defining what constitutes product or service value.
Organize work around results not tasks. Allow decision points where work is
performed. Incorporate controls into information
processing. Work in parallel, instead of
sequentially,then integrate results.
Defining Reengineering.
It is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed.
Ask: Why do we do what we do ?Why do we do it the way we
do ? The answer will reveal the tacit rules
and assumptions that underlie the way business is conducted.Often the same will be obsolete, erroneous or inappropriate.
Fundamental.
Radical.
BPR is REINVENTING & not ENHANCING/IMPROVING
Go to the root of things. Not making superficial changes or
fiddle with what is already in place. Inventing completely new ways of
accomplishing tasks.
Dramatic.
Implies quantum leap in performance. Meaning blowing up the old rules and replacing it with new ones.
It implies making MAJOR improvements, not incremental changes.
Business Process.
A Business process is set of activities that takes an input, and creates an output of value to the Customer.
Example of Business Process are:
Customer order processing, Warranty and claim processing, Budget planning, Recoveries, Contract administration, Credit approval process, Inventory Management.
Kinds of Companies who undertake reengineering.
Companies that are in deep trouble. Companies whose management has
the foresight to see trouble coming. Companies whose management is
ambitious and aggressive who want to retain their leadership positions.
When the going gets tough the tough gets going
1. Companies that are in deep trouble.
They have no choice.Examples :
Companies whose market share is substantially eroded.
Companies costs are an order of magnitude higher than their competitors.
2. Companies whose management has the
foresight to see trouble coming.
Companies see increasing competition coming in their areas of operations.
Expecting change in regulatory or economic environment.
3. Companies whose management is ambitious and aggressive who want to retain their leadership
positions.Companies that are paradigm pioneers.
These companies believe that the marketplace is battle for survival of the fittest.
Major components.
A greater focus in the organization's customer. (both internal & external)
A fundamental rethinking of the processes in the organization that need to improve in productivity and cycle time. (Known as process change or improvement)
Major Components.
A structural reorganization, typically breaking functional hierarchies into a crossfunctional team.(team building and organizational development activity)
New information & measurement system, using the latest in technology to drive improved data distribution & decision making.
Objectives of Reengineering.
Significantly improve profitability.
Achieve greater customer satisfaction.
Significantly reduce cost.
Increase productivity.
Reengineering Method
An outline
Preparing for change.
1. Top management explores the reengineering process.
Educate management on the process & the need to change.
Create a reengineering steering committee.
Develop an initial action plan.
Planning for change.
2. Prepare workforce for involvement & change.
3. Create a vision, mission and guiding principles.
Identify core competencies. Develop a vision statement. Develop a mission statement. Determine guiding principles.
Planning for change.
4. Develop a three to five year strategic plan.
Conduct a current business review. Determine external environmental
factors. Conduct an internal health review. Complete business-as-usual forecasts. Conduct a gap analysis.
Planning for change.
5. Develop yearly operational or breakthrough plans.
Develop operational objectives. Organize resources. Rank potential changes in order of
priority. Develop one year operational plans &
budgets. Apply & evaluate operational plans.
Designing Change.
6. Identify current business processes.
Determine the critical organizational processes.
Measure the critical processes. Rate the process performance. Identify opportunities and the
process to be reengineered.
Designing Change.
7. Establish the scope of the project.
Identify process stakeholders. Create the project’s mission &
goals. Structure & select team members. Develop a work plan.
Designing Change.
8. Map and analyze the process. Depict the process in a flowchart and
depict the process in an integrated flow diagram.
Complete the process mapping worksheet.
Complete the process constraint analysis.
Complete the cultural factor analysis.
Designing Change.
9. Create the ideal process. Describe the ideal process on
paper. Compare the current process to
the ideal process. Assess the gaps.
Designing Change.
10. Test the new process. Develop pilot objectives. Develop pilot measures. Gain agreement & approval from
stakeholders. Conduct a pilot test of the new
process. Assess the impact of the pilot test.
Designing Change.
11. Implementing the new process.
Develop an implementation action plan.
Execute the plan.
Evaluating change.
12. Review and evaluate progress.
Evaluate organizational measures. Have the steering committee
evaluate the results. Revise the three to five year
strategic plan, if necessary.
Evaluating change.
The final phase of the reengineering model is called Evaluating Change. The purpose of this phase is to evaluate the improvement made during the activity of the last year & to develop priorities for the coming year. Specifically,this phase helps determine where the reengineering effort has been & where it should be going in the future.
Place to begin.
Identify the value added processes the Customer cares for viz. Order fulfillment, new product development, Customer service.
Which of these processes are greatly stressed or loosing money or where Customer is dissatisfied.
Identify other processes which necessarily are not in worst condition, but if you make..
improvement in that it would bring about dramatic improvement in your Customer satisfaction and your market share.
For example an insurance company took 10 days to contact the claimant after receipt of intimation of claim. With identification of this process as critical & reengineering the same the period of 10 days was brought down to 2 days. The result was:
Dramatic improvement in Customer satisfaction. Improvement in business & financial results. Revenue per employee increased by 30%.
Reengineering v/s TQM
Reengineering is fast
Dramatic, radical change
Requires an continous, intensive, top-down, vision driven effort.
Involvement of selected few employees
TQM is a gradual process
Incremental adjustment.
Once it is built, can go on working without regular attention
Total employee involvement (TEI)
Desirable attitudes for BPR
FROM Computer are
mysterious “black boxes”
It takes me 3 weeks & 4 layers of Mgt to get pricing decision approval
I only know how to use this specific report
TO My computer is a
invaluable tool,makes my job easier.
I make pricing decisions routinely following established procedures
I know how to access & analyze information.
FROM
My boss pays my salary keep him happy.
Tomorrow will be like today. Its been like that.
I’m just a cog in the wheel
TO
Customer pays my salary I should satisfy him
Nobody knows what will happen tomorrow.
Every job in the Company is essential & important. I do make a difference.
To address behavior changes we must…..
Understand how people do their work today. What changes the new system will allow in how
people do their work in future. Identify the gap between how things are done today &
they will be done tomorrow. Determine the enablers & barriers in achieving
behavioral/process & Mgt structural changes. Develop the right messages & communication
vehicles that people understand the change.
The following should happen.
The change will push responsibility,authority and accountability lower in the organization.
Will become more customer driven for which we need accurate,timely information to take decisions.
Each area of the Organization will be responsible for entering and analyzing information.
Employees will be empowered.
THE NEW ORDER AT WORK.
Fundamental changes in business processes have implication for many many other parts and aspects of an organization. Let us examine them:
Jobs change-from simple tasks to multi-dimensional work-Process team workers, are collectively responsible for the process & not small piece of work.
Work Units change-From functional to process teams-Whole piece of work is done by team.
Team work is central to the Reengineering project
People’s roles change-From controlled to empowered- Reengineered companies empower employees to make their own rules.
Job preparation changes-From training to education-from “how” to “why”. Education increases the workers insight & understanding & teaches them the “why”.
Focus of performance measures and compensation shifts-From activity to results. People are paid for value they create. Reward for outstanding performance take the form of bonuses not pay rise.
Advancement criteria change-From performance to ability. Advancement to another job is a function of ability,not performance. Pay for performance promote for ability.
Values change- From protective to productive. Reengineering demands that employees deeply believe that they work for their Customers & not their bosses.
Organizational structural change-From hierarchical to flat. Work is performed by coequal people. Managers become coaches. Instead of supervising 7 employees they coach 30.
Challenge to BPR project:-Change Management.
Generate a need for change. Create a positive dissatisfaction with the current situation.
Generate a compelling future. Create a Vision/mission.
Back up the change process through a robust action plan.
A leading Engineering Company adopted what is called a Large Scale Interactive Process (LSIP) to trigger the desire effect amongst the employees at all levels. To create the desired change the company invited representatives of Customers, suppliers, ex-employees, sub-contractors, shareholders & bankers to a gathering of employees represented by all levels in the company & all functions. The invitees were allowed to speck about the company & how they felt when they deal with it. The exercise gave the participants significant information about the perception of stakeholders & helped in creating the desired change.
Large scale interactive process (LSIP).
Creating the organization-wide commitment & empowerment to achieve BPR results-the LSIP way.
The Process consists of involvement of a Critical mass and the affected people in BPR to trigger Paradigm shift, commitment and action plan from the event to the actual place of implementation using the cardinal principle:
D x V x F > R --- C for BPR implementation
LSIP Contd….
D=Dissatisfaction with our current way of performing with respect to
External opportunities (business environment competition, customer expectations etc)
Internal capabilities (skill, knowledge, creativity etc)
V=Vision, desired future of the company F= First step in the direction of our Vision
LISP contd…. R=Resistance to change. Change will occur
only when the dissatisfaction with things as they are, a wish for a different & better future, & the willingness to take first step in positive direction are greater then the resistance to change
C=Change (Even if one element either D,V,F is missing
the product will be zero & no change will occur)
Go back
Reengineering-Simple examples. Cash Withdrawal Procedure in Banks: Before Reengineering: 1. Fill the cheque and
present it to the counter Clerk. 2.Clerk enters details of the cheque in a register ,issues token and writes the token number on the back of the cheque 3. Another clerk enters details of your withdrawal in your A/C book kept by the Bank,verifies your sign & enters details in your passbook.(pass book is issued later) 4. Cheque is then forwarded to the cash counter & payment made. Time taken for completing the process- 15 Minutes.
After Reengineering: The four steps are now carried out by one single clerk. Who on presentation of the cheque carries out the four steps himself and pays the amount. His role is simplified by use of a computer. Time taken for the above-5 minutes. Persons involved 1 in place of 3 in the earlier process.
Suburban Train Travel Ticket Procedure: The Rail Coupon system introduced for suburban train travel in Bombay results in substantial time saving for the casual traveler and the railways.The same eliminates the need for standing in long queues for buying train tickets.
Case Example:Purchase dept of one Corporate.
Study of a company with turnover of Rs. 100 Cr & purchases of RS.30 Crores revealed that 25% of its purchases were of values less then Rs.5000/-. A sample study revealed that for purchase of item of a valued at of Rs.1000/- the company expended Rs 400/- in direct & indirect costs. The reengineering team identified the items & decided to off-load the responsibility of purchasing the items to the process customers who placed orders on the approved vendors at approved rate & budget.
Case study of engineering company which implemented BPR.
Why did the company wanted to implement BPR?
Because of
1. Pressure from competition
--Decreasing market share
--Competitive pricing
2. Customer satisfaction issues
--Quality related problems
--Order fulfillment
--Complaint redressal
3. Decreasing profitability due to.
--High inventory level
--Levy of Liquidated damages
--High overheads
4.Unintegrated Information System.
--Island of information on stand alone PC’s
--Under utilization of resources
--Lack of awareness of current IT. capabilities.
--Slower response time.
Launching the BPR project began with..
Formation of steering committee &Core Team (CT) fully responsible & empowered to carry out the project & draw necessary Resources.
CT comprised of personnel, who were acceptable as Leaders, young, outspoken & wanted the company to change. They included Personnel form, Sales, Finance, Production & Planning & IT.
CT was responsible for managing the project & translating the management vision.
Launching the BPR project contd....
Information required by each function was identified. This was to help in expeditious decision making.
The current IT system was upgraded, personnel trained to use IT as an enabler to make information available at the source for decision making.
Process orientation was still lacking, effort had totally an IT perspective.
The CT began re-examining the existing processes.
Launching the BPR project contd....
Performance measures were set to identify key processes. This helped in selection of processes for re-engineering.
The first task undertaken by the CT was to identify & remove the functional barriers which hindered decision making.
The CT invited functional specialist from other companies to share their experiences.
Processes were redesigned, tested & implemented in consultation with those affected.
Major recommendations implemented.
Involvement of all functions at the stage of job execution plan preparation.
Identification of roles and responsibilities of personnel & functions at the planning stage.
Lead time for procurement of A and B type item of purchase identified and list published.
Outsourcing manufacturing of small sized orders. Rate contracts were entered into for purchasing C
category of purchases. Authorization was given to the users to place direct orders within the budget.
Major recommendations implemented.
Following functions were combined in order to reduce the number of points in the process.
Packing and dispatch function.
Tendering and estimation.
Purchase & Stores.
Finance & accounts. Audit was created as a separate function.
The purchase system was rationalized to sped up placement of Purchase order based on predetermined authority & financial limits.
Factors responsible for success.
A strong mandate with a strong management commitment.
Ownership of recommendations through continuous participation/constructive criticism at all levels
Use of best practices from similar organization & experience of market leaders in other industry.
Continuous communication through involvement at all levels.
Corrective action on findings of the employee & customer satisfaction survey taken.
No scape-goat finding attitude. Example a Non- Conformance committee was formed to handle customer complaints as well as internal rejections.
Senior and middle management active participation in the change process.
Regular reviews at the Board level & provision of resources.
Some Hiccups!! A lack of belief initially in the effectiveness of a
BPR exercise as existing continuous improvement initiatives TQM, ISO etc…were on.
The core team could not dedicate full time to the project because of business needs, resulting in exercise taking a little longer to complete.
Top management’s acceptance of the issues was achieved after significant deliberations.
Involving the vendors in the improvement projects turned out to be challenge.
Index
Go to benchmarking
Click on the index slide to go to desired subject
Related Documents
