Concept
IT & BPR
Implement
VSM
Lecture 5:
Business Process Reengineering (BPR)
Oran Kittithreerapronchai1
1
Department of Industrial Engineering, Chulalongkorn University
Bangkok 10330 THAILAND
last updated: February 6, 2012
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Outline
1
Concept of Business Process Reengineering
2
Information Technology & Business Process
Reengineering
3
Implementation of Business Process Reengineering
4
Improving Value Adding Process using Value Steam
Mapping
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What is Business Process Reengineering?
What: rethinking & redesign of business process for dramatic improvement
Typical definition: radical changes, business process, achieve major goal, IT
as critical enabler
Key elements: customer focus, empowerment, interaction
Goals: improving efficiency, effectiveness, & economy, service, market shared
Success stories:
Ford: order fulfillment
Xeror: order fulfillment
K-Bank: re-think, re-tools, re-process in 1996
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Developments of BPR
Origin: redesigning business process by Peat Marwick, McKinsey in mid 1980
Process focus: legacy of kaizen and TQM
Economic pressure: recession (downsizing) but global competitive
Productivity paradox: technology ∝
1
productivity
Popularizing:
Reengineering the Corporation by Hammer and Campy
Process Innovation by Davenport
Bandwagon effects: vague & varieties → failed expectation
Hangover effects: new Buzz word, only in IT/IS
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Example of BPR
PO
Purchasing
copies of PO
Database
claim
Warehouse
goods
Supplier
GR
invoice
Accounting
payment
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Principles of Re-engineering
Rule 1 Organize around outcomes, not tasks:
Rule 2 Information user = Performer: make decision working spot
Rule 3 Merge information processing with information generating:
Rule 4 Geographically dispersed resources ≈ centralized ones: esp,
information
Rule 5 Link parallel activities instead of integrating results:
Rule 6 Build control into process: not control process
Rule 7 Capture information at source:
adapted from: Chase & Jacobs. 2010. “Operations and Supply Chain Management.” pp.498
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Reengineering & other programs
Question
Downsizing
Staff
Automation
Technology
TQM
Customer
Reengineering
Business
fundamental
Change
Responsibility
System
Bottom-Up
Radical core
Orientation
Function
Procedure
Process
Process
Role Of It
Ignore
Speed-up
Incidental
Key
Goal
Frequency
Incremental+
One time+
Incremental
Periodic
Incremental
Continuous
Dramatic
One time
source:. Grover, V. & Malhotra, M.K 1997. ”Journal of Operations Management” vol 15
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Major elements of BPR
Org. Restructuring
Simplification
& Standardization
Manuf./Service Company
Behavioral
Change
Business Process
Reengineering (BPR)
Process Delivery
Customer
Multimedia, Internet,
JIT, MRP II,
CAD/CAM, CIM, EDI
Information Systems
source: Gunasekaran, A. & Nath, B. 1997. “Int. J. Production Economics.” vol. 50 pp. 93
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What is business process
Business Process: A group of logically related tasks that use the firm’s resources
to provide customer-oriented results in support of the organization’s objectives
source:. Davenport, 1993
Characteristics of business process
Definability: defined boundaries, input and output, activities, responsibly of
process owner.
Order: activities ordered according to positions in time and space.
Partner: ∃ customers (or partners)
Value-adding: must add value to partners.
Embeddedness: must embedded into structure.
Cross-functionality: may span several functions.
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Roles of IT in BPR
source: Gunasekaran, A. & Nath, B. 1997. “Int. J. Production Economics.” vol. 50 pp. 93
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Seven Myths about BPR
Myth 1 Reengineering is a radical one-time approach
Myth 2 Reengineering involves breakthrough performance gains
Myth 3 Reengineering enables change primarily through IT
Myth 4 Reengineering focuses on cross-function core business process
Myth 5 Reengineering enhances individual by empowerment and teams
Myth 6 Reengineering = Standardization
Myth 7 Reengineering must conduct as a top-down project
source:. Grover, V. & Malhotra, M.K 1997. ”Journal of Operations Management” vol 15
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Concurrent BPR:
Misused term: BPR (efficiency + tech - people ) ≈ downsizing & layoff
Pre-BPR: check for inefficiency, conditions, logical reason
BPR Options: clean state VS technology-enabled
Advantages
Clean State
• No constraints
Technology-enabled
• Ease to manage
• Retain competitiveness
• Feasible design
• Leap forward
• Tool and training
• Not subjected to software
change
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BPR Methodology
Preparation: senior executive, team members, crate momentum
Process-Thinking: priority business process, customers, value-added
Creation: reasons, steps (data, personal, machine), IT
Technical design: acquired resources, interaction
Social design: acquired personal, look of new organization, change
management
Implementation: smooth transfer, monitor progress, on-time & on-budget
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Common BPR problems
Change, itself: costs, no-so-strong desire, political resistance
Business process: too big or too small, complacency, alignment with
business objectives
New Developments: quick fix approach, reliance on existing processes
Fear of failure:
“If it ain’t broke, don’t touch it”
“If you break it, you own it”
Project management: poor timing and planning, lack of resource, keeping
team on target
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What is value stream mapping (VSM)?
What: one-page picture of process from suppliers to customer
Idea: depict material & information flows → secreting value adding from
non-value adding
Benefits: see process, productivity and simplify waste process →
Limits: ’just picture’, complexity, required lot of experience
Steps:
1
2
3
4
Define and pick product(s)
Create As-Is value stream mapping
Create To-Be value stream mapping
Develop action plan
Trivial: pioneering by Toyota
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Example of VSM
source: Jacob. etal 2011.
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Symbols using in VSM
source: Jacob. etal 2011.
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As-Is Value Stream Mapping
source: The Northwest Lean Networks
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To-Be Value Stream Mapping
source: The Northwest Lean Networks
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