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Introduction
Business Process Reengineering
Dr. Vivekanand B Khanapuri
Asst. Prof.
National Institute of Industrial Engineering,
Vihar Lake, Mumbai 400 087
E-mail : vbkhanapuri@faculty.nitie.edu
VBK/BPR
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INTRODUCTION
CHANGING
BUSINESS
SCENARIO
IMPACT
OBSERVATION
SOLUTION
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CHANGING BUSINESS SCENARIO
THE THREE FORCES
VIZ..., 3 CS
CUSTOMER
COMPETITION
CHANGE
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CUSTOMER
THE NEEDS AND DEMANDS HAVE
CHANGED
LIKES TO BE TREATED INDIVIDUALLY
INFORMATION RICH HENCE DIFFICULT
TO NEGOTIATE WITH
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COMPETITION
GLOBALISATION
OPENING OF TRANSNATIONAL
BOUNDARIES
ECONOMIC LIBERALISATION
CHANGE
STRUCTURAL
CYCLICAL
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IMPACT
THE EFFECT OF THREE FORCES
COMPANIES NEED TO BE
COMPETITIVE
COMPANIES NEED TO THINK AND
ACT ON
MEETING THE NEEDS AND DEMANDS
OF CUSTOMERS
INCREASING QUALITY OF PRODUCTS
MINIMISATION OF COSTS
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OBSERVATIONS
WILLIAM WRENALL ( 1994)
PRODUCTIVITY GAINS
MUST BE QUANTUM AND
INCREMENTAL
FUNDAMENTAL ELEMENTS
OF SUCCESS ARE PEOPLE
AND TIME
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OBSERVATIONS
HAMMER AND CHAMPY
(1993)
FEW U.S. COMPANIES
SUCCESSFUL AND ACHIEVED
QUANTUM IMPROVEMENTS IN
80S INSPITE OF CHANGING
SCENARIO
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REASONS FOR
SUCCESS
RADICALLY CHANGING THE
PROCESS
ANSWERING THE BASIC
QUESTION
WHY DO WE DO WHAT WE
DO AT ALL ?
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IMPERATIVES OF CHANGE
GLOBALISATION
LIBERALISATION OF ECONOMIES
CUSTOMER TAKES CHARGE
COMPETITION INTENSIFIES
CHANGE BECOMES CONSTANT
FOCUS ON CORE COMPETENCE
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PRESSURES
COSTQUALITY SPEED SERVICE
SHORTER PRODUCT LIFE CYCLES
SHORTER PRODUCT CYCLE TIME
FASTER CUSTOMER SERVICE
DELIVERY OF OFFERINGS
FLEXIBILITY
BETTER VALUE FOR MONEY
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SOLUTION
BUSINESS PROCESS
REENGINEERING
(BPR )
IS THE SOLUTION
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WHAT IS REENGINEERING ?
As defined by Hammer & Champy
THE FUNDAMENTAL RETHINKING AND
RADICAL REDESIGN OF BUSINESS
PROCESSES TO ACHIEVE DRAMATIC
IMPROVEMENT IN CRITICAL
CONTEMPORARY MESURES OF
PERFORMANCE SUCH AS COST,
QUALITY, SERVICE AND SPEED
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FUNDAMENTAL
WHY DO WE DO WHAT WE DO ?
WHY DO WE DO THE WAY WE DO ?
WHILE DOING REENGINEERING ONE
MUST ASK THE BASIC QUESTIONS
ABOUTH THEIR COMPANIES AND
HOW DO THEY OPERATE.
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RADICAL
RADICAL REDESIGN
MEANS GETTING TO THE
ROOT OF THE THINGS
INSTEAD OF MAKING
ONLY SUPERFICIAL
CHANGES
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DRAMATIC
DRAMATIC MEANS
ACHIEVING
QUANTUM LEAPS IN
PERFORMANCE
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PROCESS
PROCESS CAN BE DEFINED
AS A COLLECTION OF
TASKS THAT TAKES ONE OR
MORE KIND OF INPUT AND
CREATES AN OUTPUT THAT
IS OF VALUE TO THE
CUSTOMER
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SALIENT CHARECTERISTICS OF
PROCESSES
1. PROCESSES HAVE CUSTOMERS
(DEFINED BUSINESS OUTCOMES )
2. PROCESSES CROSS
ORGANISATIONAL BOUNDARIES
INDEPENDENT OF ORGANISATION
STRUCTURE
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BENEFITS OF REENGINEERING
30 - 35 % REDUCTION IN COST OF SALES
65 - 70 % REDUCTION IN COST OF
QUALITY
75 - 80 % REDUCTION IN DELIVERY TIME
35 - 40 % REDUCTION IN MANPOWER
60 - 80 % REDUCTION IN INVENTORY
AN UNPREDICTABLE, BUT SUBSTANTIAL
INCREASE IN MARKET SHARE
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EXAMPLES OF PROCESSES:
--- DEVELOPING A NEW PRODUCT
--- ORDERING GOODS FROM THE
SUPPLIER
--- CREATING A MARKETING PLAN
--- PROCESSING AND PAYING AN
INSURANCE CLAIM
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NEW PRODUCT DEVELOPMENT
MARKET RESEARCH
COMPETITOR ANALYSIS
CONCEPT PROBING
DETAILED DESIGN
PRODUCT APPROVALS
PRODUCT TRIALING
PROCESS DESIGN
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HUMAN RESOURCE
MANAGEMENT
RECRUITMENT
TRAINING AND DEVELOPMENT
PERFORMANCE APPRAISAL
COUNSELLING AND GUIDANCE
DISCIPLINARY ACTION
PROMOTION AND SELECTION
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CUSTOMER SERVICE
ENQUIRY HANDLING
SALES
ORDER PROCESSING
ORDER FULFILMENT
DELIVERY
AFTER SALES SERVICE
ACCOUNT MANAGEMENT
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FINANCIAL MANAGEMENT
ACTIVITY COSTING
BUDGETING
CASH FORECASTING
REVENUE BUDGETING /
FORECASTING
TAX PLANNING
FINANCIAL REPORTING
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SUPPLY-CHAIN MANAGEMENT
PHYSICAL NETWORK DESIGN
INBOUND / OUTBOUND
LOGISTICS
SERVICE AND COST
MEASUREMENT
CONTRACT MANAGEMENT
PARTNERSHIP MANAGEMENT
RESOURCE MANAGEMENT
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Case Studies
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FORD - BILLS PAYABLE SYSTEM
PURCHASE
PURCHASE ORDER
VENDOR
GOODS
RECEIVED
RECONCILE /
CORRESPOND
INVOICE
PAYMENT
COPY OF
PURCHASE
ORDER
HOW MANY PEOPLE TO DO THIS
JOB? HOWMUCH TIME ? (IN THE OLD
PROCESS)
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FORD - BILLS PAYABLE SYSTEM
PURCHASE
PURCHASE ORDER
VENDOR
GOODS
RECEIVED
RECONCILE /
CORRESPOND
INVOICE
PAYMENT
COPY OF
PURCHASE
ORDER
500 PEOPLE (IN THE OLD PROCESS)
TO DO THIS JOB TAKING 6 WEEKS
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FORD - REENGINEERED SYSTEM
PURCHASE
VENDOR
Goods Received
Intimation (GRN)
Integrated Database
Payment
Order
No need for a bill , pay on receipt of goods
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FORD - REENGINEERED SYSTEM
PURCHASE
VENDOR
Goods Received
Intimation (GRN)
Integrated Database
Payment
Order
No need for a bill , pay on receipt of goods
150 PEOPLE DOING IT IN ONE WEEK
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MAZDA
Mazda Computer
Direct Link
VENDOR
JUST - IN - TIME PRODUCTION LINE
Gets paid same
day through EDI
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MAZDA
JUST 5 PEOPLE
(EMPOWERED 100 TIMES !!!)
SAME DAY PAYMENT
(PROCESS IMPROVEMENT
30 TIMES ???)
NO PAPER ANYWHERE !!!
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INDIAN EXPERIENCE IN BPR
AN ENGINE VALVE MANUFACTURER REDUCED
HIS ORDER BAGGING PROCESSTIME FROM 6
WEEKS TO 1 DAY
A NEWSPAPER PUBLISHER REDUCED HIS BILLING
PROCESS TIME FROM 30 DAYS TO 1 DAY
(COLLECTION OF DUES FROM 60 DAYS TO 30
DAYS)
A FINANCE AND LEASING COMPANY CUT DOWN
ITS ORDER CLOSING PROCESS FROM 4 DAYS TO
2 HOURS
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BPR CASE STUDY
BEFORE REENGINEERING
QUERY MARKETING
DESIGN
COSTING
PRODUCTION/
ENGINEERING
HOW MANY DEPARTMENTS ARE INVOLVED ?
HOW MANY TASKS ARE PERFORMED ?
HOW MANY CHANGES OF OWNERSHIP OCCUR ?
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BPR CASE STUDY
AFTER REENGINEERING
QUERY MARKETING
-- 90 - 95 % OF CASES - MARKETING EXECUTIVE
GIVES QUOTE
-- NO COMPLICATIONS; NO CONSULTATIONS
QUERY-RESPONSE
APPLICATION
SUPPORT SYSTEM
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BPR CASE STUDY CASES NEEDING INTERACTION
QUERY MARKETING
-- STILL SINGLE OWNER - VIZ. MARKETING
-- INTERACTION AT EXECUTIVE LEVELS
(EMPOWERMENT IN MANY CASES)
-- INTERACTION WITH MANAGER WHEN REQD.
-- QUERY PENDING - AMBER / RED ALERT TO CEO
COSTING
PRODCUTION /
ENGINEERING
DESIGN
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Key Features of Reengineering
&
Kinds of Changes
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KEY FEATURES
TOP DOWN EXERCISE
FAST COMMUNICATION
CLUSTERING OF FUNCTIONS
DISAPPEARANCE OF NON-VALUE ADDING
FUNCTIONS
FLATTENING OF ORGANISATION CHART
REDUCTION OF SPECIALISED ELEMENTS
USE OF DECISION SUPPORT SYSTEMS
USE OF EXPERT SYSTEMS
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KINDS OF CHANGES
WORK UNITS CHANGE FROM
FUNCTIONAL DEPARTMENT TO
PROCESS TEAMS
JOBS CHANGE FROM SINGLE TASK
TO MULTI-DIMENSIONAL WORK
PEOPLES ROLES CHANGE FROM
CONTROL TO EMPOWERED
TRAINING TO EDUCATION
ACTIVITY TO RESULTS
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KINDS OF CHANGES
CHANGING CULTURAL VALUES
(CUSTOMER ORIENTATION,
OWNERSHIP, TEAM)
MANAGERS CHANGE FROM
SUPERVISORS TO COACHES
ORGANISATION STRUCTURE CHANGES
FROM HIERARCHICAL TO FLAT
EXECUTIVE CHANGE FROM SCORE
KEEPERS TO LEADERS
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COMMON FEATURES
SEVERAL JOBS COMBINED INTO
ONE (CASE WORKER, CASE TEAM)
WORKERS TAKE DECISIONS
STEPS IN PROCESSES ARE
PERFORMED IN A NATURAL ORDER
WORK IS PERFORMED WHERE IT
MAKES THE MOST SENSE
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COMMON FEATURES
CHECKS & CONTROLS ARE
REDUCED
RECONCILIATION IS
MINIMISED
CASE MANAGER PROVIDES A
SINGLE POINT OF CONTACT
INFORMATION TECHNOLOGY
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TOTAL CUSTOMER
SATISFACTION
MYTHS VS
FACTS
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TOTAL CUSTOMER
SATISFACTION - MYTHS
PRICE IS THE ONLY THING THAT
MATTERS
WE ARE ALREADY AT 99 %
WE UNDERSTAND OUR CUSTOMERS
WE CANT AFFORD TO GIVE
CUSTOMERS WHAT THEY WANT
OUR CUSTOMER SERVICE DEPT.
HANDLES CUSTOMER COMPLAINTS
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TOTAL CUSTOMER
SATISFACTION - FACTS
CUSTOMER
POSITIVE EXPERIENCE
( 5 PERSONS)
DISAPPOINTMENT
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13 % CUSTOMERS
68 % LEAVE DUE TO POOR SERVICE
98 % NEVER COMPLAIN
TWO THIRD CUSTOMERS VIEW THAT THEIR
NEEDS ARE NOT UNDERSTOOD
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Thank you
End of Session 1