Chapter 9 Management Innovation for Modern Businesses: 4/25/2017 Chapter 9 Management Innovation for Modern Businesses: Business Process Reengineering (BPR) MINCH9e1

Objectives After studying the chapter, students should be able to.. Explain definition of Business Process Re-engineering(BPR) Describe Framework of BPR Identify characteristics of BPR Identify potential benefits of BPR for businesses Identify things to prepare for BPR implementation Explain why BPR one of management innovation.

Content Introduction BPR BPR Methodology BPR Successful and Failure Factors BPR Implementation BPR Evaluation Framework BPR : Significant Management Innovation BPR: Successful Case Summary

Content Introduction BPR BPR Methodology BPR Successful and Failure Factors BPR Implementation BPR Evaluation Framework BPR : Significant Management Innovation BPR: Successful Case Summary

When is BPR in need: Customer Competition Change Introduction When is BPR in need: Customer Competition Change

Introduction Success stories: “Wal-Mart reduces restocking time from six weeks to thirty-six hours.” ” Hewlett Packard’s assembly time for server computers touches new low- four minutes.” “Taco Bell’s sales soars from $500 million to $3 billion.”

Content Introduction BPR BPR Methodology BPR Successful and Failure Factors BPR Implementation BPR Evaluation Framework BPR : Significant Management Innovation BPR: Successful Case Summary

BPR Definition: BP + R Business Process A set of logically related tasks or activities performed to achieve a defined business outcome (Bozarth & Handfield: 92) Re-engineering the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance such as cost, quality, service and speed.

BPR Definitions of BPR: “the fundamental rethinking and radical redesign of the business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed". (Hammer and Champy,1993)

BPR framework (Grant and Mergen) source: Park Win Ying (2012)

Purpose of BPR: make all business processes best-in-class.

BPR Characteristics of BPR: Several jobs are combined into one. Employee empowerment. Steps in the processes are performed in natural order, and several jobs get done simultaneously. Processes have multiple versions. Work is performed where it makes the most sense. Controls and checks and other non-value-added work are minimized.

BPR: Roles of Information Technology: a major enabler for new forms of working and collaborating within an organization and across organizational borders

BPR Benefits of BPR: Increase Effectiveness. Reduces cost. Meaningful job for employees. Improvement in organizational approach. Growth of business

BPR in Action: Claim Resolution Process Before BPR After BPR

Content Introduction BPR BPR Methodology BPR Successful and Failure Factors BPR Implementation BPR Evaluation Framework BPR : Significant Management Innovation BPR: Successful Case Summary

BPR Methodology BPR Methodology a structured set of guidelines that enable an analyst to derive ways for problem solving called IDEF0 model. (Hammer, 2000) Prepare for Re-engineering Map and Analyze As-Is Process Design To-Be process Implement Reengineered Process Improve Process Continuously

IDEF0 Model: BRP Methodology (Hammer, 2000) BPR Methodology IDEF0 Model: BRP Methodology (Hammer, 2000)

Content Introduction BPR BPR Methodology BPR Successful and Failure Factors BPR Implementation BPR Evaluation Framework BPR : Significant Management Innovation BPR: Successful Case Summary

BPR Successful & Failure Factors Successful Factors Organization wide commitment. BPR team composition. Business needs analysis. Adequate IT infrastructure. Effective change management. Ongoing continuous improvement

BPR Successful and Failure Factors One department may be optimized at the expense of another Lack of time to focus on improving business process Lack of recognition of the extent of the problem Lack of training Inadequate infrastructure Overly bureaucratic processes Lack of motivation

Content Introduction BPR BPR Methodology BPR Successful and Failure Factors BPR Implementation BPR Evaluation Framework BPR : Significant Management Innovation BPR: Successful Case Summary

BPR Implementation Where the technique has being applied Types of firms / organizations that BPR can be applied

BPR Implementation Where the technique has being applied 1.1 Purposes: public and private sector organizations SMEs multinational cooperations 1.1 Purposes: downsizing in organizational structures improve service process organizational upgrade with innovated IT tools i.e. SAP, BAAN, ERP

BPR Implementation Types of firms / organizations that BPR can be applied Minimum Number of employees: 20 Strong management commitment to new ways of working and innovation. Well formed IT infrastructure 2.1 Applied to Company’s Problem High operational costs Low quality offered to customers High level of ''bottleneck" processes at pick seasons Poor performance of middle level managers Inappropriate distribution of resources and jobs

BPR Implementation 2.2 Duration and implementation cost of BPR The duration of each BPR project varies from 6 -to 10 months.

BPR Implementation 2.3 Conditions for implementation (infrastructures required) An operating transactional and accounting computerized system inclosing the commercial part of the transactions. A network that connects all key personnel. Workstations with Windows An exchange server (MS outlook, or MS back office) 2.4 Organizations Supporting the Implementation of BPR

Content Introduction BPR BPR Methodology BPR Successful and Failure Factors BPR Implementation BPR Evaluation Framework BPR : Significant Management Innovation BPR: Successful Case Summary

BPR Evaluation framework To signify the difficult trade-offs that sometimes have to be made they refer to their model as the devil’s quadrangle. (H.A. Reijers, S. Liman Mansar / Omega 33 (2005))

Content Introduction BPR BPR Methodology BPR Successful and Failure Factors BPR Implementation BPR Evaluation Framework BPR : Significant Management Innovation BPR: Successful Case Summary

BPR: Significant Management Innovation Criteria of Management Innovation Radical, new at the time Marked departure from previous management practices Conferred a competitive advantage on the pioneering company Lasting, being found in some form in organizations today

Content Introduction BPR BPR Methodology BPR Successful and Failure Factors BPR Implementation BPR Evaluation Framework BPR : Significant Management Innovation BPR: Successful Case Summary

BPR: Successful Case After BPR implementation, Ford Motors (India) can induce significance increase of effectiveness and efficiency of business process.

BPR: Successful Case

BPR : Successful Case

Content Introduction BPR BPR Methodology BPR Successful and Failure Factors BPR Implementation BPR Evaluation Framework BPR : Significant Management Innovation BPR: Successful Case Summary

Summary