Business Process Re-Engineering

Business Process Re-Engineering

The manufacturing industry today is significantly challenged by slow growth and a tough global economy. In order to remain competitive in the global marketplace, manufacturers are adopting radical corporate strategies -- like flattening the organization, globalizing production, forming strategic alliances with customers, suppliers and competitors, merging with other companies to form new structures, decentralizing business units, and creating global business units. Having to deal with a whole new set of non-traditional competitors can slow progress of even the sleekest of companies. This has necessitated Business Process Re-Engineering (BPR) for manufacturers of all sizes (Greenberg, 2004).

Background

There a number of definitions of business process re-engineering (BPR). Klein and Manganelli in their book "The Reengineering Handbook" defines it as the "Rapid and radical redesign of strategic, value added business processes-and the systems, policies and organizational structures that support them-to optimize work flows and productivity within an organization (Greenberg, 2004).

. Johansson and McHugh in their book "Business Process Reengineering: Breakpoint Strategies for Market Dominance," defines it as "The means by which an organization can achieve radical change in performance, as measured by cost, cycle time, service and quality, by the application of a variety of tools and techniques that focus on the business as a set of related customer-oriented core business processes rather than a set of organizational functions. Robert Jacobs in his book, "Real Time Strategic Change" defines strategic change (similar in concept to BPR) as an "Informed, participative process resulting in new ways of doing business that position an entire organization for success, now and into the future." (Greenberg, 2004).

Analysis of Business Needs

The first step of any process is to define levels of process and the needs to meet these different stages of any business re-engineering plan. The reason we need to define and frame the set of goals or needs the business requires is to resolve the problem and not the symptom of any problem. This can easily be the case if in-depth analysis is not followed by asking the following questions broken up in 6 stages. (Greenberg, 2004).

Stage 1

Preparation: What is the level of organizational commitment; what are the expectations; what are the project goals? Who should be on the team? What are the required skill sets? How will results be communicated to the organization?

Stage 2

Identification: What are the major business processes? How do these processes interact with customer and supplier processes?;

Stage 3

Vision: What are the sub-processes, activities and steps that makeup the major business processes; How do resources, information and work flow through each process; Why do we do the things we do now (getting out of the box or mental prison);

Stage 4

Solution: Technical Design: What are the required technical resources and technologies needed in the reengineered process?

Stage 5

Solution: Social Design: What are the required human resources? What immediate, near term and long range opportunities exist

Stage 6

Transformation: How and when should progress be monitored? (Greenberg, 2004).

Risk of Investment

Risk of Investment or ROI is a big part of the analysis process. Without proper contingency to any possible outcomes faced, results could deviate from a very static to dynamic nature ending in financial failure. The main 5 failure points are listed below:

Failure Point 1

Spending megabucks on new technology while giving little or no thought to changing the organization's underlying business processes. The later is often far more difficult since it involves invading political turfs and soul searching by the company's key executives. (Greenberg, 2004).

Failure Point 2

Delegating the task of re-engineering to an outside consulting firm. Usually this firm has a little or no track record in reengineering or industry specific experience. The outside firm is a sort of "crutch", relieving the organization from the sometimes arduous but always rewarding task of empowering and involving their employees at all levels in the reengineering process. Often this outside firm is used to help them in making the technology decision, a task they are usually only marginally qualified for. (Greenberg, 2004).

Failure Point 3

On the other hand, involving the right outside consulting firm can be critical in breaking down organizational barriers and providing a fresh, presumably objective organizational assessment. The outside firm can also facilitate team building which is critical to sustaining the reengineering process. All too many companies will tell me that they know their problems, so why bring in an outside firm. But do they really know their problems? Have they developed a clear methodology to address their reengineering needs? (Greenberg, 2004).

Failure Point 4

Inability to identify key breakpoints in core business processes. Breakpoints are defined as the achievement of excellence in one or more value metrics where the marketplace clearly recognizes the advantage, and where the ensuing result is a disproportionate and sustained increase in the supplier's market share. (Greenberg, 2004).

Failure Point 5

Another common error, most companies fail to commit the resources, internal or external to the task. Their key executives are so busy "putting out fires"; they think they don't have time to address BPR planning needs. BPR