The Hammer Definition of BPR Radical redesign of

The Hammer Definition of BPR Radical redesign of business processes l What BPR is not l Hammer, Michael, et al. , REENGINEERING THE CORPORATION: A Manifesto for Business Revolution, New York: Harper Collins, Publishers Inc. , 1993. l

Other References on BPR Champy, James, REENGINEERING MANAGEMENT, New York: Harper Business, 1995. l Hammer, Michael, et al. , THE REENGINEERING REVOLUTION, New York: Harper Business, 1995. l Jacobson, REENGIENEERING WITH OBJECT TECHNOLOGY, 1995. l Taylor, David A. , BUSINESS l

Some Common Benefits of BPR l There is enterprise integration Departments are consolidated n Several jobs are combined into one job n l Workers are empowered There is both horizontal and vertical reorganization n Handoffs are eliminated n There are fewer rules and less coordination is required n

Some Common Benefits of BPR, Cont’d l Number of steps in a process are reduced This is simplification n Inspections, checks and controls are reduced or eliminated n l The steps are performed in a more natural order

Some Common Benefits of BPR, Cont’d l Like Process Improvement, steps are reassessed n Can it be eliminated n Can it be taken off line n Can it be performed in parallel n Can it be combined n Is it a bottleneck n Can its mean be reduced n Can its variance be reduced

Some Common Benefits of BPR, Cont’d l Processes differ by the type of job being processed n l Not just one process but many are employed depending on the size of the job Work is performed where it makes the most sense n Wal-Mart moves the replenishment function to its suppliers

Some Common Benefits of BPR, Cont’d Reconciliation is minimized l A case manager provides a single point of contact l Hybrid centralized/decentralized operations are prevalent l n IT enables decisions to operate autonomously

Benefits of elimination of handoffs No transits l No waiting for another operator l No waiting in queues l No setups l No supervision/coordination required l

EXAMPLES: Ford l IBM Credit l Mc. Kesson Pharmacueticals l Kodak l XEROX l Motorola l

provides important business solutions Managers must learn to think inductively l Information can appear instantaneously in as many different places as needed l Generalists can do the work of experts with expert systems l {{LET’S EXAMINE THESE MORE CLOSELY}} l

many places as needed simultaneously l Shared databases make this possible

A generalist can do the work of an expert l Expert systems make this possible

Business can simultaneously reap the benefits of centralization and decentralization l Wide-area, data-communication networks make this possible

Decision-making is part of everyone’s job l Decision support tools (database access combined w/ modeling software)

receive information wherever they are They don’t need an office at headquarters any more l To receive and send mail, all they need is a notebook with cellular telephone technology modem l

Contacts with potential buyers need no longer be personal E-mail enables detailed interaction l Southwestern Bell gets their C++ programmers out of India at $10 -$15 per hour l

Planning is instantaneous and continuous due to IT l Manufacturers gather data on n product sales, raw materials price and availability, labor supply and produces a master production schedule n This can now be done instantaneously by computer based on real-time data

Planning is instantaneous, Cont’d Companies must make technology exploitation one of there competencies if they are to succeed in a period of ongoing technological change l If you can buy it, its not new l

Planning is instantaneous, Cont’d Know what you’re going to do with technology before it becomes available l It is entirely possible to stay three years ahead of the market on technology l

Who will re-engineer Leader l Process owner l Re-engineering team l Steering Committee l Re-engineering czar l

TASKS of the Re-engineering team l l l 1) determine measures of performance 2) install measures of performance 3) delineate entire existing process in all its gory detail 4) perform process value analysis and activity-based costing 5) benchmark processes by comparison with other processes

TASKS of the Re-engineering team, Cont’d l l l 6) design re-invented process 7) simulate re-invented process 8) prepare report with recommendations 9) install re-invented process 10) measure improvements

Re-engineering Opportunities Product development: concept to prototype l Sales: prospect to order l Order fulfillment: order to payment l Service: inquiry to resolution l

Symptoms of a sick process Extensive information exchange, data redundancy -- process fragmentation l Inventory buffers and other assets -slack to cope with uncertainty l High levels of checking, inspection and control -- fragmentation l

Symptoms of a sick process, Cont’d Lots of rework and iteration -inadequate feedback l Complexity, exceptions and special cases -- accretion onto simplicity l

Principles of good process design Start with a vision l Decide upon approach l As few people as possible involved in the final process l Lots of involvement, empowerment and ownership l

Principles of good process design, Cont’d Simplicity, simplicity l Make it fun, make it easy l Focus on outcomes l n Shortened cycle times n Lower cost n Higher quality n Higher throughput l Simulate the prototype