The business process reengineering (BPR) refers to the analysis and redesign of the workflows and business processes inside an organization or between several companies. It aims to make the organizations rethink the way in which they work, with the goal of cutting operational costs, improving customer service, etc. Today we are going to have a look at the business process reengineering principles and details about its methodology.
Business Process Reengineering (BPR) Principles
This concept was first introduced in an article written by Michael Hammer in 1990 for the Harvard Business Review. Later, the subject was approached again by Hammer and James Champy in their best-selling book called Reengineering the Corporation. According to them, there are 7 main principles:
- Focus on outcomes, not on tasks.
- Redesign urgency by identifying all the processes inside the company and prioritizing them.
- Integrate the work that supposes processing information into real work that creates the information.
- Approach the geographically dispersed points of interest as if they were central.
- Instead of integrating various results, link any parallel activities.
- Create a decision point in the place where work takes place; integrate control into that process.
- Get the information only once and right at the source.
When adopting a certain methodology, you need to follow certain business process reengineering steps:
1. Acknowledge There’s a Need for Change
In the case of a small startup, it’s easy to notice you need to change something. Anybody who notices the product reached a high drop-off rate can talk to the founders about changing some things. When it comes to a corporation though, things are slightly different. Just think of the fact that some employees are happy with the current situation and think they don’t need any business process reengineering tools.
When the company doesn’t go that well, most employees will understand there’s a need for change. However, if you’re only trying to go for the best, some of them may not agree. They might even fear they’ll lose their job if the company advances. In this case, you’ll need to convince them and use employee engagement strategies to reach your goal.
2. Set up a Team
Just like any normal project, you need to have a BPR team of experts. Most of the times, the team is made up of:
- Reengineering Experts – experts in different fields, from IT to manufacturing, customer service, software, workflows, etc;
- Operational Manager – someone who knows the operational processes and who knows a lot about them;
- Senior Manager – to save time and not send emails back and forth with the senior management, you need to include a manager in your BPR team.
However, like with any kind of problem that needs a team, there might be plenty of issues regarding different viewpoints, various solutions, etc.
3. Find What’s Not Working
Once you decided on a team to help you with the business process reengineering project, you must define the KPIs. This stands for the key performance indicators. For example, in manufacturing, you need to include changeover time, cycle time, defect rate, inventory turnover, and so on. With IT, you should consider the support ticket closure rate, application development, cycle time, mean time to repair, etc.
After you know what your KPIs are, you need to identify the individual processes that aren’t efficient. The easiest way to do this is to write down all the processes, a procedure called business process mapping. Here you might need the operational manager to help you out. Use flowcharts or a workflow software to save time.
4. Compare KPIs and Reengineer the Processes
Finally, it’s time for you to reengineer the process you identified earlier. Start implementing the solutions you pinpointed, as well as all the changes you need, but do that on a small scale first. The only thing you need to do now is to start applying your theories and constantly measure the KPIs to see if they work. That’s why it’s useful to start small so that you can quit the solution if you notice nothing is improving.
Business Process Reengineering Examples
There are plenty of business process reengineering examples, especially in the recent years. First, we are going to look at a company who carried out the procedure successfully, and then see some practices and tools that changed the business world.
Back in the 1980s, a depression was ruling the American automobile industry. While trying to cut costs, Ford adopted the BPR methodology to find out what processes were inefficient. As such, they discovered that their accounts payable department wasn’t too efficient, despite having 500 people working there.
So, what was the problem? Whenever the purchasing department issued a purchase order, they had to send a copy to accounts payable. Next, the material control received the goods and sent a copy of the documents to account payable as well. Moreover, the vendor also sent a receipt to accounts payable. All the three orders needed to be matched so that the accounts payable department could issue the payment. All this translated to plenty of employees. As a solution, Ford started recreating the entire process digitally, which cut down on their costs.
Here you can watch a clip explaining the BPR concept, as well as the Ford example:
There are also some other examples that show the benefits of business process reengineering, even though they are not tied to a single company. Here you have a couple of them:
- Code scanners in grocery stores and various retailers;
- ATMs (automatic teller machines) in banks;
- Electronic banking from home;
- Shopping services and telephone ordering;
- Online shopping, etc.
To draw a conclusion, business process reengineering is a concept successfully used by many businesses, even before its establishment as a concept back in 1990. It relies on the reorganizing of the inefficient process that are going on inside the company. Naturally, to identify them correctly, you also need a team of specialists. They can help you understand better the situation in each field (for example, IT, manufacturing, PR, etc.) and see what can be changed. Next, you should convince all the employees that it’s for the best to change things around. Lastly, try implementing the new processes on a small scale and check if they give you the results you want.
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