Business Process Re-engineering

(BPR)

PK Solutions, Inc.Pat Vaia, PMP

President & Executive Adviser

Date: May 11, 2006

Business Process Re-engineering BPR Concepts & Good Project Management Practices

Capture, communicate and verifying current and redesigned business processes

Practical aspects of conducting a BPR effort

Produce deliverables

Know who your customer/s are – everyone you interface with !!!!!!

Objectives of a BPR EffortConsider general process redesigning principles

Improve business processesOpportunity identificationFeasibility analysis

Set goals for redesigned process components

ProcessesActivitiesDeliverables

Principles of BPROrganizational Structure

Remove barriersSupport business processes

Customer InterfacesWork from the customer perspective

AutomationAutomate to advantage

General PrinciplesSimplicityEmpowerment

Process DesignThink horizontally

Simpler is BetterAvoid Over-engineering

Work hard to simplify

Eliminate multiple points of contact with & for the customer

Eliminate errors resulting from multiple contactsEliminate need to reconcile differing informationReduce delays resulting from reconciliation

REMEMBER: Simple ProcessesLess CostlyMore Flexible

Enable Workers to Make Decisions

Vertical CompressionProcess decision-making is not strictly a management taskWorkers are empoweredDecision-making becomes part of work

AdvantagesFewer Communication DelaysLower Management OverheadBetter Customer Response

Perform Steps in Natural Order

Parallel tasks rather than sequential procedure

Precedence set only by need

Speed up the process by:Accomplishing tasks simultaneouslyReducing time lag between early and late steps

• Less chance of changing requirements

• Less need for rework

Multiple Version Processes Single solution processOne-size-fits-allToo complex for standard/simple cases

Processes require flexibility for:Different marketsDifferent situationsResource variationsSpecial customer requests

Reengineered process contains:Simple, standard path (80% - 90%)Exception handling path (8% - 18%)Large complex path (2%)

Perform Work Where It Makes SenseAdministrative tasks performed by the process team

Small purchases

Tasks not requiring a specialist

Work off-loaded from team

Specialized capabilitiesMore cost-efficient

Reduce AuditsChecks and Controls

Controls cost more than purchasesUse only when it makes economic senseImplement aggregate or deferred controls

Reviews and InspectionsDesigns quality into a processIdentifies problems when they occurDownstream inspections

• breaks down team spirit• does little to improve

quality• adds higher costs

• Ex: ReworkChecks, controls and inspectionsadd no value for the customer

Combine Several Jobs into One

Assign multiple process activities to one person

Avoid the Industrial Revolution

Division of tasksSpecialization of laborUnskilled work forceNo need for communication

Create Task Inter-relationships

Organize Around ProcessesFormation of teams to perform an entire process

Do not split work by function (organization)Teams co-locatedEach person understands another's responsibility

• Cross-Training

Eliminate/minimize hand-offsReduces delays, errors and rework

Reduces management overhead

Adopt Customer PerspectiveAccessibility

Be available when the customer wants to interact

Information

Require only the data which cannot be captured elsewhere

Wants and Needs

What are the customers goals, objectives - wants and needs?

Are we meeting these?

Are there unknown wants?

Provide Single Point of Contact

Case manager roleSingle point of contactProcess “owner”Has access to all people and information systems involved in the processEmpowered by management to change the process

Automate AppropriatelyAvoid Costly Automating for Automation’s Sake

Weigh automation benefits against costs

• Technology acquisition

• System development and maintenance

• Work force training• Obsolescence

Avoid automating current processes unless needed

Do wrong things fasterSlows changes to effect improved processes

Automate Repetitive Tasks

Automation strong pointLeave interesting jobs for people

Business Decision are made by “people” not machines or software

Where to Look for Process Improvement

Process ImprovementOpportunity Driven

Begins with current process workflowFocuses on process componentsIdentifies opportunities for incremental improvementUse as a checking mechanism for approach

IncrementalProducts and servicesResourcesActivitiesOrganizationsInterim deliverables

Performance InhibitorLook for “A factor which negatively affects the business’s ability to attain its goals”

Result from:• Poorly designed or not

designed processes• Invalid assumptions• Environmental influences

Presents a source for process improvement or reengineering opportunities

Opportunity“A chance for improvement in a business process that allows goals to be attained (fully or partially)”

Business process may have multiple opportunitiesEach opportunity should be weighed

• Costs• Benefits• Risks• Priority of the goals it

supports

Product and Service OpportunitiesCustomer

How can the customer’s wants and needs be better understood?Are the customer’s wants and needs being met?Are there other markets for the products?

Product / ServiceWhat improvements or added value canbe made to products and services?Are products and services providedin a correct and convenient form?

Resource OpportunitiesSuppliers (Who are the Suppliers – Inputs)

How can we communicate our wants and needs?Can we assist in improving our supplier’s performance?Are there other suppliers capable of providing resources?

ResourcesWhat is state of the art?

• Material - quality, technology• Finances - cost of funding• Labor - skill set, training

Are resources provided in a correct and convenient form?Are resources provided in a timely form?Is there additional value suppliers can provide?

Activity OpportunitiesCost

Can the activity make more efficient use of resources?How can non-value-adding activities be minimized?

TimelinessHow can wait time (in-queue time) be reduced?How can lag time (out-queue time) be reduced?

PerformanceIs the activity performed by the proper organization or role?Do the performers of the activity possess the proper skills, training, etc.?Is the proper environment and equipment available to the activity’s performers?

Organizational OpportunitiesManufacturing Companies

Field Operations

Finance

Production

EffectivenessIs the location structured to effectively perform its activities?Do the proper skills exist within the organization?

InteractionHow can the number be reduced to minimize hand-offs (workflows)?Is it conveniently located to pass work to other organizations?

Interim Deliverable OpportunitiesQuality

How can the quality of the deliverables be improved?How can deliverables be made more usable by the receiving activity?

TimelinessHow can deliverables be passed between activities more quickly?How can the number of workflows be minimized?

Opportunity AnalysisCost / Benefit Analysis

Immediate (one time) costsOn-going costsImmediate (one time) benefitsOn-going benefits

Risk AnalysisRisk identificationCostLikelihood

Goal AnalysisGoal/s are met (supported) by the opportunityPriority of these goals

Classification of Goals

Operational GoalsQuantify the redesigned business process

Target the day-to-day operations of the business process

AddressThe process as a wholeIndividual activitiesInterim and ultimate deliverables

Business Process GoalsSet performance levels for the entirebusiness process in term of:

Responsiveness• What will be the interval from the initiating event

to the ultimate deliverable?Financial

• What is the value of this process?• How much does/will the process cost

to perform?Organization

• What will the organizational structure look like?• What will be the staffing levels?

Activity GoalsSet performance levels (Metrics) for individual activities in terms of:

Timing• How long will it take to perform?• How long will work wait (in-queue, out-queue)

before it is performed?Cost

• How much will it cost to perform?• What is the value added to the ultimate

deliverable?Performance

• What are the performance measures assigned to the person (organization) performing this activity?

• What incentives and/or consequences are in place for meeting this activity’s goals?

Deliverable GoalsSet performance levels for interim and ultimate process deliverables in terms of:

Quality• How will we measure quality?• Of these measurements, what level will we

attain?Efficiency

• How quickly will this deliverable be passed between activities?

• What form will the deliverable be in when passed?

Cost• How much will it cost to pass

this deliverable to the next activity?

THANK YOU

Defining & Quantifying Goals