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Business Process Reengineering. Maciej Derulski. What is a business process?. “A set of related activities that together achieve a defined business outcome and add value for customers” Purchasing Manufacturing R & D Marketing Sales. Types of Business Processes. Operational (core)
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Business Process Reengineering Maciej Derulski
What is a business process? • “A set of related activities that together achieve a defined business outcome and add value for customers” • Purchasing • Manufacturing • R & D • Marketing • Sales
Types of Business Processes • Operational (core) • Purchasing • Marketing • Manufacturing • Order processing • Managerial • Strategy • Direction • Support • IT • Finance • HR
Business Process Reengineering (BPR) • “Reengineering is the fundamental rethinking and redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed.” (Hammer & Champy 1993)
Michael Hammer • 1990, Michael Hammer published an article which claimed information technology is being used primarily to automate existing processes rather than using it to eliminate non value adding work.
Michael Hammer • Claimed: • Lots of work doesn’t add value for customer • This work should be removed and not accelerated through automation
Forces Driving BPR • Changes in the external environments • Particularly competitive & technological environments • Changes in customer wants, needs, and expectations
Forces Driving BPR • Changes in the external environments • Particularly competitive & technological environments • Changes in customer wants, needs, and expectations
Where do you begin? • high-level assessment of the organization's mission, strategic goals, and customer needs. • Does our mission need to be redefined? • Are our strategic goals aligned with our mission? • Who are our customers? What do they want or need? • The organization must first re-think what it should be doing before it can decide how to do it best
Where do you begin? • high-level assessment of the organization's mission, strategic goals, and customer needs. • Does our mission need to be redefined? • Are our strategic goals aligned with our mission? • Who are our customers? What do they want or need? • The organization must first re-think what it should be doing before it can decide how to do it best
Change Simulation • Remember the change simulation? • What was the first thing you did? • A high level assessment of organization’s mission, strategic goals, and customer needs.
Business Process Analysis • A business process can be decomposed into specific activities which can be measured, modeled, improved, re-designed, or eliminated.
Advantages of BPR • Enterprise Integration • Worker empowerment • Number of steps in a process are reduced • Organization becomes more efficient and hence more profitable
Disadvantages of BPR • Resistance to change • Higher demand on workers
Principles of BPR • Process point of view • Focus on generating more value for customers • Focus on activities which deliver value • Eliminate non-value adding activities • Keep amount of core processes to a minimum
Principles of BPR • Human point of view • Network related people and activities • Encourage involvement and participation • Make sure people are equipped, empowered and motivated
Wal-Mart • Reengineered supply chain by effectively using information technology • Inventory levels are tracked and ordering is automated
Wal-Mart • Manufacturers are linked into WalMarts system and receive automated orders • Makes WalMart very efficient at distributing products to its retail stores, and reduces storage costs.
