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IMPLEMENTING BPR : METHODOLOGY & STEPS

Chapter 02

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An exercise in BPR necessitates a fundamental rethinking & redesign in the way we work

The 5–STEP Methodology to Implement BPR (as advocated by DAVENPORT (E & Y) & JAMES SHORT (MIT Sloan School of Management))

INTRODUCTION

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DEVELOPING A PROCESS VISION & DETERMINING PROCESS OBJECTIVES

DETERMINING THE PROCESS TO BE REENGINEERED

UNDERSTANDING & MEASURING THE EXISTING PROCESSES

IDENTIFYING THE IT LEVERS

DESIGNING THE PROTOTYPE & IMPLEMENTING

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Objective of Reengineering is to provide competitive advantage

Therefore, a company has to necessarily start from the organization's business vision & derive from there the processes that have to realize that vision

Business Vision mostly focuses on the future – COMPETITION, PRODUCTS, CUSTOMER EXPECTATIONS, etc.

STEP 1 : DEVELOPING A PROCESS VISION & DETERMINING PROCESS OBJECTIVES

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-Preserves the focus on the customer

- Therefore, ensures that the processes selected for reengineering are those that provide added value to customer

ADVANTAGES OF STEP 1

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This step of ‘process Visioning” has to take place at a senior level in the enterprise, where the business is perceived as an integrated whole

An example- CEO of a company manufacturing engine valves visualizes that to survive the next 3 years he needs to achieve manifold growth in export sales- This ‘business vision’ helps to synthesize a ‘process vision’ to achieve the business vision

STEP 1 : DEVELOPING A PROCESS VISION & DETERMINING PROCESS OBJECTIVES (contd.)

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STEP 1 : DEVELOPING A PROCESS VISION & DETERMINING PROCESS OBJECTIVES (contd.)

-CEO identifies the following as mandatory to achieve the business vision:

- Ability to provide a commercial quotation over fax within 12 hours and close the deal on an export inquiry- Ability to ship products within 4 weeks of order confirmation

- These two critical areas evolve themselves into the processes that need to be reengineered:

- ORDER BAGGING- ORDER FULFILLMENT

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STEP 1 : DEVELOPING A PROCESS VISION & DETERMINING PROCESS OBJECTIVES (contd.)

-This first step essentially recognizes the following:

1. Business Vision & goals are necessarily market / customer driven and contain in them the survival values & CSF’sof the enterprise

2. Achievement of business vision may involve reengineering of > ONE PROCESS

3. Process attributes (cost, quality, time, etc.) & process measures (“half the cost”, “in a day”, etc.) need to be derived

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STEP 1 : DEVELOPING A PROCESS VISION & DETERMINING PROCESS OBJECTIVES (contd.)

-AT the end of STEP – 1 the company would be clear on :

1. What are the key processes? (IDENTIFICATION)

2. How will the reengineered process perform qualitatively & quantitatively / (VISION & OBJECTIVES)

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-After identifying the broad processes, it becomes necessary to develop & establish a common understanding of each process across the entire organization

-”Clarity” is needed in terms & expressions(e.g. “what do we mean by an order fulfillment process”?)

- Start & End of each process must be clearly spelt out

STEP 2 : DEFINING THE PROCESSES TO BE REENGINEERED

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-Apart from identifying the Start & End of the OFP, we need to lay down the process measures for the various sub-processes involved, e.g:

-Every customer order should be acknowledged within 12 hours (Query Response)

- If item is in-stock, ship within 24 hours so as to reach destination within 4 days (Order Fulfillment for items-in-stock)

-If not, procure & ship within 7 days or re-negotiate (Order Fulfillment for items-not-in-stock)

STEP 2 : DEFINING THE PROCESSES TO BE REENGINEERED (contd.)

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-Additionally, benchmarks need to be developed:

- If any order remains fulfilled beyond “x”days, an amber alert will be raised to the Divisional Head

- If any order remains fulfilled beyond “y”days, a red alert will be raised to the CEO

- If any stock lies for beyond “z” months, a red alert will be raised to the CEO

STEP 2 : DEFINING THE PROCESSES TO BE REENGINEERED (contd.)

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-Very Important to choose ‘performance metrics’properly, lest they conflict

- An Example : Metrics used for an Office décor Manufacturer

- PLANNING : lead time committed for orders, % of delayed deliveries

-PRODUCTION : Yields & Efficiencies, Capacity Utilization

-SHIPMENT : Cost of Shipment

STEP 2 : DEFINING THE PROCESSES TO BE REENGINEERED (contd.)

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-What is the Conflict here?

- PLANNING : gave safe estimates

-PRODUCTION : batched all those products that yielded high capacity utilization

-SHIPMENT : waited till a truckload was ready for the particular region before the shipment processing

Each dept. was trying its best to get good performance ‘figures’, but the company failed in meeting its commitments to customers

=> Functions have built their own “fiefdoms” in the last several decades – unless they are broken, organizations won’t really be successful on the growth path

STEP 2 : DEFINING THE PROCESSES TO BE REENGINEERED (contd.)

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FRAGMENTATION OF TQM

- With the advent of TQM, many enterprises have adopted the concept of “INTERNAL CUSTOMERS”

PROBLEM- A string of internal customers performing tasks for one another, with “hand-offs” between two of them

- Every “hand-off” is a change of ownership which increases the risk of the semi-finished job falling temporarily in a ‘black hole’ that has no owner- order processing executive has delivered- purchase order creator has delivered- others have all delivered- YET, customer has not received delivery on time

STEP 2 : DEFINING THE PROCESSES TO BE REENGINEERED (contd.)

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VERY IMPORTANT

REENGINEERING IS NOT REENGINEERING UNLESS IT DELIVERS VALUE TO CUSTOMERS

- It is very important to identify the eventual owner of the Reengineered Process

STEP 2 : DEFINING THE PROCESSES TO BE REENGINEERED (contd.)

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-This step should come only after VISIONING & IDENTIFYING the processes to be reengineered

-Very important to see how the existing system works & find, wherever possible, the current process measures available

Example: A Hospital wanting to cut down the patient waiting time had no current information on the current average waiting time

STEP 3 : UNDERSTANDING & MEASURING EXISTING PROCESSES

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-Every effort in reengineering is also an initative in process improvement

However, Reengineering is different from any other process improvement, based on 2 factors:

1. Reengineering should lead to a “dramatic improvement” in process performance on the selected measures

2. Reengineering should end up achieving "process obliteration” through effective & innovative deployment of IT

STEP 4 : IDENTIFYING THE IT LEVERS

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-Example of IT Application

- A 2-wheeler manufacturer, using a set of bar-code scanners linked to a network of computers

- Bar-code scanners read the serial numbers and dealers got to know of the shipment immediately, as the consignment was being loaded on the trucks

- Company got their money three days earlier from dealers (time to notify used to be between 3- 5 days (+) added cost of stationery & courier charges)

STEP 4 : IDENTIFYING THE IT LEVERS (contd.)

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-Ford-Mazda Case Study

- Mazda needed 5 people whereas Ford needed 500 for the same job

- Mazda obliterated the need for sending Invoices

- Suppliers of Ford components clamored for quick settlement of bills

- The problem here was reconciliation by 500 people

ISOLATED ISLANDS OF INFORMATION !!

STEP 4 : IDENTIFYING THE IT LEVERS (contd.)

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-SO FAR WE HAVE :-identified a set of core business processes that matter the most to the market place- identified the benchmarks to be achieved by these business processesgrasped the reengineering process and the points where IT Leverage is to be utilized

The final stage of implementation is unique to each organization & project because it involves issues that are multi-dimensional in nature:

- managing technology- changing people’s mindsets / attitudes- creating new organization structures- managing the entire change process

STEP 5 : DESIGNING & BUILDING A PROTOTYPE OF THE MEW PROCESS