DOM 511:

TOPIC SEVEN: BUSINESS PROCESS RE-ENGINEERING

BUSINESS PROCESS RE-ENGINEERINGBUSINESS PROCESS RE-ENGINEERING

“An organizational make-over”

“Reengineering is new, and it has to be done.”

Peter F. Drucker

BUSINESS PROCESS RE-ENGINEERINGBUSINESS PROCESS RE-ENGINEERING

Companies are driven to reinventing the corporation by one of three forces; desperation or crisis (60% of cases); foresight (30%); ambition (10%)

What is a Process?What is a Process?

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.

What is a Business Process?What is a Business Process?

A group of logically related tasks that use the firm's resources to provide customer-oriented results in support of the organization's objectives

BUSINESS PROCESS RE-ENGINEERINGBUSINESS PROCESS RE-ENGINEERING

The search for, and implementation of, radical change in business processes to achieve breakthrough resultsSynonyms: business process redesign, business transformation, process innovation, business reinvention, change integrationStarting point: clean sheet of paper

BUSINESS PROCESS RE-ENGINEERINGBUSINESS PROCESS RE-ENGINEERING

Reengineering is the fundamental rethinking and redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed. (Hammer & Champy, 1993)

What is a Most Sustainable Organization?What is a Most Sustainable Organization?

An organization that achieves goals through planned improvement and evaluation of its business management (and human capital practices).

BPR is Not?BPR is Not?

‡ Automation ‡ Downsizing ‡ Outsourcing

BUSINESS PROCESS RE-ENGINEERINGBUSINESS PROCESS RE-ENGINEERING

Start from the future and work

backwards

BPR is not easy - serious work

BPR is not free - financial & cultural

BPR often driven by fear and greed

Change is a “struggle”; BPR is a “war”

Why Reengineer?Why Reengineer?

•Customers ± Demanding ± Sophistication ± Changing Needs •‡ Competition ± Local ± Global•Change ± Technology ± Customer Preferences

Why Organizations Don’t Reengineer?Why Organizations Don’t Reengineer?

Complacency ‡ Political Resistance ‡ New Developments ‡ Fear of Unknown and Failure

BPR Versus Process SimplificationBPR Versus Process Simplification

BPR Versus Continuous ImprovementBPR Versus Continuous Improvement

PerformancePerformance

BPR seeks improvements of ± Cost ± Quality ± Service ± Speed

Radical ImprovementRadical Improvement

Sustainable ± Process improvements need to become firmly rooted within the organization Stepped Approach ± Process improvements will not happen over night they need to be gradually introduced ± Also assists the acceptance by staff of the change

People-CentredPeople-Centred

‡ ‡ Business Understanding ‡ Empowerment & Participation ‡ Organizational Culture

Focus on End-CustomersFocus on End-Customers

‡ ‡ Process improvements must relate to the needs of the organization and be relevant to the end- customers to which they are designed to serve

Version ManagementVersion Management

•‡ For different versions of a business process or data flow some mandatory information must be on the flowchart. ± Name of the business process ± Unique number of the business process ± Revision number ± Date of last change ± Author ± Page number with total pages

BPR: STRATEGY*BPR: STRATEGY*

Stakeholder Assessment - shareholders, customers, employeesDetermine which stakeholder expectations should be met to gain competitive advantageDetermine how to redesign to meet expectationsMap out IT solutions to supportDevelop & implement new processes, etc.

Implementing a BPR StrategyImplementing a BPR Strategy

•‡ For different versions of a business process or data flow some mandatory information must be on the flowchart. ± Name of the business process ± Unique number of the business process ± Revision number ± Date of last change ± Author ± Page number with total pages

BPR Implementation Key StepsBPR Implementation Key StepsSelect The Process & Appoint Process

Team Understand TheC urrent Process Develop &C ommunicate Vision Of Improved Process Identify Action Plan Execute Plan

BPR Implementation Key StepsBPR Implementation Key Steps

Step 1

Establish BPR/ HPO Project Plan

Step 1

Establish BPR/ HPO Project Plan

Step 2

Conduct Preliminary Planning

Step 2

Conduct Preliminary Planning

Step 3

Develop Business Case

Step 3

Develop Business Case

Step 4

Implement Business Case

Step 4

Implement Business Case

Step 5

Track and Validate MSO Performance

Step 5

Track and Validate MSO Performance

State the reason for BPR/HPO nomination State the BPR/HPO’s objectives Identify affected activities, employees, and FTEs Identify impacted customers and stakeholders Identify ongoing contractor support Describe desired organizational change outcomes, including metrics Identify business and human capital management evaluation process if different than described in Steps 2-5.

• Brief leadership and employees/union/others

Identify and assign Most Sustainable Organization (MSO) development team members Develop action plan with milestones Develop communications plan

• Establish data analysis requirements and collection methods

Implement communications plan Conduct AS-IS organization analysis Develop Most Sustainable Organization (MSO) (TO-BE) Measure gaps between AS-IS and TO-BE organizations

• Develop phase-in and HR transition plans

Identify and assign Most Sustainable Organization (MSO) implementation team members Establish Letter of Obligation (between agency head and MSO activity manager)

• Initiate phase-in and HR transition to the MSO

Using metrics identified in Step 1, measure the success of

- closing performance gaps,

- closing skill and competency gaps,

- achieving savings,

and

- improving quality and timeliness.

Use of ConsultantsUse of Consultants•Used to generate internal capacity •‡ Appropriate when a implementation is needed quickly •‡ Ensure that adequate consultation is sought from staff so that the initiative is organization-led and not consultant-driven •‡ Control should never be handed over to the consultant

Information Technology & BPR

Information Technology & BPR

Benefits From ITBenefits From ITAssists the Implementation of Business Processes ± Enables Product & Service Innovations ± Improve Operational Efficiency ± Coordinate Vendors & Customers in the Process Chain

Computer Aided BPR (CABPR)Computer Aided BPR (CABPR)

‡ Focus ± Business Processes ± Process Redesign ± Process Implementation

BPR ChallengesBPR Challenges•‡ Process Simplification is Common - True BPR is Not •‡ Desire to Change Not Strong Enough •‡ Start Point the Existing Process Not a Blank Slate •‡ Commitment to Existing Processes Too Strong •‡ Quick Fix Approach•Process under review too big or too small •‡ Reliance on existing process too strong •‡ The Costs of the Change Seem Too Large •‡ BPR Isolated Activity not Aligned to the Business Objectives •‡ Allocation of Resources •‡ Poor Timing and Planning •‡ Keeping the Team and Organization on Target

SummarySummary•Reengineering is a fundamental rethinking and redesign of business processes to achieve dramatic improvements • BPR has emerged from key �management traditions such as scientific management and systems thinking•Dont assume anything - remember BPR is ‘fundamental rethinking of business processes

SummarySummary

There are several models and approaches to implementing BPR and an organization should seek to adopt depending on their organizations’ needs and capabilities. An organization seeking to undertake BPR must therefore examine some key elements of its organization structure beforehand for maximum gains in the BPR implementation.

The Wrigley Company (East Africa) Limited The Wrigley Company (East Africa) Limited

The Wrigley Company (East Africa) Limited is a fully owned subsidiary of the Wm Wrigley Jr company based in Chicago, Illinois (United States of America). The parent company is the worlds’ largest manufacturer of Chewing gum with an annual turnover of US Dollars 5 billion and over 20 manufacturing plants in various parts of the world The Wrigley East Africa subsidiary operates a chewing gum manufacturing plant based in Nairobi (Kenya) and is the only plant in Africa and Middle East and therefore supplies chewing gum products throughout this region. In addition, the Wrigley Company East Africa Limited also runs the sales operations for Eastern Africa with an annual turnover of over Kenya Shillings 1 billion.

The Wrigley Company (East Africa) Limited The Wrigley Company (East Africa) Limited

At the turn of the millennium, Wm Wrigley Jr. Company made a management decision to implement BPR in all its subsidiaries globally in order to adopt its business operations to rising pressure of global competition. The organization decided to radically change the way it conducts business globally by adopting the supply chain concept and Enterprise Resource Planning (ERP) technology namely Systems Applications and Products Release 3 (SAP R/3) as an enabler.

The Wrigley Company (East Africa) Limited The Wrigley Company (East Africa) Limited

The organization engaged consultants from Deloitte international and set up a team referred to as the core team in Munich Germany. This team was composed of Wrigley business experts from various organization functions and countries. The core team came up with a model for the Wrigley worldwide business referred to as the global reference model (GRM). This model was approved and after that the rollout project code named WebEsprit was started.

The Wrigley Company (East Africa) Limited The Wrigley Company (East Africa) Limited

The project (WeBEsprit) was rolled out starting with pilot countries in 2001 and moving on to groups of countries in what was internally named rollout waves. The Kenya business implemented the project in 2004 under Asia wave 3 and completed the process in December 2004 and beginning 2005 with the redesigned business processes.

The Wrigley Company (East Africa) Limited case studyThe Wrigley Company (East Africa) Limited case study

The study intended to determine if there was improvement in the competitive measures of cost management, customer service, quality and productivity.

The Wrigley Company (East Africa) Limited case studyThe Wrigley Company (East Africa) Limited case study

It was established that The Wrigley Company gained competitive advantage by implementing BPR. It was also established that it adopted the BPR practises that are critical for successful implementation. From the research findings, the researcher recommends that organizations seeking to undertake BPR initiatives should first understand the need for changing the organization.