1-BUSINESS PROCESS RE-ENGINEERING

Re-engineering Redesign for break-through results desired

Process A PROCESS is a group of activities that takes an input, adds value to it and provides and output to an internal or external customer

DEFINITION

MICHAEL HAMMER AND JAMES CHAMPY PROPAGED THE THEORY & PRACTICE OF BPR IN 1990. HAMMER COINED THE TERM REENGINEERING AND DEFINED IT ASRADICAL DESIGN OF BUSINESS PROCESS TO ACHIEVE DRAMATIC IMPROVEMENTS IN CRITICAL CONTEMPORARY MEASURES OF PERFORMANCE SUCH AS COST, QUALITY AND SPEED 1. THUSBPRE STANDS FOR

1. RADICAL DESIGN OF BUSINESS PROCESS 2. TO ACHIEVE DRAMATIC IMPROVEMENTS 3. CRITICAL CONTEMPORARY MEASURES OF PERFORMANCE 4. SUCH AS COST, QUALITY AND SPEED o WHY CUSTOMER SATISFCATION BEING KEY TO SUCCESS TODAY AND CUSTOMERS INCREASINGLY BEING SMART ENOUGH TO SEE THRU COSMETIC IMPROVEMENTS IN PRODUCTS & SERVICES (OLD WINE IN NEW BOTTLE). THUS MORE & MORE COMPANIES ARE FINDING THAT THE PRESENT SYSTEM & PROCESS SETUP CAN ONLY BE IMPROVED SO-MUCH TO GIVE INCREMENTAL IMPROVEMENT. THIS PAVES WAY FOR WHAT IS REFERRED TO AS BUSINESS PROCESS REENGINEERING (BPRE) WHEN ORGANISATION REALISES THAT THE OLD WAYS OF DOING THINGS NEEDS CHANGING ITS CUSTOMERS ARE DEMANDING A CHANGE

COMPETIOTION IS TAKING OVER THE MARKET OTHER SYMPTOMS: TOO LONG TO MOVE PRODUCTS FROM CONCEPTION TO MARKET BUDGETING PROCESS IS TOO COMPLEX SERVICES PROVIDED BY THE ORGANISATION ARE NO LONGER COMPATIBLE WITH THE CUSTOMERS NEEDS

PEPSICO REENGINEERED ALL ITS KEY BUSINESS PROCESSES SUCH AS SALES, DELIVERY, EQUIPMENT SERVICE & REPAIR, PROCUREMENT & FINANCIAL REPORTING. PRINCIPLES OR RULES OF REENGINEERING: OUTCOMES: Organise around outcomes USERS OF OUTPUT of the process should also PERFORM the process COLLECTION OF INFO. & processing of information should be done by the same people. USE TECHNOLOGY to make dispersed locations work as a centralized unit. PARELLEL PROCESSING must be avoided and linked continuously. DE-CENTRALISE decision-making More educated workforce, DSS & controls must be put in place. CAPTURE ALL INFO. at source this avoids erroneous data entries, costlier re-entries and delays.

A PROCESS SELECTED FOR RE SHOULD BE A CORE PROCESS, WHICH HAS GREAT SCOPE OF BREAK-THOUGHT IMPROVEMENTS, RATTHER THAN INCREMENTAL IMPROVEMENTS 1. Clearly develop and re-define Business Vision & Process Objectives 2. Identify processes to be redesigned 3. Understand & measure present processes 4. Identify IYT levels Present & Required 5. Design, Build & Implement a prototype of the redesigned process Thus route to successful RE can be looked upon as the 3Rs.. RETHINK | REDESIGN | RETOOL

 RE is accompanied by massive change. It may involve LAY-OFFS, Outflows in IT and Automation. RE requires focusing on CRITICAL PROCESSES using STRONG LEADERSHIP, CFTs, IT & PROCESS ANALYSIS RE requires CLEAN SLATE PHILOSOPHY, i.e. Starting with the way the customer wants to deal with the co. Process RE in SERVICE Org. Despite speed & courtesy in addressing customers, customers hostility persists due to the inability of the service to maintain consistency in delivery & service, by the very nature of being in SERVICES Sector. Make the customer the starting point Design work processes in light of the organizational goals Restructure to support front line performance Rewrite mission statement where required to reflect the PRIMACY of the customer or by promoting a new vision. This will align the Human Dimension. (people/process/physical)

IMPACT OF BPRE ON THE SERVICES INDUSTRY: o The work process should be designed according to how well they satisfy the customer needs, and not according to internal logic. New technology should be introduced to truly support the organisation in its drive to achieve higher levels of customer satisfaction. Continuous Process Improvement V/S REENGINEERING

Need to determine whether a certain process within the organisation requires minor healing (CPI) or major surgery (RE) Though both may be necessary to drive break-through in organisation performance but differ in no. of ways1. Management involvement : LOW / HIGH 2. Intensity of team member involvement: JUNIOR / SENIOR 3. Improvement goals: INCREMENTAL / DRAMATIC 4. Implementation approach: GRADUAL / ALL OUT 5. Magnitude of organizational change involving period of time, etc.:

6. Extent of focus: CASUAL / INTENSE 7. Dependence upon information systems: REGULAR / IMMENSE CPI main-stay & a continuous process PRE is necessary at certain times & curtain situation. TQM & PRE are complementary & compatible concepts having same focus customer satisfaction. REENGINEERING & TQM

REENGINEERING & TQM ARE COMPATIBLE TERMS. TQM advocates continuous & incremental improvement of processes (like Kaizen) RE is about radical discontinuous change or breakthrough improvements through Process innovations. TQM is continuous and the process is enhanced untill its useful time is over. At this point RE enters. BENEFITS OF RE

Radical changes in performance are achieve as measured in cost, time, service & quality. Processes become simpler, leaner and more productive. Think big, Think better philosophy is propagated in the organisation. RE makes organisations more competitive by helping them make noticeable changes in the pace and quality of their response to customer needs. RE efforts accomplish change in the corporate culture and the basic principles by which its various departments function. Workers are encouraged to be part of the change, where they suggest and the management listens. It helps creating more challenging, fulfilling and rewarding job environment. LIMITATIONS OF RE It is not the panacea. Its a decisive remedy by execution is the key. Like any other Management approach, how you apply it makes the difference. It is very difficult to accomplish. Requires sustained efforts, investment of time & resources.

It is not appropriate for all processes and for all organisations, all the time. Significant process improvements cannot be realised without excessive use of Information Technology of future. It results in lay-offs, thus antagonising employees and bringing down some morale. The emotive aspects need lot of consideration before initiating RE. People participation is immense at design stage. People who perform the work are best suited to know the process and its limitation that can be improved. Top-Management and CFTs should only be facilitators.

2-BPRE & KAIZEN

Scientific Approach to Improvement (TQM/CPI): 1. Collect Meaningful data 2. Identify Root cause of Problems 3. Develop Appropriate Solutions 4. Plan & Review Changes to be made 5. Implementation & Follow-up CONTINUOUS PROCESS IMPROVEMENT (CPI) CYCLE

Phase-1: Process selection & definition Formulating the Organisational Balance Score Card (OBSC) which comprises the organisation mission, vision, critical success factors, objectives, performance measures, targets. Forming & appointing steering Groups, Defining & selecting critical processes. Phase-2: Process Evaluation & Standardization Describe clearly the selected process, measure the current performance, analyse current data, perform cause & effect analyses and identify rood-cause. Phase-3: Process Improvement The PDCA cycle is used to continuously improve the process untill desired output levels are achieved as per the objective set. Phase-4: Personal Improvement

The PDCA cycle is used to continuously improve the individuals efforts to improve themselves, their jobs and their organisation. IMPROVEMENT NEEDS

Identification of Improvement Needs: 1. Multivoting: Also referred to as Brainstorming, it involves developing a list of potential improvement areas, processes, projects. Multivoting is resorted to narrow down on priority areas. This is factored with resources available to implement change. 2. Identify customer needs: The pressing needs of the customer, customer behaviour and competitive behaviour must be studied and take up as projects for improvement. 3. Study of USE & TIME: A problem, process, project, which consumes most of employees time, must be on the top of priorities as narrowed down 4. Localise Problem: Root cause of the problem must be identified. Where, when & How often must be answered for the shortlisted problem areas. Localisation is crucial before trying to resolve. KAI means CHANGE, ZEN means GOOD. Thus, KAIZEN means making changes for the better on a continual, neverending basis. Kaizen strategy is the single most important concept in Japanese management, often considered to be a key to their competitive success. Kaizen involves on-going improvement of all things at all levels, involving Top-management, Managers & workers. ELEMENTS OF KAIZEN APPROACH

The underlying value system of KAIZEN is continuous improvement in all things, at all levels, all the time, for ever. This is contained in the chart we saw above on elements of the Kaizen approach Roles & Responsibilities: 1. Role of Top-Management- establish overriding corp. strategy and communicating commitment, allocating resources. 2. Role of Middle Managers- implement kaizen policies established, employee training to understand and learn 3. Role of Supervisors- Apply approach in respective functional areas, communication in the work-place and maintain morale, coaching.

4. Role of employees- participate, suggest, engage in continuous self & work improvement activities, improve skills 5-STEP PLAN of KAIZEN SEIRI or Straighten up separating the necessary from the un-necessary, eg. Tools, inventory, machinery, paper work SEITON or Putting things in order Proper place for materials, tools to avoid time wastage SEISO or Clean up- keep it clean & hygienic SEIKETSU or Personal cleanliness promote professionalism and personal hygiene SHITSUKE or Discipline careful adherence to standard work procedures for safety as well.

DIFFERENCE : CPI & PRe

Need to determine whether a certain process within the organisation requires minor healing (CPI) or major surgery (RE) Though both may be necessary to drive break-through in organisation performance but differ in no. of ways1. Management involvement : LOW / HIGH 2. Intensity of team member involvement: JUNIOR / SENIOR 3. Improvement goals: INCREMENTAL / DRAMATIC 4. Implementation approach: GRADUAL / ALL OUT 5. Magnitude of organizational change involving period of time, etc.: 6. Extent of focus: CASUAL / INTENSE 7. Dependence upon information systems: REGULAR / IMMENSE CPI main-stay & a continuous process PRE is necessary at certain times & curtain situation. Employees are the best judge and Management must therefore encourage or even mandate their employee input on improvement opportunity. Questions to be asked can be: Can the process be improved: YES / NO What is the best way to do this with the Tools & Skills in hand

Will improvement require a dramatic change

What to use: CPI or PE

CPI main-stay & a continuous process PRE is necessary at certain times & curtain situation. Employees are the best judge and Management must therefore encourage or even mandate their employee input on improvement opportunity. Questions to be asked can be: Can the process be improved: YES / NO What is the best way to do this with the Tools & Skills in hand Will improvement require a dramatic change

Other Key Considerations when deciding which Approach to used when are: 1. Changes in the market place: If rapid changes are happening in the market place for the companys product/services, BPRE is will be more appropriate 2. Geographic spread: CPI is more appropriate when the process is limited to 1 or 2 physical locations. 3. Customer/ Supplier Involvement: If the degree of involvement is low CPI is good. 4. Cost & Staffing allocation: Where Top management is willing to provide only limited financial resources and periodic, part-time of those involved, CPI is better choice. 5. Level of urgency: Organisations which are low on the Quality Improvement maturity curve have less urgency about improvement and are satisfied with CPI

3_BREAKTHROUGH IMPROVEMENT
Management is concerned about 2 things - Maintenance functions & Improvement function. The Standard Operating Procedures (SOP) of any organisation relate to the existing standard of technological, managerial & operational aspects and any improvements in current standards. Japanese organisations embrace TQM by resorting to Continuous Improvement & Innovations. KAIZEN propagates Continuous Improvement (CPI), by way of INCREMENTAL improvement or INNOVATION.

Breakthrough.INNOVATION

Once the limit of Incremental improvement (or CPI) is reached, a firm can improve its performance by adopting a new technology or a new process something fundamentally different of innovative. This type of innovation improvement is facilitated by Process Reengineering. INNOVATION & CREATIVITY Innovation is the process of creating & implementing a new idea. Taking useful ideas & converting them into useful products/services/processes. Creativity is the ability to combine ideas in a unique way or to make useful association among ideas. Thus Creativity provides new ideas for quality improvement in organisations and Innovation puts these idea into action. Types of INNOVATION: (i) Process, (ii) Administrative & (iii) Technical. TECHNOLOGICAL INNOVATION

This type of Innovation involves creation of goods & services, through systematic research & developmental efforts intended to satisfy demanding customers. Technological Innovation is vital for a firms competitive advantage in todays fast pace of changing times. Forces driving technological development & innovation: 1. There must be need or demand for the technology. 2. It must be theoretically possible to meet the need using available knowledge 3. It must be possible to convert the scientific knowledge into practice in both engineering & economic terms. 4. Resources such as Finance, skilled manpower, time, space, etc. should be available. 5. It must have great advantage & less complex over predecessor and also compatible with existing systems. 6. It must be possible to test at much lower cost and easily adoptable. The co. can adopt low cost leadership or Differentiation strategy from technological innovation in todays competitive market environment. KAIZEN & INNOVATION

We know by now, Kaizen or continuous incremental improvement contrasts sharply with drastic, break-through improvement resulting from Innovation and leading to Reengineering. Innovation improvement is a short-term, dramatic improvement resulting from technological break-through based on individual/group ideas & efforts. Kaizen & Innovation are complementary to each other in that, both lead to improvement. The key ingredients of Innovation are: persistence, passion, creativity & small research groups. Universal Break-through Sequence: 1. Proof of need 2. Project identification 3. Organisation & improvement 4. The diagnostic journey 5. Remedial action 6. Break-though in cultural resistance to change 7. Holding the gains control at the new level.

4-BPRE: CONCEPTS & TECHNIQUES

Any organisation to survive may need RE because: 1. Old ways of doing things need to be changed 2. Your customers are demanding change 3. Competitors are taking over your market share 4. It takes too long to move products from conception to market

5. Your manufacturing process may be too costly and time consuming 6. Your budgeting process may be too complex 7. Your services are not compatible with your customers need any more.

BPRE: CONCEPTS & TECHNIQUES contd.

Many progressive firms are interested in maintaining a competitive edge in world markets. It can be achieved by producing higher quality, at lower costs than competitors and innovations. There are 6-parts (5w1h) to achieve this: WHAT- Tasks, objects, inputs, outputs & process steps WHO- Talents, team work, customers, suppliers WHY- Tech., purpose, function, Decision making rationale WHEN- Time, process order, structure WHERE- Tech. gaps, space-process relationship HOW Tools, method-process boundaries, process flow.

BPRE: CONCEPTS & TECHNIQUES contd. Understanding Process Process is a system composed by operators, machines, work, methods, materials, tools and their immediate environment. The process consists of a certain no. of activities or operations which are used in a given sequence to transform a set of inputs into useful outputs. Common Processes to provide the best product/service at the least possible cost to meet the Vision/Mission/Objective of the organisation, include: ASSESSING customer requirements for good & services DEFINING customer desired for goods & services DESIGNING quality goods & services to meet the needs & desires of the customers PRODUCING quality good & services as desired & designed MARKETING good & services that are produced STOCKING shelves with goods BILLING for good & services provided SERVING customers SATISFYING customers by redressing their complaints.

BPRE: CONCEPTS & TECHNIQUES contd. Process Control & Process Improvement

BPRE: CONCEPTS & TECHNIQUES contd. Core Elements of Process Reengineering 1. Organisational Restructuring Reducing organisational layers, re-aligning functions and driving accountability, are considered 2. Work redesigning It is necessary to assign responsibility to a particular employee to carryout a portion of an entire work process. 3. Technology retoolingParallel processing of tasks, gathering of data on customers and faster sharing of such data must be considered. BPRE: CONCEPTS & TECHNIQUES

The RE process STEP-1: State a case for re-engineering action STEP-2: Identify the process

 STEP-3: Evaluate enablers for reengineering (IT, HR, Investment) STEP-4: Understand the current process STEP-5: Create a new process design STEP-6: Implement the reengineered process BPRE: CONCEPTS & TECHNIQUES

Some issue in BPRE: 1. Downsizing & HRM 2. Leadership 3. Quantitative Objectives 4. Resistance to change 5. Implementation time 6. Out-of-Box thinking 7. Organisational Culture 8. Concept of Human Capital 9. Behavioral change