Business Process Reengineering (BPR):
Learning
objective of the articles:
-
Define and explain
the concept of business process reengineering (BPR)
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What are the
advantages and disadvantages of business process reengineering?
Definition and Explanation of the Concept:
Business Process reengineering
(BPR)
is a more radical approach to improvement than
total quality management (TQM).
Instead of tweaking the existing system in a series of incremental
improvements, in process reengineering a business process is diagramed in
detail, questioned, and then completely redesigned to eliminate unnecessary
steps, to reduce opportunities for errors, and to reduce costs.
A business process is any series of steps that are followed to carry out
some task in a business. For example, the steps followed by your bank
when you deposit a check are a business process. While process
reengineering is similar in some respect to
TQM, its proponents view it as a more sweeping approach to change. One
difference is that while
TQM emphasizes a team approach involving people who work directly in the
process, process reengineering is more likely to be imposed from above and
to use outside consultants.
Process reengineering focuses on
simplification and elimination of wasted efforts. A central idea of process
reengineering is that all activities that do not add value to a product or
service should be eliminated. Activities that do not add value to a product
or service that customers are willing to pay for are known as
non value
added activities. For example moving large batches of work in process
from one work station to another is a non value added activity. To some
degree
just in time (JIT) involve process
reengineering as does
total quality management (TQM). These
management
approaches often overlap.
Process reengineering have been
used by many companies to deal with a wide variety of problem. For example,
the EMI Records Group was having difficulty
filling orders for its most popular CDs. Retailers and recording stars were
rebelling--it took the company as much as 20 days to deliver a big order for
a hit CD, and then nearly 20% of the order would be missing. Small,
incremental improvements would not have been adequate, so the company
reengineered its entire distribution process with dramatic effects on
on-time delivery and order fill rates. Reynolds &
Reynolds Co. of Dayton, Ohio, produces business forms. Filling an
order of a customer used to take 90 separate steps. By reengineering, the
number of steps was slashed to 20 and time required to fill an order was cut
from three weeks to one week. Massachusetts General
Hospital is even using process reengineering to standardize and
improve surgical procedure.
Employees resistance is a recurrent problem in
Process Reengineering. The cause of much of this resistance is the fear that
people may lose their jobs. Workers reason that if process reengineering
succeeds in eliminating
non value added activities, there will be less work to
do and management may be tempted to reduce the pay roll. Process Reengineering,
if carried out insensitively and without regard to such fears, can undermine
morale and will ultimately fail to improve the bottom line (i.e., profit). As
with other improvement projects, employees must be convinced that the end result
of the improvement will be more secure, rather than less secure, jobs. Real
improvement can have this effect if management uses the improvement to generate
more business rather than to cut the work force. If by improving process the
company is able to produce a better product at lower cost, the company will have
competitive strength to prosper. And a prosperous company is much more secure
employer than a company that is in trouble.
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Real Business Example:
Design by Computer:
One of the most time consuming and expensive business process is the
design stage in product development, which had traditionally relied on
paper and drafting tools. Dassault systems has met the challenge of
reengineering this process and has created Catia, the top selling
CAD/CAM allows engineers to design and develop products on a computer.
This eliminates huge amounts of paper work and slashes the time required
to design and develop a new product. Catia is used by nearly every air
craft manufacturer and was used by Boeing to design the777.
DaimlerChrysler used Catia to design the new jeep Grand Cherokee. By
debugging the production line on screen, the company saved months and
eliminated $800 million of costs.
Source: Howard Banks, "Virtually Perfect," October
4, 1999
The Dark Side of Process Reengineering:
Possible
Disadvantage:
Process reengineering that is imposed from above and that results in
disruptions and layoffs can lead to cynicism. Eileen Shapiro, a
management consultant, says that " reengineering as often implemented
can erode the bonds of trust that employees have toward their employers.
Nevertheless, many companies reengineer at the same time that they issue
mission statements proclaiming, 'Our employees are most important
assets, 'or launch new initiatives to increase 'employee involvement.'
As one superior executive, a veteran of reengineering, muttered recently
while listening to his boss give a glowing speech about working
conditions at their organization, 'I sure wish I worked for the company
he is describing.' " |
You may also be interested in other
relevant articles:
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Just-in-Time (JIT)
Manufacturing and Inventory Control System
-
Kanban
-
Total Quality Management (TQM) System
-
Six Sigma
-
Theory of Constraints (TOC)
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