BUSINESS PROCESS

REENGINEERING

Presented By:

Vivek Sharma

What Is BPR ?

• The fundamental rethinking and radical redesign of core business processes to achieve dramatic improvements in critical performance measures such as quality, cost, and cycle time.

Business Process Reengineering:

This Definition Contains Four Key Words:

• Fundamental implies that everything – every assumption, every reason, every activity – is challenged by asking why it should be continued. The implication is that nothing should be accepted as sacred. Over time, practices that were once required become obsolete and need to be removed.

1. FUNDAMENTAL

• Do not try to improve the existing situation, invent completely new ways of accomplishing work.

2. RADICAL

This Definition Contains Four Key Words:

• Do not use business process redesign to obtain marginal improvements, aim at order-of-magnitude improvements (ten times). If the marginal gains – 5 to 10 percent – are the goal, then continuous improvement is a more appropriate path than reengineering.

DRAMATIC

• Focus on the business processes instead of organizational structures.

PROCESS

Business Process Reengineering Is Not:

• It is an automatic, as opposed to human, operation or control of a process, equipment or a system; or the techniques and equipment used to achieve this.

Automation

• It is the reduction of expenditures in order to become financial stable. Those expenditures could include but are not limited to the total number of employees at a company, retirements, or spin-off companies.

Downsizing

• Involves paying another company to provide the services a company might otherwise have employed its own staff to perform. Outsourcing is readily seen in the software development sector.

Outsourcing

• Emphasizes small and measurable refinements to an organization's current processes and systems. Continuous improvements’ origins were derived from total quality management (TQM) and Six Sigma.

Continuous improvement

A group of logically related tasks that use the firm's resources to provide customer oriented results in support of the organization's objectives

What Is Business Process ?

M arketing& S ales

P urchase P roduc tion D is tribution A ccounting

C E O

Supplier

Customer/MarketsNeeds

Value-addedProducts/Services toCustomers

"Manage the white space on the organization chart!"

"We cannot improve or measure the performance of a hierarchical structure. But, we can increase output quality and customer satisfaction, as well as reduce the cost and cycle time of a process to improve it."

Processes Are Often Cross Functional Areas

What Is Re-engineering ?

Obliterate what you have now and start from scratch.

Transform every aspect of your organization.

Reengineering Example

Which line is shorter and faster?

1 2 3 4

Key Concept: • One queue for multiple

service points• Multiple services

workstation

Reengineering Example

The C’s related toOrganization Re-engineering

Customers

CompetitionChange

Commitment

CooperationCoordination

Contribution

The 3C’s of organization Re-engineering:

The 4C’s of effective teams

Key StepsKey Steps In Business Process

Re-engineering

Execute Plan

Identify Action Plan

Develop & Communicate Vision Of Improved Process

Understand The Current Process

Select The Process & Appoint Process Team

Benefits From Information Technology

Assists the Implementation of Business Processes

Enables Product & Service Innovations

Improve Operational Efficiency

Coordinate Vendors & Customers in the Process Chain Information

Technology

BusinessReengineering

Business-pulled

Technology-driven

Example Of Business Process Re-Engineering

Ford

Accounts Payable Process

Accounts Payable

Accounts Payable

VendorVendor

GoodsReceivingReceiving

Payment

Invoice

Receiving document

PurchasingPurchasingPurchase order

Copy ofpurchase order

PO = Receiving Doc. = Invoice

? ?

Ford Accounts Payable Process

Drawback Of This Account Payable Process

More than 500 accounts payable clerks matched purchase order, receiving documents,

and invoices and then issued payment.

It was slow and cumbersome.

Mismatches were common

Trigger for Ford’s Account Payable Reengineering

When goods arrive at the loading dock at Mazda:

Use bar-code reader is used to read delivery data.

Inventory data are updated.

Production schedules may be rescheduled if necessary.

Send electronic payment to the supplier.

Ford Procurement Process

AccountsPayable

AccountsPayable

VendorVendor

GoodsReceivingReceiving

Payment

Goods received

PurchasingPurchasingPurchase order

Purchase order

Data base

Ford Accounts Payable

Reengineer “procurement” instead of AP process.

The new process cuts head count in AP by 75%.

Invoices are eliminated.

Matching is computerized.

Accuracy is improved.