BasisofBPR

WhatisBPRWhatthetermBPRmeans?Whereithascomefrom?Whatdistinguishesitfromothermanage-mentphilosophies?Whyithascapturedtheimaginationofsomanymanagers?4/14/20252BusinessProcessRe-engineeringHowthetraditionalorganizationworksAtriangleisusedtorepresentanorganization-themajorityofpeopleworklowerdowntheorganizationandthemanagementhierarchyextendsallthewaytothepinnacle.Theorganizationismadeupofanumberofsub-organizationintheformofgroupsofspecialistsknownasfunctions,eachofwhichhasitsownmanagementhierarchy.4/14/20253BusinessProcessRe-engineeringFunctionalHierarchyR&DManagementfocushastraditionallybeenonthefunctionalhierarchy.ProductionSales4/14/20254BusinessProcessRe-engineeringFunctionalHierarchyTherearemanydifferentdepartmentsandpeoplearerecruitedintoonefunctionaldepartment;Eachdepartmentisresponsibleforundertakenonepartofthewholetasks;Thischainoflinkeddepartmentallowsforspecialization;Thismodelissowidelyestablishedthatitisrarelyquestioned.4/14/20255BusinessProcessRe-engineeringTheStrengthsfewerspecialistmayservicetheneedsofanumberofareas;takingthelatestthinkinginparticularareasintotheorganization;developingcareerswhichenhancespecialistexcellenceinaparticularfield,suchasMarketing,Production,ITorHumanResources;4/14/20256BusinessProcessRe-engineeringTheWeaknessesThefocusoftheorganizationcanbethe‘boss’notthecustomer;Noonehasthecontroloverthe‘horizontal’processandco-ordinationisweak;Nosinglepointofcontact;Unproductiveworkexistsbecauseoffunctionalboundarieswhichresultinmanytasksbeingdonesimplytosatisfytheinternaldemandsoftheit’sownorganization.4/14/20257BusinessProcessRe-engineeringGetridofunnecessarystepsWhenadoptaprocessapproachyoumayfind:Manyofthestepsinyourworkhavenothingtodowithdeliveringtherequiredoutcomes;Itisdifficulttoidentifywhysomestepsexistatall;Oftenitisfornobetterreasonthanbecausetheyalwayshave;Gettingridofalltheseunnecessarystepsmeansquickercustomerserviceatconsiderablylowercost.Doingthisusuallycutsacrossthefunctionaldepartment.4/14/20258BusinessProcessRe-engineeringProcessOrientedApproachR&DBPRemphasizesa“process”viewwhichcutsacrossthefunctionalhierarchiestoreachthecustomer.ProductionSalesCustomer4/14/20259BusinessProcessRe-engineeringWhatprocessfocusmeansAprocessfocusmeanslookingatthewayacustomerorderisfulfilled,anewproductcreated,oramarketingplandeveloped,withoutconcernforfunctionalboundariesorspecialization.4/14/202510BusinessProcessRe-engineeringWhatisaprocessProcess:Acontinuousandregularactionorsuccessionofactions,takingplaceorcarriedoninadefinitemanner,andleadingtotheaccomplishmentofsomeresult;acontinuousoperationorseriesofoperations.Processhasaninputandanoutput;madeupofasequenceoftasksthroughwhichthisinputpassestobecomeanoutput4/14/202511BusinessProcessRe-engineeringValueChainModelofM.PorterCompanyInfrastructureHumanresourcesTechnologyDevelopmentProcurementSupportActivitiesPrimaryActivitiesInboundLogisticsOperationsMarketingSalesOutboundLogisticsCustomerServiceMargInMargInValue-addingActivities4/14/202512BusinessProcessRe-engineeringScaleandScopeofProcessThescaleoftheprocessdependsonwhatitisperforming,whichcouldbeaverysimplesetoftasksorahighlycomplexsetofinterrelatedactivities;Thescopeofaprocessisconcernedwiththeextenttowhichitcrossesorganizationalunits(functionsordepartments);Aprocesswithabroadscopeislikelytocrossanumberoffunctionsordepartment;Ifthescaleandscopearewideranging,agreatpay-offmightbeexpected.4/14/202513BusinessProcessRe-engineeringNewProductvs.NewProcessInthepastcenturytheeconomicwinnerwerethosewhoinventednewproducts;But,inthe21stcenturysustainablecompetitiveadvantagewillcomemoreoutofnewprocesstechnologiesandmuchlessoutofnewproductstechnologies;Whatusedtobeprimary(inventingnewproducts)becomessecondary,andwhatusedtobesecondary(inventingandperfectingnewprocess)becomesprimary4/14/202514BusinessProcessRe-engineeringLevelsofprocessStrategicProcessesOperationalProcessesEnablingprocesses4/14/202515BusinessProcessRe-engineeringLevelsofprocessStrategicprocessesarethoseprocessbywhichtheorganizationplansforanddevelopitsfuture,suchasstrategyplanning,products/servicedevelopment,newprocessdevelopment…;Operationalprocessesarethosebywhichtheorgani-zationcarriesoutitsregularday-to-dayfunctions,suchassales,orderentrain,scheduling,production…;Enablingprocessesarethosebywhichenablestrate-gicandoperationalprocessestobecarriedout,suchasHRM,accounting,MIS,…;4/14/202516BusinessProcessRe-engineeringWhatisBPRBPRisanimprovementphilosophy.Itaimstoachievestepimprovementsinperformancebyredesigningtheprocessesthroughwhichanorganizationoperates,maximizingtheirvalue-addedcontentandminimizingeverythingelse.Thisprocesscanbeatanindividualprocesslevelortothewholeorganization.Criticalanalysisradicalredesignofexistingbusinessprocessachievingbreakthroughinperformancemeasures4/14/202517BusinessProcessRe-engineeringBusinessphilosophycomparisonsFocusBPR:process,minimizingofnonvalue-addedactivities;TQM:quality,gettingthingsrightfirsttimeJIT:inventories,wasteelimination,throughput;CE:newproductdevelopment,reducingtimetomarket,increasingquality;4/14/202518BusinessProcessRe-engineeringBusinessphilosophycomparisonsImprovementscale:BPR :radicalimprovement;TQM :continuousimprovement;JIT :continuousimprovement;CE :radicalimprovement;4/14/202519BusinessProcessRe-engineeringBusinessphilosophycomparisonsOrganization:BPR :processbased;TQM :notchangeorganizationalstructure, withcommongoals,acrossfunctions;JIT :changeshop-floorandteamstructure;CE :processbased(productdevelopment)4/14/202520BusinessProcessRe-engineeringBusinessphilosophycomparisonsCustomerfocus:BPR :outcomesdriven;TQM :internalandexternalsatisfaction;JIT :initiatorofaction,pullsproduction;SE :internalpartnership;4/14/202521BusinessProcessRe-engineeringProcessfocus:BPR :createbetterprocessesfroma‘clean sheet’orsystematicdesign;TQC :controlandmeasurementofimproving qualityJIT :workflow/throughput,efficiencySE :ensuringthatmarketing,R&D,and productionworktogether;Businessphilosophycomparisons4/14/202522BusinessProcessRe-engineeringTechniques:BPR :Processmaps,benchmarking,self- assessment,creativethinking;TQM :Processmaps,benchmarking,self- assessment;JIT :Visibility,Kanban;SE :programteams,CAD/CAMBusinessphilosophycomparisons4/14/202523BusinessProcessRe-engineeringContinuousImprovementvs.RadicalChangeBPRisconcernedwithradicalchangerethinkingthefundamentalprincipleofworkingprocess.Cutthenonvalue-addedactivitiesradicalperformanceimprovementThegoalofBPR,however,mightbeachievedthroughcontinuousincrementalimprovementbasedonsmallchangesthroughouttheorg.Smallchangestrategyisfarmoreeffectivethanthe‘completeoverhaul’approach.4/14/202524BusinessProcessRe-engineeringExpectationsofimprovementScopeofBPRBroadNarrowLowHighUnrealisticexpectationAppropriategoalsMissedopportunitiesScaleofpotentialbottom-lineimprovement4/14/202525BusinessProcessRe-engineeringAExample:FordAccountsPayableDepartment

SupplierPurchasingDepartmentAccountsPayablePurchaseOrderPurchaseOrderCopyInvoicePaymentGoodsGoodsInwardReceivingDocumentsOriginalProcess4/14/202526BusinessProcessRe-engineeringBEFOREBPRAnumberofpaperdocumentswereprocessedsequentiallyby3functionswhoparticipatedintheprocessindirectlytoperformmanysteps.Purchasingissueaordertosupplierandsendacopytoaccountspayablefunction.Uponarrival,theinventoryfunctionsendsacopyofreceivingdoctopayablefunction.Whentheinvoicearrives,thepayablefunctionmatchesitagainsttheorderandthereceivingdocbeforeissuingpaymenttothesupplier.Mucheffortsareneededtoresolvediscrepancies,andatotal14dataitemsmustbechecked.4/14/202527BusinessProcessRe-engineeringAExample:FordAccountsPayableDepartmentSupplierPurchasingDepartmentCentralDatabasePurchaseOrderCopyElectronicPaymentGoodsGoodsInwardNewProcessPOsentelectronicallyAccountsPayable4/14/202528BusinessProcessRe-engineeringAFTERBPRWithonly25%workforce,the3functionsparti-cipateintheprocessdirectlybyaccessingashareddatabase,eliminatingmanyinter-stepsandpaperdoc.Purchaseorderisenteredintothedatabase.Uponarrival,theinventoryfunctionaccessesthedatabase.Ifamatchisfoundthedatabaseisupdated.Thepayablefunctioncheckthedatabaseroutinelyandpreparepaymentforthesuppliers.Matchingischeckedbycomputerandonly3detaitemsneedtobecheckedintheprocess.4/14/202529BusinessProcessRe-engineeringAExample:FordAccountsPayableDepartmentOutcomeofBPR:Noinvoicewasrequired.Thenumberofdateitemstobecheckedwasreducedfrom14to3,andcheckedautomati-callybycomputer.Achieveda75%reductionofemployeesinAccountsPayableDepartment.4/14/202530BusinessProcessRe-engineeringSummayTraditionalorganizationalstructureshavebeenbuiltaroundfunctionsandhierarchywhichhaveservedenterpriseswellinthepast.How-ever,theyhaveprovenslowinrespondingtotheneedsoftoday’scompetitiveenvironment.BPRchallengingmanyoftheassumptionsonwhichorganizationhavebeenbuiltandputsprocessfirmlyonthemanagementagenda.Byredesigningtheseprocessitispossibletoeffectstepimprovementintheperformanceoftheseprocesses.4/14/202531BusinessProcessRe-engineeringInformationTechnologyandBusinessProcessBusinessprocesshaveexistedandevolvedlongbeforetheadventofmoderncomputer.ManyorganizationsareattemptingtoleveragetheadvancingITtofacilitatethecooperationbetweenfunctionalunitsandincreasetheorganization’sflexibilityandresponsiveness.Sucheffortsofteninvolvethefundamentalredesignofbusinessprocessesthatcrossfunctionalunits.4/14/202532BusinessProcessRe-engineeringInformationTechnologyandBusinessProcessAsthedatabasetechnologymatured,manyorganizationbegantibuildsystemscenteredaroundbusinessprocessthatcrossfunctionalunits.Telecommunicationprovideopportunitiesforimprovingcollaborationamongpersonnelfromdifferentfunctionalunitsintheireffortstoaccomplishacommonbusinessprocess.4/14/202533BusinessProcessRe-engineeringInformationTechnologyandBusinessProcessToeffectivelyleverageITinBPR,certaincharacteristicsofabusinessprocessmaybechangedtoachievedramaticimprovementincriticalmeasuresofperformance.Thesecharacteristicsisrelatedtohowdifferentfunctionsarecoupledtoeachotherforproducingacommonoutcomes.TheidentificationofdifferentpatternsbasedonthesedescriptiveprocesscharacteristicscanhelpsetstrategicdirectionandguidelinesineffortstoalterthecurrentcouplingpatternsofbusinessprocessesthroughBPR.4/14/202534BusinessProcessRe-engineeringFunctionalCouplingofBusinessProcessThewayvariousfunctionsarecooperatedinaccomplishingaprocess--i.e.,thefunctionalcouplingofaprocess--canbedifferentiatedalongtwodimensions:degreeofmediationanddegreeofcollaboration.4/14/202535BusinessProcessRe-engineeringTheDegreeofMediationofaBusinessProcessManyfunctionsareinvolvedinatypicalprocess;Eachparticipatingfunctionhasinputsandoutputswhichwouldeitherdirectlyfacilitatestheprocessoutcomeorserveasinputstootherfunctions.Theextentofsuchsequentialflowofinputandoutputamongthesefunctionsinabusinessprocessconstitutesthedegreeofmediation

dimensionofaprocess.4/14/202536BusinessProcessRe-engineeringRKPQXPTXQPTXQTXPQTXP12345HighLowTheDegreeofMediation4/14/202537BusinessProcessRe-engineeringTheDegreeofCollaborationDimensionofaBusinessProcessTheseconddimensionisrelatedtothedegreeofcollaborationbetweenfunctionsthroughinformationexchangeandmutualadjustmentswhenparticipatinginthesameprocess.Thefrequencyandintensityofinformationexchangebetweentwofunctionscanrangefromnone(completelyinsulated)toextensive(highlycollaborative).4/14/202538BusinessProcessRe-engineeringABCABCABCABCLowDegreeofCollaborationHighLowDegreeofMediationHighinsulatedcollaborativeindirectdirect4/14/202539BusinessProcessRe-engineeringinsulatedcollaborativeindirectdirectABCABCABCABCLowDegreeofCollaborationHighLowDegreeofMediationHightCouplingPattern:FunctionparticipateintheprocesssequentiallywithnomutualinformationexchangeEnvironment:ParticipatingfunctionsaresequentiallydependentandfacelowlevelofuncertaintyinI/Orequirements.Example:Salesfunction(A)sendscustomerordertoinventoryfunction(B)forshipmentCouplingPattern:Functionparticipateintheprocesssequentiallywithmutualinforma-tionexchangeEnvironment:ParticipatingfunctionsaresequentiallydependentandfacehighlevelofuncertaintyinI/Orequirements.Example:Engineeringfunction(A)providesmanufacturingdesigntoproduction(B)withfrequentconsultationbetweenAandB.CouplingPattern:FunctionparticipatedirectlyinproducingtheprocessoutcomewithnomutualinformationexchangeEnvironment:ParticipatingfunctionsaresequentiallyindependentandfacelowlevelofuncertaintyinI/Orequirements.Example:Recruitingworkers(A)andequip-mentrequisition(B)participatedirectlyinestablishinganewplantwithnoconsultationbetweenAandB.CouplingPattern:FunctionparticipatedirectlyinproducingtheprocessoutcomewithmutualinformationexchangeEnvironment:ParticipatingfunctionsaresequentiallyindependentandfacehighlevelofuncertaintyinI/Orequirements.Example:Advertising(A)andproduction(B)directlyparticipateinlaunchinganewproductwithfrequentconsultationbetweenAandB.4/14/202540BusinessProcessRe-engineeringFunctionalIntegrationReducingDegreeofMediationthroughITredesigningbusinessprocessfromanindirectpatterntoadirectpatternpermittingtwoormorefunctionstoproceedindependentlytheuseofsharedcomputingresourcesisthekeypointofreducingthemediationlevelofaprocess.sharedinformationisnotdepleteduponusageandmayretainitsvaluetoadditionalfunctionsafteraccessbytheinitialuser.4/14/202541BusinessProcessRe-engineeringEnhancingDegreeofCollaborationthroughITCollaborationsbetweenfunctionsarenotalwaysnecessaryITtechnologieshavegreatpotentialforimprovingcollaborationbetweenfunctionsinvolvedinabusinessprocess.TelecommunicationInternete-mailgroupwareotherOAapplications4/14/202542BusinessProcessRe-engineeringABCABCABCDBABCDBPathXPrimarilythroughapplicationofcommunicationtechnologyPathX*PathYPrimarilythroughapplicationofsharedinformationresourcesPathY*PathZApplicationofcommunicationtechnologyandsharedinformationresourcesLowDegreeofCollaborationHighLowDegreeofMediationHighIIIIIIIV4/14/202543BusinessProcessRe-engineeringABCABCABCDBABCDBPathXPrimarilythroughapplicationofcommunicationtechnologyPathX*PathYPrimarilythroughapplicationofsharedinformationresourcesPathY*PathZApplicationofcommunicationtechnologyandsharedinformationresourcesLowDegreeofCollaborationHighLowDegreeofMediationHighIIIIIIIVExampleofHP135salespersonsweretrainedtouselaptopcomputertoretrieveinventoryinformationfromcorporatedatabaseduringcustomermeetings.Theyalsomaycommunicatewiththeirpeersandsuperiorstoexchangeinformation.Ahighdegreeofcollaborationwasachievedbetweenmarketinginventoryandsalesfunctions.Results:meetingtimedecrease46%traveltimewascutby13%timewithcustomerincrease27%salesincrease10%ExampleofTIProductdevelopmentisconductedatdifferentcountries:India,Malaysia,Japan,U.S.Globalnetworkandadvancedcomputingresour-cesenabledesignteamsindifferentlocationstosustainahighlevelofcollaborationwithoutsequentialflow.Results:Timeneededtodevelopacalculatordecrease20%soonafterdesigndrawingbegantobesentelectronically,andafurtherdecreaseof17%hasbeenachievedsincethen.4/14/202544BusinessProcessRe-engineeringProcessReengineering:ChartingaStrategicPathAstrategicapproachtoProcessReengineeringTherearemanypathsforprocessreengineeringandaguidelineareneededinselectingastrategicpath.Itispossibletochartthe“right”reengineeringpathforthe“wrong”process.Toensurethattherightprocessesareselected,thefirststepoftheBPReffortscallsfortheIdentificationofthosecandidateprocessthatarecriticaltothefirm’sstrategicobjectives.4/14/202545BusinessProcessRe-engineeringProcessReengineering:ChartingaStrategicPathIdentifyingthecriticalprocessValueChain:tracingfromthe“upstream”processassociatedwithinboundlogisticstothe“downstream”processofmarketingsalesandservices.CriticalSuccessFactors(CSF):eachprocesscanbeevaluatedastoitsstrategicrelevance.4/14/202546BusinessProcessRe-engineeringAssessingReengineeringPotentialforaprocessTwohorizontalpaths(XandX*)aresuitableforprocesseswithinsufficientcollaborationandthepotentialforcollaborationenhance-mentishighTwoverticalpaths(YandY*)aresuitableforprocesseswithhighpotentialformediationreductionwheremanysequentialstepscanbeeliminated.4/14/202547BusinessProcessRe-engineeringCollaborationEnhancement:Low

MediationReduction:LowStrategicPath:remaininagivenregionwithnochangesinmediationandcollaborationlevels.ProcessCharacteristics:ithasasuitablemediationpattern,furtherreductioniseitherunfeasibleoruneconomicalandasufficientlevelofcollabora-tiontohandletheuncertaintyencountered.TypicalCandidates:processeswithstepsthataresequentiallydependent,orwithstandardizedphysicalI/Oflowandlittleneedforinformation.Example:Amailsurveymustbecompletelydesignedbeforeprinting.FDAapprovalisrequiredbeforemarketinganewdrug.4/14/202548BusinessProcessRe-engineeringCollaborationEnhancement:Low

MediationReduction:HighStrategicPath:FollowpathYorY*toreducelevelofmediation.ProcessCharacteristics:ithasasuitablemediationpattern,furtherreductionisnotneeded.However,thedegreeofmediationinthepro