Business Process Reengineering

For ASQ Members in UAE

Sunil Thawani

ASQ Country Councilor for UAE

Dec. 2001

EPPCO House, Dubai

Suppliers

Customers

Products

Services

Economic Conditions

Competition

Regulatory Requirements

Publicopinion

Environmental Concerns

Enterprise Model

Organizational Objectivesand Goals

Strategies, Plansand Policies

Processes

Procedures

Tools andTechnologies

Products

Organization

Services

Relationship Of Processes To The Business

Operating Objectives and Strategies

Processes

Subprocess

Procedures & Rules

Tools andTechnologies

Process Model

Supplier Customer

Work Activity(Value added

over time)

Tasks, People, FacilitiesTechnology, Rules,Repeatable, Controllable

Input Output

Process Flows Back & Forth between Departments

Business Management

Customer Needs

Marketing Engineering Operations Distribution Finance

CustomerSatisfaction

Business Process Reengineering Processes

Processes in traditional organization are

• Orphans

• Fragmented

• Invisible

• Unmanaged

• Defy Organization Boundaries

• Result OrientedThey are at the very heart of every enterprise to create

value for customers

Performance Improvement Approaches

Quality Team Group Issues

Process ImprovementTasks/Flows/ToolsTechniquesMeasuresSkills

Process Reengineering Processes People Organization IT

BusinessReengineeringProducts/MarketsScope in value chainCore CompetenciesPartners/Linkages

Problems Processes Major Processes Entire Business

Rem

ove

Roa

dblo

cks

Con

tinuo

us

Im

prov

emen

tQ

uant

um

Small-------------------------------Change Scope----------------------------Large

Low

----

----

----

----

----

Cha

nge

Impa

ct--

----

----

----

--- -

----

----

--H

igh

Str

ateg

icB

usin

ess

Dire

ctio

n

Why Companies Reengineer?

0% 10%20%30%40%50%60%70%80%

To reverse declines in market share/profits

To build closer relationships with customers/suppliers

To get products/services to market faster

To fight increasing competition

Top four motivations

WHAT IS BUSINESS PROCESS REENGINEERING?

BPR means starting all over, from scratch i.e. “If I were recreating this company today given what I know & given current technology, what would it look like?”.

BPR is about rethinking how work is done. Underlying principle is that design of work must be

based not on hierarchical management and the specialization of labour but on end-to-end processes and the creation of value for the customer.

M.H. & J.C

DEFINITIONS OF REENGINEERING

“ Reengineering is the fundamental rethinking & radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures performance , such as cost, Quality, Service, & Speed. “

Michael Hammer

James Champy

“ Reengineering is the rapid and radical redesign of strategic, value-added business processes and systems, policies & organization structures that support them to optimize the work flows & productivity in an organization. “

The Reengineering Handbook

(AMACOM 1994)

COMPONENTS OF PROCESS REENGINEERING

Business

ProcessesBusinessProcesses

People and

Organization

Informationand

Technology

WHICH PROCESSES ARE BEING REENGINEERED ?

0% 10% 20% 30% 40% 50% 60% 70% 80%

INDUSTRIAL COMPANIES

PRODUCTION

DISTRIBUTION/ LOGISTICS

CUSTOMER ORDERS

PROCUREMENT / MATERIAL MANAGEMENT

FINANICAL MANAGEMENT

MARKETING AND SALES

HUMAN RESOURCES

OTHER

WHICH PROCESSES ARE BEING REENGINEERED ?

0% 10% 20% 30% 40% 50% 60% 70%

SERVICE COMPANIES

FINANCIAL MANAGEMENT

MARKETING AND SALES

CUSTOMER ORDERS

DISTRIBUTION/LOGISTICS

PRODUCTION

PROCUREMENT/MATERIALS MANAGEMENT

OTHER

HUMAN RESOURCES

MIXED RESULTS

0% 10% 20% 30% 40% 50% 60% 70% 80%

Percentage of Companies Meeting Specific Objectives

CONSOLIDATING PRODUCT LINES

CONSOLIDATING SALES LINES

OUTSOURCING FUNCTIONS

OFFERING NEW PRODUCTS/SERVICES

GROWING MARKETS

SPEEDING PRODUCTS/SERVICES TO MARKET

MANAGING INVENTORY BETTER

ELIMINATING FUNCTIONS

INCREASING PROFITABILITY

ELIMINATING LOW VALUE WORK

CUTTING COSTS

INCREASING PRODUCTIVITY

STREAMLINING BUSINESS PROCESSES

REDUCING HEAD COUNTS

BUSINESS PROCESS REENGINEERING

PURCHASE DEPT.

ACCOUNTS PAYBALEVENDOR

P.O.

INVOICE

PAYMENT

G.R.N.

• 500 HEAD COUNT

• ACCOUNTS PAYABLE TO MATCH 14 ITEMS BETWEEN P.O., G.R.N. & INVOICE

RECEIPT DEPT.

FORD MOTOR COMPANY - BEFORE BPR

BUSINESS PROCESS REENGINEERING

PURCHASE DEPT.

VENDOR

P.O.

GOODS

PAYMENT

• AUTOMATIC MATCHING OF 3 ITEMS (PART NO.,UNIT OF MEASURE, SUPPLIER CODE) BETWEEN P.O. & G.R.N.

• FASTER SIMPLER, MORE ACCURATE & EFFICIENT PROCESS

•75% REDUCTION IN HEAD COUNT

•INVOICELESS PROCESSING

RECEIPT DEPT.

FORD MOTOR COMPANY - AFTER BPR

ACCOUNTS PAYABLE

DATABASE

WHAT TO REENGINEER ?

• Critical Assessment of Processes

• Select processes for Reengineering

• Criteria for selection of processes

- Cycle Time, Cost, Process Value , Key Issue , Management Priorities, Customer , Supplier & Competitor Issues.

Selecting Critical Processes

• Dysfunction : Process deepest in trouble (Fragmented , inefficient , etc. )

• Greatest impact on customer

• Feasibility : Most susceptible to successful redesign

( High cost , wide scope )

CRITICAL ASSESSMENT OF PROCESSES WORKSHOP - FLOWCHARTTheoretical InputsEnsure clear understanding of Processes Film on “Customer is Dwight”

Identify Macro to Processes, Sub-Processes, Allocate Manpower to Processes/Sub-ProcessesDefine Sub-Processes

Identify Issues to Process/Sub-ProcessesSelect key issues by Dot VotingPriorities Issues in descending order & difficulty in implementation

Identify internal customer(s) of Sub-processes, value factors & Process performancePriorities processes in terms of process performance, process impact & value

Annual Cost of Manpower to CompanyCalculate Processes/Sub-Processes manpower cost

Select Flow ItemDetermine Macro Process Cycle Times

Inventory Data in value days of R.M., W.I.P, F.G., Spares, etc.

Select processes

for

Reengineering

by

Process Impact &

PerformanceAnalysis

Key Process Issues

Process Value Performance

Process Labor Cost

Process Cycle Time

Process Material Cost

Manpower Cost-Time Profile

Material Cost-Time Profile

Customer RequirementsVendor RequirementsCompetition IssuesManagement Priorities

Fix Dates, Venue for WesTIP, Scope the Selected Processes, Identify WesTip team Leaders & Members, Collect Sponsor Expectation