IE673Session 8 - BPR1 Business Process Reengineering (BPR)

IE673 Session 8 - BPR 1

Business Process Reengineering

(BPR)


Value Metrics

• Quality

• Service

• Cost

• Cycle Time


Value Metrics

Value =

Quality X Service

Cost X Cycle Time


The Crisis

• Often the efficiency of a company’s parts come at the expense of the whole

• Work that requires the cooperation and coordination of several different departments within a company is often a source of problems.

• Even when the work involved has major impact on the bottom line, companies have no one in charge.


First Driving Force - Customers

• Demand products/services designed for their unique needs.

• Expect product configured to their needs, manufacturing plans, and convenient payment terms.


Second Driving Force - Competition

• More different kinds• Niche competitors• Falling trade barriers• Adequate is no longer good enough.• Start-up companies

– Carry no excess baggage

– Do not play by the rules

• Technology changes the nature of competition


Third Driving Force - Change

• Pervasive and persistent• It is normality• At an accelerating rate

– Ford Model T - an entire generation

– Computers - two years

• Executives think their companies have change sensing radars


Quick Definition of BPR

• Means: “Starting Over”• Does not mean: Tinkering with what already

exists or making incremental changes• Ask: “IF I were recreating the company today,

given what I know and given current technology, what would it look like?”


Formal Definition of BPR

Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as quality, cost, speed, and service.


Four Key Words

• Fundamental– Why we do what we do?– Why we do it the way we do it?

• Radical– Disregarding all existing structures and

procedures– Inventing completely new ways of

accomplishing work.


Four Key Words (cont’d)

• Dramatic– Not for marginal or incremental improvements– Only when need exists for “heavy blasting”

• Processes– Most business people are not “process-

oriented”– They are focused on tasks, on jobs, on people,

on structures.


What BPR Is Not

• It is not another name for downsizing or some other business fix of the month.

• Downsizing or restructuring only means doing less with less.

• Reengineering means doing more with less.


Total Productivity MaintenanceY= yield (%)

t(u) = Up-time (%)

t(s) = Set-up time

t(rt) = Theoretical run time

t(ra) = Actual run time

M(eff) (%) = t(rt) /{t(rt) + t(s)}

Factory Overall Efficiency (FOE):

FOE = Y x t(u) x M(eff)


Example

Y = 90 %, t(u) = 80 %, t(rt) = 5.0 hours

t(ra) = 7.3 hours, t(s) = 5.0 hours

M(eff) = 5.0/{7.3 + 1.5}

= 5.0/8.8

= 0.568

FOE = 0.90 x 0.80 x 0.568 = 0.409


The 7 New Quality Tools

• General Planning

– Affinity Diagram

– Interrelationship Diagraph

• Intermediate Planning

– Tree Diagram

– Matrix Diagram

– Matrix Data Analysis

• Detailed Planning

– Process Decision Program Chart

– Arrow Diagram


Affinity Diagram

Gathers large amounts of data and organizes it into groupingsbased on the natural relationship between each item.


Interrelationship Diagraph


Tree DiagramSystematically maps out the full range of tasks/methods needed to achieve goal.


Matrix DiagramDisplays the relationship between necessary tasks and peopleor other tasks, often to show responsibility for tasks.


Data Matrix Analysis

Temp

Humidity


Process Decision Program Chart (PDPC)

Maps out every conceivable event and contingency that can occurwhen moving from a problem statement to possible solutions.

Problem Statement

Solution x

Things that can go wrong

Countermeasures

Solved


Additional Tools/Methods

• Benchmarking

• Process Simplification

• Concurrent Engineering

• Demand Flow Technology

• Activity Based Costing

• Eliminate Non-Value Added Activities

IE673Session 8 - BPR1 Business Process Reengineering (BPR)

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