Operations Consulting Skills and Business Process Re-engineering

1. Operations Consulting Skills and Business Process Re-engineering

2. Overview • Managing a consulting organisation • Stages of operations consulting • Tools • Principles of BPR

3. Operations consulting - an expertise and research service to clients, assisting them to: • develop operations strategies e.g. product leadership, operational excellence etc. • improve production and service delivery processes • Internal (management services, operational research) and external

4. Growth in Operations Consulting • Competitive pressures on clients to • reengineer core processes • eliminate non-core processes • secure more efficiency and productivity, quality and excellence in delivery • Globalization - lean organisation, operational flexibility, outsourcing and operational networks/collaborations • Benefits of information technology

5. 5 Ps of Operations Consulting • Plant, location and facilities management • Adding and locating new plants • Expanding, contracting, or refocusing facilities • Parts/Supplier Network • Make or buy decisions • Vendor selection decisions • Processes • Technology evaluation • Process improvement &reengineering • People • Quality improvement • Setting/revising work standards • Learning curve analysis • Planning and Control Systems • Supply chain management • MRP • Shop floor control • Warehousing and distribution Source: Chase and Aquilano

6. Finders Minders Grinders Relationships within Consulting Firms Partners Managers Consultants Source: Chase and Aquilano

7. Why bring in Operations Consultants? • major investment decisions • Technical expertise shortage • Consultants have wide project expertise often in the problem area under investigation • Short term project - not long term employment • a fresh view on maximising the firm’s productive capability.

8. Stages in Consulting Process • Unfreezing • Feasibility, Sales & development proposal • Do Problem Analysis • System Design and modelling • Develop performance measures • Evaluate options • Present final report • Join team to implement changes • Fine tune and ensure client satisfaction • Review what has been learnt

9. Tools 1: Heuristic Problem solving Analyse situation Trend, urgency, size • Methods • Issue trees • 5 forces competitive advantage model • QualServ • Systems analysis • Customer & employee surveys • Gap analysis • Prototyping • Technical vs human Problem definition Actual vs symptoms Objectives/resources Generate and Compare solutions Options/criteria/costs Implementation planning Review systems Info systems/visibility

10. Tools 2: Surveys/Data gathering Plant observation/audits Work sampling and analysis Flow charting Organisation charts Method study Systems analysis

11. Tools 3: Analysis and Solution Development Problem analysis (SPC tools) Bottleneck analysis Modelling and simulation Statistical tools Project planning CPA

12. BPR • Systems Thinking • Business Process Reengineering (BPR) • Origins • Main principles and approach • Organisation of a BPR programme • Process Analysis and Charting • Problems of BPR

13. Systems view of business Environment Entropy Transformation Process Inputs Outputs/outcomes Information Adaptation Feedback

14. What is a process? …..any operational or administrative system which transforms inputs into valued outputs - typically a sequence of tasks arranged into a procedure or set of work arrangements perhaps involving various machines, departments and people.

15. What is a business process? • ….. service processes including those that support production processes (e.g. order process, engineering change process, payroll process, manufacturing process design). A group of logically related tasks that use the firm's resources to provide customer-oriented results in support of the organisation's objectives. • Making sandwiches to order • Seeing a sales order through from beginning to end • stock replenishment procedures • aircraft maintenance e.g. in a hanger or whilst waiting on the tarmac between flights

16. BPR Objectives Hammer and Champy, Re-engineering the Corporation, Harper Collins, 1993 • Making processes • effective - producing the desired resulted • efficient - minimising the resources used • adaptable - being able to adapt to changing customer and business needs. • BPR Philosophy • Radical, cross functional, dramatic

17. BPR Principles Radical Break away from out-dated, patched, obsolete arrangements and practices Fundamental Re-design generate new, deeply penetrating, best-way methods. Process Re-design core activities cross-functionally, Break-down departmentalism. Departments are “structure” solutions to past organisational problems - not fixed for ever. Dramatic Not incremental or marginal improvements but performance breakthrus: cost, quality, service & time-compression.

18. BPR Targets well-defined and managed processes • Need • process owners - accountable for how the process performs • well-defined boundaries (process scope), internal and external interfaces & responsibilities • well-documented procedures, work tasks & training measurement & feedback controls close to point of performance • customer-related measurements & targets • known cycle times • formalised change procedures • performers to know how good they can be be

19. Apply systems thinking to business processes • Focus on & organise around outcomes • Provide direct access to customers (internal + external) • Harness best technology • Control through policies, practices and feedback • Enable independent & simultaneous work • Give decision-making power to workers • Build in feedback channels

20. BPR Philosophy Does the re-engineering consultant see the glass as half full or half empty?Neither. It’s the wrong size of glass! "If you want to get to Heaven, I wouldn't start from here.Instead........ "

21. BPR - process innovation • Existing, long-in-the-tooth practices (solutions to past problems) may no longer reflect core business concerns nor what the customer actually wants • Rethink & redesign business processes to bring about sharp improvements (radical change) in performance, costs, cycle times and product/service quality.

22. BPR - Re-discovery of Industrial Engineering • George Siemens (1839-1901) information & measurement systems. • Scientific Management. The study of work (scientific management and work measurement) - associated with FW Taylor (1856-1915). • Method and time study - Frank and Lillian Gilbreth • Frederick Herzberg - Job enrichment • Brain-storming • Systems analysis for computer systems • Deming et al - Total Quality Management and Kaizen • In Search of Excellence (Peters and Waterman) • Value-added analysis (Porter).

23. BPR and Information Processing Systems • Large software systems growing old, • Limitations of early construction tools • millions of lines of patched code to maintain. • New tools (client server databases, graphic interfaces, 4GLs) cut development and maintenance costs • more knobs, buttons, access and processing power • Slow change in operational/administrative methods because of dependency on complex mainframe applications. • New technologies so timely to re-design processes • Why a new IT system without improving the business process it serves?

24. BPR Phases

25. PHASE 1: Organising for improvement Objective: build leadership, understanding & commitment Activities • establish Executive Improvement Team (EIT) • Appoint BPR champion • provide executive training • develop an improvement model • communicate goals to employees • review business strategy and customer requirements • select the critical processes • appoint process owners • select BPR Team members

26. PHASE 2: Understanding and redesign the process Objective: understand all dimensions of current business process Activities • define process mission, scope and boundaries • provide team training • develop a process overview • define customer/business measurements & expectations for the process • identify improvement opportunities * errors and re-work * high cost * poor quality * long time delays/backlog • Record/chart the process • collect cost, time and value data • perform walkthroughs on new process • resolve the differences (existing/new, ideal/realistic)

27. PHASE 3: Implementation Objective: secure efficiency, effectiveness and adaptability of the business process on implementation Activities • eliminate bureaucracy & no-value-added activities • simplify the process and reduce process time • standardise and automate • up-grade equipment • error proof the process and document it • select and train the employees • Plan/schedule the changes

28. PHASE 4: Measurements and controls Objective: develop a process control system for on-going improvement Activities • develop in-house measurements and targets • establish a feedback system • audit the process periodically • establish a poor-quality cost system

29. PHASE 5: Continuous improvement Objective: to implement a continuous improvement process Activities • Qualify/certificate the process • perform periodic qualification reviews • define and eliminate process problems • evaluate the change impact on the business and on customers • benchmark the process • provide advanced team training

30. Continuous improvement Incremental gradual change Low investment People-practices focus Improvement on existing Work-unit driven BPR Radical change High investment People and technology focus Scrap and rebuild Champion driven How is BPR different from CQI

31. Process definition and charting • Analyse (identify and chart) the process elements and steps in the process flow

32. Define/record process elements • Raw materials • Product (output) design • Job design (sequence, simplification, empowerment etc) • Processing steps used - what is done, in sequence, methods and techniques used/applied, • Equipment or tools • Management control information • People – actors (direct/indirect staff, customers, supply relationships (internal & external)

33. Operation(a task or work activity) Inspection(an inspection of the product for quantity or quality) Transportation(a movement of material from one point to another) Storage(an inventory or storage of materials awaiting the next operation) Delay(a delay in the sequence of operations) Process Analysis Elements

34. Questions to Ask in Process Analysis • What does the customer need?, operations are necessary? Can some operations be eliminated, combined, or simplified?…. • Who is performing the job? Can the operation be redesigned to use less skill or less labour? Can operations be combined to enrich jobs? …. • Where is each operation conducted? Can layout be improved? …. • When is each operation performed? Is there excessive delay or storage? Are some operations creating bottlenecks? ….. • How is the operation done? Can better methods, procedures, or equipment be used? ….

35. BPR and Bench-marking • The BPR team may benchmark another company's process to determine • process objectives • innovative practices • tried and tested methods • Benchmarking partners need not be confined to the same industry. • A photocopying firm on re-engineering its order processing system compared itself to mail-order firms as well rival photocopy companies.

36. BPR Problems • Begin with a clean sheet, avoid the existing way • Preoccupation with current operation blocks creativity • Thinking the process problem through in the light of new methods and technologies available. • Commitment to existing business processes • Avoid another quick fix yet organisational response needed • Finding the time and energy • The business needs to keep the old, existing core systems running • John Gall, “Systemantics” - If it works, don't change it!

37. BPR Problems • Choice of the target process - too big, too small • The “power and resourcing of the cross functional team” • A BPR programme is a tactic, a programme to stimulate a focus on improvement • BPR in isolation from strategic and operational plans will not work. Commitment of strategic managers is essential. • Isolated BPR efforts will lack direction and will get lost. • BPR introduced at times of stress and anxiety • Keeping the BPR team on target • The BPR team as action researchers • The costs of the change • Short-termism of the decision makers • Vaccination against change