MAF 635 BUSINESS PROCESS RE- ENGINEERING (BPR) VS CONTINUOUS PROCESS IMPROVEMENT (CPI

MAF 635BUSINESS PROCESS RE-ENGINEERING (BPR)

VSCONTINUOUS PROCESS IMPROVEMENT

(CPI)

WHAT IS BUSINESS PROCESS RE-ENGINEERING (BPR)?

Business process re-engineering (BPR) is the fundamental

rethinking and radical redesign of business process to achieve

dramatic improvement in critical areas, contemporary measure of

performance such as cost, quality, service and speed according to

Hammer & Champy, 1993.

BPR should focus on the processes that are essential to

achieving the company’s business objectives and strategies which

is known as strategic processes. The strategic processes is

common processes include developing new products, manufacturing

product, acquiring customer orders and others related processes,

although processes may differ from one organization to the next.

The aim of the BPR is to identifying and enhancing the

value-added activities and eliminating non value- added

activities. The value added activities are the activities that

provide essential value to the customers or essential to the

functioning of the business. For example: the value-added

activities in an administrative department are such managing the

business and preparing the financial statement. In the other

hand, the non value-added activities are the activities that do

not add value to a product from customer perspective or for a

business. For example: waiting, inspection and the unnecessary

movement and storage of inventories of an organization.

In simple sentences, BPR is a major surgery to get a drastic

improvement with the intention to make an organization more

flexible, responsive, efficient and effective for their

customers, employees and stakeholders.

REASON FOR BUSINESS PROCESS RE-ENGINEERING (BPR)

Based on the article Business Process Re-engineering by

Mildred Golden Pryor, there are several reason for an

organization to reengineer their business process:

To re-invent the way they work to satisfy their customers

To be competitive

To cure systematic process and behavioral problems

To enhance their capability to expand to other industries

To accommodate an era of change

To satisfy their customers, employees and other stakeholders

To be dramatically different and/or to produce different

result

To survive and be successful in the long term

To invent the “rule of the game”

However, according to Smriti Chand Business in the article of

Continuous Process Improvement versus Business Process Re-

engineering, some organizations keep away from process re-

engineering because they feel it is too costly or too time

consuming.

FOUR MAJOR STEPS IN BUSINESS PROCESS RE-ENGINEERING (BPR)

1. Prepare a business process map

Business process map is a flowchart of the activities that

make up the business process.

Sales andDispatch

Administration

MetalMelting

Finishing

MouldingPattern Design

DesignMethod

IssuePattern

Make JobMoulds

InspectMoulds

MoveMaterial

*

Pour Metal

Set UpHeatTreat

WeldDefects

GrindCastings

*

OperateHeatTreat

ProcessReceivab

les

ProcessSalesOrder

* Figure above: Business Process Map Mason & Cox’s activities.

2. Establish goals

Clear goals should be establishes by the management based on

the business’ sources of customer value for the re-engineered

process. The goals are depends on the business’ strategies

they may also include innovation, flexibility, and so on.

3. Reorganize work flow

In order for those goals can be achieved, management should

works out how to reorganize the flow of work. Management

should reconfigure the business processes rather than

functional department was a common outcome for business

process re-engineering. These changes can lead to spare

capacity which needs to be reduced in order to achieve cost

reductions.

4. Implementation

The final step in business process re-engineering is

implementation. These processes will involve substantial

change which may meet resistance from employees. Those

resistance is best managed through the use of re-engineering

project teams that involve employees form all functional areas

affected by the process, and from all levels of the

organization.

EXAMPLE OF BUSINESS PROCESS RE-ENGINEERING (BPR)

According to the article Business Process Re-engineering

versus Kaizen Method by Christiana Bogdanoiu, the entire

organizations business process or an individual department’s

business process can be re-engineered according to the needs of

an organization. For example; if the credit card department of a

bank is not functioning in an efficient manner as the bank

expected, it might be re-engineer the credit card business

process. The bank may change for X database to Y database.

WHAT IS CONTINUOUS PROCESS IMPROVEMENT (CPI)

Continuous process improvement is looking for incremental

improvement that is not drastic according to Maasaki Imai in

Kaizen, the author of book, The Key to Japan’s Competitive

Success (J. Chris White). Continuous process improvement focuses

on identifying opportunities for streamlining work and reducing

waste in the organization. Only certain department or small

improvement was implemented in the process, so only part that

have problem will be improve or change.

Continuous process improvement comes from word “Kaizen”,

Japanese words “Kai” meaning change and “Zen” meaning become good

(Newitt, 1996; Farley, 1999). Continuous process improvement or

Kaizen process is focus on process in the organization while

Kaizen costing focuses on production in the organization.

THE BEGINNING OF “KAIZEN”

The beginning of Kaizen method is for work process

improvement that includes making improvements originated in the

World War II Job Method training program. It was developed by the

Training within Industry (TWI) organization, a component of the

U.S. War Manpower Commission during World War II. Kaizen method

that suggests improvements also originated in the work TWI. As

suggestion rather than action improvement programs, Imai points

out that, “less well known is fact that the suggestion system was

brought to Japan…by TWI (Traning Within Industry)and the U.S Air

Force, (1986, page 112)” (Christiana Bognanoui).

This program’s name was changed to “How to Improve Job

Methods” (War Production Board, 1945, page 191) and it most often

referred to as Job Methods training. It taught supervisors how to

uncover opportunities for improving work processes and implement

improvements. It incorporated a job aid that reminded the person

of the improvement process.

IMPLEMENTATION OF CONTINUOUS PROCESS IMPROVEMENT IN ORGANIZATION

Continuous process improvement can be implemented in

quality, technology, process, company culture, productivity,

safety and leadership (Christiana Bogdanoiu,). The implementation

of continuous process improvement will take part in certain

process not the whole organization.

Besides that, continuous process improvement or CPI also

involves every employee in the organization. Every employees

start from upper level management to lower level management

including cleaning crew involves in the process improvement.

Everyone is encouraged to come up with small improvement

suggestion on the regular basis in order to improve the process

in the organization. This is because only person that involve

directly in the process know the leaking and failure of the

process.

Apart from that, continuous process improvement is about

making changes anywhere that improvement can be made. The Kaizen

philosophy is “do it better, make it better, improve it even if

it isn’t broken, because if we don’t, we can can’t compete with

those who do.” It means even though there are no weaknesses, but

if there is a change to fix the weaknesses, go on so we can

compete with others.

Last but not least, continuous process improvement will

focused on making small improvements on continuous basis. As

stated earlier, continuous process improvement is based on making

little changes on a regular basis; always improving productivity,

safety and effectiveness while reducing waste (Christiana

Bogdanoui).

CYCLE OF CONTINUOUS PROCESS IMPROVEMENT

Based on the continuous process improvement, there is a

cycle of continuous process improvement. There consist of 4 steps

in order to complete the processes of small improvement in the

organization.

The first step is a plan. Planning refer to identify current

process, procedure or workflow in the organization. Management or

person in charge directly with the specific process should plan

well relating with the lacking of the process and the way to

overcome its problem.

Second step is a do. Doing refer to implement the solution

from the planning phase. From the plan stage, person in charge

Do - Implement solution Check - monitor result Act – Standardize on new process

directly with the process already spot and take note about the

lacking and already have some ways how to overcome the problems.

So, the solution that implement in the process will be use as

result.

The third step is check. Checking refer to monitor the

result based in the do phase. This is because the person in

charge in the process will check and monitor the result of the

implementation of new ways in order to overcome the problem. So,

the result from the implementation of new solution will be reveal

in this stage and whether the new implementation solution will be

use for the next stage or change, also in this stage.

And the last but not least step is act. Act refer to the

action will be taken by person in charge with the specific

process based on the result from checking stage such as

standardize on new process. The new implementation solution will

be implementing in the process if it gives a good result to the

specific process and the same time reducing cost.

As conclusion for the cycle of continuous process

improvement, changes will be happen in little on regular basis

for the improvement of continuous basis in the organization.

EXAMPLE OF BENEFITS CONTINUOUS PROCESS IMPROVEMENT

Continuous process improvement involves every employee in

making changes in most small cases, incremental changes. It

focuses on identifying problems at their source, solving them at

their source, and changing standards to ensure the problem stay

solved. It’s not usual for continuous process improvement to

result in 25 to 30 suggestions per employee, per year, and to

have over 90% of those implemented (Christiana Bogdanoui).

For example, Toyota is well-known as one of the leaders in

using this method. In 1991, at one U.S. plant, 7,000 Toyota

employees submitted over 75,000 suggestions, of which 99% were

implemented (Chirstiana Bogdanoui).

DIFFERENCES BETWEEN BUSINESS REENGINEERING AND CONTINUOUS PROCESS

IMPROVEMENT

The technology advancement has made many organizations to

continually looking for different management recipes to get a

more efficient way in their business operations and reform the

process to simplify the organization and reduce the production

cost that may be a burden and can give high quality to its

customers. However, every organization may have their own

characteristic in their business methods and how they dealt with

the cost system to develop the operation in the organization.

Some organization may keep having innovations in the process or

maybe they may use continuous improvement in the process to

achieve the goals of the organization. So, there is differently

thought about the view and manner of managing the business.

Thus, there are differences between business process

reengineering and continuous process improvement. First

differences between those processes are the people that lead the

process in the organizations. In the business reengineering

process, the people that may leads are consultants, top

management and cross – functional project team. They are people

that have high authority in making decision process and people

that lead the business directions in the market. Nevertheless,

continuous process improvement will be among operation manager,

supervisors and employee. They are masses that work directly may

know the situation of the operation of the product and will be

assisted by manager or top management about the improvement path

to be risen as to increase the efficiency and effectiveness.

Furthermore, business process reengineering and continuous

process improvement can be deferred by the types of the process

used. For business process reengineering, the operation may

include cross organizational boundaries among employee and

demands to use more complex and mixed technologies. Thus, this

process may incur high cost to be implemented and the cooperation

among employee is needed to make the process run smoothly and

successfully. Wherever, continuous process improvement is

processed among well-defined bounds and use low technology. This

procedure is shorter rather than business reengineering process

as it only based on the close relation among employee.

Next difference is established on the scope that encompassed

by those processes in the organization. Line of work process

reengineering may include all stages of employee from the top

management till the lower employees. The top management will plan

to originate a fresh product that can give high profits and to

conform to the current market. Thus, the engineering process will

bring over the whole process to originate a fresh product as

planning. Nevertheless, continuous process improvement may be

grounded on certain roles in the process of production. Some

mistakes in the process streams may need improvement to make the

operation of production become seamless.

In summation, these procedures can be deferred by the degree

of modifications in the performance. Most of engineering process

may receive a radical or incremental and usually may affect the

whole streams of the process. The developer may need an

organization to use new process to meet with recent technology

advancement and it may affect the whole process of production and

equipment used. Contrary with continuous process improvement, the

degree of changes may receive a radical or incremental but

usually only affects certain part in the whole process of

production. Organization may make an improvement from time to

time to make sure the process can run smoothly as that it only

will affect certain process that give problems.

Last but not least, there are different among those

processes in term of the cost incurred for each process. For

those organization that may use business process reengineering

may needs high capital to cover up the cost use in the

technologies, computer and others system intergrated in the

process. Typically, this process may needs an organization to use

high technologies that may give positive impact in the operation

as can give profits at the future. However, for organization that

use continuous process improvement may needs low capital to cover

up the cost as this process may not need to use high

technologies. Thus, this process may make improvement in the

existing process and preferred to visual methods and

simplification.

INTERRELATION BETWEEN BUSINESS REENGINEERING AND CONTINUOUS

PROCESS IMPROVEMENT

In a broad way, there is a connection between business

reengineering process and continuous improvement process. An

organization cannot always use improvement basis as a base to

have the most efficient way in the production process as there

also requires to have innovate or reengineer the process. If the

system only uses the foundation of continuous improvement process

in line operations, as business is likely to face problems in the

high price of repairs and restoration may not be successful and

result in failing operation process. It same goes when

organization only uses reengineering process.

Typically, after an organization makes some innovation in

the process, it needs to have follow up process to make sure

those processes can run smoothly by debug, improve, refine and

fine tune any process that give some problems. This tin be

envisioned that those processes of applied science and continuous

improvement have their own roles to assist an organization

achieve the vision and missionary post and should not be utilized

as separate efforts but instead as two approaches within a single

improvement initiative. Therefore, both processes of continuous

advance and process reengineering should be an inbuilt piece of

process management. From the diagram below, we can take in the

interrelation between the process. It distinctly indicates that

those processes need each others in the production process so

organizations can promote the net income in the hereafter.

Loosely, to endure the business at that place must be a

system and processes to accomplish the ends. Toward that

particular, there must be part to execute the work of the systems

and relations among the employee can be defined the work pattern

should be executed. For instance, the whole part of the

organization as its employee and the relation can be as

procedures and directive that has been involved in the

organization. Structure between parts and relations must be

secure to make sure organization vision and mission can be

achieved.

REFERENCES

1. Business Process Reengineering Method versus Kaizen Method,

by Cristiana Bognanoiu,

http://www.slideshare.net/naveedtaji/business-process-

reengineering-vs-kaizen

2. Continuous Process Improvement versus Business Process

Reengineering, by Smriti Chand Business,

http://www.yourarticlelibrary.com/business/continuous-

process-improvement-versus-business-process-reengineering/

21133/

3. What is Continuous Improvement? By Lean Kit,

http://leankit.com/kanban/continuous-improvement/

4. What is Continuous Improvement? And Why the move to Business

Process Reengineering? http://projecttools.co.uk/Whats

%20Continuous%20Improvements.htm

APPENDICES