Presented by:

Ms Orlina C. Gorospe

Master in Management Engineering

ME 201 Strategic Management

Josefina B. Bitonio DPA

Engineering Enterprise

Professor

Techniques • The manner and ability with which an artist, writer,

dancer, athlete, or the like employs the technical skills of a particular art or field of endeavour.

• The body of specialized procedures and methods used in any specific field, especially in an area of applied science.

• Method of performance; way of accomplishing. • Technical skill; ability to apply procedures or methods so

as to effect a desired result. • Informal. method of projecting personal charm, appeal,

etc.: He has the greatest technique with customers.

dictionary.com

Method

A : a systematic procedure, technique, or mode of inquiry employed by or proper to a particular discipline or art (2) : a systematic plan followed in presenting material for instruction

• a particular form of procedure for accomplishing or approaching something, esp. a systematic or established one. – Google definition

• orderliness of thought or behavior; systematic planning or action. – Google definition

a procedure or process for attaining an object: as

B : a way, technique, or process of or for doing something (2) : a body of skills or techniques

merriam-webster.com

According to Michael Porter (Porter, 2008), more than 80% of organizations do not successfully execute their business strategies. He Estimates that in over 70% Of these cases, the reason was not the strategy itself, but ineffective execution. Poor Strategy execution is the most significant management challenge facing public and private organizations in the 21st century according to Gartner (Lapkin & Young,2011).

There are many reason for the failures of organization to bring its strategy to life. Escalating complexity and rapid change have made the development execution of effective strategy increasingly difficult (Kaplan & Norton, 2006).

Re-engineering

Business Process Reengineering (BPR)

BPR is known by many names, such as ‘core process redesign’, ‘new industrial engineering’ or ‘working smarter’. All of them imply the same concept which focuses on integrating both business process redesign and deploying IT to support the reengineering work.

• How business processes currently operate, • How to redesign these processes to eliminate

the wasted or redundant effort and improve efficiency, and

• How to implement the process changes in order

to gain competitiveness.

BPR involves discovering:

The Aim of BPR, according to Sherwood – Smith (1994)

“Seeking to devise new ways of organising tasks, organising people and redesigning IT systems so that the processes support the organisation to realise its goals”.

• Can be viewed as a response to change and it fits in the classical school of strategy where organisations adjust themselves to new forms in order to maximise their profits. [Galliers points out that the four schools (approaches) to business strategy since the 1960s are classical, processual, evolutionary and systemic.]

• Can help organisations out of crisis situations by becoming leaner, better able to adapt to market conditions, innovative, efficient, customer focused and profitable in a crisis situation”. (Hammer & Champ -1993)

• Is concerned with customer-orientation. the outputs of business processes should not only achieve the company’s objectives, but also need to satisfy customers’ requirements.

BPR

Business Process

Is a collection of activities designed to produce a specific

output for a particular customer or market. It implies a strong

emphasis on how the work is done within an organisation, in contrast to a product’s focus. A process is thus a specific

ordering of work activities across time and place, with a

beginning, an end, and clearly defined inputs and outputs: a structure for action.

-- Tharanga Thilakasiri, Importance of Business Process Reengineering

Business Process • Has a goal

• Has specific Inputs

• Has a specific output

• Uses resources

• Has a number of activities that are performed in some order

• Many affect more than one organisational unit. Horizontal organisational impact

• Creates value of some kind for the customer. The customer may be internal or external

Business Process Reengineering (BPR)

• Is a business management strategy, originally pioneered in the early 1990s, focusing on the analysis and design of workflows and processes within an organization - (Wikipedia). Began as a private sector technique to help organizations fundamentally rethink how they do their work in order to dramatically improve customer service, cut operational costs, and become world-class competitors. - Business Process Reengineering Assessment Guide US General Accounting Office

Business Process Reengineering (BPR)

• 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. – Reengineering the Corporation: Manifesto for Business Revolution by Hammer and Champy (1993)

• The analysis and design of workflows and processes within and between organisations -- SeachCIO.techtarget

• Involves the radical redesign of core business processes to achieve dramatic improvements in productivity, cycle times and quality. – BAIN & COMPANY

The analysis and design of workflows and processes within and between organisations. Business activities should be viewed as more than a collection of individual or even functional tasks; they should be broken down into processes that can be designed for maximum effectiveness, in both manufacturing and service environment.

Thomas Davenport (1993) describes “business process

redesign/reengineering” as:

Process • A collection of activities that takes one or more kinds of input

and creates an output that is of value to the customer. (Hammer and Champy – 1993 – p. 35)

• A specific ordering of work activities across time and space, with a beginning, an end, and clearly identified inputs and outputs: a structure for action. (Davenport – 1993 – p.5)

• A process is structured change, i.e. there is a pattern of events which an observer may recognise across different actual examples (or occurrences) of the process, or which may be made manifest, or implemented, in many different occurrences. (Warboys et al. – 1999 – p. 32)

Business Process Reengineering

How it Started?

The purpose of re-engineering is to

make all your process the best-in-class.

BPR can be viewed as a response to such change and therefore fits in the classical school of strategy where organisations adjust themselves to new forms in order to maximise their profits. However it is commonly agreed that BPR first came and attracted academic and industrial attention in 1990 as a result of two papers by Michael Hammer and Thomas Davenport. In 1993 they further published two key books which brought widespread attention to the emerging field of BPR.

Reengineering didn't start out as a code word for mindless bloodshed. It wasn't supposed to be the last gasp of Industrial Age management. I know because I was there from the beginning. I was

one of the "creators.“ The real creators of reengineering weren't consultants or academics.

They were real people with real problems to fix. Inside companies like Ford, Hewlett-Packard, and Mutual Benefit Life, managers were experimenting with new uses of information technology to link processes that cut across functional boundaries. But they didn't call their work reengineering; they didn't have elaborate "change models"; they certainly didn't see a movement in the making. All that came later.

– Thomas Davenport A Fad that People Forget

“That managers use process reengineering methods to discover the best processes for performing work, and that these processes be reengineered to optimise productivity.”

“To conduct the undertaking toward its objectives by seeking to derive optimum advantage from all available resources. (p. 8)”

Frederick Taylor suggested in the 1880’s

In the early 1900’s, Henri Fayol originated the concept of reengineering:

Galliers (1998) observes that “BPR ... far from being a new departure, is in fact a reversion to the classical school [Galliers points out that the four schools (approaches) to business strategy since the 1960s are classical, processual, evolutionary and systemic.] of strategic thinking popularised in the 1960s”.

That is, organisations make such radical changes when they meet competitive pressures which challenge their current processes.

MacIntosh and Francis (1997) point out some problems: “information could not easily be transferred without repeated, manual reprocessing and the layers of management served to relay and communicate information across and through the enterprise.”

As Hammer (1990) argued, “in order to achieve significant benefits, it is not sufficient to computerise the old ways, but a fundamental redesign of the core business processes is necessary”.

Hammer and Champy concluded “That previously divided tasks are now being re-unified into coherent business processes. Thus one reason why BPR becomes popular is that it provides a mechanism to make the changes better to fit the competitive environment to which the enterprises must adapt themselves in this new and post-industrial age.”

BPR is a radical change, rather than incremental change. Hammer and Champy (1993) highlight this tenet as: Re-engineering is ... about rejecting the conventional wisdom and received assumptions of the past. ... Reengineering is the search for new models of organising work. Tradition counts for nothing. Re-engineering is a new beginning. ... To succeed at reengineering, you have to be a visionary, a motivator, and a leg breaker.

BPR as Radical Change

Objectives of 5% or 10% improvement in all business processes each year must give way to efforts to achieve 50%, 100%, or even higher improvement levels in a few key processes. ... [Radical change is] the only means of obtaining the order-of-magnitude improvements necessary in today’s global marketplace. Existing approaches to meeting customer needs are so functionally based that incremental change will never yield the requisite interdependence – Thomas Davenport (1993)

Possible [radical] changes to the organisation are not limited to internal re-orderings, ... Links can be forged with other organisations even though they are competitors. This leads to a view of the organisation as a fluid mix of interests rather than a fixed entity with an objective existence.

It is recognised in the BPR literature that advances in technology bring opportunities that were difficult to imagine before the technology had been created. There is a sense of innovatory solutions looking for problems and the exploitation of unexpected consequences that cannot be predicted by a purely conceptual approach. At its best, BPR can be seen as a mix of conceptual thinking and practical experience gained through creative experimentation and faith.

How Business Process Reengineering Works According to

Business Process Reengineering is a dramatic change initiative that contains five major or steps. Managers should:

• Refocus company values on customer needs • Redesign core processes, often using

information technology to enable improvements • Reorganize a business into cross-functional

teams with end-to-end responsibility for a process

• Rethink basic organizational and people issues • Improve business processes across the

organization

Also BPR and DSS have a common aim which is to improve business processes via radical change. The most significant difference between BPR and DSS is the scope of analysis: BPR focuses on the whole organisation whereas DSS focuses on one individual decision.

Business Process Reengineering (BPR), Decision Support System (DSS) and Total Quality Management (TQM) have much common with each other. They are all focusing on business processes.

DSS is characterise as relevant to BPR as it was the first information system (IS) movement to explicitly focus on the fundamental redesign of business processes rather than on the efficient application of a new computer technology. Arnott and O’Donnell (1994).

BPR is different from TQM in that BPR concentrates on major discrete changes to business processes, whereas TQM concentrates on minor continuous improvement to business processes. That is, the improvements in TQM are smaller than the ones in BPR.

Management

In this modern competitive business world, quality has emerged as a key issue.

Quality is a relative term, which is mostly associated with the end-use of products or services

With the advent of globalization, however, it is by no

means necessary that a product which is acceptable in certain parts of the world would also be acceptable elsewhere.

Therefore quality is no longer treated as a standardized term.

It has rather become user segment specific.

Quality

The most widely accepted definition of Quality is “it is customer satisfaction”

The International Organization of Standardization defines it as, “the degree to which a set of inherent characteristics fulfils requirements.”

One of the most acclaimed management quality gurus of the 20th century, Dr. Juran, states that quality is nothing but “fitness for use.”

Grade of service / product Reliability Safety Consistency Consumer’s perception

Definition of Quality

The four-level model of the evolution of quality management Level 1 Inspection Level 2 Quality Control Level 3 Quality Assurance

Level 4 Total Quality Management

Quality Management

The Evolution

Management centered on quality and based on the participation of everybody which aims at the customer satisfaction and at the improvement of the company's personnel, of the company and of the society. The ultimate step. A quality assurance plan is operational but the management, the workers and the customers continuously interact to review / improve this plan.

Total Quality Management

1) Focus on the customers (fitness to use or to latent requirements)

2) Continuous improvement (fitness to standard and of cost)

3) Total participation

4) Societal Networking

The Highest Quality Level is made of four (4) main elements:

1)Focus on the customers

HP – They recommend each worker / employee / department to raise the following questions: 1. Who are my customers? 2. What are their needs? 3. What is my product service? 4. What are my customers’ measures of expectations? 5. What is my process for meeting their needs? 6. Does my product or service meet these needs? 7. What actions are needed to improve my process?

1. Identify the work you do. 2. Identify whom you do it for. 3. What do you need to do your work? From

whom? 4. Map the process. 5. Mistake-proof the process and eliminate

delays. 6. Establish quality and cycle time(flow time)

measurements and improve goals.

Motorola

2) Continuous Improvement

“The Seven Quality Control (7QC) steps: 1. Select the theme 2. Collect and analyse data 3. Analyse causes 4. Plant and implementation solution 5. Evaluate effects 6. Standardize the Solution 7. Reflect on process and the next problem

3) Total Participation What workers want?

Goals which are clear, challenging and

reachable Means to reach the goal Responsibility for the outcome Information about the corporate goals Participation in decisions Salary Job security Interesting work Self-development

If a company want a continuous improvement system most of these features must be granted…

4) Societal Networking The TQM mentality also assumes that your company positively interacts with the "society" in which it operates. National promotional organization Training Knowledge dissemination Societal promotional activities National standard certification Development of new methods

International Standard Organization (ISO) – 9000

Approach: 1)Develop an internal quality

assurance plan 2)Certify it by an official

organization

Principles of ISO - 9000

1.Say what you do

2.Do what you say

3.Record it, check it and correct it if needed

ISO – 9000 Structure

The ISO 9000 norm series (9000 – 9004) Guidelines for use : 9000 and 9004 The ISO 9000 norm is more a user guide which explains the difference between the norms and which gives advises on how to implement them. The ISO 9004 gives additional hints on the implementation of a quality system.

ISO – 9000 Structure

Quality Systems : 9001, 9002 and 9003 The three other norms are well-defined standards. They specify the framework for the implementation of the quality systems. They differ by the breadth of the activities which are performed in you company.

9003:Model for Quality Assurance in Final Inspection Test (Production) This is the basic certification which first aimed at guaranteeing that the final products meet the final specifications. This should be the norm aimed at by companies only involved in the manufacturing of well-defined standard products.

9002:Model for Quality Assurance in Production, Installation and Servicing This is the norm aimed by companies with pre or post manufacturing functions.

It is the broadest norm. It does not mean it is more difficult but that the norm applies to a company with the broadest spectrum of functions. As shown by the above drawing, it should be aimed at by companies with a real design function.

9001:Model for Quality Assurance in Design, Production, Installation and Servicing

• Inspection, Measuring, and Test Equipment • Inspection and Test Status • Control of Non conforming Product • Corrective Action • Handling, Storage, Packaging and Delivery • Quality Records • Internal Quality Audits • Training • Servicing • Statistical Techniques

Getting the ISO 900x Certificate (Obtaining a Certification is a Project) Depending on the size of your group, you will do the job alone or you will build a whole team with a project leader. • Define a team / a project leader • Define a plan • Team setup • Team formation • Personal (in)formation • Selection / formation of internal auditors • Evaluation of the current state One more application of PDCA Information / formation / implication of all • Definition of needs • Description of the needed procedures

Getting the ISO 900x Certificate (Obtaining a Certification is a Project) • Implementation • Internal audit (as early as possible) • Corrective actions • Final quality manual (as late as possible) • Certification audit • Manage the post-certification

Post – Certification Once the certification has been obtained, three directions should be pursued. You should systematically re-assess your efforts; try to evolve from this certification towards a real TQM spirit and also reconsider the complete process by which you deliver products or services. These three directions are discussed below. • Re-allocate the efforts/Continuous improvement loop Internal audit

(as early as possible) • Enlarge the scope : ISO9000 TQM • Process Re-engineering

We are all born ignorant, but one must work hard to remain

stupid.

Benjamin Franklin

“In this day and age it’s not about the experience you have but your ability

to learn and your ability to apply what you learn that

makes you most valuable” (Gil Yehuda and Rick Fleischman)