Industrial Engineering

Chapter 1

Productivity Improvement through Business Process Reengineering

Productivity Improvement through Business Process Reengineering

! Organizational transformation ! Flexibility is demanded where customer is the focus ! this changes are arising from the new realities, which

include:
! ! ! ! ! ! !

customers demand unique products and faster service technological innovations happen at faster rate new products develop more quickly product life cycles are shorter governments are forced to reduce deficits global economy is experiencing low growth no protection exists from global competition

Productivity Improvement through Business Process Reengineering

Derivation of BPR
!

Business Process Reengineering (BPR) is the fundamental redesign of an organization and its operations to achieve dramatic performance improvements in areas of cost, quality and cycle time. A Business Process can be described as a group of usually sequential, logically related tasks that provide products and services to both internal and external customers by using organizational resources. It includes two types of processes.
! !

Operational/core processes carried out by frontline workers in delivering services to customers. Management support processes that assist the frontline workers in delivering customer services.

In Reengineering, existing assumption governing the organization are challenged, paving the way for the radical redesign of how business is conducted.

Derivation of BPR

Benefits from BPR

!

Costs can be dramatically reduced.

! !

Improve efficiency can reduce cost. Eliminating unnecessary task can cut cost. BPR reduce error rates in producing, delivering goods and services. Faster access to information Better decision making More efficient process Employee morale climb Commitment are improved Working conditions are enhanced.

! !

Quality can be improved.

!

Processes are streamlined.

! ! !

The work environment is enhanced.

! ! !

Six Guiding principles

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Be customer driven.
!Dont ignore customer !Customers needs and priorities are fully addressed. !Customers feedback is important

Look at function first, then form.

!Direction! Why project is undertaken? !What process to be redesign and who will involve? !How this people will participate? !Consider the physical infrastructure where the project will focus.

! ! !

Position technology as an enabler, not as a solution. Think cross-functional processes, not individual task. Set measurable performance targets.
!To provide the basis for project control. !Show anticipated result.

Demonstrate success early.

!Will provide encouragement to the team members and management to continue support the project.

Organizing to Reengineer
! The sponsor ! The project management team ! The design teams ! The steering committee

Scoping and targeting

! When the business direction has been confirmed, it is

possible to begin the step of reviewing the existing business processes and selecting those to be redesigned.

Scoping and targeting

! Information gathering and data collection (multiple

line of evidence).
! Identification of opportunities. ! Screening of opportunities.

Scoping and targeting

! Information gathering and data collection

(multiple line of evidence).

! As-is process modeling ! Activities that must be performed to produce the required outputs. ! the information required by each subprocess ! The external entities or stakeholders who are involved in the process in some way. ! Performance estimates. ! Interviews ! Research

Scoping and targeting

! Identification of opportunities
! Analysis based on the process models ! Benchmarking ! Ideas from interviews with staff

Scoping and targeting

! Identification of opportunities
! Analysis based on the process models ! Identification of bottlenecks, redundancies and inefficiencies. ! Assessment of current performance and refining performance targets. Steps:
! ! ! !

! ! ! !

Identification of potential enablers. Identification of quick hits. Identification of constraints. Determination of order of magnitude cost-benefits for opportunities identified.

identifying key performance indicators assessing current performance level assessing target performance identifying performance gaps and translating these into reengineering targets

Scoping and targeting

! Identification of opportunities
! Benchmarking
! Identify comparators by selecting leaders/innovators. ! Gather information on performance. ! Compare practices, policies and use of technology

enablers. ! Document, analyze performance gaps and identify opportunities for improvement.
! Ideas from interviews with staff.

Scoping and targeting

! Screening of opportunities
! Proof of concept
! The concept proposed will actually deliver the required

results.
! Project team challenge
! Examine long list of opportunities and rank them.

! Cost-benefit analysis
! Carried out to the level of detail needed to identify the

superior project and opportunities.

Scoping and targeting

Process design
! Six guiding principles help to ensure that process
! Identify what, not who or where. ! Design processes for the vast majority of situations, the ! ! ! !

design is focused and will yield the desired results.

look after the exceptions. Minimize permanent control functions. Confirm that each function adds value to the delivery of products or services. Screen all functions for consequences of elimination Confirm consistency with the business direction.

Change Management
At the start of the project
! Begin by evaluating the degree to which the

organization is ready for change.

! Are those effected aware that changes are coming? ! To what degree have the past change initiatives been

successful?
! Identify and mobilize change agents within the

organization.

Change Management
Throughout the Project
! Find and detect any sources of resistance to the

change by

! Generate a sense of urgency that will challenge the

status quo. ! Communicate constantly

! repeat messages often ! change the vehicles and the words ! focus the message toward achieving the

change, not looking at the past.

Change Management
! ! ! !

! Ensure that senior management leads by example. ! Provide any necessary training. ! Reward peoples efforts.

Throughout the Project provide as much information as possible. communicate progress acknowledge the costs acknowledge the success- producing on time results.

! Risk of failure can be minimized by this.

Change Management
Continuous Improvement
! Further improvement of change management process.

Future Trends Business Performance Improvement

! Most organization experience proliferation of

change projects.

! A shared understanding or framework of the

dynamics of the change process is necessary.

! Focus on tangible results revenue growth,

enhanced customer service, improved quality or dramatic time-cost reductions. transformation as Business Performance Improvement (BPI).

! Thus, the organization recognizes the

Assignment 1
! Scoping and Targeting
! Find an organization and state the current process. ! Identify opportunities ! Screening of opportunities