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8/13/2019 TQM_Session08-BusinessProcessReengineering
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IE673 Session 8 - BPR 1
Business Process Reengineering
(BPR)
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IE673 Session 8 - BPR 2
Value Metrics
• Quality
• Service
• Cost
• Cycle Time
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IE673 Session 8 - BPR 3
Value Metrics
Value =
Quality X Service
Cost X Cycle Time
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IE673 Session 8 - BPR 4
The Crisis
• Often the efficiency of a company’s parts come at
the expense of the whole
• Work that requires the cooperation andcoordination of several different departments
within a company is often a source of problems.
• Even when the work involved has major impact on
the bottom line, companies have no one in charge.
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IE673 Session 8 - BPR 5
First Driving Force - Customers
• Demand products/services designed for their
unique needs.
• Expect product configured to their needs,manufacturing plans, and convenient payment
terms.
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IE673 Session 8 - BPR 6
Second Driving Force - Competition
• More different kinds
• Niche competitors
• Falling trade barriers
• Adequate is no longer good enough.
• Start-up companies
– Carry no excess baggage – Do not play by the rules
• Technology changes the nature of competition
8/13/2019 TQM_Session08-BusinessProcessReengineering
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IE673 Session 8 - BPR 7
Third Driving Force - Change
• Pervasive and persistent
• It is normality
• At an accelerating rate
– Ford Model T - an entire generation
– Computers - two years
• Executives think their companies have change
sensing radars
8/13/2019 TQM_Session08-BusinessProcessReengineering
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IE673 Session 8 - BPR 8
Quick Definition of BPR
• Means: “Starting Over”
• Does not mean: Tinkering with what already
exists or making incremental changes• Ask: “IF I were recreating the company today,
given what I know and given current technology,
what would it look like?”
8/13/2019 TQM_Session08-BusinessProcessReengineering
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IE673 Session 8 - BPR 9
Formal Definition of BPR
Reengineering is the fundamental rethinking and
radical redesign of business processes to achievedramatic improvements in critical, contemporary
measures of performance, such as quality, cost,
speed, and service.
8/13/2019 TQM_Session08-BusinessProcessReengineering
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IE673 Session 8 - BPR 10
Four Key Words
• Fundamental
– Why we do what we do?
– Why we do it the way we do it?
• Radical
– Disregarding all existing structures and
procedures
– Inventing completely new ways of
accomplishing work.
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IE673 Session 8 - BPR 11
Four Key Words (cont’d)
• Dramatic
– Not for marginal or incremental improvements
– Only when need exists for “heavy blasting”
• Processes
– Most business people are not “process-
oriented”
– They are focused on tasks, on jobs, on people,
on structures.
8/13/2019 TQM_Session08-BusinessProcessReengineering
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IE673 Session 8 - BPR 12
What BPR Is Not
• It is not another name for downsizing or
some other business fix of the month.
• Downsizing or restructuring only means
doing less with less.
• Reengineering means doing more with less.
8/13/2019 TQM_Session08-BusinessProcessReengineering
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IE673 Session 8 - BPR 13
Total Productivity MaintenanceY= yield (%)
t(u) = Up-time (%)
t(s) = Set-up time
t(rt) = Theoretical run time
t(ra) = Actual run time
M(eff) (%) = t(rt) /{t(rt) + t(s)}
Factory Overall Efficiency (FOE):
FOE = Y x t(u) x M(eff)
8/13/2019 TQM_Session08-BusinessProcessReengineering
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IE673 Session 8 - BPR 14
Example
Y = 90 %, t(u) = 80 %, t(rt) = 5.0 hours
t(ra) = 7.3 hours, t(s) = 5.0 hours
M(eff) = 5.0/{7.3 + 1.5}
= 5.0/8.8
= 0.568
FOE = 0.90 x 0.80 x 0.568 = 0.409
8/13/2019 TQM_Session08-BusinessProcessReengineering
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IE673 Session 8 - BPR 15
The 7 New Quality Tools
• General Planning
– Affinity Diagram
– Interrelationship Diagraph
• Intermediate Planning
– Tree Diagram
– Matrix Diagram
– Matrix Data Analysis
• Detailed Planning – Process Decision Program Chart
– Arrow Diagram
8/13/2019 TQM_Session08-BusinessProcessReengineering
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IE673 Session 8 - BPR 16
Affinity Diagram
Gathers large amounts of data and organizes it into groupings
based on the natural relationship between each item.
8/13/2019 TQM_Session08-BusinessProcessReengineering
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IE673 Session 8 - BPR 17
Interrelationship Diagraph
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IE673 Session 8 - BPR 18
Tree DiagramSystematically maps out the full range of tasks/methods
needed to achieve goal.
8/13/2019 TQM_Session08-BusinessProcessReengineering
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IE673 Session 8 - BPR 19
Matrix Diagram
Displays the relationship between necessary tasks and people
or other tasks, often to show responsibility for tasks.
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IE673 Session 8 - BPR 20
Data Matrix Analysis
Temp
Humidity
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IE673 Session 8 - BPR 21
Process Decision Program Chart
(PDPC)Maps out every conceivable event and contingency that can occur
when moving from a problem statement to possible solutions.
Problem Statement
Solution x
Things that can go wrong
Countermeasures
Solved
8/13/2019 TQM_Session08-BusinessProcessReengineering
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IE673 Session 8 - BPR 22
Additional Tools/Methods
• Benchmarking
• Process Simplification
• Concurrent Engineering
• Demand Flow Technology
• Activity Based Costing
• Eliminate Non-Value Added Activities