REENGINEERING WORK:DON’T AUTOMATE, OBLITERATE

PRESENTED BY:ASVINI

SHRADDHARUCHA

ABHISHEKAPALLAVI

WHY REENGINEERING?

Michael Hammer :

Michael Hammer, besides being one of the founders of BPR, he is also the president of Hammer and Co., a management education company. Hammer started out as an engineer and was a professor at MIT in the computer science department. Both TIME (1996) and Business Week (2002) listed Hammer as one of the Top 25 most influential businessmen of all times.

WHAT IS REENGINEERIING?

Hammer and Champy’s definition…

“…… 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.”

Background

Process rationalization and automation (i.e. the usual methods for boosting performance) didn't yield the dramatic improvements companies needed at that time.

Information technology- Companies left existing processes intact and used computers simply to speed them up - Heavy investments in IT delivered disappointing results

The watchwords of the new decade were - Innovation, speed, service and quality

WHAT IT IS THEN?

Reengineering effort strives for dramatic levels of improvement

It should use information technology not to automate an existing process but to enable a new one

Reengineering cannot be planned meticulously and accomplished in small and cautious steps

Rather than looking for opportunities to improve the current process, we should determine which of the steps really add value and search for new ways to achieve the result

EXAMPLES OF REENGINEERING

• FORD MOTOR COMPANY :Reengineered account payable process

• MUTUAL BENEFITS LIFE (MBL) INSURANCE :

Reengineered processing of insurance application

FORD’S ACCOUNT PAYABLE DEPT. BEFORE REENGINEERING

• Affected : more than 500 people MAZDA’S :• Account payable organization consisted

only of 5 people.

• Aim of reengineering: To cut cost To reduce head count by 20%

FORD’S OLD PROCESS

PURCHASING DEPARTMENT

VENDORMATERIAL CONTROL DEPARTMENT

ACCOUNTS PAYABLE DEPARTMENT

“WE PAID WHEN WE RECEIVED INVOICE”

INVOICE

PAYMENT

RECEIVING DOCUMENT

GOODSPURCHASE ORDER

PURCHASE ORDER

DATABASE

FORD’S NEW PROCESS

PURCHASING DEPARTMENT

VENDORMATERIAL CONTROL DEPARTMENT

ACCOUNTS PAYABLE DEPARTMENT

“WE PAY WHEN WE RECEIVE THE GOODS”

PAYMENT

GOODSINFO.

PURCHASE ORDER

RETURN GOODS IF NOT OK

CHECK

ACCEPT TRANSACTION

IF OK

FORD MOTOR COMPANY AFTER REENGINEERING

• Achieved 75% reduction in head count

• No discrepancies between financial records and the physical records

MBL’ APPLICATION PROCESS BEFORE REENGINEERING

• Long, multistep process involved• An application include : 30 discrete

steps , 5 departments and involved 19 people

• Time required : 24 hours (min.) 5-25 days(max.)

• Actual value added(VA) time needed : 17 minutes

Aim: To improve customer service 60% improvement in productivity

MBL’S OLD PROCESS

CUSTOMER

DEPARTMENT 1

DEPARTMENT 2

DEPARTMENT 3

DEPARTMENT 4

DEPARTMENT 5

SEQUENTIAL PROCESS

MBL’S NEW PROCESS

CUSTOMERCASE MANAGER

+WORK STATIONS

COMPUTER NETWORK

CASE MANAGER

CASE MANAGER

DATABASE

MAIN FRAME AND SHARED DATABASE

• Could complete an application in minimum 4 hours.

• Average time required for entire application processing reduced to 2-5 days.

• Elimination of 100 field office positions.• Capacity increased by more than 2

times.

MUTUAL BENEFIT LIFE INSURANCE AFTER REENGINEERING

PRINCIPLES OF REENGINEERING

1. ORGANIZE AROUND OUTCOMES, NOT TASKS

2. HAVE THOSE WHO USE THE OUTPUT OF THE PROCESS PERFORM THE PROCESS

3. SUBSUME INFORMATION-PROCESSING WORK INTO THE REAL WORK THAT PRODUCES THE INFORMATION

4. TREAT GEOGRAPHICALLY DISPERSED RESOURCES AS THOUGH THEY WERE CENTRALIZED

5. LINK PARALLEL ACTIVITIES INSTEAD OF INTEGRATING THEIR RESULTS

6. PUT THE DECISION POINT WHERE THE WORK IS PERFORMED, AND BIULT CONTROL INTO THE PROCESS

7. CAPTURE INFORMATION ONCE AND AT THE SOURCE

Gujarat Cancer Research Institute, India

2002-03 2003-04 2004-06215000000

220000000

225000000

230000000

235000000

240000000

245000000

250000000

255000000

260000000

COMPARISION INCOME AND EXPENDITURE

INCOME ₹EXPENDITURE ₹

Their Existing Process :

OLD STRUCTURE

DIRECTOR

DEPUTY DIRECTOR ADMINISTRATIVE OFFICER

A new organization structure

DIRECTOR

DEPUTY DIRECTOR MEDICINE

DEPUTY DIRECTOR SURGERY

DEPUTY DIRECTOR RESEARCH

ADMINISTRATIVE OFFICER

DRUGS AND MEDICINES

General tablets and capsules

Anti -cancer oral

Anti-cancer injectibles

general injectible drugs so on........

•Selection of vendors•List price•Selection

A NEW SYSTEM FOR VENDOR SELECTION BASEKET OF ITEMS

1200 Purchase orders every year

4-5 per working day

A new prescription for placing purchase ordersOld system

Leading digits: 1-4 Digits 5-7 Last digits: 8-10

Major group code Minor group code Serial number of the item

12 Purchase orders every month

Vendor

Hospital

New system

•A computerized database

Benefits of the new system

Old system New system Old system New system Old system New systemNo. of vendors No. of purchase orders No. of items in inventory

0

100

200

300

400

500

600

700

800

Impact of BPR

Drugs and medicines Lab supplies X-ray items Surgical items

THANK YOU