BUSINESS PROCESSRE-ENGINEERING

at Magnet Joinery

Richard Hill

Lecture Plan

Background The Need for Improvement Total Quality Management What Went Wrong? BPR Results

Background

Leading manufacturer/retailer in UK Supply Retail, Trade and New Build Compete with DIY chains, Builder’s

Merchants 215 Outlets in UK 4 Manufacturing sites

The Need for Improvement

Significant change in marketplace Emphasis on non-standard products Customers increasingly impatient Design/advice services demanded for free Business can’t react quick enough Losing market position

Total Quality Management

“Achieve success through constantly meeting agreed customer requirements at the lowest cost, by continually releasing the potential of all employees”

TQM

Define customer needs Benchmark processes Change working culture Make employees accountable Constant, incremental improvement

TQM at Magnet

Employees and Trade Unions briefed Problem-solving training Quality Improvement Teams Process measuring Problems identified

– Solutions delegated

Results

Material cost of SA Door reduced by £0.82

Sales order lead-time reduced from 28 days to 23 days

Direct Sales LT increased by 2 days to 18 days

WIP increased by 12%

What Went Wrong?

Focus on low-level detail No macro picture Lack of coordinated effort Busy fools Benchmarks meant nothing Not quick enough Lack of commitment from workforce –

suspicious of thorny issues

BPR

Focus on whole business improvement Radical, one-hit approach Brutally honest Addresses processes across multiple

functions Ignores traditional departmental

boundaries

BPR at Magnet

Let’s face the facts:– Maintain output– Reduce costs– Convert losses to profits

More efficient business processes– Less staff required

BPR at Magnet 2

Customer needs/business goals identified BPR Project members gathered Existing processes measured Logical processes modelled Processes prototyped and systems selected Retrain and retool - implementation

BPR at Magnet 3

Direct sales – placement of order to deliver, 18 days Complete sales request – 2 days Assign matls to order – 2 days Assign to Distribution Schedule – 1 day Pass to Prodn. Planning – 2 day Schedule (Capacity plan) – 2 days Release to factory – 2 days Manufacture – 3 days Distribution – 4 days

BPR at Magnet 4

Process order – 2 days– Complete sales request– Assign matls to order– Assign to Distribution Schedule– Pass to Prodn. Planning– Schedule (Capacity plan)

Release to factory – 2 days Manufacture – 3 days Distribution – 4 days

Results

Direct Sales turnaround 11 days (18) Catalogue products in-store within 2 days (23) Sales Order transactions reduced by 64% Headcount reduced from 850 to 610 Distribution stock reduced by 28% Project Cost: £2.3M over two years Annual Savings: £4.3M (Keighley)

Key Features of Success

Unlike TQM, definite end to ‘project’– Easier to sell/justify/measure

Focus on business operations– Ignore existing barriers

Removal of waste – process queue time reduced Use of IT to streamline by automating Investigate thoroughly, model, trial, implement Up-front brutality, radical approach Culture better prepared for TQM

Summary

Background The Need for Improvement TQM at Magnet What Went Wrong? BPR at Magnet Results Key Features of Success