Highlights of our full range of training courses / Workshops:
Lean & Agile Supply Chain / Inventory Modelling
Lean & Agile Manufacturing Planning & Control
Operations Management / Team Leader Training
Step Change Management / Business Process Reengineering
Continuous Improvement
Procurement (Purchasing & Supplier Management)
IS / IT / e-commerce
Product Management / New Product Introduction / Quality Management
Bookmarks for this topic below:
Our full range of training
Relevant Training / Workshops
Relevant Further Reading
Relevant Training Course / In-house Workshop Highlights:
Training for the BPR project team:
S02 Business Process Re-engineering (Detail)
Training for the management team: S01 BPR Executive Overview
You may also wish to consider the following related training courses:
S03 Vision of a World Class Organisation
S04 Strategic Capacity Analysis
S05 World Class Change Management
S06 / S07 Benchmarking
S08 Programme Management
S09 Project Management
S13 Culture Development Methods
Relevant Further Reading:
The following further articles were mentioned in this paper:
a. Permanently Maintained Website Articles:
Introduction to Benchmarking
Focused Improvement Systems (Continuous Improvement)
IS / IT Strategy Software Selection and Implementations
Implementing ERP computer Systems
Postponement and Mass Customisation
Agile Manufacturing
Culture Development
b. Previously Featured Articles from our Archives
(Up to 2 per organisation available on request):
Previous Best Practices:
B041: "21 Barriers to Lean & Agile"
Previous Techniques:
T006: Pareto Analysis
T007: CARAP Analysis
T013: SWOT Analysis
T021: "Takt Time"
T026: Product life cycle analysis
T030: Impact / Ease Analysis
T033: Process FMEA
Previous Questions:
Previous Malpractices:
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Organisational Redesign (Business Process Re-engineering) (BPR)
This article provides an overview of Business Process Re-engineering
(Organisational Design), including types of organisations, the
reasons for a strategic review of organization & processes, the method of doing so,
and some
of the problems.
Links to
related training and further reading on left
In a small business the owner does everything. As the business
grows the owner has to employ functional specialists to which he or she delegates certain aspects of running the business. Over
time these functions expand to a point where they become
departments, and often barriers are erected (often physical)
between departments. As documents, materials and information flow
between departments, delays start to occur as they pass from
in-tray, to out-tray, to in-tray again. Often defensive systems
such as date-stamping and countersigning start to emerge as one
department blames another for a mistake or delay. Office politics emerge.
Complicated procedures
emerge. As they expand, departmental hierarchies are created and departments
relocate creating communications difficulties. The business products or services
change. Paper work, meetings, computer systems and conference calls, grow in an attempt to counteract
these difficulties to an extent where it is actually
almost impossible to co-ordinate activities and get things done. It is at
this point that the objectives of the organisation can actually
be in conflict with the current organisation and procedures, and
costs go through the roof.
This is the time to sit back
and think there must be a better way!
Organisations
There are basically four types of organisation:
- A project is a series of related
one-off tasks designed to produce a one-off or small volume
output and typically non-repetitive. Implied in project work is the intensive
co-ordination of different specialists, in large-scale longer-term
undertakings (e.g. a block of houses, possible of the same design or
dissimilar designs).
- A function is a collection of activities relating to a skill-set,
person or institution, frequently referred to as a department (e.g. The finance
department).
- A process is a sequence of logically related
activities, tasks, or procedures with a goal and leading to an
outcome. A process can cover a number of people in different functions.
In fact it is independent of function.
- A composite example to put these last two terms into context might be that the accounts
function do credit checking on a new
customer, as a part of the sales process.
- Matrix organisations are a mixture of these, where you will
have for example a functional manager (say for your pay and rations) and a project manager
(for individual jobs).
These are often called "dotted line" relationships, particularly
where an executive at HQ has a functional role. The difficulty in
these relationships is that the compromises, that are often
necessary to satisfy two bosses, are not defined properly with
rules of engagement (or terms of reference), which often results
in pleasing neither.
Procedures
- A procedure is a series of prescribed actions carried out in a
certain order or manner (e.g. a purchasing procedure).
BPR
Inefficiency arises when an inappropriate mechanism is used to achieve an
outcome. E.g. In the composite example above, why can't the sales department do
credit checking (following suitable training), without reference to the finance
department? There may be good reasons for the current situation, but they should
be systematically challenged. E.g.
- What is the objective of this process? (The objective of a sales process
is fairly obviously to sell.)
- Is this task needed in the context of selling? If it is:
- Who decides the priorities for this task?
- What is the best way of doing it?
- Why does the accountability, responsibility and task move between
departments?
- Why can't the person who does credit checking sit in the sales
office?
- Etc.
This is where "Business Process Re-engineering" ("BPR", "Business Process
Re-design", or as it is sometimes called "Organizational Redesign") is useful. BPR generally
approaches a problem from the point of view of the (internal or external) "customer" and
of the whole process. Customer views are required to ensure that the
eventual design actually satisfies them. Process views are
required to try to remove the in-tray / out tray problem, and to focus
activity within the process on its goal, not individual functions,
so that unneeded or irrelevant activity is removed.
However the
functional organisation has strengths too, in greater critical mass and
therefore (in theory) flexibility and resilience. There are therefore a set of
arguments as to whether functions should be centralised or decentralised. These need to be considered.
The BPR Project
There are five stages to a BPR development project:
Stage 1: Define the need (“To Be”), approach & priority (the design
criteria for the new process & the scope & priority of the proposed development)
(Stage 1 clearly distinguishes BPR from other types of improvement process.)
Outputs of Stage 1:
- A clear "future state" view of prioritised actions derived from business plan,
(i.e. The future objectives for this process):
- The competitive position / required performance characteristics
- Critical Success Factors (CSF's) for the business (what you must be
good at)
- A subjective view of process quality (the extent to which it is
contributing to the Critical Success Factors (CSF's) for the business)
- What options are possible (from Benchmarking)
- A SWOT analysis of the situation required (“To Be”)
- Current symptoms of the 21 barriers to lean
& agile processes (wastes)
- Scope of proposed development (BPR / other projects)
- Justification / Budget for the project
- How the project will be managed
Stage 2: Agree the current “As-Is” process
Outputs of Stage 2:
- A clear, unambiguous, agreed, documented, understanding of the current
(“As-Is”) six drivers of performance and the whole process ready to critically analyse
verses the requirements established in stage 1
Stage 3: Analysis & Concept Design of “To-Be” (Ideally, in outline, how we
want the new process to work)
Outputs of Stage 3:
- An innovative, lean & agile proposed process, which is realigned to and
meets the requirements established in stage 1
- A simplified, reorganised, responsive, proposed process with waste
removed
- Control systems established to manage the proposed process
- Quick wins identified
- Risks identified
Stage 4: Detailed Design (How “To Be” will work in detail)
Outputs of Stage 4:
- A proven, detailed design of the
proposed process & control systems to make work flow & manage dynamic states
(see below)
- A revised floor plan
- Resource requirements
- Proposed computer systems, Equipment, Materials handling, Skills
required
- A costed implementation plan of the new process
- Justification (cash flows) of the new process (implementation &
running costs)
Stage 3 & 4 have to consider not simply average conditions, but also
anticipated dynamic conditions, so perhaps a little more explanation of design is
needed:
Steady State Design
This takes a snapshot of the situation and defines the processes,
simplifies them, removes waste and redesigns them using average
requirements. The main considerations for steady state design are:
- Purpose of changes (objectives of new process)
- Takt Time (The underlying average demand for the product or service) (See
Previous Technique 021: "Takt Time")
- Average resources needed for the new process and constraints within
it
Dynamic Design
This takes a view that the variables in the business which impact this
process cannot all been
eliminated and that the systems need to function in adverse, cyclic / seasonal, or
dynamic circumstances, and that processes rarely operate in "average"
circumstances. The main considerations of dynamic design are:
- Variables defined (input, process, output)
- Flexibility defined
- Control systems selected
- Buffers required to accommodate variability defined
(capacity & / or inventory)
- Mechanisms for responding to variability defined
- Mechanisms tested
- Measurement & control systems defined
Stage 5: Implementation, Institutionalisation & Improvement
Outputs of Stage 5:
- Handover of the new process to operations
- Institutionalisation of the process ("standard working" / auditable)
- Realigned culture & behaviour
- Measures of performance to drive Focused
Improvement Systems (FIS)
- Post implementation review to ensure the benefits have been achieved &
the lessons learned
Scale
There are two schools of thought on the scale of BPR projects:
- It has to start from a strategic view or you will simply
be making a low level activity or function more efficient
(sub-optimising).
- It has to be done on a small scale to deliver anything within
a satisfactory time-scale and budget and also minimise risk.
Frequently BPR are IT are either separated or piggybacked in a
software implementation or in a process redesign, for similar
reasons.
All of these views are correct:
- Large scale BPR is a great
revenue earner for large consultancies, but can cause
chaos in implementation (High risk but without the
opportunities presented by IT can be sub-optimal).
- Small scale BPR at a department level can
be making a function "efficient" at doing unnecessary things
when viewed from a higher level (Small effect).
- BPR without appropriate technology / IT makes for effective but
often inefficient operation. It can also lead to not
exploiting technology to do something that is otherwise
impossible (Solving the wrong problem).
- BPR in conjunction with major technology / IT change has
resulted in catastrophic short-term effects, with large
projects often in major over-run, but usually with the
best long-term outcome. (Very high risk, very high
benefit).
- In software
implementation or computerization, organisational and
procedural matters are often forgotten resulting in:
- automating an ineffective process;
- or applying an
inappropriate technique;
- or layering the new software
processes on top of the old ones;
- duplicating the work
and eventually failing. (Low risk, little or no benefit).
(See Implementing ERP Computer
Systems).
Resources
There are a further four considerations on resources for BPR projects.
- The best people should be assigned to the project on a
full time basis for the duration of the project, (and
usually given the plum jobs in the redesigned business).
This may give short-term difficulties, since these people
are the main people running your business today, but delivers the best results and
provides for simple project management.
- Part time and sub-contract resources are
sometimes used to
undertake the project. This keeps your business running
but usually the project management is difficult. In
smaller businesses this may be the only way it can be
done, but the results are generally not so satisfactory.
- The process should be participative to overcome resistance to change, (not
invented here), which is often encountered on imposed solutions.
- It will be difficult to overcome inter-function disputes, and
remove the politics from the process unless the project is
managed by a senior person, with local knowledge and all the
stakeholders are represented.
Impartial outside help can alleviate these problems but does not solve them.
Project Management
Regular project management reviews by senior executives should
prevent terms of reference drift, as well as control project
quality, cost and time-scales. We cover this topic in our training courses
S08: Programme Management. & S09
Project Management.
Tools and Techniques
The tools & techniques of BPR include:
- Purpose analysis (To identify the objectives.) (See
"Focused Improvement Systems")
- Competitive comparison (Competitive criteria plus SWOT analyses)
- Process Quality Management (PQM)
- Strategic Capacity Analysis:
- Resource capability (CARAP Analysis)
- Core competence
- Critical Success Factors (CSF's) vs. Performance Drivers Analysis
- Change management (Force field Analysis & Relationship Mapping) (To
identify cultural constraints)
- Brown paper flowcharting
- Process Activity Analysis is our own (superior in terms of
comprehensiveness and identifying waste, in our view) brand of what is sometimes called
"Value Stream Mapping" or "Flowcharting" (To identify current or future information,
material, or document flows.)
- Waste analysis (To identify waste in the current
process.) We use our three proprietary techniques to establish waste:
- Complexity / Variability Analysis
- Agility Analysis (Our 118 point self diagnosis) (See
Agile Manufacturing) (Yes it is applicable to
non-manufacturing businesses.)
- 21 wastes (which does include the original 7 wastes of Ohno) (see
Previous Best Practice 041: "21 Barriers to
Lean & Agile")
- Ownership Analysis (To identify changes of ownership of
material, information or documents, during their life cycle.)
- Benchmarking (To identify
alternative strategies, organisation, processes,
procedures and methods.)
- Resource Domination Analysis, which aims to identify what products or
services consume what resources as an aid to reorganising resources within a
process, has been developed by us from what was originally called "Runner
Repeater Stranger" analysis to produce more self contained processes.
- Product life cycle analysis (To identify whether
investment in particular products and processes are
worthwhile.)
- Pareto Analysis (To sort the wheat from the chaff, in
products, processes, value, space utilisation etc.)
- Segmentation (A method of virtually, or actually
segmenting the business or processes.)
- Input / Process / Output diagrams (A method of defining a
process)
- Control Systems Design (A method of identifying
appropriate control systems techniques for the new
situation.)
- Measures of Performance Design (A method of identifying
how the new process will be measured.) (See Focused Improvement Systems)
- Culture Development (A method of identifying cultural
development needs.)
- Postponement and Mass Customisation
Commonality Trees Analysis
(A method of improving flexibility, and reducing lead
times.)
- Impact / Ease Analysis (A method of identifying the
appropriate things to develop and how to control their
development.)
- Risk analysis, SWOT, and
FMEA (Methods of identifying
which aspects of the process or development are risky and
which need close monitoring or preventative measures to
avoid problems.)
- Simulation (One of the methods of testing the new design prior to
implementation.)
We teach most of these techniques in detail in our S02
Business Process Reengineering training & others in detail in a number of our
other courses (See below). However a significant innovative input is
required to avoid this process simply making the present process more
efficient instead of more effective. This is provided by Blue Skies
(breakthrough) lateral thinking.
Some final words of warning!
When designing you are designing for the future. Neither you,
nor I have a crystal ball, however you need to be aware of
technology trends and innovations, and guard against adverse
eventualities using sensitivity analysis, and contingency planning. I am aware of one
large, multinational, organisation that disbanded a department designed to support integrated business
processes &
software, at a time when ERP software was just emerging. They had to reengineer
the process shortly afterwards. (See "World Class Change Management"
training.)
In the early days of BPR, we used to think that the outcome was a design that
would last for ever. However we were surprised by several clients who said that
they were experiencing difficulties less than two years after the BPR project
was successfully (in everyone's view) completed! Of course some requirement had
changed, which had not been foreseen and the design itself was too inflexible to
easily assimilate the change. This has caused us to reengineer our dynamic
design methodology considerably, away from conventional steady state,
Value Stream Mapping approaches.
Value Stream Mapping can & does provide quick wins
on waste reduction, & is incorporated into our BPR training, but cannot by
itself produce robust, long lasting, processes.
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