Business Process Re-engineering 02 – Principles & Dimensions
Dimensions & Characteristics Fundamental changes to process, technology and human factors to achieve dramatic improvements in key measures The dimensions & characteristics: • Balanced attention to processes, people and technology • Cross functional, process based perspective • Judged by measurable results achieved
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Process: The Basic Concept •
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What is a process? - “a collection of business activities that creates value for a customer - a transformation of inputs(s) into output(s): a state of change Re-engineer processes, not functions or organisations Some typical processes: - concept to prototype : develop product - target to customer order : acquire customer - customer order to pay : fulfill order - purchase request to payment : procure materials - enquiry to resolution : service Slide 3 of 21
Process viewpoint
Identification and mapping - identify, name and relate the processes to each other • Ownership - assigning owners for all processes • Measurement - establishing and communicating end-to-end customer driven process measures and measurement mechanisms •
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Process viewpoint
Management - evaluate process performance against customer needs and competitive benchmarks • Awareness - creating appreciation of the organisation’s processes and customers - develop a process-oriented mindset •
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The Business operation The business operation diamond
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Business Processes
Jobs and Structure re q
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Values and Beliefs
Management and Measurement Systems
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The Impact of BPR The business operation diamond in context Competitor actions Customer needs
Technological and environmental factors Assessment of capabilities
Business Processes
Jobs and Structure INFRASTRUCTURE Values and Beliefs Management and Measurement Systems Slide 7 of 21
Elements of BPR
• Process focus • Radical change • Dramatic improvement BPR is about competitiveness.
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Process Focus
• A set of linked activities that adds value to the process to create an effective output • Focus should be on core business processes that addresses the external customer and supplier
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Radical Change
• The objective is to address competitiveness and marketdominance • Radical change provides a new way of building core competencies and good investment management
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Dramatic improvement
• To achieve major improvement in the core process • Planning, procedures and resources are required • Measure, control and manage the process
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BPR Model Competitiveness BPR Process focus
Radical change
Dramatic improvement
Change and risk management Best practices - the foundation for success
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Why re-engineer ?
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Downsizing / Rightsizing Customer satisfaction Quality improvement goals Functional performance improvement Reduce costs Increase speed (of service) Overcome a competitive threat Change of organisational structure
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Process Improvement Possibilities
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Eliminate duplicate activities Combine related activities Eliminate multiple reviews and approvals Eliminate inspections Simplify processes Reduce batch size Outsource inefficient activities Centralise or decentralise functions / activities
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Reasons to improve processes • Invisible – Managers delegate their knowledge – Process performance is not measured • Inconsistent – Jobs, measures and infrastructure are not aligned with the current process • Ignored – Processes often unmanaged and rarely updated • Ill conceived – Processes and policies are developed piecemeal and informally rather than designed as a whole Slide 15 of 21
BPR is different
• High ambition – Improvements in key performance measures, such as cost, quality, service or speed • Process focus – A customer-oriented viewpoint. No organisational boundaries
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BPR is different
• Creative rule-breaking – Finding assumptions about normal business practice and customers’ needs • Information technology to enable the above – IT enables new ways of working through substitution and automation
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Typical benefits BPR produces
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Improve customer service Reduce cycle time Improve quality Reduce costs Increase market share Reduce product development time Increase sales
Think of specific examples for various processes
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Value-chain analysis • Developed by Michael Porter : – To classify, understand and analyse an organisation’s value-added processes to achieve competitive advantage – To analyse how to improve cost structure (productivity) and add value (differentiation) – Applicable to any industry – Processes classifed into 5 Primary activities and 4 Support activities
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Value-chain analysis Firm Infrastructure
PR O
Human Resource Management Technological Development
FI T
Service
Marketing and Sales
Outbound Logistics
Operations
Inbound Logistics
Procurement
P
T I F O R
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Value-chain analysis Financial Policy Flight/ Route and Yield Analysis Training
Accounting Pilot Training Pilot Safety
Regulatory Compliance Baggage Handling Training
Computer Reservation System/ Inflight System/ Flight Scheduling System/ Yield Management System
Legal
Community Affairs
Agent Training
Inflight Training
Human Resource Management
Product DevelopmentBaggage Tracking Market Research System
Technological Development Procurement
Information Technology Communications • Route selection • Ticket counter • Baggage system • Promotion • Passenger operations • Flight connections• Advertising service system • Gate operations • Rental car and • Advantage • Yield • Aircraft operations Hotel reservation programmes management • Onboard services system • Travel agent system (pricing) • Baggage handling programmes • Fuel • Ticket office • Group sales • Flight scheduling • Crew scheduling • Facilities planning • Aircraft acquisition Inbound Logistics Operations Outbound Logistics Marketing & Sales
• Lost baggage services • Complaint follow - up
Service Slide 21 of 21