Whenever we order our drinks at the coffee shops on a daily basis, we are actually triggering a business process. When the waiter at the coffee shop takes the order at our table, he will pass our orders to the kitchen by yelling our orders from one end of the coffee shop to another. Most of the time, the kitchen helper will hear the order and start to prepare. The waiter will then go around taking a few other orders. After he is done with taking orders, he will collect the drinks from the kitchen and serve it to the customers.
Customers will then pay up for the drinks. In the event there isn’t enough change for big notes, the waiter will have to go back to the counter to break the notes into smaller variations in order to return the correct amount of change to the customers. In some cases, he might deliver the wrong order as he doesn’t note down the orders in pen and paper, he just passes on the order to the kitchen by shouting.
Many years down the road, the coffee shop has earned enough to pay for a renovation and overhaul. The boss of the coffee shop has decided to upgrade the coffee shop to a restaurant. He realises that he need to retrain his staff to operate the restaurant as the methods of operating a restaurant differs from the methods of operating the coffee shop. He also realise that he can incorporate some equipment to help him process orders more efficiently. In summary, he needs to change the way the restaurant does things (processes) and how he does things (Method/tools used to carry out the task). The boss has to do a total revamp of the methods and processes of how he was previously used to in the coffee shop. This is what is meant by business process reengineering. In definition, business process is an organizational change in its methods used to redesign an organization to improve efficiency and effectiveness (Mehta, 2011). Reengineering is the organizational change characterized by drastic process transformation.
Concepts BPR focus & Objectives In order for companies to operate more efficiently, reduce waste, retain their customers and drive sales, understanding and applying BPR is essential for this change to happen. Firstly, we have to map out the organization’s goals, objectives, primary business function, the people they have and the tools they use. The second objective would be to analyse the current process and redesign/revamp them. By doing so, companies will be able to achieve better ROI and eliminate waste. This will help the company to gain competitive advantage over others in its efficiency and also profits (Muharram, 2007). Perspective of BPR
BPR is a framework designed for companies to adopt. This framework helps to optimize processes by making it more streamlined. A good example to explain this point would be the difference between a vertical and cross functional organization.
In a horizontal organization, the customer interacts only with one party but in a vertical structure, customers might have to deal with different departments. Figure 3 shows a customer dealing with his account manager for the application of a loan. In the process, the customer does not need to deal with the different departments involved in the application of a loan. This allows the loan application to be more streamlined (Zigiaris, 2000). A vertical structure is not as efficient as customers will have to deal with several departments to process their requests. In a call centre environment, when the customer logs a call for a IT issue, the calling department will answer his call and log the case.
He will then be transferred to the technical department who will assist him with 1st level troubleshooting. In the event he cannot solve the problem, the matter will be escalated to a level 2 support and also a product specialist. After his issue has been resolved, he will be transferred to the payment department where he will pay for the IT services he has used. After making payment, he will receive an email from the feedback department where they will ask the customer for feedback for the case.
This slows down the entire process of resolving the problem from end to end. One of the main goal in BPR is to optimize the processes that takes place within the organization and reduce lead time. In order to do so, businesses has to look at its processes from a clean state perspective. For a company to be able to streamline their processes, they have to add value to their customers through their processes. Processes should maintain its ability to add value to customers. For those processes that do not, we can automate them and put the focus on adding value. This will result in higher customer satisfaction, better efficiency, elimination of watse and greater ROI(Park, 2008).
BPR Methodologies There are several techniques to business process redesign and reengineering. We will discuss a few in this section. Hammer and Champy A major overhaul in the organization’s process and structure is one of the keys to ensuring that cost is lowered and service quality is being improved. The means of implemeting these is via the use of information technology. Besides reorganization and using IT to power the business, redesigning the work process and optimizing it, helps the organization to reduce time taken, lower costs and improve quality (Rouse, 2009). A Case study of Ford Motor Company
Ford used to employ 500 accounts payable staff in the past. These 500 staff are running the tasks of tracking faults between purchase orders, receipts and invoices. After Ford decided to reengineer their process, the number of staff needed reduced from 500 to 125. Their reengineering efforts include: * Creating an online database where all purchase orders issued by the buyers are being captured * Goods are being checked when received. The shipment being sent has to match with that in the database. This allows the staff to check if the goods were actual orders being indented. This system of checking eliminates the need to check for faults between purchase orders. * Goods being received will be marked as received and the database is being updated real-time. (Hammer & Champy, 2000)
Perspective of process reengineering by Hammer and Champy 1. Organize around outcomes, not tasks. 2. Identify all the processes in an organization and prioritize them in order of redesign urgency. 3. Integrate information processing work into the real work that produces the information. 4. Treat geographically dispersed resources as though they were centralized. 5. Link parallel activities in the workflow instead of just integrating their results. 6. Put the decision point where the work is performed, and build control into the process. 7. Capture information once and at the source.
(Rouse, 2009) The methodology preached by Hammer and Champy clearly reflects what was being discussed in the BPR focus and objectives at the start of this report. Its focus is to eliminate waste and also to focus on deliverables that will add value to customers. In order to do so, IT systems can be employed in order to automate processes which do not add value. This point of automation is being reiterated in the case study of Ford Motors. This concept of rethinking and redesigning the business process radically helps us to improve many areas of the business such as lowering costs, improving customer service, ensure quality is being maintained and speed up the entire workflow.