Business Process Reengineering
(BPR)
References:
Production and operations management .R. Panneerselvam. New Delhi-110001-2007
Business Process Re-engineering (BPE))
http://www.hkbu.edu.hk/~samho/tqm/tqmex/bpr.htm
Introduction
For many organizations, achieving a desired target may be easy, but to sustain the new level of its operation becomes more difficult. In the competing global business environment, sustenance of the current level of operation of the organization alone will not be sufficient because there should be continuous significant growth of the organization to compete with their co-players in the market.
This introduces further more difficulty for many organizations. Under such situations, the organization can take shelter under Business Process Reengineering (BPR) and utilize its strength for its betterment.
The pioneer in this field is Michael Hammer, the eminent management consultant.
Business Process Reengineering is defined as the fundamental rethinking and radical redesign of business process to achieve dramatic improvement in critical, contemporary measures of performance such as cost, quality and speed of products/services delivered/provided by an organization.
As stated in the definition, the dominant performance measures of any organization are cost, quality and speed. This means that the products/services delivered/provided by the organization to its customers should have the utmost quality with the least cost and lead time.
Business Process Re-engineering (BPR)
BPR is a management process used to re-define the mission statement, analyze the critical success factors, re-design the organizational structure and re-engineer the critical processes in order to improve customer satisfaction. BPR challenges managers to rethink their traditional methods of doing work and commit themselves to a customer-focused process. Many outstanding organizations have achieved and maintained their leadership through BPR [Oakland, 1995]. Companies using these techniques have reported significant bottom-line results, including better customer relations, reductions in cycle time to market, increased productivity, fewer defects/errors and increased profitability. BPR uses recognized techniques for improving business results and questions the effectiveness of the traditional organizational structure. Defining, measuring, analyzing and re-engineering work processes to improve customer satisfaction pays off in many different ways.
Re-engineer your business to the needs of your customers [Lip, 1989]
Why is BPR Useful?
Improvements in business performance of, say, 10-15 per cent can be achieved in most companies using conventional consultancy techniques. Where quantum leaps are required -- for example, where the old needs to be completely replaced with the new -- then re-engineering is a good way forward. The key to grasping the way BPR differs from other improvement studies lies in understanding the focus, breadth and duration of the re-engineering process.
The primary focus is on the customers -- those people who pay the money which keeps the business going. So if a process does not help to serve a customer then why have the process in the first instance? Although BPR requires a detailed knowledge of what the customers want it does not demand a highly detailed understanding of the tasks involved in every activity of the business. This makes BPR economical in terms of investigation time when compared with conventional methods, in which highly-detailed studies are usually undertaken before any change is made. BPR requires that those conducting the study are highly experienced in business practices and systems, and are able to identify the features of the business which are crucial to its success. A high-level in-house team, working with experienced consultants, would be able to provide the necessary expertise.
A further facet of the BPR approach concerns the speed with which changes are introduced. Conventional wisdom states that change is best brought about through an evolutionary approach. If it is required to introduce a radically changed organization, it can be argued that it makes good sense to carry out the necessary changes quickly. Many major BPR projects have been implemented within one year [Ovenden, 1994].
Steps of Business Process Reengineering:
The steps of BPR which are practiced by many organizations are as listed below:
1. Development of process vision and determination of process objectives
2. Definition of processes to be reengineered
3. Measurement of existing processes
4. Identification of information technology applications
5. Design of prototype and implementation
Model for Business process reengineering
1. Development of process vision and determination:
A process is a collection of activities which provide value addition in the process of satisfying customer needs. Reengineering a process is called as the redefinition and simplification of the process. A business which has customer focus has the greater probability of success because such approaches recognize competition, products and customer expectations in the years to come. This customer focus is called business vision. Once, the business vision finalizes the above mentioned factors, the next task is to develop process vision and determine process objectives. This exercise is done at fairly senior level in the management so that he /she will have an integrated thinking about the entire organizational activities.
The primary tasks of this step are:
- identification of key processes
- Visioning the qualitative performance of each process
- Determination of quantitative objectives of each process
.
2. Definition of processes to be reengineered:
This step defines the identified processes which are to be reengineered. The person who is in involved in this step should ask questions which will lead to have more clarity on the processes. An identified process in turn may have sub-process. So, execution of the following sub-steps will lead to the completion of this step.
- Identification of the starting point of the process
- Identification of the ending point of the process
- Identification of the process measures of the various sub-processes.
- Establishment of benchmarks of the process which will help to control and ensure the process outcome.
This step further helps to visualize the reengineered process and identify the eventual process owner of the reengineered process.
3. Measurement of existing processes:
The general measures of any process are like, quality, cost and time. In many organizations, the existing level of performance measures of different processes may not be satisfactory. Unless, we understand, identify and define different processes, there is a possibility of continuing the business activities inefficiently as in the past.
Hence, this step further refines the understanding and definition of different processes. Then, it identifies related performance measures. For example, in an order processing cycle, the performance measures may be as follows:
- Response time of the salesperson to customer's queries
- Actual lead time to fulfill the order
- Percentage returns of consignment delivered to customers
- Price competitiveness in relation to company's competitors.
Determination of the above performance measures will reveal the existing level of operation in terms of different measures which may not be satisfactory most of the time. This gives an opportunity to the company to redefine the process for improving different performance measures.
4. Identification of information technology (IT) application:
The success of BPR lies in the extent of usage of IT in different processes of any business organization. The advent of information technology enables many business organizations to perform their operations (processes) in a consistent way with more speed. Further, it helps to implement integrity constraints of different business processes crossing their boundaries which are not normally possible without IT.
The main objective of reengineering is to have dramatic improvement in the performance of selected measures of a process. Further it should result in achieving process transformation through appropriate use of information technology.
In the bills payable system of Ford Mazda, it was possible to reduce the number of people to 5 from 500 through an innovative application of simple computer network. This helped the system to have dramatic increase in empowerment of people and reduction in process time.
Take the case of library system of a leading university. Implementation of barcode system along with barcode reader would definitely reduce the waiting time of students and faculty and hence the queue length in front of books issue and receipt counters. Further, the entire operation can be managed with less number of counters. In addition to these measures, there will be consistency in executing different processes.
5. Design of prototype and implementation
The last step of BPR is the design of prototype and its implementation. From the step 1 onwards, the ideas are generated. While the core group spends its valuable time on the system of study to conceive the reengineered processes, simultaneously the owners of different processes are created. At this stage, the core business processes, their performance measures, the benchmarks of the performance measures and appropriate IT levers are available. An integrated model of the processes based on these input is called as the prototype.
Through the prototype can yield desired results, it is customary to fine tune it to have enhanced features for better results.
While implementing the prototype, there may be resistance due to mindsets of the people who were involved with the old system .Because, the prototyping involves the users by way of taking their feedbacks in the fine tuning process; there is a greater probability of removing their mindsets. This will enable the users to accept the system with the modified processes. However, a formal training programme for the people who are involved with the processes would pave the way for the successful implementation of prototype of BPR.
Applications of Business Process Reengineering
As mentioned earlier, BPR can be applied to all situations where dramatic improvement is required. Some examples are presented to appreciate it.
(i) Railway reservations system:
In the past, they had the following major limitations in railway reservation system:
- Booking of onward journey only from the place of start of the journey.
- Booking of return journey subject to availability of seats; otherwise, customers waited for written confirmation from the other end.
- Cumbersome process of cancellation of tickets during return journey.
After introducing information technology as the backbone in the railway reservation system and BPR oriented design, all the above major limitations are removed. In addition to these benefits, there are few more benefits as listed below as the result of BPR application to do the heavy number crunching operations and complicated queries.
- Reduced waiting time of customers at the booking counters.
- Capability to answer the queries like, availability of seats for onward as well as return journey in the desired trains. If the booking in the desired train is not possible, then the counter clerk is in a position to suggest the next best alternate train to suit the convenience of the customer.
(ii) Breweries manufacturing:
A leading brewery faced with the problem of sourcing its materials requirement to suit to its product mix for a given planning period. Due to non-availability of a particular raw material, the corresponding product has been regrouped with a later product mix which resulted in lost demand.
A team which investigated the problem from the BPR angle identified different processes which are involved in the raw materials procurement system as under:
- Order placement
- Receipt of items against order.
- Quality checking of raw materials
- Accounting accepted items in stores
- Issue of items from stores to production line.
The team convinced about the nature and the functioning of all the above processes except the order placement process. The system did not take the lead times for placing orders seriously. Since, the manufacturing system and logistic system of different suppliers are subject to variations, there were difficulties in estimating the lead times of items precisely. So, the team directed the industrial engineering department of the company to look into the matter to come out with proper lead time estimates for different items.
The industrial engineering department in turn conducted a study to collect relevant data and finally came out with realistic estimates for the lead times of different items. In this process, it used appropriate inventory models. Further the team felt that the entire system of procurement with its MRP (Material requirement planning) should be computerized using Excel, since it permits sensitivity analysis in case of any practical deviation in terms of schedule, minor change in the variability of raw materials, etc. the required system was fully made available by the company's system department under the guidance of the team within a fortnight. Further, this system was integrated with the company's raw materials stores issues system.
In the enhanced system, the company is able to carry out its production as per its plan and meet customer demands.
