1
ERP enabled Business Process Re-engineering
Learning Objectives of the unit : Explain the role of Business
Process Reengineering (BPR) within the organization Understand the
origins and key characteristics of BPR ERP & BPR, Work Flow
Management. FIVE STAGE AS IS / TO BE ANALYSIS.
2
What is BPR ?
Reengineering is the fundamental rethinking and radical redesign
of business processes to achieve dramatic improvements in critical,
contemporary measures of performance, such as cost, quality,
service and speed. (Hammer & Champy, 1993)
3
The Need for BPR Customers (know what they want and are willing
to pay for it) Competition (Continuous increase will result in
changes to price, quality, selective service, and delivery) Change
(continues to occur in people & culture, organizational
structures, policies & procedures, and technology)
4
The Need for BPR Techniques lag behind technology
(Technologically capable, but not functionally operational)
Significant gap between the actual and desired results, creating a
business Problem. Fragmented piecemeal systems (focus on vertical
functions, with the existence of redundancies of effort and
actions). Integration across departmental and organizational
boundaries (information and operations are needed).
5
BPR is Not? Automation Downsizing Outsourcing Process
improvement projects / activities Continuous Improvement Activity
Reorganizing
6
BPR Versus Process Simplification
Process Simplification Incremental Change Process-Led Assume
Attitudes & Behaviors Management-Led Various Simultaneous
Projects
Process Reengineering Radical Transformation Vision-Led Change
Attitudes & Behaviors Director-Led Limited Number of
Initiatives
(Source Coulson-Thomas, 1992)
7
BPR Versus Continuous Improvement
Continuous Improvement Incremental Change People Focus Low
Investment Improve Existing Work Unit Driven
Process Reengineering Radical Transformation People &
Technology Focus High Investment Rebuild Champion Driven
8
T Q M and Reengineering
Rate of change TQM: continuous improvement Reengineering:
dramatic improvement
4-
9
TQM versus Reengineering
4-9
10
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)
11
What is a Business Process??? A collection of activities that
take one or more inputs and turn that into a product that adds
value to a customer A group of logically related tasks that use the
firm's resources to provide customer-oriented results in support of
the organization's objectives
12
Why Organizations Dont Reengineer? Complacency Political
Resistance
New Developments Fear of Unknown and Failure
13
Performance BPR seeks improvements of Cost Quality Service
Speed
14
Key Characteristics Systems Philosophy Global Perspective on
Business Processes Radical Improvement Integrated Change People
Centred Focus on End-Customers Process-Based
15
Key Characteristics Several jobs are combined into one Employees
are empowered to make decisions Steps in business process: natural
order Process may have multiple versions Work is performed where it
makes the most sense
16
Key Characteristics Controls, checks, other non-value-added work
is minimized Reconciliation is minimized - minimize external
contact points Hybrid centralized / decentralized operation is used
A single point of contact is provided for the customer
17
Systems PerspectiveFeedback
Inputs
Transformation
Outputs
Environment
18
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
19
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
20
Integrated Change Viable Solutions Process improvements must be
viable and practical
Balanced Improvements Process improvements must be realistic
Enterprise integration Departments are consolidated Several jobs
are combined into one job \
21
People-Centred Business Understanding Empowerment &
Participation Organizational Culture Worker empowerment There is
both horizontal and vertical reorganization Handoffs are eliminated
There are fewer rules and less coordination is required
22
Focus on End-Customers Process improvements must relate to the
needs of the organization and be relevant to the endcustomers to
which they are designed to serve
23
Re-engineering Redesign of processes (Fundamental change in
business processes) From mass production to mass customization
(Mass production of the same products --- Mass production of
different products) Cycle time reduction (Change in the time it
takes to complete a process from start to end; time can provide
competitive advantage Restructuring organizations (May need to
restructure the entire organization to reap the benefits of
BPR)
24
BPR Symbols
25
Business Process Flowchart SymbolsAn Activity A Document
A Decision
Data (input as outputs)
26
Business Process Flowchart SymbolsA Predefined Process Start The
Start of a Process The End of a Process Representing a Relation
End
27
Business Process Flowchart SymbolsContinuation 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
28
Data Flowchart SymbolsManual Data Item A Database File
Representing a Relation Continuation Off-Page Connector
29
Rules For Data Symbols
30
Rules For Data SymbolsStartGenerate Purchase Order
Symbol used to identify the start of a business process
Activities must be described as a verb Decisions have only two
possibilities (Yes & No)
OK?
Yes
No Crossing lines are not allowed If one side of the decision
has no further processes defined this symbol has to be used
End
31
Rules For Data SymbolsI 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
Purchase Order
A
Posting of Bonus
32
Rules For Data SymbolsPredefined 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.
Sub-Process DeliveryBC 4.04
33
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
34
Implementing a BPR Strategy
35
Key Steps To BPR
Initiation - Select The ProcessesDocumenting the processes
Understand The Current Process AS ISDevelop & Communicate
Vision Of Improved TO BE Processes
IMPLEMENTATION of ERP enabled BPR
36
Initiation - Select the Process
Crucial Tasks Persuasive Case for Action WHY BPR ? Select the
Processes to be Reengineered Sponsorship / budget established
Appoint the Project Team to Lead the Reengineering Initiative
committed (full time Core team with extended team for support).
Develop Project scope, plan and milestones A communication plan
information flow
37
Select the Process Review Business Strategy and Customer
Requirements Select Core Processes Understand Customer Needs Dont
Assume Anything
38
Appoint the Process Team Appoint BPR Champion Identify Process
Owners
Establish Executive Improvement Team Provide Training to
Executive Team
39
Core Skills Required Capacity to view the organization as a
whole Ability to focus on end-customers Ability to assume
individual and collective responsibility Ability to challenge
fundamental assumptions Courage to deliver and venture into unknown
areas
40
Documenting the Current Processes Document a Process using
Michael Porters Value Chain
Michael E. Porter
41
The Porters Value ChainSupport activities
Primary activitiesInbound logistics Operations Outbound
logistics Marketing and Sales Service Corporate infrastructure
Human resources management Technology Development Procurement
Materials receiving, storing, and distribution to manufacturing
premises Transforming inputs into finished products. Storing and
distributing products Promotions and sales force Service to
maintain or enhance product value Support of entire value chain,
e.g. general management planning, financing, accounting, legal
services, government affairs, and QM Recruiting, hiring, training,
and development Improving product and manufacturing process
Purchasing input
41
42
Porters Value ChainAdministrative Coordination and Support
Services SIS: Collaborative Work Systems
Support Processes
Human Resources Management SIS: Employee Skills Database Systems
Technology Development SIS: Computer-Aided Engineering and
DesignProcurement of Resources SIS: Electronic Data Interchange
with Suppliers Marketing and Sales SIS: Interactive Targeted
Marketing
Competitive Advantage Customer Service SIS: Help Desk Expert
System
Inbound Logistics
Operations SIS: ComputerAided Flexible Manufacturing
Outbound Logistics SIS: Online Point-ofSale and Order
Processing
Primary Business Processes
SIS: Automated Just-in-Time Warehousin g
42
43
Porters Value Chain
Primary Activities:
Inbound Logistics: Inbound activities to receive, store and
distribute inputs to the product, such as material handling,
inventory control, warehousing and contact with suppliers.
Operations: Production activities to create the product such as
machining, packaging, printing and testing. Outbound Logistics:
Outbound activities to store and distribute the product to
customers, including warehousing, order processing and vehicle
scheduling. Marketing and Sales: Activities associated with
providing a means by which buyers can purchase the product and be
included to do so (advertising, selling, pricing, merchandising and
promotion). Service: Activities for providing service or
maintaining product value, including installation and training.
43
44
Porters Value Chain
Support Activities:
Procurement: Purchasing input. Technology Development: Not just
machines and processes but also Human Resource Management:
Activities involved in recruiting, training Infrastructure: General
management, finance, planning and qualityassurance. Infrastructure
supports the whole value chain.and staff development.
expertise, procedures and systems.
44
45
Porters Value System
SUPPLIER VALUE CHAINS
FIRM VALUE CHAIN
CHANNEL VALUE CHAINS
BUYER VALUE CHAINS
In the value system supplier, firm, distributor, and buyer value
chains overlap. The suppliers outbound logistics is the firms
inbound logistics. The Distributors inbound logistics is the firms
outbound logistics, etc.
45
46
IT managers care about these models The models provide a map to
help managers Find where they are Find where they should go
You are here
The road to competitive advantage
Goal
47
Stage 3 Focus on AS IS Processes 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) Carefully resolve any
inconsistencies Existing -- New Process Ideal -- Realistic
Process
48
Stage 3 Focus on AS IS Processes
Clearly Identify Improvement Opportunities Quality Rework
Document the Process (PROCESS MAPS) Cost Time Value Data
49
Stage 3 Focus on AS IS Processes PROCESS ASSESSMENTLOOK FOR
ELIMINATING REDUNDANCY, BUREAUCRACY, NON-VALUE ADDING ACTIVITIES,
ERRORS / DEFECTS, REDUCE CYCLE TIME,
50
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
51
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
52
Identify Action Plan Develop an Action Plan Appoint Process
Owners
Simplify the Process to Reduce Process Time Remove any
Bureaucracy that may hinder implementation
53
Identify Action Plan Remove no-value-added activities
Standardize Process and Automate Where Possible Up-grade Equipment
Plan/schedule the changes Construct in-house metrics and targets
Introduce and firmly establish a feedback system Audit, Audit,
Audit
54
IMPLEMENT 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
55
ERP & BPR
56
Benefits From ERP Assists the Implementation of Business
Processes Access to Global Best Practices for various processes
which are proven and standardized. Provides integrated approach
enhancing the focus on customer requirements / fulfillment Improve
Operational Efficiency Coordinate with Vendors & Customers in
the Process Chain ERP & BPR go hand in hand. ERP to be used to
Innovate.
57
ERP IN MODELLING BUSINESS PROCESSES
Focus Business Processes Process Redesign Process Implementation
Integration of all functions / across divisions Information flow
accurate & on-time MIS reports for facilitating decision
making/actions Used to automate transactional and laborious
business processes.
58
WORK FLOW MANAGEMENT SYSTEM IN ERP Work Flow (Routing) system in
ERP is an automated organizational process facilitating
communication of work content, coordination between departments /
people and control of processes. WFM integrates : Technology
Organization / divisions Methodology (processes) Collaboration of
Business processes. Communication within / outside using SCM / CRM
etc., Human interaction reqd. to meet customer requirements.
59
TASKS of the Re-engineering team
1) determine measures of performance 2) install measures of
performance 3) delineate entire existing process in all its gory
detail 4) perform process value analysis and activity-based costing
5) benchmark processes by comparison with other processes
60
Contd 6) design re-invented process 7) simulate re-invented
process 8) prepare report with recommendations 9) install
re-invented process 10) measure improvements
61
BPR Challenges
62
Continuous Evaluation
Is reengineering truly transformational? Will reengineering
improve customer relations? Has reengineering cut across the
organization? Is information technology playing an integral role in
the reengineering solution? Does it hurt?
4-62
63
Common Problems Process Simplification is Common - True BPR is
Not Desire to Change Not Strong Enough Starting Point is the
Existing Process & Not a Blank Slate Commitment to Existing
Processes Too Strong Quick Fix Approach
64
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
65
Managerial Issues Ethical issues (BPR projects may lead to the
need to lay-off, retrain, or transfer employees) BPR implementation
(Few organization-wide BPR effort) Incremental improvement programs
BPR tools (Often uses existing tools rather than creation of new
tools) Role of IT (IT should be a supportive, not lead role in BPR
projects) Failures (Big projects tend to increase failure
rates)
66
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