BPR latest Two

8/7/2019 BPR latest Two

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Criteria for BPR

y Dysfunctional: Which processes are in the

deepest trouble?

y Importance: Which processes have the

greatest impact on the company's

customers?

y Feasibility: Which of the companys

processes are at the moment mostsusceptible to successful redesign?


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Origin

y Scientific Management. FW Taylor (1856-

1915).

"To conduct the undertaking toward its

objectives by seeking to derive optimum

advantage from all available resources."

(Loyd 1994)


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Origin

y Frederick Herzberg - Job Enrichment

Who is performing the job? Can the

operation be redesigned to use less skillor less labor? Can operations be

combined to enrich jobs? .


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Origin: In Search of Excellence

(Peters & Waterman)y A bias for action, active decision making - 'getting on with it'.

y Close to the customer- learning from the people served bythe business.

y Autonomy and entrepreneurship - fostering innovationand nurturing 'champions'.

y Productivity through people - treating rank and fileemployees as a source of quality.

y Hands-on, value-driven - management philosophy thatguides everyday practice - management showing its

commitment.y Stick to the knitting - stay with the business that you know.

y Simple form, lean staff- some of the best companies haveminimal staff.

y Simultaneous loose-tight properties - autonomy in shop-floor activities plus centralised values.


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Origin

y Deming et al - Total Quality Management

and Kaizen

y Value-Added Analysis (Porter).


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Key Characteristics

y Systems Philosophy

y Global Perspective on Business Processes

y

Radical Improvementy Integrated Change

y People Centred

y

Focus on End-Customersy Process-Based


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TransformationInputs Outputs

Feedback

Environment

Systems Perspective


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Process Based

y Added Value

BPR Initiatives must add-value over and above

the existing process

y Customer-Led

BPR Initiatives must meet the needs of the

customer


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Radical Improvement

y Sustainable

Process improvements need to become firmly

rooted within the organization

y Stepped Approach

Process improvements will not happen over

night they need to be gradually introduced Also assists the acceptance by staff of the

change


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Integrated Change

y Viable Solutions

Process improvements must be viable and

practical

y Balanced Improvements


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People-Centred

y Business Understanding

y Empowerment & Participation

y Organizational Culture


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Focus on End-Customers

y Process improvements must relate to the

needs of the organization and be relevant

to the end-customers to which they are

designed to serve


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Processes in Traditional

Organization

y Orphans

y Fragmented

y Invisible

y Unmanaged


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Components of Process

Reengineering


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Business Process Reengineering Life CycleDefine corporate

visions and business

goals

Identify business

processes to be

reengineered

Analyze and

measure an

existing process

Identify enabling IT &generate alternative

process redesigns

Evaluate and

select a process

redesign

Implement the

reengineered

process

Continuous

improvement of

the process

Visioning

Identifying

Analyzing

Redesigning

Evaluating

Implementing

Improving

Manage change and stakeholder interests

Enterprise-wide engineering

Process-specific

engineering


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Case Study (Think Outside the Bun)

y We were going backwards - fast ... If

something was simple, we made it

complex. If it was hard, we figured out a

way to make it impossible. - Taco Bell

CEO, John E. Martin

y Customer buy for $1 are worth about 25

cents. 75 cents goes into marketing,

advertising, and overhead.

y Reengineering from the customers point

of view. Are customer willing to pay

for these value-added activities?.


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A

imsReview performance of Taco Bell

Examine reasons for reduced productivity

Review overall effects after reengineering


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Problem Definition

In 1983, analysis showed that the Taco Bells total cumulative growthsince 1978 was a shocking negative 16% compared to a positive 6% ofthe total industry.

The management identified the following factors;

Lack of business vision.

Reliance on obsolete management and operational practices focusing

on processes instead of customers.Top-down structure, with multiple levels of management

Following traditional approaches, which assumed what customerswanted without even asking them.

Slower and costlier service.


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U

nderlyingA

ssumptionsThe older system of operations was based upon certain assumptions:

Assuming that the restaurant knew what the customers wanted withouteven asking them.

Investing in large kitchen areas.

Operating the restaurant along the lines of a manufacturing company.

Believing only segment they could target was the one within the

restaurants premises. This translated into $78 mn, while total marketwas about $600 bn in USA alone.

Limiting themselves of becoming value leader in the quick-servicerestaurant industry instead of value leader for all foods for all mealoccasions.


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R

eengineered SolutionComplete reorganization of human resources.

Dramatic redesign of operational systems.

Doing away with entire levels of management.

Creation of jobs like market manager.

Replacing area supervisors with market managers .

Eliminating district managers and promoting restaurant managers.

Taco Bell followed only one rule during re-engineering

Enhance those things that bring value to the customer and

change or eliminate those that dont.


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R

eengineered SolutioncontdThey also changed their restaurant structure by:Limiting the kitchen area by from 70% to 30%Increasing the customer area from 30% to 70%Doubling the seating capacity in the area available

Introduced two new methodologies:

ReengineeringProcess

K-Minus TACO

(Total Automation ofCompany Operation)


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Reengineered Solutioncontd

K-Minus:-

K-Minus means kitchen less restaurant. Most of their food was cooked

outside the restaurant at central locations. Stemmed from the concept:food should be retailed not manufactured.

TACO (Total Automation of Company Operations):-

An MIS facility with empowered employees with computer know-how.Eliminated paper work and allowed more time for customers.

Served as agents of change for more innovative ideas. Like new andvaried points of distribution: street corners, concession stands etc.


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ConclusionThis case study brings forth the following conclusions:

Reengineering businesses is a reality and not limited to

textbooks. If done properly, it can virtually turn around anybusiness.

Customer must be the starting point.

Resistance to change should be anticipated.

Every company should seek a phrase that makes itscorporate vision clear like we want to be number one in theshare of stomach (Taco Bell).


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Case:Old System at Ford

y A number of paper documents was processedsequentially by 3 functions who participate in the processindirectly with a workforce of 500 clerks to perform manyintermediate steps:

y The purchasing function issues a purchase order to the

supplier and sends a copy to the accounts payablefunction.y Upon arrival of purchased goods, the inventory function

sends a copy of the receiving document to the payablefunction.

y When the invoice from the supplier arrives in the mail, thepayable function matches it against the purchase orderand the receiving document before issuing payment to thesupplier.

y Much of efforts are needed to resolve frequentdiscrepancies between the documents, and a total of 14

data items must be checked in the process.


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New Processy Accounts payable clerks no longer match purchase order

with receiving document, primarily because the new processeliminates the invoice entirely. With a work force of only 125,the 3 functions participate in the process directly byaccessing a shared database, eliminating many intermediatesteps and sequential flow of paper documents. The newprocess looks like this:

y The purchase order is entered into the shared database bythe purchasing function.

y Upon receiving goods, the inventory function accesses thedatabase. If a match is found, the goods are shipped and thestatus of the order in the database is updated. Otherwise, thegoods are returned to the sender.

y The payable function routinely accesses the database toprepare payment checks for orders that have changedstatus, and invoices from suppliers are eliminated.

y Matching and discrepancy resolution of paper documents areno longer needed, and only 3 data items need to be checkedin the process.


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New Process

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