Allana Institute of Management Sciences

Business Process Reengineering

Dr Vishwas Phadnis BE , MBA , PhD
• Business process re-engineering aims at maximizing customer value while
minimizing the consumption of resources.
1.Benefits of having BPR in place
1. Total customer satisfaction
2. Cost Advantage
3. Competitive Advantage
4. Creates value for customers
5. Clear Business Vision
• Business is a battle. A war to get the attention you deserve.
• Your enemies? The numerous competitors striving to gain prominence.
• Of course, the battle is not for the faint-hearted.
• Business involves so many obstacles. You need a superb product. You
must market it to potential customers. You need to evaluate your
processes. You need to meet the demands of our evolving society and
your growing customers.
• But none of these matter if your business process . If customers aren’t
satisfied with the way your business is run, then you might as well lay your
sword down in defeat. Customers are in search of the best.
• You must rethink how your business works in order to improve customer
service, cut operational costs, and become a world-class competitor.
• Skip that step, and nothing can save your business.
• The good news is, the secret to reengineering your business process is
right here at your fingertips. It’s the secret of top businesses in the world.
• You have a powerful product that can change the world, that product is
worth fighting for. So when you’re ready to enter the battleground, arm
yourself with this guide and fight the good fight. It’s a battle you must win.
• “The concept of business process reengineering (BPR) is to rethink and
break down existing business processes. This allows a company to
reduce costs and improve productivity through newer, more efficient
processes”
• Analysis and redesign of workflows within enterprises in order to optimize
end-to-end processes and automate non-value-added tasks”
• It was in 1990, when Michael Hammer, a former Professor of Computer
Science at the Massachusetts Institute of Technology (MIT), published the
article “Reengineering Work: Don’t Automate, Obliterate( destroy , leave no
clear traces )” in the Harvard Business Review in which he claimed that the
major challenge for managers is to obliterate ( destroy , leave no clear traces
) forms of work that do not add value, rather than using technology for
automating it.
• His claim was simple: Most of the work being done by businesses do not add
any value for customers, and this work should be removed, not accelerated
through automation. He proposed that companies should reconsider their
inability to satisfy customer needs and reengineer their processes.
• Hammer affirms that with BPR, businesses:
• Will add more value to customers
• Accelerate their processes
• Focus only on what matters
• DIAGRAM
• Today, business process reengineering is still making a splash. Many
companies have adopted it and seen higher productivity, more
competitiveness, and a larger customer base,
• Why try BPR?
• As a business owner desirous of change, you need to constantly evaluate
your processes to meet the demands of the evolving society and your
growing customer.
• Business process reengineering is a business management strategy that
focuses on the analysis and design of workflows and business
• With business process reengineering, you’ll achieve the following for your
company
• Customer focus: The ultimate reason for BPR is the customer. With it, you provide
your customers a better service.
• Speed: The speed at which your business operates quadruples. For instance, if the
process before BPR had an average cycle time of 10 hours, afterward, the average
cycle time should be cut down to less than three hours.
• Compression: You are able to cut major tasks of cost and capital throughout the
value chain.
• Flexibility: You become closer to the customer. The company can develop a
mechanism that makes it aware, able to spot the weak points, and adapt to new
market requirements.
• Quality: Processes, not necessarily just individuals, affect quality levels. As BPR
helps improve the former, it also improves the latter.
• Innovation: The company innovates new processes.
• Productivity: BPR drastically improves your effectiveness and efficiency.
• In a nutshell; business process reengineering:
• Reduces cost and cycle time: BPR eliminates unproductive activities
and redundant human labor. It also aids a business in reorganizing by
teams, accelerates information flows, and gets rid of errors and job
repetitions.
• Promotes quality: BPR simplifies who does what in a business. This
increases accountability among workers. It also helps management and
customers receive quick feedback.
• Ensures customer satisfaction: If customers’ needs are quickly fulfilled,
they are likely to feel satisfied and come back for more.
• Understanding the Importance of BPR: A Case Scenario
• Let’s consider a case scenario to help you understand why BPR is an important
decision for your company:
• Customer A ordered goods from a particular company, but after some time, he still
hasn’t received his order. He begins worrying and calls the company to ask why.
• “Let me transfer you to the accounting department to check if the order was invoiced,”
responds the telephone operator.
• Now, the customer must explain his problem to the accounting department again who
had this to say: “We invoiced your order, but I don’t know if it has been shipped. You
need to talk to the logistics department. Unfortunately, I could not transfer you since
they are located in another city.”
• Thereafter, the customer calls the logistics department and explains the situation again.
The
• logistics manager responds, “Although the order should have been delivered, I haven’t
yet received the order from the production department. Please hold on a minute. I will
try to contact them to find out what happened.”
• Then, the inventory manager tries to help resolve the situation. Sensing the customer is
becoming furious, he says, “Sir I am sorry, it is the finish department’s fault. Somebody
forgot your order in the finish storage. I will send it to you as soon as possible.”
• After this encounter, do you think the customer would place another order with
the same company?
• The above scenario is what happens in a company without business
process reengineering.
• What Did You Note About the Scenario?
• Throughout the conversation, you might have noticed an emphasis on
individual departments and their functions. Most of the employees
indicated they did their jobs but don’t know if others have done the
same. Nobody took full responsibility. As awkward as the situation seems,
it’s prevalent in many companies and organizations.
• With BPR, the customer only has to speak to one person — the case
manager. All internal controls are the responsibility of the order
processing team. This way, customer needs are met without any hitches.
• Rules of Reengineering
• The some of the important principles or rules of reengineering
are as follows:
• Reengineering is about achieving a significant improvement in process so
that contemporary customer requirements of quality, speed, innovations,
customisation and service are met.
• Organise around outcomes, not tasks:
• Several specialised tasks previously performed by different people should be
combined into a single job. The new job created should involve all the steps
in a process that creates a well-defined outcome. Organising around
outcomes eliminates the need for hand-offs, resulting in greater speed,
productivity and customer responsiveness.
• Have those who use the output of the process perform the
process:employees can make some of their purchases without going
through the purchasing department. Customers can perform simple repairs
• Merge information processing work into the real work that
produces the information:
• This means that people who collect information should also be responsible
for processing it which greatly reduces errors by cutting the numbers of
external contact points for a process.
• Treat geographically dispersed resources as though they work
centralised:Decision making should also be a part of the work performed
• There must be decision aiding-technology to cut unnecessary controls and to keep
a check in the process. Hammer states the decision should be made by the person
who is doing the work.
• The processes can be improved by empowering the authority of the resource with
the responsibility to make the decision and improve the workflow.
• This is possible with an educated and knowledgeable workforce.
• Capture data at its point of origins
• Benefits of having a pre-decided BPR in place
• Total customer satisfaction
• Customer needs are a priority that gives a clear vision to the organization. The customers
when provided with a better service that matches their expectations, thus building loyalty
in them.
• The design and delivery of the business process are redone to match the performance
with the expectation of the customer.
• Cost Advantage
• As the whole process is remodeled, unnecessary costs are eliminated through the value
chain. It reduces the cost and cycle time by eliminating the unproductive activities and
organizing the teams.
• It has radically improved the effectiveness and efficiency of operations.
• Competitive Advantage
• Business process re-engineering helps an organization to focus on its core competencies,
which gives it a competitive advantage.
• Creates value for customers
• .The firm analyzes value-creating activity and compares it with the competitors to
find ways to improve it.
• Clear Business Vision
• Business process re-engineering gives a firm an explicit vision that aligns its goals
and objectives with that of customer’s needs, wants, and interests.
• This way an organization acquires some brand identity and an ideal structure to
target the customer.
• BPR and Process Simplification
• While BPS or streamlining is done to improve processes within the existing
organizational structure, BPR is done to create dramatic improvements
to enable the organization to break away from conventional wisdom
and approaches, thereby creating widespread change.
• Business Process Reengineering (BPR) is usually done to identify and
eliminate the organizational barriers impeding the flow of processes to create
“drastic” changes while BPS is more subtle in its approach. BPR has faced a
significant amount of criticism over the years since it often leads to lowered
employee morale and lay-offs in light of the significant changes that come
with it.
• Here are some key differences between BPS and BPR:
• 1. While BPS or streamlining is done to improve processes within the existing
organizational structure, BPR is done to create dramatic improvements to
enable the organisation break away from conventional wisdom and
approaches, thereby creating widespread change.
• 2. BPS is a preventive technique that should be applied as a principle across
the business, whether or not there are problems while BPR is often applied to
fend off impending disasters. Some however argue that whether or not BPS is
implemented within the organisation, BPR may still be necessary in response
to changes in the legal/political environment.
• 3. BPS is often seen as running repairs/maintenance and can be used to
achieve quick wins while BPR focuses more on the improvement of
organisational operations enterprise-wide, which takes a significant amount of
time to accomplish.
• Use Business Process Simplification when:
1.Existing process is already mapped/documented
2.Existing process fundamentally works but not well enough with some areas in need of
improvement
3.Your focus is the process - not on implementing an overarching business strategy.
• Use Business Process Reengineering when:
1.Existing process is redundant or in need of a rethink and major improvements
2.The process fundamentally no longer works and a major overhaul is required. Everyone
agrees that the current process is useless and needs to be changed.
3.Your focus is the overall strategy and not a particular task
Key Targets of BPR
Business process reengineering is the act of recreating a core business process with the
goal of improving product output, quality, or reducing costs. Typically, it involves the
analysis of company workflows, finding processes that are sub-par or inefficient, and
figuring out ways to get rid of them or change them.
BPR is very important for an organization because it makes business more efficient and businesses
cannot improve or innovate without it.
• Changing nature of business operations
• Rapid changes are taking place in all fields. Traditional way of operations is
replaced by fitter, smarter, and more streamlined operations. Changes have to be
implemented fast and companies that fail to go with changes are likely collapse.
There is a pressing demand to change company design and which cannot be
achieved without redesigning existing unfits processes.
• Cost and cycle time reduction
• BPR is to implemented in organizations to eliminate unproductive activities and
redundant human labor. When a business reorganizes by teams , it decreases the
importance of having management levels. It also increases information flows and
avoids of errors and job repetition.
• Promotes quality
• BPR needed to promote quality in all activities of an organization. This happens
because BPR decreases disintegration of work.
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• Better results and Products

• Efficiency and focused goals allow company and its employees to put more
energy towards products improvements. Re engineering business processes
provides improvements in all areas of business , and those improvements also
reflect in product improvement.
• Simple and streamlined operation
• At the end of the BPR processes, business has streamlined its functions and
removes unnecessary processes that used to slow its activities , as a result ,
operations of business become more directed towards the goals.
• Increased efficiencies
• Increased efficiencies come out with a streamlined operation. By reducing down
operations and change processes, things move easier and faster which ultimately
increase overall efficiency
BPR and Continuous Improvements
They do have at least one thing in common, though ― they’re both
management tools used to improve company efficiency and earnings.
Both business process engineering and continuous improvement focus on
reshaping existing processes, but BPR aims to shake things up fundamentally.
BPR focuses on outcomes instead of individual tasks. Rearranging the order of
tasks, eliminating tasks; these are more in the continuous improvement.
Reengineering and continuous improvement mean the same thing. Sustaining
change almost always harms an organization while disruptive change almost
always help an organization. The idea of a value chain is not significant to
organizations that do not manufacture products.
Continuous improvement principles to facilitate change on a constant and
progressive basis. BPR, on the other hand, advocates large step changes using
structural process re-design and a fundamental rethinking of the business.
Business process reengineering is a drastic move reserved for a moment when
a company is seriously underperforming or maybe even in the midst of a crisis.
• Business process reengineering
• Business process reengineering is about completely rebuilding a
company’s operations to improve efficiency, productivity, profitability,
and other metrics determined by leadership. It’s the most fundamental
blank-slate approach a company’s leaders can take when they’re
convinced that change is necessary if they want to deliver the value
customers demand.
• In most cases, companies end up reducing the number of steps
required to move from ordering to delivery. Improving customer
satisfaction by building cross-functional teams is also a common tool
for restructuring operations. Since cost-cutting is usually, though not
always, a motivating factor, layoffs are often one unfortunate outcome
of business process reengineering.
• Continuous improvement
• Continuous improvement is a cultural norm that high-functioning
companies deliberately cultivate, especially to avoid a business crisis
that results in business process reengineering. Continuous
improvement is often associated with manufacturing, where
incremental improvements deliver compounding benefits over time.
• There’s a myth that companies adopt continuous improvement when
they feel pressured to cut costs. In reality, continuous improvement
focuses on empowering employees to embrace efficiency, make
suggestions. This leads to innovations in production and service that
contribute to overall growth.
• When team members have sincerely implemented the continuous
improvement approach, reduced process costs are almost inevitable.
• TQM is concerned about improving productivity through quality improvements
while BPR is about making process improvements through radical redesign
and use of advanced technologies. TQM is focusing on continuous improvements
while BPR is concerned about product innovations. Both these concepts are related
to improving the efficiency in an organization.
• Michael Hammer argues that the two concepts are compatible and actually
complement each other. Both concepts have the same focus – customer
satisfaction.
• Total quality management (TQM) is a management philosophy practiced in many
organizations, focusing on continuously improving the quality of its products and
services in order to fulfill the customer expectations without influencing the
ethical values. Therefore, everybody who is related to the organization from top
to bottom has a huge responsibility in providing quality products or services.
• In order to achieve TQM by fulfilling the requirements of the customers, one
needs to be thoroughly concerned about the following principles.
• Necessity of producing quality output in the first time.
• Focusing on satisfying the customer expectations.
• • Encouraging mutual respect and teamwork.
• Benefits of TQM
• Using the TQM philosophy ensures the following results:
• Organization becomes more competitive.
• Helping to establish a new culture which enables growth and long-
term success.
• Creates a productive working environment in which everyone can
succeed.
• Helps to reduce stress, waste and defects.
• Helps to build partnerships, teams and co-operation.
• Objectives of BPR
• The main objectives of BPR include the following factors:
• Customer focus -The main objective of BPR is to increase the level of customer
satisfaction.
• Speed – With the use of advanced technologies, the processing speed is expected
to be improved as most of the tasks are automated.
• Compression – It explains the ways of reducing the cost and capital invested in
primary activities, throughout the value chain. It can be done by combining the
interrelated activities or by performing parallel activities in a particular process.
• Flexibility – It is ab out the adaptive processes and structures used to changing
conditions and competition.By being closer to the customer, the company would be
able to develop the awareness mechanisms to tackle the areas that require
improvements .
• Quality – The level of quality can always be maintained with the expected levels of
standards and can be monitored by the processes.
• Innovation – Leadership through innovation provides changes in the organization
to achieve competitive advantage.
 Difference between TQM and BPR?
• TQM and BPR have a cross-functional relationship. TQM is concerned
about improving productivity through quality improvements while BPR
is about making process improvements through radical redesign and
use of advanced technologies.
• TQM is focusing on continuous improvements while BPR is concerned
about product innovations.
• TQM emphasis on the use of statistical process control while BPR
emphasis on the use of information technology.
• Both top down and bottom up approaches can be used in
implementing TQM, but BPR can be implemented only through a top-
down approach.
• Quality specialists tend to focus on incremental change and gradual
improvement of processes ( kaizen ), while specialist of reengineering
often seek radical redesign and drastic improvement of processes. Quality
management often referred to as TQM or continuous improvement, means
programs and initiatives, which emphasize incremental improvement in
work processes, and outputs over an open-ended period of time. In
contrast, reengineering, also known as business process redesign or
process innovation, refers to prudent( cautious ) initiatives intended to
achieve radically redesigned and improved work processes in a specific
time frame.