re-engineering the supply chain. meaning of bpr the fundamental rethinking and radical redesign of...
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RE-ENGINEERING THE SUPPLY CHAIN
MEANING OF BPR
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.
- Hammer and Champy, 1993
“Fundamental”
Must ask “Why do we do what we do? (steps)Question the tacit rules and assumptions underlying the organization’s culture.Begin with logical specification of what a company must do. (Again goals and steps)Then specify the physical design of how to perform these activities better and simpler
“Radical”
Must examine the “root” of business processes, structures, and policies.Don’t fiddle with the old; cast it away and begin anew. (rethink rather than only change)Reengineering is reinvention, not modification or enhancement.
“Dramatic”
Not small, incremental improvements; BPR seeks order of magnitude improve-ments in cost, quality, service, and speed. Use of IT to assist in these.
“Dramatic”: Who Undertakes BPR?
Companies in deep trouble -- need order of magnitude improvements!Companies who foresee trouble -- “an ounce of prevention ....”Companies in peak condition who want to further their competitive advantage.
“Processes”
“a collection of activities that takes one or more kinds of inputs and creates an output that is of value to the customer”.Collection of activities -- the “P”
Synonyms:Business process redesign, business transformation, process innovation, business reinvention, change integration
BPR derives its existence from different disciplines, and four major areas can be identified as being subjected to change in BPR
organization technology strategy people
WHY REENGINEERING?
CustomersDemandingSophisticationChanging Needs
CompetitionLocalGlobal
ChangeTechnologyCustomer Preferences
OBJECTIVES OF BPR
Streamlining management processes and formalising communications,Eliminating unproductive activities in the operational processes,Improving decision making capability,Improving collaborative creation of work products such as documentation, specifications, designs, etc.,Strengthening synergy in the team member’s approach to problem solving and taking cognizance of important changes.
CurrentBusinessProcesses
FutureBusinessProcesses
Information
Technology
Skills
STRATEGIC
DIRECTIONS
Information
Technology
Skills
Current Environments (AS-IS)
Future Environments (TO-BE)
Transition/Implementation (Change Management)
Business Process Reengineering Methodology …
CurrentProducts/Services
FutureProducts/Services
BPR - Steps
Step 1 Step 2 Step 3
Understand Simplify/Improve
Automate
Understand the existing systems associated with all the functionalities
Draft & frame the possibilities & ways to simplify or Improve or eliminate the processes
Implement with the help of ERP
Bu
sin
ess
Pro
cess
Re-e
ngin
eeri
ng
Four Elements of Reengineering
Radical or at least significant changes
Business process as opposed to departments or functional areas
Achieving major goals or dramatic performance improvements
IT as a critical enabler
Related Change ProgramsRightsizing refers to adjustments in staffing requirements Restructuring refers to changes in formal structural relationships Automation refers to application of technologies to automate existing procedures without questioning their appropriateness TQM involves bottom-up participation and continous evaluation of current practices resulting in incremental changes
Characteristics of Reeng. Processes
Several jobs are combined into one. Compress the organization horizontally and vertically.Replace several task specialists with one ‘case worker.’Group task specialists into case teams.
Benefits: improves efficiency, reduces errors and administrative overhead, and increases accountability.
Workers make decisions. Compress organization vertically to reduce chain of command.Tie decision making to getting the work done: Those who do the work make the decisions.Benefits: reduces delays, lowers overhead, provides better customer response, empowers workers.
Characteristics of Reeng. Processes
The process steps are performed in a natural order. Eliminate process linearity and sequence where possible.
Perform tasks concurrently to reduce process cycle time.
Characteristics of Reeng. Processes
Characteristics of Reeng. Processes
Processes have multiple versions. Standardization is dead: One size does NOT fit all.Create multiple versions of the same process, each tuned to meet the needs of different inputs, situations, or markets.Benefits: eliminates complexity and exceptions that must be incorporated in a standardized process.
Characteristics of Reeng. Processes
Checks and controls are reduced. Checks and controls don’t add value; use them only when they make economic sense.Tolerate limited, modest abuse to reduce costs of prevention.Provide effective systems for detecting abuse, e.g., audits.
People IssuesFear of changeEmphasis on Team workViewing “Big Picture” rather than a job or step in a process
Technology IssuesCareful use of unproved technologiesQuick deployment of cost effective technologiesResistance to Change from Old technology; Why change when “NOT” BrokeDealing with legacy systemsChanges in Information Systems Architectures.
Organizational IssuesTop Management CommitmentHigh visibility and High ExpectationsStructural and cultural changes ProblemsMoving Decision Making and Control points; may lead to replacement of organizational units
BPR Techniques & Tools
BPR Techniques & Tools – Flow Chart Technique
It is a graphical representation which uses symbols to represent such things as operations, data, flow direction, and equipment, for the definition, analysis, or solution of a problem.
BPR Techniques & Tools – Data Flow Diagrams
Data Flow Diagrams (DFDs) describe the processes showing how these processes link together through data stores and how the processes relate to the users and the outside world.
BPR Techniques & Tools – Role Activity Diagrams-RAD
Role Activity Diagrams (RADs) are based around a graphic view of the process from the perspective of individual roles, concentrating on the responsibility of roles and the interactions between them .
BPR Techniques & Tools – Role Interaction Diagrams - RID
Role Interaction Diagrams are composed of a matrix that represents the processes by using text and symbols.
BPR Techniques & Tools – Gannt Charts
Gannt Chart is a matrix representation that shows the flow of activities and durations.
BPR Techniques & Tools – IDEF
Integrated Definition of Function Modelling (IDEF) is a family of methods that can be used to describe operations in an enterprise.
BPR Techniques & Tools – Unified Modelling Language - UML
UML is a language for specifying, visualization, constructing and documenting artefacts of software systems, as well as for business modelling and other non-software systems.
BPR Techniques & Tools – Simulation
Simulation is collection of methods and applications to imitiate the behaviour of real systems. Simulation can be classified, according to certain characteristics, in deterministic, stochastic, static, dynamic, continous, and discrete.
The role of information technology
Shared databases, making information available at many places Expert systems, allowing generalists to perform specialist tasks Telecommunication networks, allowing organizations to be centralized and decentralized at the same time Decision-support tools, allowing decision-making to be a part of everybody's job Wirelss data communication and portable computers, allowing field personnel to work office independent Interactive videodisk, to get in immediate contact with potential buyers Automatic identification and tracking, allowing things to tell where they are, instead of requiring to be found High performance computing, allowing on-the-fly planning and revisioning
BPR AND SCM
The primary strategies of SCM are intra and inter organizational synergy while the primary aspect of BPR is lean, core process synergy.
Both have the common denominator of customer focus.
SCM and BPR are two complementary philosophies. After full and successful BPR, functional and internal integration, in SCM jargon will be fulfilled.
PARALLELS BETWEEN BPR AND SCM
Area for Area for changechange
BPR terminologyBPR terminology SCM terminologySCM terminology
Process Elimination of wasteSpeed up core processesConcentration on core processes
Reduce non value added activitiesLead time reductionTo do what it does best
People Board level commitmentMulti-skilled & inquisitive workforceAttitudinal changes
SCM champion at board levelMulti-skilled & inquisitive workforceAttitudinal changes
Technology
Technological changesIT-a key to BPRTreat vendors as adversaries
Technological changesIT-a key to SCMPartnership sourcing
Innovation
Customer focusConstant product/process innovation
Streamline processesConstant innovation at the interfacesof the company
Analysis No Analysis by paralysisTake a holistic view
Use aggregate modeling to redesign and take a systems view
NEED OF BPR IN SCM
To transform a business from an inward looking to flexible outward looking business.Giving a wider perspective to the organization, seeking core processes and creating learner structures.To identify the bottlenecks in the systems and areas requiring change which are essential to remain competitive.
REQUIREMENTS FOR BPR IMPLEMENTATION
Create a climate of commitment for its members to a higher purpose.Foster organic partnership through knowledge networking.Install an environment for taking responsible leadership.Encourage and empower the members for developing extra-ordinary breadth of perspectives.Create capacity for change and involve in eventuating total quality and productivity in every endeavour.
Dr Derek Wright SUPPLY/5
PROCESS RE-ENGINEERING SUPPLY CHAINS
MANUFACTURING
RESEARCH & DEVELOPMENT
LOGISTICS
MARKETING
FINANCE
EFFICIENCYFOCUS:
TASKS
FUNCTIONS
ACCOUNTING
MANAGEMENT
EFFICIENCYFOCUS:
TASKS
FUNCTIONS
ACCOUNTING
MANAGEMENT
FUTURECUSTOMERS‘
FOCUS:
PROCESS EFFICIENCY
OPERATIONALAGILITY
CORPORATEINFORMATION
PROCESSMANAGEMENT
CUSTOMERS‘FOCUS:
PROCESS EFFICIENCY
OPERATIONALAGILITY
CORPORATEINFORMATION
PROCESSMANAGEMENT
PAST
SUPPLY CHAIN PERFORMANCE
BPR in the Supply Chain scenario
Harrington’s (1991) steps to streamlining:Bureaucracy eliminationDuplication eliminationValue-added assessmentSimplificationProcess cycle time reductionError proofingUpgradingSimple languageStandardizationSupplier partnersBig picture improvementAutomation and/or mechanization
IMPLEMENTATION OF BPR AND SCM
Process based on adverserelations within processes.Poor information flow.Limited concept of customer
Process identificationProcess simplificationAutomate if possibleFinding the customer
Learn processesBusiness process orientedContinual search for Customer focusedchain
Learn processesBusiness process orientedContinual search for Customer focusedchain
Process identificationProcess simplificationAutomate if possibleFinding the customer
Process based on adverserelations within processes.Poor information flow.Limited concept of customer.
Improvements Possible Implement Changes Improvement Realized
BPR Scenario
SCM Scenario
CONCLUSION
Re-engineering the supply chain shows significant improvements in cost reductions and thereby helps in gaining competitive advantage. BPR continually searches for step changes and strategically phase these ideas in the supply chain.