Industrial Revolution’s Model of Organization and Production Complex work is broken down into simple and repetitive tasks that are performed in sequence by specialists. Specialization of labor: Individual jobs become simple Sequential processes: Coordinating people becomes more complex (The role of the hierarchy) Narrow and repetitive jobs: De-skilling the work forces Managers’ job is to control the quantity, cost, and quality of the work performed. Control as a dominant style Financial-oriented scoreboard Employees are organized by business function. Hierarchical structure Sumber Kepustakaan : gunston.gmu.edu/ecommerce/mba731/doc/BPR_all_Part_I.ppt

Problems Functional departments become barriers to change. Too much time and money are spent in ineffective coordination and communication. Too little time for doing work that really benefits customers. Overheads are soaring. Business processes are evolved over a period of time and are not designed to handle changing business environments or to take advantages of emerging technologies. Sumber Kepustakaan : gunston.gmu.edu/ecommerce/mba731/doc/BPR_all_Part_I.ppt

Process Evolution "We are structured today by historical accident. As we added products, we added functional stovepipes." "Processes in organizations have never been designed in the first place." Sumber Kepustakaan : gunston.gmu.edu/ecommerce/mba731/doc/BPR_all_Part_I.ppt

Definition of Reengineering 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. Source: Adapted from Hammer and Champy, Reengineering the Corporation, 1993 Sumber Kepustakaan : gunston.gmu.edu/ecommerce/mba731/doc/BPR_all_Part_I.ppt

What Business Reengineering Is Not? Automating: Paving the cow paths. (Automate poor processes.) Downsizing: Doing less with less. Cut costs or reduce payrolls. (Creating new products and services, as well as positive thinking are critical to the success of BPR.) Sumber Kepustakaan : gunston.gmu.edu/ecommerce/mba731/doc/BPR_all_Part_I.ppt

Obliterate what you have now and start from scratch. Reengineering Is ... Extremist's View Obliterate what you have now and start from scratch. Transform every aspect of your organization. Source: Michael Hammer, “Reengineering Work: Don’t Automate, Obliterate,” Harvard Business Review, July-August, 1990, pp. 104-112. Sumber Kepustakaan : gunston.gmu.edu/ecommerce/mba731/doc/BPR_all_Part_I.ppt

Gordian Knot In a Greek legend, nobody could untie a knot tied by King Gordius of Phrygia. Many people tried to untie the knot, but nobody succeeded. ... until Alexander the Great found a smart and direct solution. Sumber Kepustakaan : gunston.gmu.edu/ecommerce/mba731/doc/BPR_all_Part_I.ppt

Definition of Process A process is simply a structured, measured set of activities designed to produce a specific output for a particular customers or market. -- Thomas Davenport Characteristics: A specific sequencing of work activities across time and place A beginning and an end Clearly defined inputs and outputs Customer-focus How the work is done Process ownership Measurable and meaningful performance Sumber Kepustakaan : gunston.gmu.edu/ecommerce/mba731/doc/BPR_all_Part_I.ppt

Types of Processes Dimensions & Type Examples Organization Entity Inter-organizational Inter-functional Inter-personal Objects Physical Informational Activities Operational Managerial Order from a supplier Develop a new product Approve a bank loan Manufacture a product Prepare a proposal Fill a customer order Develop a budget Adapted from: Davenport, T. H. and Short, J. E., "The New Industrial Engineering: Information Technology and Business Process Redesign," Sloan Management Review, Summer 1990, p. 17. Sumber Kepustakaan : gunston.gmu.edu/ecommerce/mba731/doc/BPR_all_Part_I.ppt

Processes Are Often Cross Functional Areas "Manage the white space on the organization chart!" Customer/ Markets Needs Supplier Value-added Products/ Services to Customers "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." Sumber Kepustakaan : gunston.gmu.edu/ecommerce/mba731/doc/BPR_all_Part_I.ppt

Process-Orientation Process-orientation is the key to the BPR success Remove stovepipe functions Focus on cross-functional core process redesign “Link activities, functions, and information in new ways to achieve breakthrough improvements in cost, quality, and timeliness.” * * Source: Dichter, Gagnon, and Alexander, “Leading Organizational Transformation,” The McKinsey, Quarterly, 1993, Number 1. Sumber Kepustakaan : gunston.gmu.edu/ecommerce/mba731/doc/BPR_all_Part_I.ppt

BPR and Other Organizational Initiatives Alias: Process Innovation Core Process Redesign (CPR) Relevant Initiatives in Organizations TQM Continuous Process Improvement Information Strategy Planning and Information Engineering IT for Competitive Advantages Related Initiatives in Public Sectors Reinventing the Government Functional Process Improvement (DOD) Sumber Kepustakaan : gunston.gmu.edu/ecommerce/mba731/doc/BPR_all_Part_I.ppt

Ford Accounts Payable Process* Purchasing Vendor Purchase order Receiving Goods Copy of purchase order Receiving document Accounts Payable Invoice ? ? Payment PO = Receiving Doc. = Invoice *Source: Adapted from Hammer and Champy, 1993 Sumber Kepustakaan : gunston.gmu.edu/ecommerce/mba731/doc/BPR_all_Part_I.ppt

Ford Procurement Process Purchasing Vendor Purchase order Receiving Goods Purchase order Goods received Accounts Payable Data base Payment Sumber Kepustakaan : gunston.gmu.edu/ecommerce/mba731/doc/BPR_all_Part_I.ppt

Ford Accounts Payable Before After 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. After 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. Sumber Kepustakaan : gunston.gmu.edu/ecommerce/mba731/doc/BPR_all_Part_I.ppt

Reengineered Process Key Concept: One queue for multiple service points Multiple services workstation Sumber Kepustakaan : gunston.gmu.edu/ecommerce/mba731/doc/BPR_all_Part_I.ppt