industrial revolution’s model of organization and production sumber kepustakaan :...

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Industrial Revolution’s Model of Organization and Production

Sumber Kepustakaan : gunston.gmu.edu/ecommerce/mba731/doc/BPR_all_Part_I.ppt

Complex work is broken down into simple and repetitive tasks that are performed in sequence by specialists. Specialization of labor: Individual jobs become simple Sequential processes: Coordinating people becomes more complex

(The role of the hierarchy) Narrow and repetitive jobs: De-skilling the work forces

Managers’ job is to control the quantity, cost, and quality of the work performed. Control as a dominant style Financial-oriented scoreboard

Employees are organized by business function. Hierarchical structure


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Problems

Functional departments become barriers to change.

Too much time and money are spent in ineffective coordination and communication.

Too little time for doing work that really benefits customers.

Overheads are soaring. Business processes are evolved over a period

of time and are not designed to handle changing business environments or to take advantages of emerging technologies.


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Process Evolution

"We are structured today by historical accident. As we added products, we added functional stovepipes."

"Processes in organizations have never been designed in the first place."


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Definition of Reengineering

The fundamental rethinking

and radical redesign of

core business processes to

achieve dramatic improvements in

critical performance measures such as

quality, cost, and cycle time. Source: Adapted from Hammer and Champy, Reengineering the Corporation, 1993

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What Business Reengineering Is Not?


Automating: Paving the cow paths. (Automate poor processes.)

Downsizing: Doing less with less. Cut costs or reduce payrolls. (Creating new products and services, as well as positive thinking are critical to the success of BPR.)


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Reengineering Is ...

Obliterate what you have now and start from scratch.

Transform every aspect of your organization.

Source: Michael Hammer, “Reengineering Work: Don’t Automate, Obliterate,” Harvard Business Review, July-August, 1990, pp. 104-112.

Extremist's ViewExtremist's View


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Gordian Knot

In a Greek legend, nobody could untie a knot tied by King Gordius of Phrygia. Many people tried to untie the knot, but nobody succeeded.

... until Alexander the Great found a smart and direct solution.


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Definition of Process

A process is simply a structured, measured set of activities designed to produce a specific output for a particular customers or market.

-- Thomas Davenport

Characteristics: A specific sequencing of work activities across time and

place A beginning and an end Clearly defined inputs and outputs Customer-focus How the work is done Process ownership Measurable and meaningful performance


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Types of Processes

Adapted from: Davenport, T. H. and Short, J. E., "The New Industrial Engineering: Information Technology and Business Process Redesign," Sloan Management Review, Summer 1990, p. 17.

Dimensions & Type Examples

Order from a supplier

Develop a new product

Approve a bank loan

Manufacture a product

Prepare a proposal

Fill a customer order

Develop a budget

Organization Entity• Inter-organizational

• Inter-functional

• Inter-personal

Objects• Physical

• Informational

Activities• Operational

• Managerial


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Processes Are Often Cross Functional Areas

M arketing& S ales

P urchase P roduc tion D is tribution A ccounting

C E O

Supplier

Customer/MarketsNeeds

Value-addedProducts/Services toCustomers

"Manage the white space on the organization chart!"

"We cannot improve or measure the performance of a hierarchical structure. But, we can increase output quality and customer satisfaction, as well as reduce the cost and cycle time of a process to improve it."


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Process-Orientation

Process-orientation is the key to the BPR success Remove stovepipe functionsFocus on cross-functional core process redesign “Link activities, functions, and information in new ways to

achieve breakthrough improvements in cost, quality, and timeliness.” *

* Source: Dichter, Gagnon, and Alexander, “Leading Organizational Transformation,” The McKinsey, Quarterly, 1993, Number 1.


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BPR and Other Organizational Initiatives

Alias: Process Innovation Core Process Redesign (CPR)

Relevant Initiatives in Organizations TQM Continuous Process Improvement Information Strategy Planning and Information

Engineering IT for Competitive Advantages

Related Initiatives in Public Sectors Reinventing the Government Functional Process Improvement (DOD)


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Ford Accounts Payable Process*

PO = Receiving Doc. = Invoice

Accounts Payable

Accounts Payable

VendorVendor

GoodsReceivingReceiving

Payment

Invoice

Receiving document

PurchasingPurchasingPurchase order

Copy ofpurchase order

*Source: Adapted from Hammer and Champy, 1993

? ?


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Ford Procurement Process

AccountsPayable

AccountsPayable

VendorVendor

GoodsReceivingReceiving

Payment

Goods received

PurchasingPurchasingPurchase order

Purchase order

Data base


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Ford Accounts Payable

More than 500 accounts payable clerks matched purchase order, receiving documents, and invoices and then issued payment.

It was slow and cumbersome.Mismatches were common.

BeforeBefore

AfterAfter

• Reengineer “procurement” instead of AP process.• The new process cuts head count in AP by 75%.• Invoices are eliminated. • Matching is computerized. • Accuracy is improved.


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Reengineered Process

Key Concept: • One queue for multiple

service points• Multiple services

workstation

industrial revolution’s model of organization and production sumber kepustakaan :...

Documents

reengineering work

production sumber kepustakaan

problems sumber kepustakaan

business reengineering

complex work

business function

extremists view slide

hierarchical structure