Business Process Reengineering

Maciej Derulski

What is a business process?

• “A set of related activities that together achieve a defined business outcome and add value for customers”

• Purchasing• Manufacturing• R & D• Marketing• Sales

Types of Business Processes

• Operational (core)– Purchasing– Marketing– Manufacturing– Order processing

• Managerial– Strategy– Direction

• Support– IT– Finance– HR

Business Process Reengineering (BPR)

• “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)

Michael Hammer

• 1990, Michael Hammer published an article which claimed information technology is being used primarily to automate existing processes rather than using it to eliminate non value adding work.

Michael Hammer

• Claimed:– Lots of work doesn’t add value for customer

– This work should be removed and not accelerated through automation

Forces Driving BPR

• Changes in the external environments– Particularly competitive & technological environments

• Changes in customer wants, needs, and expectations

Forces Driving BPR

• Changes in the external environments– Particularly competitive & technological environments

• Changes in customer wants, needs, and expectations

Where do you begin?

• high-level assessment of the organization's mission, strategic goals, and customer needs.

• Does our mission need to be redefined? • Are our strategic goals aligned with our mission? • Who are our customers? What do they want or need?

• The organization must first re-think what it should be doing before it can decide how to do it best

Where do you begin?

• high-level assessment of the organization's mission, strategic goals, and customer needs.

• Does our mission need to be redefined? • Are our strategic goals aligned with our mission? • Who are our customers? What do they want or need?

• The organization must first re-think what it should be doing before it can decide how to do it best

Change Simulation

• Remember the change simulation?

• What was the first thing you did?– A high level assessment of

organization’s mission, strategic goals, and customer needs.

BPR Steps

BPR Steps

Business Process Analysis

• A business process can be decomposed into specific activities which can be measured, modeled, improved, re-designed, or eliminated.

Advantages of BPR

• Enterprise Integration

• Worker empowerment

• Number of steps in a process are reduced

• Organization becomes more efficient and hence more profitable

Disadvantages of BPR

• Resistance to change

• Higher demand on workers

Principles of BPR

• Process point of view– Focus on generating more value for customers

– Focus on activities which deliver value

– Eliminate non-value adding activities

– Keep amount of core processes to a minimum

Principles of BPR

• Human point of view– Network related people and activities

– Encourage involvement and participation

– Make sure people are equipped, empowered and motivated

Wal-Mart

• Reengineered supply chain by effectively using information technology

• Inventory levels are tracked and ordering is automated

Wal-Mart

• Manufacturers are linked into WalMarts system and receive automated orders

• Makes WalMart very efficient at distributing products to its retail stores, and reduces storage costs.

Time’s Up!