Unit description

Contemporary Management Issues examines the way of thinking that is needed to address issues
as they emerge. Contemporary issues have arisen as a result of past, and current, thinking and
practices. Similarly, future issues will emerge as a result of current thinking and practices.
One of the dominant themes in quality management literature is the degree of complexity that the
contemporary manager must be able to take into account in making decisions that shape the
response to current issues and the future of their organisations.
Contemporary Management Issues invites re-evaluation of traditional management practices.
Beyond that, the subject focuses on developing thinking tools and practices that facilitate more
adaptive responses to novel issues as they emerge. A key focus is the response to complexity in
society and how issues of leadership, ethics, and social responsibility are interconnected with all
business decisions.

SEVEN BPR PRINCIPLES

Michael Hammer, co-author of Reengineering the Corporation: A Manifesto for
Business R e v o l u t i o n a n d t h e f a t h e r o f r e e n g i n e e r i n g , e s t a b l i s h e d s e v e n
p r i n c i p l e s t h a t h a v e g u i d e d many successful reengineering efforts:
Organize around processes and outcomes, not tasks.
Companies often divide business proc esses into individual tasks and assign them to
different people !he documents used in the business process often "ait for hours or days at each
desktop as they are passed bet"een the people involved in the process #elphi
Consulting $roup estimates that up to %& percent of the time needed to complete
typical office tasks is a result of gathering and transferring paper documents 'hen a system
is reengineered, the responsibility for an entire process is assigned to a single
individual "henever possible ( n r e e n g i n e e r e d s ys t e m s e a c h ) o b i s d e s i g n e d
a r o u n d a n ob)ective or an outcome, such as a completed process, rather than one of
the tasks necessary to complete the process (nterdisciplinary teams that concentrate
on completing a particular business process and adding value to customers often replace
functional departments, such as accounting, manufacturing, and engineering (n the past, "hen
salespersons at (BM Credit Corporation called "ith a re*uest for financing, t h e y
reached one of fourtee n employees "ho recorded the re*uest !he
re*uest "as for"arded through five different individuals "ho checked the
customer+s credit, determined the interest rate, and handled other procedures (t
took si days to t"o "eeks to complete all five steps ince there "as no "ay
to track re*uests as they moved from desk to desk, sales
representatives "ere unable to get an ans"er "hen they called to determine the status
of a re*uest 'hen a re*uest "as "alked through the five steps, the company discovered
that the actual "ork took only an hour and a half ( B M C r e d i t r e e n g i n e e r e d t h e p r o c e s s
and eliminated the five steps Most applications are straightfor"ard and
o n e i n d i v i d u a l , c a l l e d a d e a l s t r u c t u r e r , u s e s a c o m p u t e r s ys t e m t o process
an application from beginning to end 'hen comple ities arise, the deal structurer can call on a
small group of specialists (BM Credit increased the number of applications
it processes by .&&-fold "hile reducing its head count slightly
Centralize and disperse data.
ome companies centrali/e operations to achieve economies of scale 0thers
decentrali/e o p e r a t i o n s t o b e m o r e r e s p o n s i v e t o t h e i r c u s t o m e r s a n d t o
provide better service ' i t h current technology, companies can have the
advantages of both approaches: corporate-"ide data bases centrali/e data, and
telecommunications technology disburses it 1 a c h of He"lett-2ackard+s 3&
manufacturing units had its o"n decentrali/ed purchasing system Although
t h e s ys t e m s s e r v e d t h e n e e d s o f t h e i n d i v i d u a l u n i t s v e r y " e l l , H 2 " a s
unable to negotiate *uantity discounts based on its purchasing
po"er A s p a r t o f i t s reengineering efforts, H2 organi/ed a corporate purchasing
department that created a datdata base of approved vendors H2 no" has the best elements
of centrali/ation anddecentrali/ation: each plant meets its needs by purchasing from the
approved vendors, and t h e corporate office tracks purchases and
n e g o t i a t e s * u a n t i t y d i s c o u n t s 4 " i n s o t h e r concessions from vendors4 and
resolves problems "ith vendors !he result "as a 53 percent reduction in failure rates,
a .3& percent improvement in ontime deliveries, a significantly lo"er cost of goods
purchased, and a 3& percent reduction in lead times

Capture data once, at its source.

Many organizations have a number of separate information systems, such as an
accounting system, a management information system, a marketing system, a
production system, and so on 1ach of these systems collects, enters, and processes
some of the same information 6ot o n l y i s t h i s i n e f f i c i e n t a n d e x p e n s i v e , b u t
redundant data e i s t s t h a t a l l t o o o f t e n c o n t a i n s discrepancies !hese
problems can be solved by capturing data once, at its source, storing it in data bases,
and making the data accessible to all authori/ed users 7or e ample, data can be captured
electronically at its source using bar codes and scanners Alternatively, data can be
entered directly into a system using electronic data interchange (1#(8 !his approach
reduces errors and costs and eliminates data processing delays A f e " ye a r s a g o
management at u n M i c r o s ys t e m s b e c a m e a l a r m e d t h a t i t s i n f o r m a t i o n
systems could not easily communicate "ith each other ome data had to be entered
as many as ten times into different incompatible systems !he system "as
reengineered, and no" data t h a t i s e n t e r e d i n t o a n y s ys t e m a n y " h e r e i n t h e " o r l d
i s e n t e r e d o n l y o n c e a n d b e c o m e s available to "hoever needs it
Information producers process information.
Most organi/ations process their ac*uisition9payment information like 7ord Motor used to do
7ord prepared multicopy purchase orders and receiving reports 7ourteen different
data items on these t"o documents had to be matched to a vendor+s invoice before a
payment could be m a d e A c c o u n t s p a ya b l e h a d m o r e t h a n 3 & & p e o p l e " h o
s p e n t m o s t o f t h e i r t i m e t r yi n g t o reconcile all the mismatches !he process "as
time consuming and frustrating, and vendors "ere unhappy because payments "ere
delayed 7ord+s system "as reengineered so that the people "ho produce the
information also process it (n the ne" system, vendors do not send invoices
2urchasing agents enter purchase orders directly into the company data base !he
part number, supplier code, and unit of measure are e n t e r e d b y t h e r e c e i v i n g c l e r k
"hen goods arrive ! h e c o m p u t e r m a t c h e s t h e s e d a t a i t e m s "ith outstanding
purchase order data (f they do not match, the goods are returned (f they do match,
the goods are accepted 4 and the computer prepares and sends the check to the vendor
Output users perform the processes.
Most organi/ations are split into separate departments and each speciali/es in a
specific task 1ach department completes its particular task and
passes its product o f f t o a n o t h e r department !his principle states that the
people "ho use information from the system should be those "ho perform the process that produces
that information B e f o r e r e e n g i n e e r i n g , 2 h o e n i #esigns (nc had its
s a l e s p e r s o n s c a l l o n c u s t o m e r s t o determine "hat they desired in the "ay of
furniture !he salesmen submitted the ideas to a team that p roduced a design that the
salesperson took back to the customer Customers made

changes and the salesperson took the changes back to the designers 'hen the salesman took the
ne" design back to the customers, they "ould again evaluate the design and re*uest more changes
(t took up to si "eeks to satisfy customers and present them "ith a final design 2hoeni replaced
the old system "ith one in "hich salespersons, using a 2C and a special soft"are package, designed
the furniture themselves in less than a "eek !his system "as later improved so that a salesperson
could use a portable computer to design the furniture right in the customer+s office !he system,
"hich cost 2hoeni ;. million, has increased dealer sales by up to .,&&& percent and has boosted
after-ta income by <5 percent

Empo er orkers.

Most organi/ations have a hierarchical structure "ith one or more levels of management to
supervise, direct, and control those belo" them Many organi/ations have found that empo"ering
"orkers "ith decision-making responsibilities leads to a higher *uality product and service, faster
responses to problems, and fe"er levels of management 1 pert systems and other ne"ly
developed information technology helps "orkers make correct decisions and avoid
mistakes Mutual Benefit =ife reengineered a thirty-step insurance approval process performed by
.% people in five different departments Approvals took from five to <3 days A case manager
no" has the po"er to grant approval and performs the entire approval process MB= eliminated
several layers of supervision and control, and the supervisors "ho remain are responsible for
facilitating the "ork of case managers Case managers are also supported by an e pert system and
by specialists "ho help them "ith particularly difficult applications !urnaround time improved
dramatically since there is no need to pass applications from one person to another !here are
fe"er errors, and costs decreased substantially Case managers handle t"ice the volume of ne"
applications, allo"ing the company to eliminate one hundred field positions

Integrate parallel activities.

Many business processes are so comple that they are divided up and assigned to independent
teams !hese teams "ork in parallel "ith each other and then integrate their tasks "hen they are
done 7or e ample, "hen Chrysler designed a ne" car, they had different teams designing the
body, the interior, the engine, the transmission and other elements 'hen they began assembling
the cars, they often found that the components did not fit together properly and had to be
redesigned !he product development process "as reengineered, and Chrysler organi/ed its teams
differently A ne" team "as created for each ne" car and people from each design area "ere placed
on the team Chrysler not only reduced the number of costly redesigns but "as also able to reduce
its product development time significantly