Business Process Reengineering Maciej Derulski

What is a business process? “A set of related activities that together achieve a defined business outcome and add value for customers” Purchasing Manufacturing R & D Marketing Sales

Types of Business Processes Operational (core) –Purchasing –Marketing –Manufacturing –Order processing Managerial –Strategy –Direction Support –IT –Finance –HR

Business Process Reengineering (BPR) “Reengineering is the fundamental rethinking and redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed.” (Hammer & Champy 1993)

Michael Hammer 1990, Michael Hammer published an article which claimed information technology is being used primarily to automate existing processes rather than using it to eliminate non value adding work.

Michael Hammer Claimed: –Lots of work doesn’t add value for customer –This work should be removed and not accelerated through automation

Forces Driving BPR Changes in the external environments –Particularly competitive & technological environments Changes in customer wants, needs, and expectations

Forces Driving BPR Changes in the external environments –Particularly competitive & technological environments Changes in customer wants, needs, and expectations

Where do you begin? high-level assessment of the organization's mission, strategic goals, and customer needs. Does our mission need to be redefined? Are our strategic goals aligned with our mission? Who are our customers? What do they want or need? The organization must first re-think what it should be doing before it can decide how to do it best

Where do you begin? high-level assessment of the organization's mission, strategic goals, and customer needs. Does our mission need to be redefined? Are our strategic goals aligned with our mission? Who are our customers? What do they want or need? The organization must first re-think what it should be doing before it can decide how to do it best

Change Simulation Remember the change simulation? What was the first thing you did? –A high level assessment of organization’s mission, strategic goals, and customer needs.

BPR Steps

Business Process Analysis A business process can be decomposed into specific activities which can be measured, modeled, improved, re-designed, or eliminated.

Advantages of BPR Enterprise Integration Worker empowerment Number of steps in a process are reduced Organization becomes more efficient and hence more profitable

Disadvantages of BPR Resistance to change Higher demand on workers

Principles of BPR Process point of view –Focus on generating more value for customers –Focus on activities which deliver value –Eliminate non-value adding activities –Keep amount of core processes to a minimum

Principles of BPR Human point of view –Network related people and activities –Encourage involvement and participation –Make sure people are equipped, empowered and motivated

Wal-Mart Reengineered supply chain by effectively using information technology Inventory levels are tracked and ordering is automated

Wal-Mart Manufacturers are linked into WalMarts system and receive automated orders Makes WalMart very efficient at distributing products to its retail stores, and reduces storage costs.

Time’s Up!