International Journal of Production Research,

Vol. 46, No. 16, 15 August 2008, 4463–4482

Developing a process re-engineering-oriented organizational change

exploratory simulation system (PROCESS)

CHI-KUANG CHEN* and CHENG-HO TSAI

Yuan Ze University, Taiwan

(Revision received December 2006)

In the past two decades, business process re-engineering (BPR) and organiza-
tional restructuring (OR) have been two of the most popular approaches to
improving the efficiency and the effectiveness of an organization. However, a
review of the relevant literature reveals that the two approaches have been studied
in isolation. The theoretical gap in academic research is also reflected in practice.
The present paper therefore proposes a customer-oriented and process-focused
two-stage framework, entitled the ‘process re-engineering-oriented organizational
change exploratory simulation system’ (‘PROCESS’), to address these theoretical
deficiencies. Two key concepts are introduced in this two-stage framework.
The first is the ‘process module’ (PM), which indicates a set of common sequential
activities that can be grouped as a subunit of a business process. The second is the
‘macro-process’ (MP), which indicates that a set of business processes have
similar characteristics or functions. The two concepts serve as ‘stepping stones’
between BPR and OR. Based on these two concepts, the decision rules and the
mathematical/simulation model can be developed under this two-stage frame-
work. The paper then presents a case study to demonstrate the effectiveness of the
‘PROCESS’.

Keywords: Organizational change management; Business process re-engineering;

Organizational restructuring

1. Introduction

To survive in the turbulent contemporary environment, business organizations need

to adapt to external conditions. By enhancing the effectiveness and efficiency of
manufacturing or service systems they hope to increase quality and flexibility to
satisfy their customers’ expectations and thus deliver expected business results.
To achieve these objectives, change management has become a popular approach.
There are many approaches to achieving such organizational change (OC) —
including business-process re-engineering (BPR), organizational restructuring (OR),
total quality management (TQM), six sigma (6), benchmarking learning, and the
ISO quality-management system.
Among these, BPR has received increasing interest in the past two decades.
Several strategies and models have been developed for the implementation of
BPR (Harrison and Pratt 1993, Wastell et al. 1994, Davenport and Beers 1995,

*Corresponding author. Email: ieckchen@saturn.yzu.edu.tw

International Journal of Production Research

ISSN 0020–7543 print/ISSN 1366–588X online ß 2008 Taylor & Francis
http://www.tandf.co.uk/journals
DOI: 10.1080/00207540601182286
4464 C.-K. Chen and C.-H. Tsai

Earl et al. 1995, Stoddard and Jarvenpaa 1995, Bititci and Muir 1997, Chan and
Choi 1997, Guha et al. 1997). However, most of the related research has
concentrated on how to optimize business processes, with relatively little attention
being placed on how organizational structures should be adjusted to fit the new
business processes. Harvey (1995) has confirmed that organizational structure
change management is always the biggest challenge in BPR implementation. Some
BPR methodologies and techniques have been developed to incorporate OR. These
have included group technology (GT, Groover 1987, Burbidge 1989, 1991), cellar
manufacturing (CM, Groover 1987, Black 1991, Jones et al. 1997), production flow
analysis (PFA, Burbidge 1989, 1991), information flow analysis (IFA, Macintosh
1997), and organizational elements model (OEM, Kaufman 1981, 2000). In addition,
Porter (1985) proposed a systematic approach to analysis of a value chain to examine
how the activities of a firm can best be grouped and organized. Gilbreath (1986)
showed how to manage the project team in an organization from the perspectives of
failure symptoms, failure tendencies, failure factors, and success factors. However, in
view of the complicated organizational designs of BPR and OR, and the different
focuses of the methodologies, the present authors suggest that a coherent conceptual
framework is needed to integrate these two approaches.
It is also apparent from the literature that most of the studies of BPR and OR
have focused on the social aspects of change management, rather than the technical
and systematic aspects of an organization. These social aspects of change
management have included leadership, organizational culture, change-project
management, human-resource management, and so on (Thong et al. 2000, Biazo
and Bernardi 2003, Hengst and Vreede 2004). Although some research has
investigated the technical and systematic aspects of change management (Bititci
and Muir 1997, Kettinger et al. 1997, Love et al. 1998, Giaglis et al. 1999, Jang 2003),
no practical model incorporating the technical aspects of an organization has yet
been developed.
In this paper, a two-stage framework is proposed to address these deficiencies in
the literature, which is entitled the ‘process re-engineering-oriented organizational-
change exploratory simulation system’ (‘PROCESS’). It is a customer-oriented and
process-focused framework that simultaneously takes into account the needs of both
BPR and OR. In proposing this two-stage framework, the paper aims to achieve the
following objectives: (i) to investigate the theoretical relationship between BPR and
OR; and (ii) to propose a change-management model that is both technical and
holistic to facilitate organizational change through BPR and OR.

2. Literature review

2.1 BPR implementation strategies, models, and critical factors

Three streams of research can be identified in the BPR-related literature of the past
two decades: (i) studies of implementation strategy; (ii) studies of implementation
models; and (iii) studies of the critical success factors involved. Each of these is
described below.
With respect to implementation strategy, Earl et al. (1995) conducted a series of
case studies and identified four BPR strategies — ecological, bureaucratic, systems,
 Developing a PROCESS 4465

and engineering. Stoddard and Jarvenpaa (1995) proposed two strategies for
implementing a BPR project: evolutionary and revolutionary. The scope and the
depth of planned change in the revolutionary strategy was broader and deeper
than that in the evolutionary strategy. They also found that it is more appropriate to
use revolutionary tactics in the earlier phases of implementing BPR than in the later
phases. Bititci and Muir (1997) investigated the strategy for BPR from four
dimensions: information flow, shared resources, location, and time relationship.
According to the characteristics of the four dimensions, a decision can be made on
whether processes in these dimensions should be grouped together to form a new
business process; a ‘bottom-up’ strategy for integrating the different processes was
then proposed. Soliman (1998) proposed ‘process mapping’ as an essential tool for
BPR. During the initial steps of BPR, ‘process mapping’ is used to evaluate the
existing processes and to identify their non-value-added activities. Using this
approach, the process designer can determine the most economical form of BPR by
assessing how many levels of process mapping are required for a given process and
how much it is likely to cost.
With respect to the second stream of BPR research, that of the implementation
model, Davenport and Beers (1995) developed a model to process information during
BPR implementation. The model included a ‘performance loop’ and a ‘relevance
loop’ for processing information. The ‘performance loop’ was the feedback between
a defined task and its outcome; the ‘relevance loop’ involved an evaluation of the
relationship between the process goal and the environment. Kettinger et al. (1997)
investigated BPR methods, techniques, and tools (MTTs) and placed them within an
empirically derived reference framework. Using this framework, the authors
conducted a comprehensive survey of commonly used BPR MTTs, thus producing
a summary of the knowledge base required to improve BPR. Motwani et al. (1998)
conducted an extensive review and classification of BPR literature before proposing
a theoretical model of four research streams: definition and measurement, normative
issues, conceptual model, and current practices in BPR. Using this theoretical model,
they presented a six-phase practical framework for a successful BPR project. Chan
and Choi (1997) proposed soft system methodology (SSM), which included a
six-dimensional analysis of ‘client’, ‘actor’, ‘transformation’, ‘worldview’, ‘owner’,
and ‘environment’ (CATWOE). To illustrate the applicability of SSM in the context
of BPR, Chan and Choi (1997) conducted a case study of the implementation of an
image-processing system in a hospital. The results showed that SSM was a useful
organizational problem-solving technique, especially in dealing with a complex
business environment and an unstructured problem.
The third stream of BPR research has concentrated on the critical success factors,
and the causal relationships between antecedent conditions and outcomes. Grover
et al. (1995) identified six categories of problems in BPR implementation:
(i) management support; (ii) technological competence; (iii) process delineation;
(iv) project planning; (v) change management; and (vi) project management. Hengst
and Vreede (2004) studied the efficiency and effectiveness of nine BPR projects and
identified 87 ‘themes’, which were organized into 12 categories of ‘lessons’ to provide
insight into the ‘best practices’ for a collaborative business engineering approach to
BPR. Grover et al. (1999) empirically examined the importance of antecedents of
the organizational structure, IT knowledge resources, and infrastructure in a BPR
project. Thong et al. (2000) noted the role of social and political pressures,
4466 C.-K. Chen and C.-H. Tsai

press publicity, a re-engineering team comprised mainly of neutral staff, performance

benchmarks adapted from the private sector, and high-level approval for redesigned
processes.

2.2 Some extended BPR methodologies and techniques

Apart from the studies noted above, which have dealt with BPR implementation
strategies, models, and critical factors, other studies have developed BPR
methodologies and techniques with the intention of extending the scope of
organization change beyond BPR itself to incorporate OR. For example, Burbidge
(1991) proposed PFA as a technique for planning change in existing batch and
jobbing production factories by using group technique (GT). It involves an analysis
of the production routes for each component and an examination of commonalities
to define groups of equipment that are capable of completing a ‘family’ of similar
components. PFA consists of five components: (i) company flow analysis (CFA);
(ii) factory flow analysis (FFA); (iii) group analysis (GA); (iv) line analysis (LA); and
(v) tooling analysis (TA). Building on Burbidge’s (1991) work, Macintosh (1997)
extrapolated PFA to the context of information flow and developed a methodology
known as ‘information flow analysis’ (IFA). IFA is also based on an analogy with
group technology in manufacturing organizations. The first step in IFA is to model
the flow of information through the current organizational structure. Significance
analysis is then performed to cluster the information product route numbers and
define the primary network of new groups. The new groupings represent a logical set
of independent business processes that contains resources from a variety of
functional groups. PFA and IFA can both be used to define the changes that are
required to make a transition from a functional structure to a process-oriented
structure.
Jones et al. (1997) presented the example of a cross-functional redesign process
team to demonstrate how cellular manufacturing techniques and a binary ordering
algorithm can be applied to business processes to create process teams. The study
revealed that lead time and service level were significantly improved. Gunasekaran
and Kobu (2002) also proposed a framework for identifying and selecting the most
appropriate BPR tools and techniques. The framework demonstrated a linkage
between organizational restructuring and behavioural changes, and utilized
information technology for re-engineering business processes. Jang (2003) presented
a collection of process and data-modelling methods designed to support modelling
activities in the context of enterprise integration. This ‘integration definition’
(‘IDEF’) model was then applied to the analysis and design of a manufacturing
enterprise. The author also provided a decomposition model to decide which
activities needed to be scheduled concurrently and grouped into appropriate groups.

2.3 Studies of OR
The studies described above were focused on: (i) launching organizational change
from the perspective of BPR; or (ii) extending the implementation of BPR to include
OR. In addition to these approaches, several studies have focused on OR with the
intention of extending it to include BPR. For example, Love et al. (1998) argued that
traditional pyramid-based organizations have led to the development of hierarchies,
 Developing a PROCESS 4467

line/staff tasks, specific task-evaluation methods, and a host of organizational

approaches that rest upon the idea of the individual task. As a consequence, a
pyramid hierarchy of management becomes necessary to supervise and control
workers — thus producing disjointed functional silos. To overcome the limitations of
existing organizational forms, they proposed a conceptual model for process change.
They suggested that a process-based horizontal organization should be implemented
so as to encourage mutual collaboration and integration of work teams, rather than
specialized functional units. Giaglis et al. (1999) stated that OR is primarily a design
problem and that the use of business-process simulation (BPS) models can address
organizational design requirements efficiently. They proposed a methodology for
incorporating simulation within the wider context of organizational design studies.
The methodology consisted of four phases — ‘initiative’, ‘simulate’, ‘experiment’,
and ‘conclude’ (ISEC) — which divided the organizational system into 16 steps.
Kaufman (1981, 2000) proposed an OEM to determine and diagnose organiza-
tional needs. The OEM defined three levels of results (indicating the external aspects
of an organization, including products, outputs, and outcomes) and two types of
means (indicating the internal aspects of an organization, including inputs and
processes). Using the OEM, it is possible to relate organizational efforts (the two
types of means), organizational results (products and outputs), and societal effects
(outcomes), and to identify the most common organizational interventions. Rarely
does an intervention relate to linkages among all five of the organizational elements.
To ensure that organizational improvement will be useful both internally and
externally, an overall view of an organization and its relationship to society is
required. Thus, any intervention planning should include all five organizational
elements. Zulch et al. (2004) also proposed a simulation-aided approach for
designing organizational structures in accordance with manufacturing systems. Their
approach was based on the modelling of the forecasted order program, elementary
processes, activity networks, and manufacturing orders. The authors presented a
case study to demonstrate the design and analysis of various organizational
structures in the context of gear-box manufacturing using robot grip arms.

2.4 Summary of the past literature on BPR and OR

The literature review presented here reveals that there is a need to develop a concise
methodology to connect BPR and OR. Although some methodologies have been
developed for this purpose, some authors have contended that the issue has not been
adequately addressed. Cao et al. (2001) have argued that different types of
organizational change must be taken into account for BPR to be applied
successfully. Al-Mashari and Zairi (1999) have argued in favour of the creation of
a new organizational structure to support the implementation of BPR. Simon (1994)
pointed out that OR is often required for implementing BPR change initiatives but
that this often fails to occur because organizations predominantly act as
conglomerates of structures, rather than as a coordinated network of processes.
The present authors argue that three factors have contributed to deficiencies in
attempts to produce an integrated model of BPR and OR. First, the complexity of
the organizational design has produced difficulties. For example, the differentiations
and integrations in an organization are always challenging in any design of
organizational structure. Secondly, the organizational structure and process design is
4468 C.-K. Chen and C.-H. Tsai

usually treated as an issue of a large-scale system design. For example, Gilbreath

(1986) has argued that it is almost impossible to distinguish the process itself because
a business process can be so burdened by accompanying statements and declarations
of authority, accountability, organizational and personal sensitivities, tradition,
external regulations, and so on. Thirdly, the focus of BPR is somewhat different
from the focus of OR. For example, a business process is essentially concerned with
how a product is produced or a service is delivered. In contrast, organizational
structure is usually more concerned with the issues of authority and control, and with
how many levels and functional departments are appropriate in the hierarchy of an
organization.

3. Research framework

To address the issue of incorporating BPR and OR in a single model, a two-stage

framework is suggested, referred to as a ‘process re-engineering-oriented organiza-
tional change exploratory simulation system’ (‘PROCESS’).
The conceptual framework of the PROCESS is shown in figure 1. On the left side
are the customer needs at the entry of the manufacturing or service order; these
represent the trigger (input) of the activities in an organization. On the right side
of the diagram, customer satisfaction with services and the effectiveness of the
production system represent the outcomes (output). To achieve customer satisfaction
with a product or a service, a series of activities must be effectively performed;
this series of activities is called a ‘business process’. The persons performing
these tasks could be from the same department or from different departments of the
organization.
In the central part of the diagram, the process modules (PMs) first facilitate the
required changes from the existing business process (EBPs) to the proposed business
process (PBPs). The ‘macro processes’ (MPs) then facilitate the required changes
from the PBPs to a new organizational structure (OS). The two-stage PROCESS
model depicted in figure 1 is a customer-oriented and process-focused framework
that simultaneously takes into account the needs of BPR and OR. The model is
discussed in greater detail below.

3.1 Development of the process module

The ‘process module’ (PM) is defined as a set of common sequential activities that
can be grouped as a subunit of a business process. An ‘activity’ is the basic unit of a
business process. Such an activity might be an ‘operation’, an ‘inspection’,
‘transportation’, or ‘storage’. Figure 2 presents the conceptual framework for
developing these PMs. As shown in figure 2, two cases can be taken into account in
developing a PM. The first case is that the set of common sequential activities is
found within an existing business process — such as A6, A1, A2, and A3 being in the
same sequence in both BP1 and BP2; they are therefore grouped to form PM1. The
other case is that the set of common sequential activities is found across different
business processes — such as A5, A7, and A4 being grouped as PM2. Work analysis
and simplification of PM1 and PM2 are then conducted to improve efficiency. Based
on these simplified PMs, customer-oriented business processes are developed.
 Developing a PROCESS 4469

Organizational structure (OS)

OS1 OS2 OS3 … OSn

Macro-process (MP)
Customer needs; Entry of the manufacturing or service order

Customer satisfaction; Effectiveness of a production system

MP1 MP2 MP3 … MPn

Proposed business process (PBP)

PM1 PM3 A3 PMx

PM2 A4 PM5 PMy

Process module (PM)

PM1 PM2 PM3 … PMn

Existing business process (EBP)

A1 A2 A3 Ai

A4 A5 A6 Aj

Figure 1. Conceptual framework of PROCESS.

Various mathematical or simulation models can be developed in this stage of

organizational change. Techniques or methodologies that can be used as alternatives
for developing PMs include group technology (GT), cellular manufacturing (CM),
PFA, and IFA. GT is a manufacturing philosophy in which similar parts are
identified and grouped together to take advantage of their similarities in
manufacturing and design (Groover 1987). CM is a group of processes designed to
make a ‘family’ of parts in a flexible way (Black 1991); it is sometimes used to
describe the operations of a GT machine cell (Groover 1987). PFA and IFA are
techniques for finding both GT groups and their associated ‘families’ by analyzing
the information in component process routes that identify the operations needed to
make each part and the machines to be used for each operation (Burbidge 1989,
Macintosh 1997).
In this stage of PM development, it is important to group the ‘activity’
appropriately. The objective of this stage is to decompose the existing processes and
4470 C.-K. Chen and C.-H. Tsai

Process module (PM)

PM1 A6 A1 A2 A3

PM2 A5 A7 A4

PMi Ax Ay Az

Existing business process (EBP)

BP1 A6 A1 A2 A3 A5 A7 Ax

BP2 A3 A6 A1 A2 A3 A4 Ay

Figure 2. Development of process module.

to come up with the proposed business process. There are advantages in grouping
those common sequential activities in a PM. These advantages include: (i) it can
shorten the time for developing a business process. The idea comes from the use of
container in the ocean/air cargo transportation. (ii) It can increase efficiency by
simplifying or rationalizing a business process. An industrial engineer is able to save
time by analyzing the whole business process contained within a frequently used
business PM. (iii) Because the efficiency of a business process has been taken into
account in the development of PMs, a firm is then able to concentrate its efforts on
customer orientation when a business process is re-engineered.

3.2 Development of the macro-process

The ‘macro-process’ (MP) is defined as a set of business processes that have similar
characteristics. The similar characteristics can be defined in terms of: (i) organ-
izational functions; or (ii) certain products. If defined in terms of organizational
functions, the macro-process might be termed a ‘product-development MP’, a
‘product-design MP’, a ‘procurement MP’, a ‘production/manufacturing MP’, a
‘sales/marketing MP’, and so on. If defined in terms of products, the macro-processes
are described in terms of different product series — such as ‘product series A’,
‘product series B’, ‘product series C’, and so on.
Figure 3 presents the conceptual framework for developing these MPs. As shown
in figure 3, certain business processes (BP1, BP2, . . . BPi) have similar characteristics,
such as a set of similar manufacturing processes among different products; they are
 Developing a PROCESS 4471

Macro-process (MP)

MPa MPi MPj … MPn

BP1 BPa BPg BPx

BP2 BPb BPh BPy

BPi BPi BPz

Proposed business process (PBP)

BP1 PM1 Ai Aj PM5

BP2 Am PM2 PM5 An

BPi Ap PMi PMj Aq

.
.
.
BPm PM3 Ax … PMn

Figure 3. Development of macro-process.

therefore grouped to form a macro-process (designated MPa). In other cases, these

business processes could share other characteristics — such as a set of similar sales-
service processes among different products, or different geographical areas, or
different customer groups. Depending on the specific characteristics of the business
processes in a given organization, a mathematical optimization or simulation model
can be developed to identify the appropriate MPs. Because the function of the MPs is
to serve as a stepping stone between PBP and the new OS, the development of these
MPs is thus treated as preparation for organizational restructuring. In developing
these MPs, the most important objectives to be considered are: (i) the efficiency of a
production or a service system; and (ii) the focus of the customer satisfaction. To this
purpose, it is suggested to use the historical manufacturing or service order data to
respond to the needs of customers and the external environment rather than using
static data regarding business processes.
Based on the descriptions of MP, various mathematical or simulation models can
be developed to facilitate the elicitation of a new organization structure. The
methods used for eliciting MPs can be either quantitative (such as mathematical
optimization, heuristic optimization, simulation, and statistical analysis) or
4472 C.-K. Chen and C.-H. Tsai

non-quantitative (such as nominal group techniques, dialectic inquiry, devil’s

advocate, and quality-improvement methods). Several methodologies and models
can be utilized in the development of MP. For example, the construction of a value
chain, which was proposed by Porter (1985), is a systematic way of examining all the
activities that a firm performs and how they interact in analyzing the source of
competitive advantage. The organizational elements model, which was proposed by
Kaufman (1981, 2000), can be used to determine and diagnose organizational needs
by examining the performance of an organization from three levels of results and
two types of means. The classification of business processes and the types of
organizational structure, which were presented by Gilbreath (1986), can also be used
in this stage of MP development.

4. A case study

To demonstrate how the two-stage PROCESS framework is implemented, a case

study is presented. The subject of this case study was a government missile-
manufacturing division in Taiwan. This division planned to launch organizational
change, including manufacturing process re-engineering and organizational restruc-
turing. The case is presented in the following order: (i) description of the existing
production system; (ii) implementation of the proposed PROCESS (including the
development of MPs, PMs, and OR); and (iii) the settings of the simulation model
and the performance evaluation.

4.1 Description of existing production system

4.1.1 Existing system. Missile production is based on small orders of various types
of missile. A mass-production system is therefore not suitable, and a ‘job-shop’
production system (based on workstations) was therefore in existence. A workstation
consisted of a group of machines and the necessary manufacturing processes for
missile production. Table 1 presents the 12 workstations of the existing production
system.
There were more than 20 functional departments in this missile-producing
division, and the workstations belonged to various departments of the division. The
manufacturing machines included machines for turning, milling, grinding, drilling,
casting, polishing, lapping, welding, soldering, heat treatment, hot working, cold
working, ultrasonic machining (USM), electrical discharge machining (EDM), and
electro arc treatments. Apart from these manufacturing processes, workstations 11
and 12 were reserved for handling and transport of materials and documents.
On the basis of the existing 12 workstations, seven major components in the
manufacture of a missile were identified: (i) missile armaments; (ii) missile
electronics; (iii) motor part 1; (iv) motor part 2; (v) cruise control; (vi) front-end-
assembly; and (vii) tail-end assembly. Table 2 presents the manufacturing processes
of the seven major components.

4.1.2 Problems in the existing system. With a view to enhancing the effectiveness
of the production system, a task force was set up to identify potential areas for
 Developing a PROCESS 4473

Table 1. Twelve workstations of the existing production system.

Workstation Code Description

1 A1 Grinding, turning, drilling, honing, lapping

2 A2
3 A3
4 A4
5 A5
6 A6
7 A7
8 A8
9 A9
10 A10
11 A11
12 A12
Rough grinding, turning, drilling, honing, lapping, inspection
Electro discharge machining, electro chemical machining, laser
beam machining, ultrasonic machining, honing, lapping
Finish turning inspection
Heat treatment, hot working, cold working, welding, bonding
Heat treatment, hot working, cold working, inspection
Electric arc, hard anodizing
Electric inspection
Physical property measurement, physical property inspection,
ultrasonic inspection, bonding inspection
Bonding
Material handling and transportation
Document handling and transportation

Table 2. Manufacturing processes for the seven major components.

Major
component Manufacturing process

a A10A1A2A7A1A2A10A1A8A10A1A2
b A1A5A1A2A1A5A1A2A7A8A10A1A2A10A8A1A2
c A9A1A5A1A9A1A2A1A9A6A1A2A9A7A8A9A1A6
d A9A1A5A1A2A9A7A8A1A10A9A1A10A9A1A2A9
e A10A8A3A5A3A4A7A8A10A1A8A10A3A4
f A10A1A10A1A10A1A10A1A5A1A2A7A8A10A9
g A3A5A3A5A6A5A6A3A5A3A4A7A8A10A1A2A10A3A4A1A5A6A7A8A3

improvement. Two problems in particular were identified in the existing production

system.
The first problem revealed a need for manufacturing-process re-engineering.
Changes in the types of orders that had been received in the past few years had led
to some of the workstations lying idle while others were busy. This had led to
bottlenecks, with work-in-process (WIP) waiting at certain points in the production
line. An urgent issue for the division was therefore how to re-engineer the
manufacturing process to increase machine utilization and decrease production time.
The second problem revealed a need for organizational restructuring. Apart from
the occurrence of bottlenecks and idle machines in the manufacturing process, it was
also discovered that the movement of WIP across different departments required
excessive material- and document-handling. To address the question of manufactur-
ing process re-engineering and to reduce material-handling and document-handling,
it was apparent that organizational restructuring was required.
Taken together, these two problems indicated a need for both BPR and OR.
The PROCESS framework was therefore applied to address these requirements
simultaneously. To simplify the demonstration of the two-stage PROCESS, the ‘as-
is’ configuration strategy is employed. According to this configuration, the seven
major components in the manufacture of a missile are retained, that is, no new major
4474 C.-K. Chen and C.-H. Tsai

component is added in the proposed manufacturing process. And the sophisticated

quantitative methodologies are also not adapted in this case study.

4.2 Implementation of PROCESS model

4.2.1 Development of PMs and proposed manufacturing process. To establish the

PMs in this case, an examination was made of the common sequential manufacturing
activities among the seven major components of the manufacturing process. Four
illustrative PMs are described in this case study, although this is not an exhaustive
list of all possible PMs for the seven major components. The four illustrative PMs
were designated as PM1, PM2, PM3, and PM4.
. PM1: PM1 was formed by grouping the common sequential manufacturing
activities of A1, A2, and A9.
. PM2: PM2 was formed by grouping A7, A8, and A10.
. PM3: PM3 was formed by grouping A3 and A4.
. PM4: PM4 was formed by grouping A5 and A6.
Table 3 presents the four proposed PMs.
Table 4 presents the seven proposed manufacturing processes for the four
proposed PMs. After each PM had been grouped, a new workstation was then set
up. The development of these PMs had two significant benefits: (i) reduction in
material- and document-handling to a minimum level at the new workstation; and
(ii) work simplification and process re-engineering to improve the effectiveness of the
production system.

Table 3. The development of process modules.

PM Manufacturing activities

PM1 A1, A2, A9

PM2 A7, A8, A10
PM3 A3, A4
PM4 A5, A6

Table 4. Proposed manufacturing processes for the seven major components.

Major
component Manufacturing process

a PM2PM1PM2PM1PM2PM1PM2PM1
b PM1PM4PM1PM4PM1PM2PM1PM2PM1
c PM1PM4PM1PM4PM2PM1PM4
d PM1PM4PM1PM2PM1PM2PM1PM1PM2PM1
e PM2PM3PM4PM3PM2PM1PM2PM3
f PM2PM1PM2PM1PM2PM1PM2PM1PM4PM1 PM2PM1
g PM3PM4PM3PM4PM3PM4PM3PM2PM1PM2PM3PM1PM4PM2PM3
 Developing a PROCESS 4475

4.2.2 Development of MPs and proposed organizational structure. To develop the

MPs, the manufacturing processes of the seven major components were examined.
Five MPs were then proposed as follows.
. MP1: MP1 was formed by grouping major components a and b, which were
both related to missile armaments.
. MP2: MP2 was formed by grouping major components c and d, which were
both related to motor parts.
. MP3 and MP4: Major component e was decomposed to form MP3 and MP4;
MP3 was the electronic part of cruise control, whereas MP4 was the
mechanical part of cruise control.
. MP5: MP5 was formed by grouping major components f and g, which were
both related to missile assembly.
Table 5 presents the development of the five MPs.
Having developed the PMs and MPs, a three-department organization was then
proposed. The three departments were designated as OS1, OS2, and OS3.
. OS1: MP1 was proposed as the first department (OS1) because of its
independence from the manufacturing activities of other MPs.
. OS2: OS2 was formed by grouping MP2 and MP3 in view of the similarity of
these two MPs as part of the electronic-manufacturing process.
. OS3: OS3 was formed by grouping MP4 and MP5, both of which were
concerned with the final assembly.
Table 6 presents the proposed organizational structure.

4.3 Performance evaluation

4.3.1 Settings of simulation model. To evaluate the performance of this implemen-

tation of the PROCESS, a simulation analysis was conducted to compare the

Table 5. Development of macro-processes.

MP Major component

MP1 a, b
MP2 c, d
MP3 e
MP4 e
MP5 f, g

Table 6. Proposed organizational structure.

Proposed OS Macro process

OS1 MP1
OS2 MP2, MP3
OS3 MP4, MP5
4476 C.-K. Chen and C.-H. Tsai

performance of the proposed system with the existing production system.

The simulation software ARENA was used for this performance evaluation, and
two indicators were used to evaluate the respective performances. The first was
machine utilization at each workstation, the second was a process time for the seven
major components of the manufacturing process.
The input information of the simulation model included: (i) the manufacturing
process of the existing and the proposed production systems; (ii) the process time of
each workstation; and (iii) the entry of order. The input information for the
manufacturing process in the proposed production system is the same as in the
existing proposed production system — except for the time for document-handling
and the time for material-handling. The time for material-handling is set as zero for
the workstations that have been grouped. Rather than being set as multiple times in
the existing production system, the time of document-handling is set as only once
for the workstations that have been grouped. The input information for the process
time of each workstation is taken to be a triangular distribution with the values of:
(i) the shortest time; (ii) the average time; and (iii) the longest time. For example, the
WIP transportation time for each move between workstations was set at 0.8 hours,
2.5 hours, and 4.5 hours, and the time for handling each document was set at
0.5 hours, 2.3 hours, and 4.2 hours. The manufacturing order of certain major
components was randomly launched by the simulation model as the input
information for the entry of order. The entry of the manufacturing order was
taken as an exponential distribution with a mean of 5 hours.

4.3.2 Results. Using the simulation model described above, 30 runs of 2000-hours
manufacturing duration and 3000-hours manufacturing duration were conducted to
examine the performance of the existing production system and the proposed
production system. The results are shown in tables 7 and 8.
In the case of the 2000-hours manufacturing duration (see table 7), the total
process time for the seven major components in the existing production system was
9184 hours, whereas it was only 7181 hours in the proposed production system. This
represented a 21.8% reduction in total process time [(9184 hrs
7181 hrs)/9184 hrs].

Table 7. Process time of each major component.

Process time in the existing Process time in the proposed

production system production system

Major component 2000 hrs 3000 hrs 2000 hrs 3000 hrs

a 1325 1767 1026 1346

b 1303 1670 977 1301
c 1311 1775 1054 1376
d 1310 1773 1009 1335
e 1302 1685 1049 1368
f 1312 1731 1047 1363
g 1321 1802 1019 1336
Total (hrs) 9184 12203 7181 9425
 Developing a PROCESS 4477

In the case of the 3000-hours manufacturing duration, a 22.8% reduction in total

process time was realized [(12 203 hrs
9425 hrs)/12 203 hrs].
The other indicator, that of machine utilization, was also significantly improved.
In the case of the 2000-hours manufacturing duration (see table 8), the average
machine utilization for the 10 workstations (workstations 1–10) of the existing
production was 0.075, whereas it increased to 0.238 in the proposed production
system. Similarly, in the case of the 3000-hours manufacturing duration, the average
machine utilization for the 10 workstations increased from 0.077 to 0.238.
The reduction of the process time and the improvement of machine utilization
can be attributed to the following reasons. First, WIP transportation time and
document-handling were reduced to the minimum level by the development of PMs,
MPs, and OR. Secondly, as a result of manufacturing process re-engineering, the
manufacturing process in the proposed production system became smoother than
in the existing production system. Thus the phenomena of bottlenecks and idle
workstations were significantly reduced. According to the simulation report, the
amount of WIP in the production system was significantly reduced (by 23%) and
the output of the final product was significantly increased (by about 150% in both
the 2000-hours duration of manufacturing and the 3000-hours duration).

5. Discussion

The case study shows that the performance of the proposed production system was
significantly better than the existing system. However, this does not represent an
exhaustive examination of the existing production system; it is merely a specific
example of the potential application of the two-stage PROCESS framework.
As noted above in the presentation of the PROCESS, several quantitative
techniques (including mathematical optimization, heuristic optimization, statistical
analysis, and so on) can be used in developing the MPs, PMs, and OR. However, no
quantitative technique was employed in the case study presented here (apart from the

Table 8. Machine utilization in each workstation.

Process time in the existing Process time in the proposed

production system production system

Workstation 2000 hrs 3000 hrs 2000 hrs 3000 hrs

1 0.114 0.122 0.432 0.433

2 0.170 0.172 0.185 0.186
3 0.049 0.054 0.282 0.281
4 0.026 0.026 0.141 0.140
5 0.069 0.078 0.244 0.244
6 0.014 0.016 0.062 0.062
7 0.115 0.107 0.350 0.351
8 0.088 0.087 0.180 0.181
9 0.086 0.088 0.216 0.217
10 0.016 0.017 0.398 0.397
Average 0.075 0.077 0.249 0.249
4478 C.-K. Chen and C.-H. Tsai

mathematical analysis of the simulation used to evaluate performance). The reason

for not employing mathematical techniques in this case study was because certain
implications of the PROCESS need to be investigated before deploying a
sophisticated quantitative model. These include the following questions:
. What are the advantages of process re-engineering and organizational
restructuring being taken into account simultaneously?
. Why does organizational change have to be launched initially from process
re-engineering, with organizational restructuring then following?
. What are the advantages of employing the two stepping stones, MP and PM,
in organizational change?

5.1 BPR and OR being taken into account simultaneously

In simple terms, both business processes and organizational structures exist to
regulate the behaviour of people during the production of goods and services.
Although business processes and organizational structures are treated as distinct
subject areas for the purposes of research, they exist concurrently in an organization.
The present study contends that they should therefore be considered simultaneously
for the purpose of maximizing the advantages of the organizational change. The
proposed two-stage PROCESS framework deals with these two subjects by
employing the mechanisms of the PM and the MP. The results of this case study
have revealed that it is both feasible and necessary to consider BPR and OR
simultaneously. The advantages include: (i) an increase in product output; (ii) a
reduction in process time; (iii) an improvement in machine utilization; and (iv) the
elimination of WIP.

5.2 Launching BPR before OR

Although the above discussion suggests that several advantages can be derived from
the implementation of BPR and OR simultaneously, the question arises as to how it
really works in practice. Two approaches are likely considered in the implementation
of the two tasks. The first approach is the change initiated from process
re-engineering, then organizational restructuring being followed. The other approach
is the change initiated from organizational restructuring, then process re-engineering
being followed. Based on the real situation which occurred in the practical arena, it is
usually found that only process re-engineering is implemented in the first approach,
however organizational restructuring is not followed anymore. On the other hand,
it is usually found that despite process re-engineering being launched by following
organizational restructure in the second approach, organizational restructuring is
always the centre of the change.
To overcome these weaknesses in change management, the two-stage PROCESS
framework is proposed. This is a process re-engineering-oriented organizational
change model that is designed to ensure that any change that is initiated from a
combination of process re-engineering and organizational restructuring really does
eventuate. In the case study described here, process re-engineering was launched on
the basis of the development of the PMs, and the development of MPs and the
proposal for OR then followed. The case study presented above did demonstrate the
 Developing a PROCESS 4479

steps involved in the proposed organizational structure, and how these were derived
from the rearrangement of the manufacturing activities.

5.3 Employing MPs and PMs in organizational change

A crucial feature of the proposed model was the incorporation of the two stepping
stones (MPs and PMs) to facilitate organizational change. The case study presented
here has provided evidence that the proposed production system was significantly
improved by the deployment of the PMs and MPs. However, if the improvements
derived from BPR and OR are examined separately, it is interesting to note that the
advantages derived from OR were significantly larger in this case than those derived
from BPR (see tables 9 and 10). For example, based on the output of the simulation
analysis shown in table 9, it is apparent that the reduction of total process time
derived from OR was 17.1% [(11 506 hrs
9425 hrs)/12 203 hrs], whereas that
derived from BPR was only 5.7% [(12 203 hrs
11 506 hrs)/12 203 hrs]. This means
that the reduction of total process time derived from OR was approximately three
times as great as that from BPR. Similar findings were apparent in machine
utilization. As shown in table 10, the improvement of machine utility derived from

Table 9. Comparisons of process time in PM only and PM þ MP (3000 hrs).

Major Existing production Proposed production Proposed production

component system system for PM only system for PM þ MP

a 1767 1687 1346

b 1670 1635 1301
c 1775 1622 1376
d 1773 1641 1335
e 1685 1629 1368
f 1731 1645 1363
g 1802 1647 1336
Total (hrs) 12 203 11 506 9425

Table 10. Comparisons of machine utilization in PM only and PM þ MP (3000 hrs).

Existing production Proposed production Proposed production

Workstation system system for PM only system for PM þ MP

1 0.114 0.117 0.433

2 0.170 0.178 0.186
3 0.086 0.045 0.281
4 0.115 0.084 0.140
5 0.088 0.108 0.244
6 0.016 0.022 0.062
7 0.049 0.079 0.351
8 0.026 0.060 0.181
9 0.069 0.074 0.217
10 0.014 0.013 0.397
Average 0.075 0.078 0.249
4480 C.-K. Chen and C.-H. Tsai

OR was 228.0% [(0.249
0.078)/0.075], whereas that derived from BPR was only
4.0% [(0.078
0.075)/0.075].
Apart from the advantages already discussed above, the two stepping stones
under the two-stage PROCESS framework in organizational change management
also provided the following benefits.
. They provided a creative means of fusing BPR and OR, and ensuring that
these two changes were implemented smoothly.
. They provided a flexible means of implementing organizational change by
allowing for a variety of analytic methods (including quantitative methods
and non-quantitative methods) to be chosen to effect changes in BPR and
OR. They also provided flexibility in choosing appropriate analytic methods
between BPR and OR.
. They allowed for the content of organizational change to meet customers’
needs. In this regard, it is important to note that the proposed model takes
into account historical order data from customers in implementing any
organizational change and process re-engineering. The inclusion of the PMs
and MPs is thus helpful in meeting customers’ needs.

6. Conclusions and suggestions for the future study

To address the theoretical gaps between BPR and OR in organizational change, a

‘process re-engineering-oriented organizational change exploratory simulation
system’ (‘PROCESS’) was proposed in this study. A case study was also conducted
to demonstrate the effectiveness of the proposed two-stage PROCESS framework.
Although the PROCESS proposed in this study can serve as a holistic framework for
facilitating organizational change of BPR and OR simultaneously, future studies are
suggested for further implementation of this framework. The following suggestions
are made.
First, to conduct a more exhaustive organizational change, some quantitative
methods can be employed in developing the PMs, MPs, BPR, and OR. For this
purpose, the attributes of each process activity, PM, MP, and business process have
to be defined. For instance, the attributes of a process activity could be defined as:
‘who’, ‘when’, ‘where’, ‘what’, ‘why’, and ‘how’. The attributes of a business process,
a PM, or an MP could be defined as: ‘product’, ‘customer group’, ‘function’,
‘responsible person’ (or department), and so on. Using these attributes, a
quantitative model could then be developed. In addition, specific methodologies
and techniques mentioned above — such as GT, CM, IDEF, IFA, PFA, and OEM
— can be used in the PROCESS framework.
Second, extension models of PROCESS could be developed for specific purposes.
For example, if a choice had to be made from among several alternatives for
organizational structure (such as work team, functional structure, matrix structure,
or product structure), an extension model under the PROCESS framework could be
developed to evaluate the most appropriate organizational structure design for a
given enterprise. Various types of extension models could be developed; however, the
present authors suggest that the three criteria to evaluate their performance should
always be: (i) effectiveness; (ii) feasibility; and (iii) practicality.
 Developing a PROCESS 4481

Third, it would be interesting to conduct a study of how PROCESS can be used

in a multi-level organizational structure. Most enterprises have some sort of multi-
level structure (incorporating senior management, middle management, and junior
management), and large-scale enterprises have even more complex structures. The
design of any organizational structure is a complicated topic, and the development
of a feasible approach under the framework of PROCESS would therefore be a
challenging task.

Acknowledgement

This study was funded by the National Science Council, Republic of China (Taiwan)
(NSC 94-2213-E-007-028).

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