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Industrial Engineering

Chapter 1

Productivity Improvement through

Business Process Reengineering

1

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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

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Derivation of BPR

! Business Process Reengineering (BPR) is the fundamental redesign of anorganization and its operations to achieve dramatic performanceimprovements in areas of cost, quality and cycle time.

! ABusiness 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 twotypes of processes.

! Operational/core processes carried out by frontline workers in deliveringservices to customers.

! Management support processes that assist the frontline workers in deliveringcustomer services.

! In Reengineering, existing assumption governing the organization arechallenged, paving the way for the radical redesign of how business isconducted.

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Derivation of BPR

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Benefits from BPR

! Costs can be dramatically reduced.! Improve efficiency can reduce cost.! Eliminating unnecessary task can cut cost.! Quality can be improved.

! BPR reduce error rates in producing, delivering goods and services.! Processes are streamlined.

! Faster access to information! Better decision making! More efficient process! The work environment is enhanced.

!Employee morale climb! Commitment are improved! Working conditions are enhanced.

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Six Guiding principles!

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.

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Organizing to Reengineer

! The sponsor! The project management team! The design teams! The steering committee

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Scoping and targeting

! When the business direction has been confirmed, it ispossible to begin the step of reviewing the existing

business processes and selecting those to be redesigned.

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! Information gathering and data collection (multipleline of evidence).

! Identification of opportunities.! Screening of opportunities.

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! 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

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

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! Identification of opportunities! Analysis based on the process models! Identification of bottlenecks, redundancies and inefficiencies.! Assessment of current performance and refining performancetargets. Steps:! identifying key performance indicators! assessing current performance level! assessing target performance! identifying performance gaps and translating these into

reengineering targets! Identification of potential enablers.! Identification of quick hits.! Identification of constraints.! Determination of order of magnitude cost-benefits foropportunities identified.

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! 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 identifyopportunities for improvement.

! Ideas from interviews with staff.

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! Screening of opportunities! Proof of concept

! The concept proposed will actually deliver the requiredresults.

! Project team challenge! Examine long list of opportunities and rank them.! Cost-benefit analysis

! Carried out to the level of detail needed to identify thesuperior project and opportunities.

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Process design

! Six guiding principles help to ensure that processdesign is focused and will yield the desired results.

! Identify what, not who or where.! Design processes for the vast majority of situations, the

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.

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Change Management

At the start of the project

! Begin by evaluating the degree to which theorganization is ready for change.

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

! Identify and mobilize change agents within theorganization.

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Change Management

Throughout the Project

! Find and detect any sources of resistance to thechange by

! Generate a sense of urgency that will challenge thestatus quo.! Communicate constantly! repeat messages often

! change the vehicles and the words! focus the message toward achieving the

change, not looking at the past.

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Change Management

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

time results.! Ensure that senior management leads by example.! Provide any necessary training.! Reward peoples efforts.! Risk of failure can be minimized by this.

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Change Management

Continuous Improvement

! Further improvement of change management process.

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Future Trends Business

Performance Improvement

! Most organization experience proliferation ofchange projects.

! A shared understanding or framework of thedynamics of the change process is necessary.

! Focus on tangible results revenue growth,enhanced customer service, improved quality ordramatic time-cost reductions.

! Thus, the organization recognizes thetransformation as Business PerformanceImprovement (BPI).

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Assignment 1

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

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