BPMJ
4,2
154
Business Process Management
Journal, Vol. 4 No. 2, 1998,
pp. 154-167. © MCB University
Press, 1355-2503
Best practice in reengineering:
a successful example of the
Porsche research and
development center
Stephan Zinser
Fraunhofer-Institute for Industrial Engineering, Stuttgart, Germany
Armin Baumgärtner and Frank-Steffen Walliser
Porsche AG, Weissach, Germany
Introduction
Structural change necessitates a fundamental overall renewal of classic
management principles and organisational structures in many enterprises. The
increase in pressure from the market has led to shifting the management focus
from the realisation of tasks towards the shaping of business processes on the
one hand and from rationalising towards market and customer orientation on
the other hand.
In the mid-1970s companies reacted to changes in the markets by
conventional productivity management in order to accomplish an efficient
execution of tasks. The increasing individualisation of customer demands
entailed an increase in flexibility and swiftness of the companies concerned. It
was necessary to improve the integration of companies: management of
integration was given priority. At the beginning of the 1990s lean
management strove for flat hierarchies and short decision-making
procedures. Continuous improvement processes, supported by all staff
members, should result in improved efficiency, i.e. wasteful use of resources in
all processes is avoided and thereby potentials for cost-saving are
demonstrated. Total quality management (TQM) has been regarded as a
comprehensive company-wide approach, focusing on quality. Each and every
single staff member regards himself as supplier for external and internal
customers, who have to be supplied with goods of a previously determined
quality. This leads to a high level of customer orientation (Bullinger and
Zinser, 1996a).
Nowadays increasing international competition creates a steadily growing
pressure for improvement. One thing is for sure: if you are working in
international competition, you are forced to develop new methods, intellectual
approaches and structures in order to ensure and consolidate competitiveness.
There is a need for organisational structures that bring together market and
technology with the aim to assure a long-range survival and competitiveness of
the company. Particularly in the field of organisation design there is a high
demand for a learning organisation with decentralised responsibility. Best practice in
Successful organisations are, on the one hand, in a position to create new and reengineering
unfamiliar relationship patterns and to act accordingly, and, on the other hand,
they find implementations for new ideas and concepts. (Bullinger and Zinser,
1996b)
Those who want to be competitive, have to think about new methods of
improving efficiency. It is not functions or hierarchies which are crucial, but the 155
processes within an enterprise. This results in aligning enterprises with basic
processes and in renouncing the old thinking in functions and hierarchies.
Consequently iterations are avoided, stocks can be cut down, the processing
time is shortened, complexities are reduced and the redundant generation and
input of data can be avoided. Business reengineering stands as a model for this:
by concentrating on newly rethought business processes, at the end of which
the customer stands, further value is being created for the customer. It is the
main focus of business reengineering to reshape a company fundamentally and
to stress key business processes.
According to a study of the Fraunhofer Institute for Industrial Engineering
German firms have realised the necessity of business process management.
Large and medium-sized companies of public and private sectors were
questioned in the study. Approximately 84 per cent of the people questioned
were from the top or middle management. 72 per cent of all companies
questioned considered the reorganisation of processes as “important” or “very
important”. Many companies at least try to reorganise “around” the core tasks.
48 per cent of the analysed companies have already finished this concept to a
large extent. Current models are clear processes, responsible self-organisation
and profit-orientated action (Bullinger et al., 1995).
The modelling of innovative processes aims therefore at the process
structures along the chain of appreciation of the firm. Business reengineering
fits organisational structures to the processes, of which they are a part
(Martinsons, 1995).
The key questions are: which function-transcending tasks and measures
are crucial to the success of the company, and how are they achieved? Taking
account of strategic relevance there will develop a hierarchy of processes:
business processes, main processes and subprocesses. Each interface
provokes a frictional loss, which becomes apparent in changes of processing
time, loss of information and double work. Further symptoms of a lack of
thinking in processes or of uncontrolled processes are (Bullinger and Zinser,
1997):
• excessive exchange of information, redundant data, multiple entries;
• long delivery times, huge stocks, buffer and other reserves;
• a great deal of control in comparison with appreciation;
• much extra work to make up/iterations and
• a high complexity, i.e. a great amount of exception rules/special cases.
BPMJ The radical new shaping of existing processes does not, however, warrant
4,2 working business processes. In the end there will be not integrated processes
without the support of so-called “enablers”. Innovative information and
communication technology are for instance key enablers within reengineering
concepts (Kaplan and Murdock, 1991). They are the key to, but not the objective
of, changes in organisation and processes.
156 The creative use of modern information technology is therefore of crucial
importance in the reshaping and reorientation of the enterprise with regard to
an increase in innovation energy. Innovative I&C technology is, according to the
aforementioned IAO survey (see Figure 1), crucial to realising customer and
innovation orientation. Successful use of I&C technologies within a business
reengineering project requires that all essentially new possibilities, which
today’s information technology has created, are taken into account (Teng et al.,
1995).

Customer Focus

Innovation Focus

Quality Leadership
Key
I&C-technologies
Cost Leadership are a crucial factor
I&C-technologies
have no influence
Differentiation of Services
Figure 1.
I&C technologies at
reengineering projects 0 10 20 30 40 50
%

3 × 3-method for process reengineering

Innovations are being regarded as strategic competition factors within the ever
shortening market cycles. The development process is therefore of crucial
importance to the competitiveness of companies. Entrepreneurial objectives
have to concentrate on a faster time-to-market, i.e. on the acceleration of
innovation processes, the reduction of error rates in product development and a
decrease in introduction costs (Bullinger and Zinser, 1997). With these
objectives in mind, a new process for obtaining parts of prototypes has been
developed and implemented in the Porsche research and development center in
Weissach. The main goal of reengineering was to lower the processing time
from the average eight days to only one day. A specially devised 3 × 3-method
was used for the process reengineering. Some components had been taken from
the business reengineering pioneers, Hammer and Champy (Hammer and
Champy, 1993), some had been taken from the previous experiences of the Best practice in
reengineering team. reengineering
The 3 × 3 principle, shown in Figure 2, takes into account a phase of stability
within the implementation of new processes as an essential extension of
traditional methods in reengineering. Only after reaching this phase of stability
is it possible to finish the reengineering project and to dissolve the
reengineering base team. 157
The 3 × 3 principle encompasses three main phases, they themselves have
three different subphases each. In the first phase – the initiation of a project – the
recognised problems are described within a team. A careful selection and
analysis of data relating to the problems ensures their objectivity at their
presentation. To obtain an objective view on the process, a team was established.

1 2 3

Recognising Forming a Describing

Initiation the problem team the problem

Analysing Defining Realising

the cause measures temporary
Definition measures

Controlling Stabilising Congratulating

the Figure 2.
Control success success
team 3 × 3 principle of
process reengineering

In the definition phase causes are analysed and appropriate countermeasures

defined. Wherever possible, temporary measures should be applied in order to
test their outcome.
The implementation of the defined measures is pursued in the control phase.
On the basis of appropriate reference data and review methods the process
efficiency is tracked up to the phase of stability and finally the team receives the
grateful recognition for its engagement.

A practical example: new acquisition of prototype parts in

development
Successful reengineering requires systematic action, the sensible use of
methods and tools and the consideration of critical factors of success. The
BPMJ example of a reengineering project for the acquisition of prototype parts in
4,2 the development center of the Porsche AG will demonstrate the 3 × 3
reengineering approach, the methods and tools used and the structure of the
reengineering project. Besides the presentation of this method in practical
use, we will give much attention to the experiences of this reengineering
project.
158
Phase 1: Initiation
In the initiation phase important business processes are identified and
scrutinised for their potential for improvement. Within this analysis the
acquisition process of prototype parts was identified as a crucial process within
the development.
Phase 1.1: recognising the problem – new demands on the acquisition
processes of prototype parts. The increasing demands on the reduction in
development time within the automobile industry can only be realised by the
efficient use of the most up-to-date development methods (for example,
simultaneous engineering) and technologies. New technologies prove effective
by their consideration of integrated processes. Rapid prototyping (RP)
technology permits for instance a very fast production of complex parts and
thereby allows the optimisation of the product at much earlier stages in its
development. This potential for the RP technology can only be completely
exploited, if the sectors preceding and succeeding it are likewise optimised. The
acquisition process is within the front sector of the entire rapid prototyping
process. The study in the Porsche development center showed that the
processing time for the acquisition of prototype parts no longer meet today’s
requirements.
Phase 1.2: forming a team – reengineering structure and forming a team.
The reengineering team structure, as shown in Figure 3, links the necessary
process knowledge for the analysis and the devising of measures directly to the
enterprise-wide co-ordination of all activities in process improvement. The
solutions are not merely academic, but they reflect a sound knowledge of
processes, which in turn is used in all improvement measures.
The selection of the team manager takes place primarily with regard to the
later implementation. Team managers directly affected by changes, show a
much keener interest in a practicable and implemented solution, than those for
whom the improvement project is but one of many. This is also a reason, why no
external consultants have been called in to this method of process improvement.
The reengineering team consists of members of all departments concerned.
A rough process mapping is done beforehand to identify the involved sectors.
Each reengineering team has its own team mission, wherein objectives, costs
and deadlines as well as the process phase to be examined are laid down in full.
The team of this reengineering project got an office on their own. This measure
proved extremely sensible for efficient teamwork. Other sources often confirm
this experience (Kennedy, 1994).
 Best practice in
Priorisation and co-ordination

CEO
reengineering

Reengineering- Reengineering-
steering committee steering committee
A B
159
direct reporting

Reengineering Reengineering Reengineering

team-leader 1 team-leader 2 team-leader 3

Department 1 Department 1 Department 1

Process knowledge

Department 2 Department 2 Department 2

Figure 3.
Department 3 Department 3 Department 3
Structure of
Department 4 Department 4 Department 4
reengineering team

Phase 1.3: describing the problem – the old process of the acquisition of
prototype parts. After forming the reengineering team with members from
purchasing, equipment, construction, research, data processing departments
and the workshop, a detailed description of the potential for improvement was
prepared on the basis of the rough process mapping. An internal customer-
supplier-relation was chosen as the foundation; development engineers from
construction and research (exhibitors) with an own need of parts were regarded
as internal customers. The purchasing department functioned as the supplier in
this case, as they were responsible for the acquisition of the parts.
The discussions with all sectors concerned provided the following potential
for improvement:
• shorter processing times,
• improvement of information quality,
• better co-ordination of the interfaces between different departments.

Phase 2: definition
Phase 2.1: analysing the causes – process mapping to examine the potential for
improvement. After process mapping the deficiencies of the process capable of
improvement became obvious.
• waiting time until a requirement report is approved;
• differences in media between report form, EDP-system and order form;
BPMJ • waiting time until order is approved;
4,2 • transport to supplier by mail;
• organisational separation of all involved units.
The traditional process (Figure 4) required a conventional form to be filled in,
which in turn had to be approved by the project manager. There was no
160 obligation to check the available funds of the budget section used nor to check
the prices given.

8-30 days

Project Purchase Head of supplier Equipment

Issuer manager department department department

Request Request Order Order

form form form form
signature 1 signature 2
signature 1
Figure 4.
Process of the
acquisition of prototype
parts before the Prototype
reengineering part

After approval the form was sent by in-house mail to the purchase department.
There the request form was entered into a central EDP-system. The purchase
department chose or confirmed the suppliers and the prices. After printing the
order form it was duly signed by the person responsible for purchase and then
sent to the supplier by mail. This process normally took about eight days, up to
30 days were, however, no exception.
The equipment department, responsible for the provision of the parts for the
prototype body, was not fully informed of the latest time plan. This used to be
so critical, because the production processes of prototype parts do not allow
such precise time forecasts as possible with series production processes.
Therefore dates could change quite quickly, which required reaction and
countermeasures at the prototype body. Only like this could production dates
for the complete prototype be kept.
Phase 2.2: defining measures – two-day-workshop to find new ideas and to
define measures. The reengineering team held a two-day-workshop to generate
new measures. The preliminary examination and the analysis of weaknesses
helped in formulating very ambitious but nevertheless realisable goals. The
processing time should be shortened to one day, and information flow on the
current state should be improved.
During the two-day-workshop the team clung to the goal, although it seemed
totally out of reach at first. The interdepartmental composition of the team,
however, provided new ideas, which complemented each other, and finally a Best practice in
solution was found; a solution so simple and radical, that it left all people reengineering
involved deeply impressed (see Figure 5).
The ideas of the new process were built into concrete, individually realisable
modules (see Figure 6). This provided for an organisation-specific adaptation of
the solution at the later implementation.
161

1-3 days

Issuer BTT Supplier Equipment

department

Order
online Fax

Prototype
part
Database- Database- SAP- Prototype-
prices parts budget- planning
checker
Figure 5.
The process of
prototype parts
acquisition after the
Purchase Head reengineering

Component Data bank Budget-

Team of prices checker
One day
processing
time Figure 6.
Workflow
system for Budget Abolished: The six solution
requirement guidelines signature modules within the new
forms process

Module 1: component team

At the focus of the new process was the formation of a so-called component
team (BTT, prototype parts team PPT). This permanent interdepartmental
team should be composed by staff from purchase, equipment and of research
departments. This team should be entrusted with the complete co-ordination
and ordering of prototype parts and be situated in proximity to the exhibitor.
BPMJ The main advantage of the team was its intrinsic concentration of know-how
4,2 from the formerly separated departments.

Module 2: workflow system for requirement forms

To shorten idling time and to eliminate transport time an on-line requirement
form was realised on the existing EDP-system. This on-line system accesses the
162 existing data base and checks the validity of the item numbers ordered.

Module 3: databank of prices

The databank of prices allows parallel entering. The purchase department
enters supplier, price and validity of price; the on-line requirement form
accesses the prices from this special databank.

Module 4: budget guidelines

To improve information flow on the material budget the envisioned quantities
are shown on each requirement form. This allows constant comparison with the
guidelines and hence entails an improved budget control.

Module 5: budget checker

As the remaining budget funds are shown by the budget checker, everyone who
orders material will see immediately the effects of his doing so on the material
budget.

Module 6: signature procedures abolished

One problem in realising such workflow systems is the approval or the
illustration of a signature on an electronic document. The solution was
amazingly simple: the signatures were replaced with the budget checker. The
responsibility for the material budget was assigned to the issuer; the control of
which could be abolished. The signature of the person responsible for
purchase was henceforth only necessary for the entries in the databank of
prices.
Phase 2.3: realising temporary measures – faster realisation of the first
modules. The modules needed to be implemented as soon as possible. The
planned software would require about six months of programming. The
modular approach, however, allowed the immediate use of some modules. Only
two months later, after refining the necessary details, the first component team
for a project could be assembled. The experiences of this project could be used
at later implementations in other departments.

Phase 3: control
Phase 3.1: controlling success: realisation in the pilot project and observation of
the efficiency of the process. After the workshop the real work began. After the
approval of the ideas for reengineering of the acquisition of prototype parts by
the board of directors and the CEO, the ideas were divided into smaller tasks,
which were then tackled by a core team of three. The biggest part of it was of
course the software development, which was done using existing systems in Best practice in
order to enable its testing at a much earlier stage. reengineering
In parallel with that was the co-ordination and information of all relevant
departments and the departments which did not participate in the workshop
respectively. This entailed about 80 individual talks and meetings, which
clarified the necessary need of information and communication of
reengineering projects further. This high level of communication expenditure 163
was accepted deliberately to ensure the smooth start of this pilot project and to
overcome the expected resistance. To support the introductory phase even
more, process manuals were designed for all staff members, which explained in
detail the use of the new software and the processes.
Figure 7 shows the intensity of communication with the development of
information points. Points were awarded per information and member of staff.
The more intense the information became, the more points could be awarded: a
written information scored one point for instance, a workshop two points.
Three points were the maximum. This maximum score was only awarded for
the transfer of given information into own individual action.
The continuous measurement of information allowed a co-ordinated use of
information events. The pilot project began in the engine development unit after
the software had been accomplished. In order to obtain statistical predictions on
the improvement in process efficiency, the average processing times were
recorded each week. The pilot project began with one staff member each from
equipment and research. A purchase department member could be integrated
into the team about three months later.
The graphical representation of the processing time statistics in Figure 8
clearly shows three phases during the implementation process:
Phase 1: euphoria. The first four weeks displayed a visible increase in effort,
as the staff were in the focus of the new project. The latest processing times

Information points
600

500
Preparation and Co-ordination
400

300
Start of Implementation

200

Figure 7.
100
Intensity of
communication in
0 reengineering projects
weeks
BPMJ processing time in days number of requests
250
60
4,2
euphoria learning stability

40
200

164 20
150 Key
request
0 average
5 10
Integration of purchase
25 30 35 40 goal
department member 100

Figure 8. 50
Average processing
time per week and
quantity of ordered
parts 0
weeks in 1997

were continuously communicated and the process was supported by the

reengineering core team by intervening in conflicts of co-ordination, which are
inevitable in such times of change. During these four weeks the processing time
was well within the envisioned objective.
Phase 2: learning. The next weeks saw the normalisation of the efforts of the
staff involved. As only now all exceptional and special cases occurred, the
processing time deteriorated increasingly or was subject to great fluctuations.
The main reason for this situation was the incomplete filling of the databank of
prices, without which there could be no further processing. The reengineering
core team did not intervene deliberately at this time to give the component team
the opportunity of tackling the tasks on their own with the relevant units. Some
errors in the software and the tight capacity of personnel (only two staff
members) depressed motivation even further.
Phase 3: stability. By complementing the team with the purchase department
member and by fixing the software errors, the process stabilised and the
envisioned objectives were within reach. Figure 9 shows the allocation of
processing time (the time used for the entry of data into the databank was
ignored in this figure). At this point, the reengineering core team withdrew from
direct involvement in the process and restricted themselves to simple
observation of the process.
Phase 3.2: stabilising success – caring for the new process and improving on
initial difficulties quickly. The phases depicted in Figure 8 show clearly that it is
paramount to actively monitor the process right up to the phase of stability.
This can only be achieved successfully by internal implementation teams. In
particular, fixing some minor errors in the software and the conciliating, neutral
 Allocation of processing time Best practice in
100,0%
reengineering

75,0%
68,6%

165
50,0%

25,0%

9,3% 10,6%
9,3%
1,0% 1,2% Figure 9.
0,0% Allocation of processing
>0-2 >2-4 >4-6 >6-8 >8-10 >10
times BTT
Processing time in days

role of the reengineering core team helped the process to achieve growing
acceptance and hence stability in process efficiency.
Phase 3.3: congratulating the team – final workshop with participation of
management. To end the reengineering project a workshop with participation
of management was held. This gave the opportunity to gather and adapt all
experiences, which are necessary for the introduction of the new process in
other departments. From this time on any further optimisation takes place
within the component team.

Summary
Successful reengineering requires a systematic approach, the sensible use of
methods and tools and the consideration of critical factors for success. The case
study explained the 3 × 3-method of process reengineering at Porsche AG and
showed their experiences in implementing a new process in the acquisition of
prototype parts. The main factors for success in reaching a state of stability
were:
• The support of top management. Although top management is only
actively involved in the initiation of the project, many top managers cede
the actual reengineering work too early and too fast to their staff alone.
There is a causality between the engagement of management and the
achievement of the project. The top management should devote at least
20 to 50 percent of their time to the reengineering project, especially in
the initiation phase.
• Ambitious objectives. Reengineering is not worth the trouble if the
company anticipates only small improvements. Reengineering efforts,
BPMJ anticipating only 10 percent in cost reduction, 20 percent in processing
4,2 time reduction or an increase in turnover of 15 percent, have rates
frequently of success well below average. Successful business
reengineering necessitates ambitious objectives, i.e. improvements in the
range of at least 30 to 50 percent.
• The deployment of a creative team to problem solving. A team is formed
166 out of the most competent staff members to plan and execute a
reengineering project. These should distinguish themselves by process-
specific experiences, creativity and a strong ability for motivation. It is
important that the project provides a real career opportunity for all staff
members concerned. One tends to underestimate the longevity of the
existing company culture. It turned out that many reengineering
projects fail because of the resistance of the staff.
• Process approach and integration of EDP. Most of the time only
procedures or partial processes are reshaped, but not the complete chain
of appreciation. The effects on the success of reengineering can hardly be
felt then, i.e. processes need to be right in the center of the organisational
shaping. Business processes are shaped consequently on customer
demands and therefore transcend company boundaries. Another danger
in department-isolated reengineering lies in the fact that only symptoms
are tackled. Most of the time this happens at the end of the chain of
appreciation, the reasons for inefficiency and ineffectiveness can be
found at one or many points within the process of appreciation.
Furthermore it evolved during the reengineering project, that the effort for
appropriate information and communication is excessively high. The massive
use of information and communication technology is of utmost importance to
such aggressive objectives, as was the case with this project. In many cases the
structure of information technology within the firm has to be rethought in order
to improve existing structures on the one hand and to achieve completely new
objectives at the other hand, all with the help of state-of-the-art technology. The
present case confirmed in this respect that the use of information and
communication technology is imperative to reaching the phase of stability in a
modified process.

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reengineering
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