Ch-8 (Business Process Reengineering)

CH-8
Business Process Reengineering
Chapter
8
8-1
Copyright 2010, G Nagalingappa, Manjunath V S
Total Quality Management
Text and Cases
G Nagalingappa, Manjunath V S
Excel Books
CH-8
Introduction
Some of the recent headlines in the popular press read:
"Walmart reduces restocking time from six weeks to thirty-six hours." Hewlett Packard's assembly time for server computers touches new low-four minutes. "Taco Bell's sales soar from $500 million to $3 billion" The reason behind these success stories: Business Process Reengineering!
Cont.
8-2
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CH-8
Continuous Improvement Model
Document the as is process
Establish measures
Follow process
Measure performance
Identify and implement improvement
8-3
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CH-8
BPR is Continuous Improvement Model
Improving business process is effective to obtain gradual, incremental improvement. A competition exists in business driven by customer, competition and change companies look for new solution. Hence BPR guides for this problem.
8-4
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CH-8
What is BPR?
"Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical,
contemporary measures of performance such as cost, quality, service and speed."
Cont.
8-5
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CH-8
Changes through BPR

8-6
Organizational structure Management system Employee responsibilities Performance measurement Incentive system Skill development Use of IT Process change Technology
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CH-8
Scope of improvement Project
Learn from others
Create new process
Plan
transition
Implement
8-7
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CH-8
Implementing BPR
Phase I: Preparing for change

Phase II: Planning for change Phase III: Designing the change Phase IV: Evaluating the change
8-8
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CH-8
Phase I: Preparing for change
Educate management explores the reengineering process needs to change Create a reengineering steering committee. Develop an initial action plan. Prepare the workforce for involvement and change.
8-9
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CH-8
Phase II: Planning for change

Create a vision mission & guiding principles I. Identify core competencies II. Develop vision statement III. Develop a mission statement IV. Determine the guiding principles. Develop a 3-5 year plan I. Conduct a current business review II. Determine the external environment factors. III. Conduct an internal health review IV. Complete business as usual forecasts V. Conduct a gap analyses VI. Develop a 3-5 year strategic plan
8-10
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CH-8
Phase II: Planning for change

Develop yearly operational or breakthrough plans I. Develop operational objectives II. Organize resources III. Rank potential changes in order of priority IV. Develop yearly operational plans & budgets V. Apply & evaluate operational plans
8-11
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CH-8
Phase III: Designing the change

Identify the current business process I. Determine the critical organizational process. II. Measure the critical processes III. Rate the process performance IV. Identify opportunities & processes to be re-engineering. Establish the scope of the process-mapping project I. Identify the process stakeholders II. Create the projects mission & goals III. Structure and select team members IV. Develop a work plan
8-12
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CH-8

Map & analyze the process I. Depict the process in a flow chart II. Depict the process in an integrated flow chart III. Compete the process mapping worksheet IV. Complete the process constraint analysis V. Compete the cultural factors analysis. Create the ideal process I. Describe the ideal process on paper II. Compare the current process to the ideal process III. Assess the gaps
8-13
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CH-8

Test the new ideal process I. Develop the pilot objectives II. Develop the pilot measures III. Gain agreement & approval from stakeholders IV. Conduct a pilot test of the new process V. Assess the impact of pilot test.
Implement the new process I. Develop the implementation action plan II. Execute the plan
8-14
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CH-8
Phase IV: Evaluating the change

Review & evaluate measure I. Has the steering committee evaluated the results? II. Revise the three to four strategic plan, if necessary.
Repeat the yearly operational/breakthrough planning cycle.
8-15
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CH-8
Reengineering Structure: HR, culture, believes, models

1. Accountability for results are not clearly communicated and measurable resulting in subjective and biased performance appraisals.
2.
3.
Parts of the organization are significantly over- or under-staffed.

Organizational inefficient. communications are inconsistent, fragmented, and
4.
Technology
and/or
innovation
are
creating
changes
in
workflow
and
production processes. 5. Significant staffing increases or decreases are contemplated.
6.Personnel retention & turnover is significant or deteriorating
7.Morale is deteriorating
8.New skills & capabilities are needed to meet expected operational requirements.
8-16
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CH-8
Common Pitfalls of BPR

1. 2. 3. BPR cannot solve all the problems BPR may face many difficulties in implementation Stiff resistance may come from staff as it involves radical changes in structure, processes, methods etc. 4. BPR relies heavily on IT and it may need heavy investment in software and hardware.
8-17
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CH-8
Change Management and BPR

BPR involves bringing in radical changes in organizational processes, methods, structure, etc. Change management processes: 1. Phase 1 Preparing for change (Preparation, assessment and strategy development) 2. Phase 2 Managing change (Detailed planning and change management implementation) 3. Phase 3 Reinforcing change (Data gathering, corrective action and recognition)
8-18
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CH-8
TQM and BPR

TQM and BPR are customer-oriented. Improving the customer satisfaction. TQM and BPR are process-oriented with team approach. TQM assumes that the existing practices or systems are principally right and useful. BPR assumes the existing system is useless and suggests starting it over. TQM emphasis on total involvement, including all the stakeholders. For BPR, the project can be controlled to a specified area only. TQM emphasis on the use of statistical process control. However, there is no similar concern for BPR.
8-19
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CH-8
Comparison between BPR vs. Kaizen

Reengineering Who leads? Usually consultants, top management, and a cross-functional Project Team Is a "project" with a defined beginning and end An entire Value Stream process Kaizen The people that actually do the work (with strong guidance in the early years by top management) Never ending. Every subprocess should be kaizened repeatedly forever Although kaizen usually starts with a kaikaku that addresses the entire Value Stream process - most kaizen events focus on one specific sub-process
Duration
Scope
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CH-8
Degree of change
Changes can be incremental or radical - and usually affect an entire integrated process
Changes can be incremental or radical but usually only affect a limited sub-process at a time
Speed
Generally implemented in a Each kaizen event Big Bang changeover generates immediately noticeable and measurable Changes High risk of things reverting back to the way they were soon after the consultants leave Re-engineering projects are often led by computer consultants - who tend to "fix most problems with (you guessed it) computers Since the people that actually do the work are the ones making the changes acceptance is very high Most "lean" methods minimize or even eliminate reliance on technology - with a preference toward visual methods and simplification
Acceptance
Technology
8-21
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CH-8
Similarities Both address the entire Value Stream of a process. Kaizen usually starts out with a kaikaku "big change" Both require a qualified, competent, and committed Change to have any chance of success.
8-22
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Ch-8 (Business Process Reengineering)

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CH-8

Business Process Reengineering

Business Process Reengineering

Copyright 2010, G Nagalingappa, Manjunath V S

Total Quality Management

Text and Cases

Business Process Reengineering

Total Quality Management

Text and Cases

Business Process Reengineering

Continuous Improvement Model

Document the as is process

Identify and implement improvement

Copyright 2010, G Nagalingappa, Manjunath V S

Total Quality Management

Text and Cases

Business Process Reengineering

BPR is Continuous Improvement Model

Copyright 2010, G Nagalingappa, Manjunath V S

Total Quality Management

Text and Cases

Business Process Reengineering

contemporary measures of performance such as cost, quality, service and speed."

Total Quality Management

Text and Cases

Business Process Reengineering

Changes through BPR

Total Quality Management

Text and Cases

Business Process Reengineering

Business Process Reengineering

Scope of improvement Project

Learn from others

Create new process

Copyright 2010, G Nagalingappa, Manjunath V S

Total Quality Management

Text and Cases

Business Process Reengineering

Phase I: Preparing for change

Copyright 2010, G Nagalingappa, Manjunath V S

Total Quality Management

Text and Cases

Business Process Reengineering

Phase I: Preparing for change

Total Quality Management

Text and Cases

Business Process Reengineering

Phase II: Planning for change

Total Quality Management

Text and Cases

Business Process Reengineering

Phase II: Planning for change

Copyright 2010, G Nagalingappa, Manjunath V S

Total Quality Management

Text and Cases

Business Process Reengineering

Phase III: Designing the change

Copyright 2010, G Nagalingappa, Manjunath V S

Total Quality Management

Text and Cases

Business Process Reengineering

Phase III: Designing the change

Copyright 2010, G Nagalingappa, Manjunath V S

Total Quality Management