BPR

The Dream

Every company wants to be

• Flexible enough to adjust to changing market conditions

• Lean enough to beat competitor’s price
• Innovative enough to keeps products technologically fresh
• Dedicated enough to deliver quality and customer service
 BPR

What is Business Process Reengineering?

It is a notion of discontinuous thinking – identifying and

abandoning the outdated rules* and fundamental
assumptions that underlie the current business
operations.

* These rules are based on assumptions about

technology, people and organizational goals that are no
longer valid.
 Division of Labor

200 years ago

Adam Smith propounded the principle of division of labor.

Specialized workers replaced artisans.

If an artisan built 20 pins a day. Specialized workers

made 48000 pins a day.

This is the principle around which companies were built

for 200 years
 Command and Control
Ford invented the assembly line to apply the
concept of division of labor to production

Alfred Sloan extended the concept of division of

management.

To do 100 units of work per hour you need ten workers

plus one supervisor @ 10 units per worker.

To manage 1000 units of work you need 196 people.

• 100 workers, 10 supervisors, 1 Manager, 3 Asst Mgrs,
18 HR executives, 12 in Administration, 15 in a/c, audit
and planning etc.
 The 3 Cs
The factors forcing corporations to abandon age
old methods

• Customers
• Competition
• Change
 What is a business process

A business process is a set of activities that

taken together produce a result of value to the
customer
 A process view of Business
Customer Order

Accounting

Purchasing

Production

Logistics
Sales

Material Order

02/11/10 Copyright - ICFAI Business 8

School
 (dis) advantage of division of labor

Business process is complex

Advantages Disadvantages
No need for highly skilled No one takes responsibility
workers
Everybody is accountable
through bureaucratic chain
of command
 Reengineering defined

Reengineering is the fundamental rethinking of

and radical design of business process to
achieve dramatic improvement in critical
contemporary measure of performance in cost
and quality
 Case 1 – IBM Credit

receive log

request

Modify prepare quote

Case 2 – Ford Motors – A/C Payables

PO

purchase V vendor
IN

D/N
PO

GIN

A/C Rec. Clerk

Case 3 – Kodak– Product Development

• Single Use Camera

• Product development time – 70 weeks
• Sequential process
• Body  shutter  film advance  etc.
• Rework, wastage

Concurrent Engineering
• Parallel design
• CAD/CAM
• Design Database
• Parallel Production
• Product development time – 35 weeks
• Reduction in tooling and manuf. Costs 25% less
 BPR Enables

Old Rule New rule

IBM Every bid required unique Most requests are simple
(Ratings database) distinct process straight forward

FORD We pay when we receive We pay when we receive

(online database) invoice goods

Kodak Design is a sequential Design can happen

(Design Database) process concurrently
 BPR Requirements

• Process orientation
• Rule breaking
• Ambition
• Creative use of technology
 Who needs BPR

• Companies in deep trouble

• They have no choice – do something radical
• OK companies now but see trouble ahead
• New competitors, new regulations, changing customer needs
• Peak companies doing very well
• Build entry barriers, Set standards