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Business Process Reengineering BPR

 

Contents

1.1 Process

  • It is a structured, measured set of activities designed to produce a specified output for a particular customer or market. It implies a strong emphasis on how work is done within an organization" (Davenport 1993).

  • Processes may be defined based on three dimensions (Davenport & Short 1990):

    • Entities: Processes take place between organizational entities. They could be:

      • Inter-organizational

      • Inter-functional or

      • Interpersonal 

    • Objects: Processes result in manipulation of objects (output). These objects could be:

      • Physical or

      • Informational

    • Activities: Processes could involve two types of activities:

      • Managerial (e.g. develop a budget) and

      • Operational (e.g. fill a customer order).

1.2 Business Process

  • A set of logically related tasks performed to achieve a defined business outcome. Davenport & Short (1990)

 

1.3 Business Process Redesign

  • It is the analysis and design of workflows and processes within and between organizations" (Davenport & Short 1990).

1.4 Business Process Re-engineering

  • The critical analysis and radical redesign of existing business processes to achieve breakthrough improvements in performance measures. Teng et al. (1994)

  • A structured approach by all or part of an enterprise to improve the value of its products and services while reducing resource requirements.  (Also referred to as Business Process Improvement (BPR), Business Process Redesign, and Functional Process Improvement.)

  • 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)

2. Types of Business Process

  • Business processes are sequences and combinations of business activities. They break into:

    • External Process: (Operational)

      Customer facing processes, that deliver products and services of Value to the Customer examples:

      • Get Order

      • Develop Product

      • Fulfil Order

      • Support Product

    • Management Process:

      Processes controlling and coordinating the organization's activities to ensure that business objectives are delivered.

    • Examples:

      • Make Strategy

      • Set Direction

      • Manage

    • Support Processes:

      Processes provide infrastructural and other assistance to business processes.

    • Examples:

      • IT

      • Financial Systems

      • HR Systems

  • Another classification of Business Processes:

    • knowledge-based Processes

    • Operational Processes

3. Key Process Attributes

  • Interfaces, i.e., customers, inputs, outputs, due dates...

  • Flows: Volumes, cycle times, queuing delays, information flows...

  • Organizational Supports: Functional units, measurements and incentives, feedback and monitoring

N.B. For Key processes we should identify:

  • Beginning and End points of the process

  • Process Stakeholders

  • Process Owners

  • Process Participants

5. Five Areas of Improvement by BPR

  1. Strategy and Business Plans

  2. Organization Structure

  3. Business Process

  4. Business Information Technology

  5. Organization Culture

6. BPR Targets http://en.wikipedia.org/wiki/Business_process_reengineering

  • Customer Friendly: (Competitive Edge)

One of the main goals of introducing BPR is to get a Competitive Edge and that can only be gained by providing the customers more than what the others in the market are asking for. 

  • Effectiveness:

How effective is the product or service that the business or manufacturing company providing the customer? 

  • Efficiency:

How efficient is the company that is manufacturing the product before introducing it to the market to maximize costs? This is one of the key categories that is believed to be more important than any others.

7.1 Process point of View

  • Externally, focus on end customers and the generation of greater value for customers.

  • Give customers and users a single and accessible point of contact through which they can use whatever resources and people are relevant to their needs and interests.

  • Internally, focus on activities which deliver value to customers.

  • Encourage learning and development by building creative working environments.  

  • Concentrate on flows and processes (including communication) through the organization.

  • Remove non-value added activities

  • Undertake parallel activities

  • Speed up response and development times

  • Concentrate on outputs rather than inputs

  • Give priority to the delivery of value rather than the maintenance of management control.

  • Keep the number of core processes to a minimum (approx. 12).

  • They all should be directed to external customers.

  • Ensure that continuous improvement is built into implemented solutions.

7.2 Human & Organizational Point View

  • Network related people and activities. Virtual corporations are becoming commonplace in some business sectors.

  • Implement work teams and case managers extensively throughout the organization.

  • Move discretion and authority closer to the customer,

  • Re-allocate responsibilities between the organization, its suppliers and customers.

  • Encourage involvement and participation. This requires error-tolerant leadership.

  • Ensure people are equipped, motivated and empowered to do what is expected of them.

  • Where ever possible, people should assume full responsibility for managing and controlling themselves. This requires planning skills.

  • Work should be broadened without sacrificing depth of expertise in strategic areas.

  • Avoid over-sophistication. Don't replace creative thinking with software tools.

  • Build learning, renewal, and short feedback loops into business processes.

8. USA Business Reengineering Principles

  • Understand

  • Simplify

  • Automate

9. Suggested Question for Reengineering http://www.dmem.strath.ac.uk/CSM/TQML/TQM9 12.pdf

  • What are the objectives of the process ?

  • Are these objectives in line with the corporate objectives ?

  • Do you need the process ?

  • What value does it add to the corporate mission, vision or strategy ?

  • Who are the customers of the process ?

  • What are the customers requirements ?

  • Does the process meet the customers requirements ?

  • What problems does the process have in meeting its customers needs?

  • Who are the suppliers of the process ?

  • Have told them the requirements of the process ? Are these correct ?

  • Does the suppliers meet the specified requirements

  • Is the process efficient ? - Value Engineering / Analysis

  • Is there any waste in the process ? - How can we eliminate it ?

  • Who is responsible for the process ?

  • Who else could do it ?

  • Is the responsibility located correctly ?

                                       Objective

 

Scope

Streamlining

Process Improvement

"Cost-Reduction"

Re-engineering

Achieving Best-In-Class

"Competitive Parity "

Re-inventing

Break-Point

"Rewriting the Rules"

Intra-functional

Projects are aimed at single and isolated tasks, activities or single  function.

Example 1.1:

Eliminate costly paper work by introducing an e-mail system to internal communication.

Example 1.2.:

Reengineer the sourcing process to ensure that the lowest cost suppliers are being selected.

Example 1.3.:

A company uses a digital voice recording system to streamline its acquisition process, and to improve communications

Inter-functional

Projects target cross functional business processes, but are contained within a business unit.

Example: 2.1:

A bank has created a simplified, one page form for loan applications for those customers, seeking up to US$ 60k.

Example 2.2.:

Introduce self-directed work teams to the order management process in a manufacturing company.

Example 2.3.:

A bank dissolves all existing 120 branches, and introduces an extremely user-friendly direct banking system on the Internet.

Inter-organizational

Projects bridge  between two or more business units, such as the company and its customers and suppliers.

Example 3.1:

Link up with one particular vendor for cost saving purposes in product design and parts delivery (single source concept).

Example 3.2.: Reengineering the delivery process between a german machine manufacturer and all its European automotive parts suppliers (just-in-time processes).

Example 3.3.:

An automotive company externalizes all employees, except a staff of thirty people. Former employees turn into entrepreneurs and form a network of suppliers together with other vendors.

  • Break-Point projects of type 2.3. and 3.3. are rare, due to high implementation risks associated with large-scale projects

  • Small scope project type 1.1. may not classified as a Business Reengineering project at all

 

Step 1:

Project Preparation

Step 2:

Redesign of Processes

Step 3:

Implementation

Hammer/ Champy

1. Introduction

2. Identification

3. Selection

4. Understanding

5. Redesign

6. Implementation

Davenport

1. Visioning and Goal setting
2. Identification

3. Understand and measure
4. Information Technology

5. Prototyping
6. Implementation

Manganelli/Klein

 

1. Preparation
2. Identification

3. Process Vision
4a. Technical Design
4b. Social Design

5. Transformation

KODAK

1. Project Initiation
5. Change Management

2. Understanding

3. New Process Design
5. Change Management

4. Business Transition
5. Change Management

 

15. Difference & Similarity between BPR and TQM

  • Both TQM and BPR share a cross-functional orientation.

  • TQM  focuses on incremental change and gradual improvement of work processes and outputs over an open-ended period of time. BPR seeks radical redesign and drastic improvement of processes a bounded time frame.

Process Improvement (TQM) versus Process Innovation (BPR) From Davenport (1993, p. 11)
 

 

Process Improvement 
TQM

Process Innovation
BPR

Level of Change

Incremental

Radical

Starting Point

Existing Process

Clean Slate

Frequency of Change

One-time/Continuous   

One-time

Time Required     

Short

Long

Participation 

Bottom-Up    

Top-Down

Typical Scope 

Narrow, within functions 

Broad, cross-functional

Risk 

Moderate

High

Primary Enabler 

Statistical Control

Information Technology

Type of Change     

Cultural

Cultural/Structural

 
  • Six Sigma is a new and improved BPR which has been reworked, reanalyzed and renamed for the employees’ sake.

  • Purpose:

  • Steps

    • Opportunity Analysis

    • Utilization of Root Cause Analysis

      • Identify Priorities

      • Survey Planning Best Practices

      • Survey Sourcing Best Practices

      • Survey manufacturing Best Practices

      • Survey Logistics Best Practices

      • Identify Best Practice business impact

      • Conduct Business Relevancy Analysis

    • Design To-Be Blueprint

      • TO BE Geographic Map

      • TO BE Thread Diagram

      • TO BE Information Flow

      • TO BE Work Flow

19. References