it and bpr

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Business Process Reengineering and Information Technology:

4- 1 Business Process Reengineering and Information Technology

Basic Concepts :

4- 2 Basic Concepts Business process (What/why actions to produce outputs from inputs) Value added (Add value to organizational customers via values added to products/services) Business Process Reengineering (BPR) Fundamental changes to people and culture, organizational structure, policies/procedures, and technology Demand chain Pressures to produce products or provide services Supply chain Flow of materials, information, and services from raw material suppliers through factories & warehouses to the end customers (also includes organizations and processes that create and delivery those products, information, and services to the end customers)

Basic Concepts:

4- 3 Basic Concepts Supply chain management Planning, organizing, coordinating all supply chain activities to reduce uncertainty and risks and positively affect inventory levels, cycle time, business processes, and customer service Extended supply chain Combination of the push of the supply chain and the pull of the demand chain Networked organization Linking functional components of the organization via Intranets, Internet, LAN, and WAN Organizational transformation

What is a Business Process???:

4- 4 What is a Business Process??? A collection of activities that take one or more inputs and turn that into a product that adds value to a customer A Business Process

Demand and Supply Chains:

4- 5 Demand and Supply Chains DEMAND CHAIN--all activities that relate to obtaining an order among all participants SUPPLY CHAIN--all activities that occur once you get an order EXTENDED SUPPLY CHAIN--both the demand and supply chains taken together Corresponds to the value system concept with analysis of the values chain components Supply chain analysis seeks to primarily maximize values and support activities all along the extended value chain it is 5-6 times more difficult to get a new customer than it is to retain an existing one

The Need for BPR:

4- 6 The Need for BPR Customers (know what they want and are willing to pay for it) Competition (Continuous increase will result in changes to price, quality, selective service, and delivery) Change (continues to occur in people&culture, organizational structures, policies&procedures, and technology) Techniques lag behind technology (Technologically capable, but not functionally operational) Problem of the stovepipe (lack of communication between vertical functional areas) Fragmented piecemeal systems (focus on vertical functions, with the existence of redundancies of effort and actions Integration across departmental and organizational boundaries (information and operations are needed)

Processes in Relation to Departments:

4- 7 Processes in Relation to Departments Marketing Engineering Manufacturing Field Service Figure 3-1. An Illustration of Departmental Stovepipes Departmental Stovepipes Order Fulfillment Customer New Product Introduction Customer Customer

The Principles of BPR and The Role of IT:

4- 8 The Principles of BPR and The Role of IT Characteristics of BPR (Fundamental change in organizations) Methodologies and frameworks for BPR Enabling role of IT

Characteristics of Business Process Reengineering:

4- 9 Characteristics of Business Process Reengineering Several jobs are combined into one Employees are empowered to make decisions Steps in business process: natural order Process may have multiple versions Work is performed where it makes the most sense

Characteristics of Business Process Reengineering:

4- 10 Characteristics of Business Process Reengineering Controls, checks, other non-value-added work is minimized Reconciliation is minimized - minimize external contact points Hybrid centralized / decentralized operation is used A single point of contact is provided for the customer

Business Process Reengineering and Restructuring the Organization:

4- 11 Business Process Reengineering and Restructuring the Organization Redesign of processes (Fundamental change in business processes) From mass production to mass customization (Mass production of the same products --- Mass production of different products) Cycle time reduction (Change in the time it takes to complete a process from start to end; time can provide competitive advantage Restructuring organizations (May need to restructure the entire organization to reap the benefits of BPR)

Common Benefits of BPR:

Common Benefits of BPR Enterprise integration Departments are consolidated Several jobs are combined into one job Worker empowerment There is both horizontal and vertical reorganization Handoffs are eliminated There are fewer rules and less coordination is required

Common Benefits of BPR, Cont’d:

Common Benefits of BPR, Cont’d Number of steps in a process are reduced This is simplification Inspections, checks and controls are reduced or eliminated The steps are performed in a more natural order

Common Benefits of BPR, Cont’d:

Common Benefits of BPR, Cont’d Like Process Improvement, steps are reassessed Can it be eliminated Can it be taken off line Can it be performed in parallel Can it be combined Is it a bottleneck Can its mean be reduced Can its variance be reduced WHAT IS ITS COST???

Common Benefits of BPR, Cont’d:

Common Benefits of BPR, Cont’d Processes differ by the type of job being processed Not just one process but many are employed depending on the size of the job Work is performed where it makes the most sense Wal-Mart moves the replenishment function to its suppliers

Common Benefits of BPR, Cont’d:

Common Benefits of BPR, Cont’d Reconciliation is minimized A case manager provides a single point of contact Hybrid centralized/decentralized operations are prevalent IT enables decisions to operate autonomously

Benefits of elimination of handoffs:

Benefits of elimination of handoffs No transits No waiting for another operator No waiting in queues No setups No supervision/coordination required

Cost and Quality in relation to cycle time:

4- 18 Cost and Quality in relation to cycle time Cost Quality Time

The Networked Organization:

4- 19 The Networked Organization Structure of networked organizations Informal, less structured, delegate/lead, ownership/participant, empower employee asset, shared ownership of information, flatter/manageable organizations, risk management, team contributions Empowerment Vesting employees with traditionally held managerial authority for decision making or approval authority Empowerment may require training regarding new/existing skills Companies are also empowering customers, suppliers, and other business partners (Extranets support external empowerment) IT / empowerment relationship IT important contribution is providing the correct information at the appropriate time with the correct quality and appropriate costs IT can provide information that enhances the creativity and productivity of employees, as well as the quality of their work Teams Self-managed teams are performing many organizational functions Permanent work group teams Problem solving teams Quality circles Management teams Virtual teams

Virtual Corporations:

4- 20 Virtual Corporations A virtual corporation is an organization composed of several business partners sharing costs and resources for the purpose of producing a product or service. Can be a Temporary or permanent virtual corporation Composed of several components at different locations that have different ownership of resources at those different locations

Major Attributes of Virtual Corporations:

4- 21 Major Attributes of Virtual Corporations Excellence (Different partners have different competencies) Utilization (Resources put to better use) Opportunism (Organized to meet market opportunities or meet market threats) Lack of borders (Indeterminable border of VC) Trust (Much more reliance between business partners in VC) Adaptability to change (Quicker adaptation to change) Technology Networked IT is central to VC Inter-organizational systems (IOS) is often present between business partners IT facilitates communication and collaboration among dispersed business partners

Total Quality Management and Reengineering:

4- 22 Total Quality Management and Reengineering Rate of change TQM: continuous improvement Reengineering: dramatic improvement

TQM versus Reengineering:

4- 23 TQM versus Reengineering

Implementing Reengineering:

4- 24 Implementing Reengineering Redesign (Readiness for change) Retool (Transitioning to the change) Re-orchestrate (Institutionalizing the change)

Tools for BPR:

4- 25 Tools for BPR Simulation (Simulate organizational activities and scenarios) Flow diagrams (Modeling of the flows of things through the organization) Work analysis (Analysis of the existing process and proposed solutions) Application development (Create application to support/institutionalize the change) Workflow software (System controls into the hands of end-user – help automate business processes and provide a quality interface between business systems)

TASKS of the Re-engineering team:

TASKS of the Re-engineering team 1) determine measures of performance 2) install measures of performance 3) delineate entire existing process in all its gory detail 4) perform process value analysis and activity-based costing 5) benchmark processes by comparison with other processes

TASKS of the Re-engineering team, Cont’d:

TASKS of the Re-engineering team, Cont’d 6) design re-invented process 7) simulate re-invented process 8) prepare report with recommendations 9) install re-invented process 10) measure improvements


4- 28 HOW IS PROCESS REENGINEERING DIFFERENT FROM CONTINUOUS IMPROVEMENT? Process innovation endeavors to create catastrophic improvement in a single sweep whereas continuous improvement is incremental improvement over a period of time? Process innovation is top-down, whereas continuous improvement is bottom up Process improvement implies use of specific change tools, specifically information technology


4- 29 HOW IS PROCESS REENGINEERING THE SAME OR SIMILAR TO CONTINUOUS IMPROVEMENT? Both focus on cultural change: Operational performance Measurement of results Empowerment of employees


4- 30 PROCESS REENGINEERING VS PROCESS IMPROVEMENT IMPROVEMENT REENGINEERING Level of change Incremental Radical Starting point Existing process Clean slate Frequency of change Continuous One-time Time required short-term long-term Participation bottom-up top-down Typical scope Narrow Broad Risk Moderate High Primary enabler Statistical control IT Type of change cultural cultural/structural



Implementation Issues:

4- 32 Implementation Issues Improvement comes out of TQM Continuous evaluation Eliminating jobs Time Costs Quality

Implementation Strategy:

4- 33 Implementation Strategy Redesign Retool Re-orchestrate

Re-orchestrate: Organizational Change :

4- 34 Re-orchestrate: Organizational Change Leadership Corporate values Cultural change Incentives Accountability Zeal

Re-orchestrate: Organizational Change:

4- 35 Re-orchestrate: Organizational Change Communication Ambiguity Obstacles to change Celebrate success

Continuous Evaluation:

4- 36 Continuous Evaluation Is reengineering truly transformational? Will reengineering improve customer relations? Has reengineering cut across the organization? Is information technology playing an integral role in the reengineering solution? Does it hurt?

When to Use BPR?:

4- 37 When to Use BPR? Failure rate as high as 75-85% Improperly aligned BPR and IT Expensive Organizational resistance

Managerial Issues:

4- 38 Managerial Issues Ethical issues (SCM or BPR projects may lead to the need to lay-off, retrain, or transfer employees) BPR implementation (Few organization-wide BPR effort) Incremental improvement programs BPR tools (Often uses existing tools rather than creation of new tools) Role of IT (IT should be a supportive, not lead role in SCM and BPR projects) Failures (Big projects tend to increase failure rates) TQM and BPR

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