Concept IT & BPR Implement VSM Lecture 5: Business Process Reengineering (BPR) Oran Kittithreerapronchai 1 1 Department of Industrial Engineering, Chulalongkorn University Bangkok 10330 THAILAND last updated: February 6, 2012 ProMIS v1.0 1/ 19
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Concept IT & BPR Implement VSM
Lecture 5:Business Process Reengineering (BPR)
Oran Kittithreerapronchai1
1Department of Industrial Engineering, Chulalongkorn UniversityBangkok 10330 THAILAND
last updated: February 6, 2012
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Outline
1 Concept of Business Process Reengineering
2 Information Technology & Business ProcessReengineering
3 Implementation of Business Process Reengineering
4 Improving Value Adding Process using Value SteamMapping
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What is Business Process Reengineering?
What: rethinking & redesign of business process for dramatic improvement
Typical definition: radical changes, business process, achieve major goal, ITas critical enabler
Key elements: customer focus, empowerment, interaction
Goals: improving efficiency, effectiveness, & economy, service, market shared
Success stories:
Ford: order fulfillmentXeror: order fulfillment
K-Bank: re-think, re-tools, re-process in 1996
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Developments of BPR
Origin: redesigning business process by Peat Marwick, McKinsey in mid 1980
Process focus: legacy of kaizen and TQM
Economic pressure: recession (downsizing) but global competitive
Productivity paradox: technology ∝ 1
productivity
Popularizing:
Reengineering the Corporation by Hammer and CampyProcess Innovation by Davenport
Bandwagon effects: vague & varieties → failed expectation
Hangover effects: new Buzz word, only in IT/IS
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Example of BPR
Warehouse
Purchasing
Accounting
Database Suppliergoods
PO
payment
invoice
GR
claim
cop
ieso
fP
O
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Principles of Re-engineering
Rule 1 Organize around outcomes, not tasks:
Rule 2 Information user = Performer: make decision working spot
Rule 3 Merge information processing with information generating:
Rule 4 Geographically dispersed resources ≈ centralized ones: esp,information
Rule 5 Link parallel activities instead of integrating results:
Rule 6 Build control into process: not control process
Rule 7 Capture information at source:
adapted from: Chase & Jacobs. 2010. “Operations and Supply Chain Management.” pp.498
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Reengineering & other programs
Downsizing Automation TQM Reengineering
Question Staff Technology Customer Businessfundamental
Change Responsibility System Bottom-Up Radical core
Orientation Function Procedure Process Process
Role Of It Ignore Speed-up Incidental Key
Goal Incremental+ Incremental Incremental Dramatic
Frequency One time+ Periodic Continuous One time
source:. Grover, V. & Malhotra, M.K 1997. ”Journal of Operations Management” vol 15
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Major elements of BPR
Business Process
Reengineering (BPR)
Simplification
& Standardization
Multimedia, Internet,JIT, MRP II,
CAD/CAM, CIM, EDI
Customer
Manuf./Service Company
Org. Restructuring
Information Systems
Process Delivery
BehavioralChange
source: Gunasekaran, A. & Nath, B. 1997. “Int. J. Production Economics.” vol. 50 pp. 93
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What is business process
Business Process: A group of logically related tasks that use the firm’s resourcesto provide customer-oriented results in support of the organization’s objectives
source:. Davenport, 1993
Characteristics of business process
Definability: defined boundaries, input and output, activities, responsibly ofprocess owner.
Order: activities ordered according to positions in time and space.
Partner: ∃ customers (or partners)
Value-adding: must add value to partners.
Embeddedness: must embedded into structure.
Cross-functionality: may span several functions.
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Roles of IT in BPR
source: Gunasekaran, A. & Nath, B. 1997. “Int. J. Production Economics.” vol. 50 pp. 93
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Seven Myths about BPR
Myth 1 Reengineering is a radical one-time approach
Myth 2 Reengineering involves breakthrough performance gains
Myth 3 Reengineering enables change primarily through IT
Myth 4 Reengineering focuses on cross-function core business process
Myth 5 Reengineering enhances individual by empowerment and teams
Myth 6 Reengineering = Standardization
Myth 7 Reengineering must conduct as a top-down project
source:. Grover, V. & Malhotra, M.K 1997. ”Journal of Operations Management” vol 15
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Concurrent BPR:
Misused term: BPR (efficiency + tech - people ) ≈ downsizing & layoff
Pre-BPR: check for inefficiency, conditions, logical reason
BPR Options: clean state VS technology-enabled
Advantages
Clean State Technology-enabled
• No constraints • Ease to manage
• Retain competitiveness • Feasible design
• Leap forward • Tool and training
• Not subjected to softwarechange
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BPR Methodology
Preparation: senior executive, team members, crate momentum
Process-Thinking: priority business process, customers, value-added
Creation: reasons, steps (data, personal, machine), IT
Technical design: acquired resources, interaction
Social design: acquired personal, look of new organization, changemanagement
Implementation: smooth transfer, monitor progress, on-time & on-budget
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Common BPR problems
Change, itself: costs, no-so-strong desire, political resistance
Business process: too big or too small, complacency, alignment withbusiness objectives
New Developments: quick fix approach, reliance on existing processes
Fear of failure:
“If it ain’t broke, don’t touch it”“If you break it, you own it”
Project management: poor timing and planning, lack of resource, keepingteam on target
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What is value stream mapping (VSM)?
What: one-page picture of process from suppliers to customer
Idea: depict material & information flows → secreting value adding fromnon-value adding
Benefits: see process, productivity and simplify waste process →Limits: ’just picture’, complexity, required lot of experience
Steps:
1 Define and pick product(s)2 Create As-Is value stream mapping3 Create To-Be value stream mapping4 Develop action plan
Trivial: pioneering by Toyota
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Example of VSM
source: Jacob. etal 2011.
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Symbols using in VSM
source: Jacob. etal 2011.
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As-Is Value Stream Mapping
source: The Northwest Lean Networks
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To-Be Value Stream Mapping
source: The Northwest Lean Networks
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