Study on Process Reengineering of Medium and Small Coal Machine
Manufacture Enterprises
Jing-wen An, Zhi-qiang Zhang
School of Management, China University of Mining & Technology, Beijing
(zzqhot@126.com)
Abstract - Based on the theory and method of process
reengineering, this paper implemented process engineering
on JY company which is a coal machine manufacture
enterprise. On the basis of analysis, diagnosis and
optimization on existing process, process system and
organizational structure were reengineered, and related
management system were establish. That shows that BPR is
an important way for medium and small coal machine
manufacture enterprises to standardize enterprise
management, enhance organization and coordination
flexible, promote enterprise competition ability.
especially the small and medium sized enterprises whose
standardization management is weak and the organization
flexibility is poor, after the systematical analysis and
careful arrangement and recreate process, can effectively
standardize enterprise management, enhance the
organization and coordination flexibility and promote
enterprise competition ability.
Keywords - medium and small enterprises, coal machine
manufacture enterprise, process reengineering
A.
I.
INTRODUCTION
Since the 1980s, with the rapid development of the
world economy and technology, the uncertainty of the
enterprise survival environment is increasing, the
competition which enterprises are facing is also becoming
increasingly fierce, which mainly reflected in the
competition of variety, quality, price, time and service.
Only the one who has advantages in these five respects
can survive and develop. Enterprises used a lot of
advanced management methods and manufacturing
technology, and the comprehensive using of these
technology and methods, indeed, has improved and
enhanced the enterprises’ competitiveness [1]. However,
among them, process reengineering is the most effective
method to improve the competitiveness of the enterprise
in terms of the point of strategy.
Business Process Reengineering (BPR) in developed
country are widely applied, some big companies such as
IBM, HP, Siemens, and other enterprises implemented
BPR, have made outstanding achievements, and business
regards it as an important strategy to achieve competitive
advantage as an industrial management revolution. In our
country, the implementation of BPR also has successful
cases, such as the Haier group to apply internal market
chain management in the whole group via BPR, establish
business flow, logistics and the product, which is the
successful model of BPR implementation [2]. The small
and medium-sized enterprises are in small scale, simple
organizational structure, less management level, easier
communication and simple external environment, these
features are conducive to the implementation of process
reengineering.
By using BPR thoughts and methods on JY company
as an example, this paper states that the enterprises
Ⅱ.
PROCESS REENGINEERING THEORY
The Concept of Process Reengineering
After 1990's, 3C (Custom, Competition, Chang)
have made the uncertainty of market demand increased
greatly, further more the enterprises are facing a rapid
changing and unpredictable buyer's market, the traditional
production and management pattern already unable to
react to the market, it is in this circumstance ,in the
beginning of 1990’s, American Dr.Hamor proposed
management thinking "business process reengineering",
and then in the United States and other industrialized
countries , made the core management revolution of the
"business process reengineering"[1].
Ha defined process reengineering as:" the
fundamentally rethink and completely redesign of
enterprise business process in order to improve enterprise
cost, quality, service and speed significantly." BPR
emphasis on improving process and customer needs and
satisfaction, the use of advanced information technology,
manufacturing technology and modern management
means, maximizing the technical function integration and
management function integration, to break the traditional
functional organization structure , building a new process
of organizational structure, so as to realize the
improvement of enterprise in cost, quality, service, speed,
and other aspects and enhance the enterprise market
reaction rate and the market adapt greatly [2].
B. Process Reengineering Steps
Successful implementation of enterprise process
engineering and establishing implementation plan is very
importantly, the implementation of the plan is the
strategic
planning
implementation
of
process
reengineering. Different scholars’ summarization of BPR
implementation stage and stage classification are different,
but the general ideas are basically the same. The key is to
grasp the principle and contents of various stages [3]. The
model figure of process reengineering implementation[4]
(see Fig.1).
Strategic
Vision
BuiId vision,
Selecting key process,
Ready to change
organization
Project
Initiation
Set up the project team,
Project planning,
Identify the target
Process
Diagnosis
Express existing
processes,
Analyze existing
processes
New Process
Design
Design new processes,
Design new
organizational structure,
Design new human
resources
New Process
Implementation
Staff training,
NEw salary system,
New IT arrangement
Continuous
Improvement
Continuous
improvement Of New
process,
Restructure other
processes
Fig. 1 Model figure of process reengineering implementation
C.
Ways of Process Reengineering
(l) New reengineering method [5]
This method makes us to rethink the way of product
and service providing designing process in a white paper
fundamentally. The new method will start from the target,
and gradually pour push, process should be designed to
reach the requirements of the organization. This method
is profound, dramatic, high risky and has big resistance,
and may bring huge cost if the reform fails.
(2) Gradual transformation method
Through the systematic analysis of the existing
process, this method is to create new process based on the
existing process. This method is efficient, advance step by
step, and has a lower risk of resistance and smaller
interference to the normal operation. Many big companies
at home or abroad regard continuous improvement as
important part of their enterprise culture, through the
work of the hundreds of thousands of small changes, the
huge performance improvement can be gradually
accumulated.
Ⅲ.
A.
JY COMPANY CONDITION
Company Introduction
JY company was founded in 60’s, after 30 years of
development, the efforts of several generations. JY
company has owned total assets of nearly forty million
yuan, 20 mu of land, nearly one hundred sets equipment
and 280 workers, and JY company is one of professional
production manufacturer of China's coal mine integrated
production mechanization equipment.
Company mainly manages manufacture, technical
development, technically services of industrial electrical
and mechanical equipment. Operation mode is
manufacture and sale primarily. The main products of JY
company are mining emulsion pump and its accessories,
spary pump station and its accessories, etc.
B. Present Situation and Problem Analysis
JY company predecessor is a branch factory of one
machinery company, mainly supplies mainly corporation
with all kinds of accessories of hydraulic and independent
product such as emulsion pump and spray pump. After
decades of construction and development, facilities,
product level, personnel quality have improved greatly.
However, the head office management system reform had
finished, the branch factory restructured into a company
in 2008, which brought this factory with the opportunities
and challenges. At the background of the financial crisis
and the integration of the coal mine in recent years, the
pump industry competition is intense, and the weak basic
management all lead to poor product quality, slow weak
customer demand response, which had made the company
lost a large market share in crisis edge.
Through the methods of field inspection, related
personnel's communication, special problem research and
material consultation, the following key problems were
found out.
(1)Organization structure aspect
JY Company used strict linear function structure
under original workshop management mode, Which had
not adapt to the need greatly to increase production
flexibility, speed up the external market response and
strengthen
internal
management;
Departments
responsibility divided was unclear, nonstandard and
imbalance, lacked of effective communication
cooperation mechanism between departments, and
organizational operation efficiency is not high. In the end
responsibilities and interests were unequal, and the
management ranges were too big, which lead to low
management efficiency.
(2) Management process aspect
The responsibilities of process units were not clear,
cooperation degree is not high, and the processes were
lack of flexibility, standardization, systematization. The
design and implement of Management process all existed
problems, and the setting of department and key position
were not reasonable which all led some management
process missing or fuzzy, and some processes often
appear as "short circuit" in the implementation process, so
the phenomenon of dispute over trifles and shuffle arose .
(3)Management aspect
Enterprise basic management is weak, because the
existing extensive management mode seriously restricted
the expansion of enterprise production capacity and the
enhancement of benefit; reform task was Serious, because
the company equity structure changed, and the company's
leadership adjusted hugely, and the reform referred to
benefit pattern adjustment. So this reform will affect
stability and spread to development if carelessly a bit.
(4) Other aspects
Ability crisis were increasingly serious, because of
the company's development and the change of external
environment, equipment ability, management level,
workshop area, process layout and technical strength,
human resources, enterprise culture and so on all would
not meet the demands of the new situation. And there is a
big gap among many domestic industry pump companies
on the capital strength technical level, management
experience and product quality.
From the above analysis, we can conclude that
current business process and organization structure of JY
company had been difficult to adapt to the new market
competition environment needs. Faced with such serious
situation, if not decisively reform, JY company might
face survival crisis soon. Although the risk of internal
management changes was high, but in the present
situation, the risks of no reformation would be greater
than the risks of implementing reformation. Therefore,
the implementation of the new process reengineering was
at a better time.
Ⅳ. IMPLEMENTATION OF PROCESS
REENGINEERING ON JY COMPANY
A.
external market environment and according to the
company management status, strategic objectives and
reengineering ideas, the objective of process
reengineering was made sure to construct "smooth
process, efficient organization, hard working personnel"
process management system, ensure the strategy
implementation of JY company successfully.
At the same time to ensure the smooth
implementation of the process reengineering, four core
principles were established: with process as the core
principle, people oriented principle, customer oriented
principle, quality first principle.
B.
Implementation of Process Reengineering
（1）Establishment of framework
With the best process management practice and
theory, and considering the practical situation, JY
company's overall processes were divided into two
classes: business process and management process.
According to the feature of specific production and
functional management, the first process framework of
JY company was formed (see Fig.2).
Meanwhile, on the basis of the framework, the
second and the third process were set up, and nine first
processes and fifty-six second processes and third
processes were set up preliminary [6].
Goals and Principles of Process Reengineering
On the basis of the analysis of the internal and
Business
process
Customers
exploitation and
maintaining
Product design
and
development
Procurement
Production
Delivery and
after sales
Operations management
Managem
ent
process
Human resource management
Smooth process,
Efficient
organizations,
Capable
personnel
Quality management
Financial Management
Fig. 2.
The first process framework of JY company
(2)Determination and optimization of key processes
Through the special conference and the matrix
analysis method, the determined key processes include
six key processes: production management, quality
management, financial management and so on. On the
basis of full understanding and analysis to the key process,
we should find and research the sickness of existing
process, and then to design process [7].
Take the process of production optimization for
example:
(3) Design plan of organization
Business process reengineering request to establish
process firstly, and then according to the new
organizational structure of flat process to streamline
management level, reduce the management cost and
delegate management, and the new decision point is
located in the business process execution place.
According to the analysis of the status and combined
with external best practices and the reality of JY company,
firstly, the organization frame structure design carried
through on the basis of framework system optimization of
JY company and according to "streamline organization,
personnel optimization" principle. Secondly, the
organization department functions boundary was
determined and department responsibility was written.
Then the fixation of posts and staff was determined based
on the design of organizational structure. Finally, key
position introductions were established.
Product Department
Responsible Department
Process Name
Levels
Responsible
Department
Production
Process Numbers
Department
Product Department
Node
A
Outsourcing
manufacturers
B
Quality Department
Sales Department
C
D
Product Department
Levels
One Level Process
Product
Outsourcing
Department
Department
manufacturers
Note
A
B
Process Name
Beginning
Corporate
Management
Department
Sales Department
D
E
Beginning
Consulate with relevant departments
to determine
contract
Release purchase
notice
Batch purchase
of raw material
1
Production
Process Numbers
Quality
Department
C
Release
purchase
notice
1
Release mass
production
notice
2
Whether to have
production conditions
2
Whether to have
production
conditions Random
否
Release mass
production notice
3
Prepare
production
plan
3
4
5
Production
plan
Release mass
production
notice
Prepare
production plan
4
If there is
outsourcing
arrangements?
5
Release
production
plan
Arrange the
outsourcing
manufacturers
6
Release
production plan
7
Organize
Production
Outsourcing review list (Manufacturer and
contract assessment)
Review
record
Arrange
outsourcing
Review
Yes
No
Yes
Production process
management/Outsourcing
manufacturers management
7
Include process
inspection
Production process
management/Outsourcing
manufacturers management
No
Organize
production
6
8
parts list（Sales Supply）
是
是
Include process
inspection
Product check
list
product
inspection
8
Product check list
Whether to
pass?
product
inspection
9
If they are
qualified
10
Product
storage
11
Delivery
发货流
程
process
Creates Unit
Unqualified
product disposal
process
No
Product
storage,
ERP
operation
9
Yes
10
JY Company
Fig. 3.
Signer
Date
No
Unqualified product
disposal process
Yes
Delivery
process
发货流程
JY Company
Creates Unit
Original production management process
If they are
qualified
Signer
General
office
Finishedparts
storage
Production
department
manager
Mechanical
processing
workshops
Standard part
storage
Finance
department
Production
department
Tool storage
General
manager
Sales
department
Technical
manager
Labour
union
Planning
Consumable
storage
General Assembly
Shop
secretary
Enterprise
management
department
Labor union
President
Material feeding
workshop
outsourcing
products
incoming
Production
vice manager
general
manager
Product
department
Sales vice
manager
Chief
accountant
Financial
department
Technical
department
Chief
engineer
laboratory
Dispatching
center
Supply
department
Sales
department
Quality vice
manager
Equipment
Department
Quality
department
Date
Fig. 4. Optimized production management process
Structure
section
Machining
section
Assembly
section
semi product
warehouse
Tool storage
Material
storage
Standard
partts Storage
Finishedparts
storage
laboratory
Quality
department
Gage
storage
Inspection
group
Equipment
security
department
Design group
Technical
center
Technology
group
Reproduction
room
Electrical
group
Fig. 5 Original organization structure
Any reform and innovation of management must
carry out on system level, which is an important principle
Fig. 6.
Optimized organization structure
to get rid of the rule by men for modern enterprise,
especially modern china enterprise, so process
reengineering as an important management innovation is
no exception. At the same time process reengineering is
an system engineering, need each aspect provide
guarantee for this to set up process management,
evaluation, compensation and other enterprise
management system, to effectively ensure the smooth
implementation of the process reengineering.
V.
EFFECT
From may 2010 the beginning of carrying out the
above process reform plan to may 2011, through the
continuous reform optimization, temporary workers
reduce by 30%; Organization operation efficiency and
production efficiency increase obviously, pump
production cycle reduces seven days; Product quality and
customer satisfaction improve significantly. Due to the
implementation of the new assessment method and salary
system, the worker enthusiasm is remarkably improved,
labor productivity increases by 20%, the per capita wage
of worker increases by 16%, annual output value
increases by 21% and profits growth rate is up to 28%.
These show that the effect of BPR on JY company is
obvious.
VI. CONCLUSION
This paper systematically analyzed the management
status of the JY company and existing problems, used the
method of combining theory with practice, and put
forward the implementing method of JY company process
reengineering. Through the study, the conclusions are as
follows:
(1) The right process reengineering can make the
enterprise operation efficiency and economic benefit,
product and service quality and customer satisfaction
increase hugely. Promoting process reengineering on the
small and medium sized enterprises similar to JY
company is the need for small and medium sized
enterprise to change development mode, realize leaping
development, increase enterprise flexible, improve
economic and social benefits and realize strategic
objective.
(2) BPR so far is just a thought, but not be called a
theory. Because as a kind of innovation theory, BPR is far
from mature, internal mechanism of BPR and deep
understanding of the essential rule are far from
established. And advanced thinking and theory are not
enough to bring the success to practice. Not perfect
method system and lack analysis tools are all obstacles
factors to effective BPR in practice. Therefore enterprises
in practical application avoid blind imitation by all means,
and should combine BPR with IE and other management
methods, only that can we guarantee the success of the
process reengineering [8].
(3)The practice of JY company business process
reengineering proved that the method of this paper for
enterprise process reengineering has certain directive
significance, and can reduce mistakes, improve the
efficiency, ensure smooth completion of the business
process reengineering[9][10].
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