Operations Consulting Skills

1
Operations Consulting Skills Business Process
Re-engineering
2
Overview

• Operations management
• Consultancy stages
• Some Tools
• Principles of BPR

3
Operations consulting

• - an expertise and research service to clients,
  assisting them to
• develop operations strategies e.g. product
  leadership, operational excellence, quality,
  just-in-time, BPR etc.
• improve production service delivery processes
• Internal (management services, operational
  research) and external

4
Example Operations Consulting projects

• Plant, location and facilities management
• Adding locating new plant
• Expanding, contracting, or refocusing facilities
• Parts/Supplier Network
• Make or buy decisions
• Vendor selection decisions
• Processes
• Technology evaluation implementation
• Process improvement reengineering
• People
• Quality improvement
• Setting/revising work standards
• Planning and Control Systems
• Supply chain management
• Outsourcing
• ERP
• Work flow control and scheduling
• Logistics, warehousing and distribution

Source Chase and Aquilano
5
Roles within Consulting Firms
Partners (Finders)
Service departments Finance, Marketing, HR
Managers (Minders)
Consultants (Grinders)
Source Chase and Aquilano
6
Stages in Consulting Process
Decision point

• Feasibility
• Analysis and Unfreezing
• Sales development proposal
• Detailed Problem Analysis
• New system design and modeling
• Develop performance measures
• Evaluate options
• Present report recommendations
• Join team to implement changes
• Fine tune and ensure client satisfaction
• Review what has been learnt

Decision point
Decision point
Decision point
Decision point
Decision point
7
Tools 1 Heuristic Problem solving
Analyse situation
Trend, urgency, size
Problem definition
Actual vs symptoms
Objectives/resources
Generate and Compare solutions
Options/criteria/costs
Implementation planning
Review systems
Info systems/visibility
8
Tools 2 Surveys/Data gathering

• Methods
• Issue trees
• 5 forces competitive advantage
• Supply chain
• Value-added
• QualServ
• Systems analysis
• Customer employee surveys
• Gap analysis
• Prototyping
• Technical vs human

Plant observation/audits
Work sampling analysis
Information systems analysis
Flow charting
Organisation charts
Method study
9
BPR Introduction

• Why does so much IT investment seem not produce
  corresponding increase in productivity and
  performance?
• 1. Faulty measurements
• 2. Information Technology
• 3. Organizational process, structure and design
• Hammer Champy radically redesign key business
  processes Reengineering The Corporation A
  Manifesto for Business Revolution
• Davenport Short highlight the relationship
  between IT and BPR relationships The New
  Industrial Engineering Information Technology
  and Business Process Redesign

10
Business Process Reengineering (BPR)

• Making processes
• effective - producing the desired resulted
• efficient - minimising the resources used
• adaptable - to changing customer business
  needs.
• BPR Philosophy
• Radical, cross functional, dramatic

• Focus on organise around outcomes
• Provide direct access to customers (internal
  external)
• Harness technology
• Control through policies, practices and feedback
• Enable independent and simultaneous work
• Build in feedback channels

Hammer and Champy, Re-engineering the
Corporation, Harper Collins, 1993
11
BPR Focus

• on end-to-end business process that extends all
  to the way to a customer (external or internal)
  who receives some value from the process
• on essential processes that deliver outcomes
• - moving flow
• - cross-functional in scope within enterprise
• - cross-enterprises
• assumptions about performance improvement thru.
  reengineering
• 1. clean-sheet rethinking
• 2. quantum improvements gt incremental
  improvements
• 3. use IT to re-engineer process in
  qualitatively different ways
• 4. maximum value-added in process, minimise
  everything else
• 5. measure value thru. surrogate performance
  measures
• 6. Change work environment to fit reengineered
  process

12
What is a Process?

• Definition
• A specific ordering of work activities across
  time and place, with a beginning, an end, and
  clearly identified inputs and outputs a
  structure for action (Davenport, 1993)
• A collection of activities that takes one or more
  kinds of input and creates an output that is of
  value to a customer (Hammer Champy, 1993)

13
What is a business process?

• . a group of logically related tasks using the
  firm's resources to provide customer-oriented
  results to support organisation's objectives.
• ..an operational or admin. system that
  transforms inputs into valued outputs - typically
  a task sequence arranged as a procedure perhaps
  involving machines, depts. people.
• making sandwiches to order
• seeing a sales order through from beginning to
  end
• stock replenishment procedures
• aircraft maintenance e.g. in hanger or on tarmac
  between flights
• . includes service support processes e.g.
  engineering change or payroll process,
  manufacturing process design.

14
Kinds of process

• Operational (production) directly achieves
  operational objectives
• Control goal to maintain a state relating to
  another process
• Generic applicable to any group member (an
  abstraction or class, essentials of a process
  that may be shared)
• Customised adaptation of a generic process to
  suit specific objectives and using identified
  resources
• Enactable defined executed using process
  technologies
• Meta-process concerned with another process(es)

15
System Thinking

• Systemicof a bodily system as a whole
  (medically oriented definition)
• of or concerning a system as a whole
• A framework of thinking, analysis and synthesis
• the ability to see the world as a complex system
• these are connected to those and everything
  else
• you cant just do this without those being
  affected

16
Systems view of business
Environment
Entropy
Transformation Process
Inputs
Outputs/outcomes
Adaptation
Information
Feedback
17
Leavitt Diamond (adapted)

• A conceptual framework
• for evaluating balancing
• IT-enabled change

IT Use
Business Processes
Organisational Form
Change one variable adjust others e.g. new IT
business processes need to be changed. New skills
organisational form to match the IT?
Requisite People Skills
18
Leavitt Diamond (cont.)

• BPR as well as successful organisational change
  needs a balance of all these elements in a viable
  combination
• IT-driven perspectives emphasise importance of
  integrated IT architecture
• Organisational design perspectives focus on
  finding new organisational form
• Human resource perspective emphasise empowerment,
  rewards systems and training
• BPR perspectives focus primarily on business
  processes

19
Evolution of BPR
Degree of enabling IT
Knowledge Management
Web-enabled e-business
Time-based competition
1st-wave BPR
2nd-wave BPR
TQM
Richness of business transformation
20
BPR requirements

• Need
• process owners - accountable for how well the
  process performs
• well-defined boundaries (process scope), internal
  external interfaces responsibilities
• well-documented procedures, work tasks training
  measurement feedback controls close to point of
  performance
• customer-related measurements targets
• known cycle times
• formalised change procedures
• performers to know how good they can be.

21
BPR - process innovation

• Existing, long-in-the-tooth practices (solutions
  to past problems) may no longer reflect core
  business concerns nor what the customer may
  actually want.
• Rethink redesign BPs for sharp improvement
  (radical change) in performance, costs, cycle
  times quality.
• "If you want to get to Heaven, I wouldn't start
  from here." Start with a clean sheet of paper
• Imperatives
• evaluate core business activities
• consider BPs cross-functionally
• re-design radically, don't just tinker
• aim for sharp improvements in performance levels

22
BPR serves

• the aspirations of business strategy makers
  implementors.
• target better operating ability to satisfy
  customers - radical change may be needed.
• a BPR programme is a tactic, a programme to
  achieve desired results.
• BPR in isolation from strategic plans will not
  work. Commitment of strategic managers is
  essential.
• isolated BPR efforts will lack direction and will
  get lost.

23
BPR as Neo-Taylorisim?

• The aims, processes and outcomes of BPR have
  roots in various organisational efficiency,
  productivity and competitiveness movements.

24
BPR, TQM the March of Ind. Engineering

• George Siemens (1839-1901) information
  measurement systems.
• Sci Mgt. work and method study FW Taylor, Frank
  Lillian Gilbreth
• Frederick Herzberg - Job enrichment
• Systems analysis for computer systems
• Deming et al - TQM and Kaizen
• In Search of Excellence (Peters Waterman)
• Value-added analysis (Porter)
• Creativity, lateral thinking, brain-storming

25
BPR and Information Processing Systems

• Large software systems growing old,
• Limitations of early construction tools
• millions of lines of patched code to maintain.
• New tools (client server databases, graphic
  interfaces, 4GLs) cut development and maintenance
  costs
• more knobs, buttons, access processing power
• Slow change in operational/administrative methods
  because of dependency on complex mainframe
  applications.
• New technologies timely to re-design business
  processes
• Why generate a new IT system without improving
  the business process it serves?

26
Is BPR different from CQI?

• Continuous improvement
• Incremental gradual change
• Low investment
• People-practices focus
• Improvement on existing
• Work-unit driven

• BPR
• Radical change
• High investment
• People technology focus
• Scrap and rebuild
• Champion driven

27
BPR Phases
28
BPR Project

• An organisational change project with three
  components business strategy, business process
  and information systems
• BPR must be linked with business strategy and
  information system

29
Steps in process analysis

• target the process area for change
• Business process
• Task process
• form a team. Select project leader
• decide on the objectives of the analysis
• define customers suppliers
• analyse (identify/ chart) the process elements
  steps in the process flow
• describe the existing transformation process
• develop improved process design
• gain management approval of the improved design
• implement new process design

30
Participants in BPR Project
Process Owners
Process Participants
BPR Project Sponsors
Core BPR Project Team
BPR facilitators consultants
IT e-commerce specialists
Human resources specialist
31
Identify process elements

• raw materials
• product (output) design
• job (sequence, simplification, discretion etc)
• processing steps used
• management control information
• equipment or tools
• people actors (direct/indirect staff,
  customers, supply relationships (internal
  external)

32
PHASE 1 Organising for improvement

• Objective build leadership, understanding
  commitment
• Activities
• establish Executive Improvement Team (EIT)
• Appoint BPR champion
• provide executive training
• develop an improvement model
• communicate goals to employees
• review business strategy and customer
  requirements
• select the critical processes
• appoint process owners
• select BPR Team members

33
PHASE 2 Understanding redesign the process

• Objective understand all dimensions of current
  business process
• Activities
• define process mission, scope and boundaries
• provide team training
• develop a process overview
• define customer/business measurements
  expectations for the process
• identify improvement opportunities
• errors and re-work high cost
• poor quality long time delays/backlog
• Record/chart the process
• collect cost, time value data
• perform walkthroughs on new process
• resolve the differences (existing/new,
  ideal/realistic)

34
Process definition and charting

• Analyse (identify and chart) the process elements
  and steps in the process flow

35
PHASE 3 Implementation

• Objective secure efficiency, effectiveness and
  adaptability of the business process on
  implementation
• Activities
• eliminate bureaucracy and no-value-added
  activities
• simplify the process and reduce process time
• standardise and automate
• up-grade equipment
• error proof the process and document it
• select and train the employees
• Plan/schedule the changes

36
PHASE 4 Measurements and controls

• Objective
• develop a process control system for on-going
  improvement
• Activities
• develop in-house measurements and targets
• establish a feedback system
• audit the process periodically
• establish a poor-quality cost system

37
PHASE 5 Continuous improvement

• Objective
• to implement a continuous improvement process
• Activities
• Qualify/certificate 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

38
Process Chart Symbols
39
Method Study Questions for Process Analysis

• What does the customer need?, operations are
  necessary? Can some operations be eliminated,
  combined, or simplified?.
• Who is performing the job? Can the operation be
  redesigned to use less skill or less labor? Can
  operations be combined to enrich jobs? .
• Where is each operation conducted? Can layout be
  improved? .
• When is each operation performed? Is there
  excessive delay or storage? Are some operations
  creating bottlenecks? ..
• How is the operation done? Can better methods,
  procedures, or equipment be used? .

40
BPR and Bench-marking

• The BPR team may benchmark another company's
  process to determine
• process objectives
• innovative practices
• tried and tested methods
• Benchmarking partners need not be from the same
  industry.
• A photocopying firm on re-engineering its order
  processing system compared itself to mail-order
  firms as well rival photocopy companies.

41
BPR Problems

• Starting with a clean sheet
• Preoccupation commitment to existing business
  processes
• Thinking the problem thru. in the light of new
  methods technologies
• Choice of the target process - too big, too small
• The power and resourcing of the cross functional
  team
• BPR in isolation from strategic and ops plans
  will not work.
• Top commitment essential. Short-termism of
  decision makers
• Isolated efforts will lack direction and will get
  lost.
• Done at times of stress and anxiety
• Keeping the BPR team on target
• BPR team as action researchers
• Costs of the change
• Vaccination against change another quick fix
• Finding the time and energy
• We need to keep the old, existing core systems
  running

BPR programmes tended To run out of steam. Has
BPR gone away - unfashionable?
John Gall, Systemantics - If it works, don't
change it!
42
BPR for e-Business

• rethinking/ redesigning business processes at
  both enterprise supply chain level to take
  advantage of Internet connectivity new ways of
  creating value
• Redesign front-office processes that interact
  with customers back-office processes (across
  entire supply chains)
• Changing the way the organisation operates,
  handling physical e- business processes and how
  people work

43
Redesigning Business Processes

• Customer-facing
• provide value to process recipient
• outputs used by external or internal customers
• Cross-functional, cross-department,
  cross-enterprise
• completed task handed to another do next task in
  sequence
• Altering dynamics of information flows
• Knowledge that participants need created around
  the process (data, reports, trends, exceptions,
  FAQ ideas)
• Multiple versions of business processes rather
  than one-size-fits all
• Degree of structure of a process highly
  structured or fluid not tightly determined