Business Process Reengineering

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• Business Process Reengineering
• For ASQ Members in UAE
• Sunil Thawani
• ASQ Country Councilor for UAE
• Dec. 2001
• EPPCO House, Dubai

2
Enterprise Model
Regulatory Requirements
Competition
Suppliers
Organizational Objectives and Goals
Products
Customers
Services
Products
Strategies, Plans and Policies
Services
Public opinion
Processes
Organization
Procedures
Economic Conditions
Environmental Concerns
Tools and Technologies
3
Relationship Of Processes To The Business
Operating Objectives and Strategies
Processes
Subprocess
Procedures Rules
Tools and Technologies
4
Process Model
Customer
Supplier
Work Activity (Value added over time)
Input
Output
Tasks, People, Facilities Technology,
Rules, Repeatable, Controllable
5
Process Flows Back Forth between Departments
Business Management
Customer Needs
Marketing
Engineering
Operations
Distribution
Finance
Customer Satisfaction
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Business Process Reengineering Processes

• Processes in traditional organization are
• Orphans
• Fragmented
• Invisible
• Unmanaged
• Defy Organization Boundaries
• Result Oriented
• They are at the very heart of every enterprise to
  create value for customers

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Performance Improvement Approaches
Strategic Business Direction
Business Reengineering Products/Markets Scope in
value chain Core Competencies Partners/Linkages
Process Reengineering Processes
People Organization IT
Quantum
Continuous Improvement
Low--------------------Change Impact--------------
--------------High
Process Improvement Tasks/Flows/Tools Techniques M
easures Skills
Quality Team Group Issues
Remove Roadblocks
Problems
Processes
Major Processes
Entire Business
Small-------------------------------Change
Scope----------------------------Large
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Why Companies Reengineer?
Top four motivations
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WHAT IS BUSINESS PROCESS REENGINEERING?

• BPR means starting all over, from scratch i.e.
  If I were recreating this company today given
  what I know given current technology, what
  would it look like?.
• BPR is about rethinking how work is done.
• Underlying principle is that design of work must
  be based not on hierarchical management and the
  specialization of labour but on end-to-end
  processes and the creation of value for the
  customer.
• M.H. J.C

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DEFINITIONS OF REENGINEERING

• Reengineering is the fundamental rethinking
  radical redesign of business processes to
  achieve dramatic improvements in critical,
  contemporary measures performance , such as cost,
  Quality, Service, Speed.
• Michael Hammer
• James Champy
• Reengineering is the rapid and radical
  redesign of strategic, value-added business
  processes and systems, policies organization
  structures that support them to optimize the work
  flows productivity in an organization.
• The Reengineering Handbook
• (AMACOM 1994)

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COMPONENTS OF PROCESS REENGINEERING
Business Processes

• Business
• Processes

Information and Technology
People and Organization
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WHICH PROCESSES ARE BEING REENGINEERED ?
INDUSTRIAL COMPANIES
PRODUCTION
DISTRIBUTION/ LOGISTICS
CUSTOMER ORDERS
PROCUREMENT / MATERIAL MANAGEMENT
FINANICAL MANAGEMENT
MARKETING AND SALES
HUMAN RESOURCES
OTHER
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WHICH PROCESSES ARE BEING REENGINEERED ?
SERVICE COMPANIES
FINANCIAL MANAGEMENT
MARKETING AND SALES
CUSTOMER ORDERS
DISTRIBUTION/LOGISTICS
PRODUCTION
PROCUREMENT/MATERIALS MANAGEMENT
OTHER
HUMAN RESOURCES
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MIXED RESULTS
Percentage of Companies Meeting Specific
Objectives
STREAMLINING BUSINESS PROCESSES
INCREASING PRODUCTIVITY
CUTTING COSTS
REDUCING HEAD COUNTS
ELIMINATING LOW VALUE WORK
INCREASING PROFITABILITY
ELIMINATING FUNCTIONS
MANAGING INVENTORY BETTER
SPEEDING PRODUCTS/SERVICES TO MARKET
GROWING MARKETS
OFFERING NEW PRODUCTS/SERVICES
OUTSOURCING FUNCTIONS
CONSOLIDATING SALES LINES
CONSOLIDATING PRODUCT LINES
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BUSINESS PROCESS REENGINEERING
FORD MOTOR COMPANY - BEFORE BPR
PURCHASE DEPT.
P.O.
ACCOUNTS PAYBALE
INVOICE
VENDOR
PAYMENT
RECEIPT DEPT.
G.R.N.

• 500 HEAD COUNT
• ACCOUNTS PAYABLE TO MATCH 14 ITEMS BETWEEN P.O.,
  G.R.N. INVOICE

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BUSINESS PROCESS REENGINEERING
FORD MOTOR COMPANY - AFTER BPR
PURCHASE DEPT.
P.O.
RECEIPT DEPT.
DATABASE
GOODS
VENDOR
PAYMENT
ACCOUNTS PAYABLE

• AUTOMATIC MATCHING OF 3 ITEMS (PART NO.,UNIT OF
  MEASURE, SUPPLIER CODE) BETWEEN P.O. G.R.N.
• FASTER SIMPLER, MORE ACCURATE EFFICIENT
  PROCESS
• 75 REDUCTION IN HEAD COUNT
• INVOICELESS PROCESSING

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WHAT TO REENGINEER ?

• Critical Assessment of Processes
• Select processes for Reengineering
• Criteria for selection of processes
• - Cycle Time, Cost, Process Value , Key Issue ,
  Management Priorities, Customer , Supplier
  Competitor Issues.

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Selecting Critical Processes

• Dysfunction Process deepest in trouble
  (Fragmented , inefficient , etc. )
• Greatest impact on customer
• Feasibility Most susceptible to successful
  redesign
• ( High cost , wide scope )

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CRITICAL ASSESSMENT OF PROCESSES WORKSHOP -
FLOWCHART
Theoretical Inputs Ensure clear understanding of
Processes Film on Customer is Dwight
Select processes for Reengineering by Process
Impact Performance Analysis
Identify Macro to Processes, Sub-Processes,
Allocate Manpower to Processes/Sub-Processes Defi
ne Sub-Processes
Identify Issues to Process/Sub-Processes Select
key issues by Dot Voting Priorities Issues in
descending order difficulty in implementation
Key Process Issues
Identify internal customer(s) of Sub-processes,
value factors Process performance Priorities
processes in terms of process performance,
process impact value
Process Value Performance
Process Labor Cost
Annual Cost of Manpower to Company Calculate
Processes/Sub-Processes manpower cost
Manpower Cost-Time Profile
Select Flow Item Determine Macro Process Cycle
Times
Process Cycle Time
Material Cost-Time Profile
Inventory Data in value days of R.M., W.I.P,
F.G., Spares, etc.
Process Material Cost
Customer Requirements Vendor Requirements Competit
ion Issues Management Priorities
Fix Dates, Venue for WesTIP, Scope the Selected
Processes, Identify WesTip team Leaders
Members, Collect Sponsor Expectation