BUSINESS PROCESS REENGINEERING

-Why BPR?

-What is BPR. -What is not BPR. -What changes occur when BPR is done. -Who will carry out - New processes through process mapping -How to carryout changes

Why BPR?

WHY BPR
Three forces are driving the modern organizations Customers Competition Change

WHY BPR
- Organizations have to be lean, flexible, responsive, competitive, innovative, efficient, customer focused and profitable to remain in business. - Reengineering transforms how organizations traditionally produce and deliver goods and services.

WHY BPR
- Adam Smiths principle of the division of laborwhich was further improved through evolutionary steps can no longer keep the organizations in business. - Although this division of labor has enabled organizations to mass-produce standardized products and services efficiently, it can be overly complicated, difficult to manage, and slow to respond to the rapid and unpredictable changes experienced by many organizations today

What is BPR?

WHAT IS BPR
Reengineering addresses the problems by breaking down specialized work units into more integrated, cross-functional work processes. This streamlines work processes and makes them faster and more flexible; consequently they are more responsive to changes in competitive conditions, customer demands, product life cycles, and technologies.

WHAT IS BPR
Reengineering requires an almost revolutionary change in how organizations design their structures and their work. It addresses fundamental issues about why organizations do what they do, and why do they do it in a particular way. The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical measures of performance, such as cost, quality, service and speed is BPR

WHAT IS BPR
This definition contains four key words: Fundamental Radical Dramatic Processes

WHAT IS BPR
Fundamental:
In doing re engineering, business people should ask these two fundamental questions: Why do we do what we do Why do we do it the way we do it Re engineering ignores what is and concentrates on what should be

WHAT IS BPR
Radical:
Radical redesign means getting to root of the things not making superficial changes or fiddling with is already in place, but throwing away old. Radical redesign means disregarding all existing structures and procedures, and inventing completely new ways of accomplishing work. Re engineering is about business re invention, not business improvement, business enhancement or business modification.

WHAT IS BPR
Dramatic:
Re engineering is not about making marginal or incremental improvements, but about achieving quantum leaps in performance. Re engineering should be brought in when need for heavy corrections is felt. Companies which are in deep trouble or whose leaders have foresight to see that the company is going to be in deep trouble resort to re engineering.

WHAT IS BPR
Processes:
Process is collection of activities that take one or more kinds of inputs and create output that has value for customers. It addresses following questions: How do you develop a new product How can we do what we do faster How can we do what we do better Why do we do what we do at all.

WHAT IS NOT BPR?

WHAT IS NOT BPR

Reengineering is not the same as automation. Business reengineering is not software reengineering. Reengineering is not restructuring or downsizing. Reengineering is not same as reorganizing, delayering or flattening an organization. Reengineering is not the same as busting bureaucracy. Reengineering is not the same as TQM.

CHANGES THAT OCCUR WHEN ORGANIZATIONS REENGINEER

SOME CHARACTERISTICS OF BPR

Several jobs are combined into one. Workers make decisions. The steps in process are performed in natural order. Processes have multiple versions. Work is performed where it makes the most sense. Checks and controls are reduced. Reconciliation is minimized. A case manager provides single point of contact. Hybrid centralized/decentralized operations are prevalent.

CHANGES THAT OCCUR WHEN ORGANIZATIONS REENGINEER

Work units change from functional departments to process teams. Jobs change from simple to multi dimensional tasks. Peoples role change from controlled to empowered. Job preparation changes from training to education. Focus of performance measures and compensation change from activity to results. Advancement criteria change from performance to ability. Values change from protective to productive. Managers change from supervisors to coaches. Organizational structure change from hierarchical to flat. Executives change from scorekeepers to leaders.

WHO REENGINEERS

WHO REENGINEERS
Leader. Process owner Reengineering team. Steering committee. Reengineering czar.

NEW PROCESS THROUGH PROCESS MAPPING

NEW PROCESS THROUGH PROCESS MAPPING

PROCESS MAPPING
What is process mapping:
Process mapping is a tool that allows one to model the flow of any business process in a graphical form.

Why process mapping is done

It is done to allow one to see how the process actually works across functional boundaries.
It thereby enables all employees to see how the business process actually works and how it can be changed to be more effective. Process mapping also creates a common language for dealing with changes to business processes.

PROCESS MAPPING
Who does process mapping and how:
An experienced facilitator conducts process mapping training. The role of the facilitator is to encourage interaction and creative input from everyone by throwing questions back to the group. The idea is to facilitate learning by discovery and inquiry, not by being told what to do.

EMPLOYEE INVOLVEMENT
Why employees should be involved in process mapping:
They know the process and the sequence of work. They know the bottlenecks They know the contacts in the organization to get things done.

Bosses to be kept out of mapping because they may think that they are experts and may not allow the employees carrying out work to give details by dominating proceedings.

IDENTIFY START AND END ACTIVITIES

What are start and end activities:
Activity which kick starts the process for example the receipt of an invoice is to be identified. Activity in which process ends such as posting of material in priced store ledger.

IDENTIFY START AND END ACTIVITIES

Why start and end activities are to be identified:
to maintain the focus and keep the process manageable. Non value adding activities to be eliminated or reduced by questioning their significance in the process. Each input and its output are to be questioned to find out what process needs and what next customer in the sequence would get before he begins his activity.

IDENTIFY CUSTOMER/SUPPLIER REQUIREMENTS

Who are customers and suppliers:
Every employee working in a process should serve either as an internal customer or an external customer or both. The activity which does not have a customer need to be eliminated.

IDENTIFY CUSTOMER/SUPPLIER REQUIREMENTS

Why customers and suppliers to be identified by process team:
The process team members should identify what they need from their internal or external customers to perform process effectively. A purchasing team may require other departments, for example, to fill in all fields of the Purchase Order prior to submission.

IDENTIFY PROCESS OWNER FOR EACH PROCESS

Who are process owners and why they should be specified:
- Process owner is one who has authority and credibility to take decisions. For each process, one Process Owner is to be identified. - Where processes involve many departments, the Process Owner should have sufficient authority and credibility to make decisions spanning these departments. - This is critical for ensuring process efficiency.

MANAGING THE DETAILS

How process maps are created:
- Each process map should be presented in a simple manner.
- The process map should not be more than one page. Where the process map requires more details, than it has to be broken in sub processes and each sub process dealt with separately as independent process. - Only important steps in the process need to be documented. For this the bottleneck operations or the operations which have interface with customer or suppliers should get precedence.

STANDARDIZE MAPPING CONVENTIONS

- Mapping symbols, flow direction, page layout, fonts, titling and so on, should be the same from one map to another. Keep the number of flow chart symbols to a minimum.
- This would enable anyone in the organization to understand process map easily and quickly.

AGREEMENT FROM STAKEHOLDERS

- Obtaining commitment of stake holders to the new process is essential.
- The team leader of the process mapping, the process owner and the managers of interfacing processes should agree and perhaps put their signatures on the process document. - This would not only secure their commitment but also overcome resistance or headaches at a later date.

DOCUMENT THE PROCESS

The process definition and steps in sequence are to be written down by the team leader. Brain storming all the process activities and note on a flip chart. Debate sequence and obtain agreement of all members of the team. Finally draw the process map with the help of line and arrows sequentially and accurately to show the process flow.

It should be displayed where actual work is performed and also sent to all stake holders of the process

MANAGEMENT COMMITMENT & TRAINING

Once Process map is ready than what next:
The process would need management commitment in letter and spirit. The process should be demonstrated to management to obtain their commitment. To help maintain motivation of team members, over performers are to be rewarded frequently. This is possible when management supports the process ungrudgingly. The team members should be adequately trained to implement new process.

RESTRUCTURE AROUND THE NEW BUSINESS PROCESSES

Restructuring organization around new process:
This last step involves changes in the organization to support the new business processes. implementing new information and measurement systems is important. Measuring behaviors, such as absenteeism and grievances, is replaced to assessing outcomes, such as productivity, customer satisfaction, and cost savings. Information technology is key driver of reengineering. It can educe the cost and time associated with integrating business processes.

PREPARE THE ORGANIZATION

Reengineering begins with clarification and assessment of the organizations context, including its competitive environment, strategy, and objectives. This effort establishes the need for reengineering and the strategic direction that the process should follow. Changes in an organization competitive environment can signal a need for radical change in how it does business.

GTE Case Study

Preparing the organization
As preparation for reengineering at GTE Telephone Operations, for example, executives determined that although deregulation had begun with coin-operated telephones and long-distance service, it soon would spread to the local network. They concluded that this would present an enormous competitive challenge and that the old way of doing business, reinforced by years of regulatory protection, would seriously saddle the organization with high costs.

CASE STUDY
Specify organization strategy and objective
The business strategy determines the focus of reengineering and guides decisions about the business processes that are essential for strategic success. GTE executives recognized that the keys to the firms success in competitive environment were low costs and customer satisfaction. They set dramatic goals of doubling revenues while halving costs and reducing product development time by 75 percent.

CASE STUDY
A final task in this preparation step is to communicate clearly throughout the organization why reengineering is necessary and the direction it will lake. GTEs communications program lasted a year and a half, and helped ensure that members understood the reasons underlying the program and the magnitude of the changes to be made.

SPECIFY ORGANIZATION STRATEGY AND OBJECTIVE

Senior executives were careful to communicate, both verbally and behaviorally, that they were fully committed to the change effort. Demonstration of such unwavering support seems necessary if Organization members are to challenge their traditional thinking about how business should he conducted.

CASE STUDY
Fundamentally rethink the way work gets done
This step lies at the heart of reengineering and involves these activities: identifying and analyzing core business processes, defining their key performance objectives, and designing new processes. These tasks are the real work of reengineering and typically are performed by a cross-functional team who is given considerable time and resources to accomplish them.

CASE STUDY
Identify and analyze core business processes
Core processes are considered essential for strategic success. They include activities that transform inputs into valued outputs. Core processes typically are assessed through development of a process map that lists the different activities required to deliver an organizations products or services.

CASE STUDY
GTE determined that its core processes could be characterized as choose, use, and pay. Customers first choose a telephone carrier, then use its services, and pay for them. GTE developed a process map for these core processes that included the work flow for getting customers to choose, use, and pay for the firms service.

IDENTIFY AND ANALYZE CORE BUSINESS PROCESSES

Analysis of core business processes can include assigning costs to each of the major phases of the work flow to help identify costs that may be hidden in the activities of the production process. Traditional cost accounting systems do not store data in process terms; they identify costs according to categories of expense, such as salaries, fixed costs, and supplies. This method can be misleading and result in erroneous conclusion about how to reduce costs.

The material control department at a Dana Corporation plant in Plymouth, Minnesota, changed from a traditional to a process-based accounting system. The traditional accounting system showed that salaries and fringe benefits accounted for 82 percent of total costsan assessment that suggested workforce downsizing was the most effective way to lower costs. The process-based accounting system revealed a that 44 percent of the departments costs involved expediting, resolving, and reissuing orders from suppliers and customers. In other words, almost half of their costs were associated with reworking deficient orders.

IDENTIFY AND ANALYZE CORE BUSINESS PROCESSES

Organizations often engage in process activities that have little or no added value.
For instance, in a hospital an employee on each work shift checked a pump that circulated oxygen. Eight years earlier, the pump had failed and caused a death. Since that time, a new pump had been installed with faultprotection equipment and control sensors that no longer required the physical inspection. Yet because of habit, the checking process remained in place and drained resources that could be used more productively in other areas.

DEFINE PERFORMANCE OBJECTIVES

Challenging performance goals are set in this step. The highest possible level of performance for any particular process is identified, and dramatic goals are set for speed, quality, cost, or other Inca- sores of performance. These standards can be derived from customer requirements or from benchmarks of the best practices of industry leaders.

For example, at Andersen Windows, the demand for unique window shapes pushed the number of different products from 28,000 to more than 86,000 in 1991. The pressure on the shop floor for a batch of one resulted in 20 percent of all shipments containing at least one order discrepancy.
As part of its reengineering effort, Andersen set targets for ease of ordering, manufacturing, and delivery. Each retailer and distributor was sold an interactive, computerized version of its catalogue that allowed customers to design their own windows. The resulting design is then given a unique license plate number and the specifications are sent directly to the factory. By 1995, new sales had tripled at some retail locations, the number of products had increased to 188,000, and fewer than one in two hundred shipments had a discrepancy.