Business Process Reengineering (BPR):
Learning objective of the articles:
Definition and Explanation of the Concept:
Business Process reengineering (BPR) is a more radical approach to improvement than total quality management (TQM). Instead of tweaking the existing system in a series of incremental improvements, in process reengineering a business process is diagramed in detail, questioned, and then completely redesigned to eliminate unnecessary steps, to reduce opportunities for errors, and to reduce costs. A business process is any series of steps that are followed to carry out some task in a business. For example, the steps followed by your bank when you deposit a check are a business process. While process reengineering is similar in some respect to TQM, its proponents view it as a more sweeping approach to change. One difference is that while TQM emphasizes a team approach involving people who work directly in the process, process reengineering is more likely to be imposed from above and to use outside consultants.
Process reengineering focuses on simplification and elimination of wasted efforts. A central idea of process reengineering is that all activities that do not add value to a product or service should be eliminated. Activities that do not add value to a product or service that customers are willing to pay for are known as non value added activities. For example moving large batches of work in process from one work station to another is a non value added activity. To some degree just in time (JIT) involve process reengineering as does total quality management (TQM). These management approaches often overlap.
Process reengineering have been used by many companies to deal with a wide variety of problem. For example, the EMI Records Group was having difficulty filling orders for its most popular CDs. Retailers and recording stars were rebelling–it took the company as much as 20 days to deliver a big order for a hit CD, and then nearly 20% of the order would be missing. Small, incremental improvements would not have been adequate, so the company reengineered its entire distribution process with dramatic effects on on-time delivery and order fill rates. Reynolds & Reynolds Co. of Dayton, Ohio, produces business forms. Filling an order of a customer used to take 90 separate steps. By reengineering, the number of steps was slashed to 20 and time required to fill an order was cut from three weeks to one week. Massachusetts General Hospital is even using process reengineering to standardize and improve surgical procedure.
Employees resistance is a recurrent problem in Process Reengineering. The cause of much of this resistance is the fear that people may lose their jobs. Workers reason that if process reengineering succeeds in eliminating non value added activities, there will be less work to do and management may be tempted to reduce the pay roll. Process Reengineering, if carried out insensitively and without regard to such fears, can undermine morale and will ultimately fail to improve the bottom line (i.e., profit). As with other improvement projects, employees must be convinced that the end result of the improvement will be more secure, rather than less secure, jobs. Real improvement can have this effect if management uses the improvement to generate more business rather than to cut the work force. If by improving process the company is able to produce a better product at lower cost, the company will have competitive strength to prosper. And a prosperous company is much more secure employer than a company that is in trouble.
Real Business Examples:
Design by Computer:
One of the most time consuming and expensive business process is the design stage in product development, which had traditionally relied on paper and drafting tools. Dassault systems has met the challenge of reengineering this process and has created Catia, the top selling CAD/CAM allows engineers to design and develop products on a computer. This eliminates huge amounts of paper work and slashes the time required to design and develop a new product. Catia is used by nearly every air craft manufacturer and was used by Boeing to design the777. DaimlerChrysler used Catia to design the new jeep Grand Cherokee. By debugging the production line on screen, the company saved months and eliminated $800 million of costs.
Source: Howard Banks, “Virtually Perfect,” October 4, 1999
The Dark Side of Process Reengineering – Possible Disadvantage:
Process reengineering that is imposed from above and that results in disruptions and layoffs can lead to cynicism. Eileen Shapiro, a management consultant, says that ” reengineering as often implemented can erode the bonds of trust that employees have toward their employers. Nevertheless, many companies reengineer at the same time that they issue mission statements proclaiming, ‘Our employees are most important assets, ‘or launch new initiatives to increase ’employee involvement.’ As one superior executive, a veteran of reengineering, muttered recently while listening to his boss give a glowing speech about working conditions at their organization, ‘I sure wish I worked for the company he is describing.’ ”
You may also be interested in other useful articles from “business and quality improvement programs” chapter:
- Just-in-Time (JIT) Manufacturing and Inventory Control System
- Total Quality Management (TQM) System
- Six Sigma
- Business Process Reengineering (BPR)
- Theory of Constraints (TOC)