1. 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
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2. 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.
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3. 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."
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4. 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
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5. 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.)
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6. 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
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7. 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.
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8. 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
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9. 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.
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10. 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."
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11. 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.
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12. 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)
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13. 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
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14. Ford Procurement Process
Purchasing
Vendor
Purchase order
Receiving
Goods
Purchase
order
Goods
received
Accounts
Payable
Data base
Payment
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15. 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.
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16. Reengineered Process Key Concept:
One queue for multiple service points
Multiple services workstation
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