chapter 9 management innovation for modern businesses: business process reengineering (bpr)

Chapter 9 Management Innovation for Modern Businesses:

Business Process Reengineering (BPR)

Objectives

After studying the chapter, students should be able to..•Explain definition of Business Process Re-engineering(BPR)•Describe Framework of BPR •Identify characteristics of BPR•Identify potential benefits of BPR for businesses•Identify things to prepare for BPR implementation •Explain why BPR one of management innovation.

Content

Introduction

BPR

BPR Methodology

BPR Successful and Failure Factors

BPR Implementation

BPR Evaluation Framework

BPR : Significant Management Innovation

BPR: Successful Case

Summary

Content

Introduction

BPR

BPR Methodology

BPR Successful and Failure Factors

BPR Implementation

BPR Evaluation Framework

BPR : Significant Management Innovation

BPR: Successful Case

Summary

Introduction

When is BPR in need:•Customer•Competition•Change

Introduction

Success stories:“Wal-Mart reduces restocking time from six weeks to thirty-six hours.”

” Hewlett Packard’s assembly time for server computers touches new low- four minutes.”

“Taco Bell’s sales soars from $500 million to $3 billion.”

Content

Introduction

BPR

BPR Methodology

BPR Successful and Failure Factors

BPR Implementation

BPR Evaluation Framework

BPR : Significant Management Innovation

BPR: Successful Case

Summary

BPR

Definition: BP + R•Business Process

A set of logically related tasks or activities performed to achieve a defined business outcome (Bozarth & Handfield: 92)

•Re-engineering the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance such as cost, quality, service and speed.

BPR

Definitions of BPR:“the fundamental rethinking and radical redesign of the business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed". (Hammer and Champy,1993)

BPR Framework

BPR framework (Grant and Mergen) source: Park Win Ying (2012)

BPR

BPR

Purpose of BPR:make all business processes best-in-class.

BPRCharacteristics of BPR:•Several jobs are combined into one.•Employee empowerment.•Steps in the processes are performed in natural order, and several jobs get done simultaneously.•Processes have multiple versions. •Work is performed where it makes the most sense.•Controls and checks and other non-value-added work are minimized.

BPR:

Roles of Information Technology:•a major enabler for new forms of working and collaborating within an organization and across organizational borders

BPR

Benefits of BPR:•Increase Effectiveness.•Reduces cost.•Meaningful job for employees.•Improvement in organizational approach.•Growth of business

BPR in Action: Claim Resolution Process

After BPRBefore BPR

BPR

Content

Introduction

BPR

BPR Methodology

BPR Successful and Failure Factors

BPR Implementation

BPR Evaluation Framework

BPR : Significant Management Innovation

BPR: Successful Case

Summary

BPR Methodology

BPR Methodology a structured set of guidelines that enable an analyst to derive ways for problem solving called IDEF0 model. (Hammer, 2000)

1. Prepare for Re-engineering2. Map and Analyze As-Is Process3. Design To-Be process4. Implement Reengineered Process5. Improve Process Continuously

BPR Methodology

IDEF0 Model: BRP Methodology (Hammer, 2000)

Content

Introduction

BPR

BPR Methodology

BPR Successful and Failure Factors

BPR Implementation

BPR Evaluation Framework

BPR : Significant Management Innovation

BPR: Successful Case

Summary

BPR Successful & Failure FactorsSuccessful Factors•Organization wide commitment.•BPR team composition.•Business needs analysis.•Adequate IT infrastructure.•Effective change management.•Ongoing continuous improvement

BPR Successful and Failure FactorsFailure Factors•One department may be optimized at the expense of another•Lack of time to focus on improving business process•Lack of recognition of the extent of the problem•Lack of training•Inadequate infrastructure•Overly bureaucratic processes•Lack of motivation

Content

Introduction

BPR

BPR Methodology

BPR Successful and Failure Factors

BPR Implementation

BPR Evaluation Framework

BPR : Significant Management Innovation

BPR: Successful Case

Summary

BPR Implementation

•Where the technique has being applied•Types of firms / organizations that BPR can be applied

BPR Implementation1. Where the technique has being

applied• public and private sector organizations• SMEs• multinational cooperations

1.1 Purposes:• downsizing in organizational structures• improve service process• organizational upgrade with innovated IT

tools i.e. SAP, BAAN, ERP

BPR Implementation2. Types of firms / organizations

that BPR can be applied• Minimum Number of employees: 20• Strong management commitment to new

ways of working and innovation.• Well formed IT infrastructure

2.1 Applied to Company’s Problem 2. High operational costs3. Low quality offered to customers4. High level of ''bottleneck" processes at

pick seasons5. Poor performance of middle level

managers6. Inappropriate distribution of resources

and jobs

2.2 Duration and implementation cost of BPR•The duration of each BPR project varies from 6 -to 10 months.

BPR Implementation

2.3 Conditions for implementation (infrastructures required)

• An operating transactional and accounting computerized system inclosing the commercial part of the transactions.

• A network that connects all key personnel.

• Workstations with Windows • An exchange server (MS outlook, or MS

back office)

2.4 Organizations Supporting the Implementation of BPR

BPR Implementation

Content

Introduction

BPR

BPR Methodology

BPR Successful and Failure Factors

BPR Implementation

BPR Evaluation Framework

BPR : Significant Management Innovation

BPR: Successful Case

Summary

BPR Evaluation framework

To signify the difficult trade-offs that sometimes have to be made they refer to their model as the devil’s quadrangle. (H.A. Reijers, S. Liman Mansar / Omega 33 (2005))

Content

Introduction

BPR

BPR Methodology

BPR Successful and Failure Factors

BPR Implementation

BPR Evaluation Framework

BPR : Significant Management Innovation

BPR: Successful Case

Summary

• Criteria of Management Innovation Radical, new at the time Marked departure from previous

management practices Conferred a competitive advantage on

the pioneering company Lasting, being found in some form in

organizations today

BPR: Significant Management Innovation

Content

Introduction

BPR

BPR Methodology

BPR Successful and Failure Factors

BPR Implementation

BPR Evaluation Framework

BPR : Significant Management Innovation

BPR: Successful Case

Summary

After BPR implementation, Ford Motors (India) can induce significance increase of effectiveness and efficiency of business process.

BPR: Successful Case

BPR: Successful Case

BPR : Successful Case

Content

Introduction

BPR

BPR Methodology

BPR Successful and Failure Factors

BPR Implementation

BPR Evaluation Framework

BPR : Significant Management Innovation

BPR: Successful Case

Summary

Summary