MG2066

Operations Consulting Skills &

Business Process Re-engineering

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Overview

Operations management
Consultancy stages
Some Tools
Principles of BPR

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Operations consulting

- an expertise and research service to clients,

assisting them to:

 develop operations strategies e.g. product

leadership, operational excellence, quality, just-
in-time, BPR etc.
 improve production & service delivery processes
 Internal (management services, operational
research) and external

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Example Operations Consulting projects

 Plant,Adding

location and facilities management
& locating new plant
 Expanding, contracting, or refocusing facilities
 Parts/Supplier Network
Make or buy decisions

 Vendor selection decisions
 Processes
Technology evaluation & implementation

 Process improvement & reengineering
 People
Quality improvement

 Setting/revising work standards
 Planning and Control Systems
Supply chain management

 Outsourcing
 ERP Source: Chase and Aquilano
 Work flow control and scheduling
 Logistics, warehousing and distribution
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Roles within Consulting Firms

Partners Service departments

(Finders) Finance, Marketing, HR

Managers
(Minders)

Consultants
(Grinders)

Source: Chase and Aquilano

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Stages in Consulting Process

Decision point
 Feasibility
 Analysis and Unfreezing Decision point

 Sales & development proposal Decision point

 Detailed Problem Analysis

 New system design and modeling
 Develop performance measures
 Evaluate options Decision point

 Present report recommendations Decision point

 Join team to implement changes

 Fine tune and ensure client satisfaction Decision point

 Review what has been learnt

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Tools 1: Heuristic Problem solving

Trend, urgency, size

Analyse situation

Actual vs symptoms
Problem definition
Objectives/resources
Generate and
Compare solutions
Options/criteria/costs

Implementation
planning

Info systems/visibility
Review systems

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Tools 2: Surveys/Data gathering

Methods
Methods
Plant observation/audits •Issue
Issue trees
trees
Work sampling & analysis Information
•55 forces
forces competitive
advantage
competitive
advantage
Flow charting systems •Supply
Supply chain
chain
analysis •Value-added
Value-added
Organisation charts
•QualServ
QualServ
Method study •Systems
Systems analysis
analysis
•Customer
Customer &
employee
&
employee surveys
surveys
•Gap
Gap analysis
analysis
•Prototyping
Prototyping
•Technical
Technical vsvs human
human

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BPR Introduction

 Why does so much IT investment seem not produce

corresponding increase in productivity and performance?

1. Faulty measurements
2. Information Technology
3. Organizational process, structure and design

 Hammer & Champy – radically redesign key business processes

“Reengineering The Corporation: A Manifesto for Business
Revolution”
 Davenport & Short – highlight the relationship between IT and
BPR relationships: “The New Industrial Engineering: Information
Technology and Business Process Redesign”

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Business Process Reengineering (BPR)

Making processes
• effective - producing the desired resulted
 Focus
outcomes
on & organise around

• efficient - minimising the resources used  Provide direct access to

• adaptable - to changing customer & customers (internal & external)
business needs.  Harness technology
 Control through policies,
practices and feedback
BPR Philosophy
Radical, cross functional, dramatic  Enable independent and
simultaneous work
 Build in feedback channels
Hammer and Champy,
Re-engineering the Corporation,
Harper Collins, 1993

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BPR Focus

 on end-to-end business process that extends all to the way to a customer

(external or internal) who receives some value from the process
 on essential processes that deliver outcomes
- moving flow
- cross-functional in scope within enterprise
- cross-enterprises
 assumptions about performance improvement thru. reengineering
1. clean-sheet rethinking
2. quantum improvements > incremental improvements
3. use IT to re-engineer process in qualitatively different ways
4. maximum value-added in process, minimise everything else
5. measure value thru. surrogate performance measures
6. Change work environment to fit reengineered process

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What is a Process?

Definition:
 A specific ordering of work activities across time and place, with a
beginning, an end, and clearly identified inputs and outputs: a
structure for action (Davenport, 1993)
 A collection of activities that takes one or more kinds of input and
creates an output that is of value to a customer (Hammer&
Champy, 1993)

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What is a business process?

…. a group of logically related tasks using the firm's resources to

provide customer-oriented results to support organisation's
objectives.
…..an operational or admin. system that transforms inputs into
valued outputs - typically a task sequence arranged as a
procedure perhaps involving machines, depts. & people.

• making sandwiches to order

• seeing a sales order through from beginning to end
• stock replenishment procedures
• aircraft maintenance e.g. in hanger or on tarmac between
flights
…. includes service support processes e.g. engineering change
or payroll process, manufacturing process design.
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Kinds of process:

 Operational
objectives
(production) – directly achieves operational

 Control – goal to maintain a state relating to another process

 Generic – applicable to any group member (an abstraction or
class, essentials of a process that may be shared)
 Customised – adaptation of a generic process to suit specific
objectives and using identified resources
 Enactable – defined + executed using process technologies
 Meta-process – concerned with another process(es)

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System Thinking

 Systemic:
“of a bodily system as a whole” (medically oriented definition)
 “ of or concerning a system as a whole”
A framework of thinking, analysis and synthesis

 the ability to see the world as a complex system

“these are connected to those and everything else”
“you can’t just do this without those being affected”

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Systems view of business

Environment Entropy

Inputs Outputs/outcomes
Transformation
Process

Adaptation
Information
Feedback

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Leavitt Diamond (adapted)

A conceptual framework
IT Use for evaluating & balancing
IT-enabled change

Business Organisational
Processes Form

Change one variable &

Requisite adjust others e.g. new IT
People Skills & business processes
need to be changed. New
skills & organisational form
to match the IT?
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Leavitt Diamond (cont.)

 BPR as well as successful organisational change needs a

balance of all these elements in a viable combination
 IT-driven perspectives emphasise importance of integrated IT
architecture
 Organisational design perspectives focus on finding new
organisational form
 Human resource perspective emphasise empowerment,
rewards systems and training
 BPR perspectives focus primarily on business processes

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Evolution of BPR

Degree of enabling IT
Knowledge
Management

Web-enabled
e-business
Time-based
competition

1st-wave BPR 2nd-wave BPR

TQM

Richness of business
transformation
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BPR requirements

Need
 process owners - accountable for how well the process
performs
 well-defined boundaries (process scope), internal & external
interfaces & responsibilities
 well-documented procedures, work tasks & training
measurement & feedback controls close to point of
performance
 customer-related measurements & targets
 known cycle times
 formalised change procedures
 performers to know how good they can be.

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BPR - process innovation

 Existing, long-in-the-tooth practices (solutions to past

problems) may no longer reflect core business concerns nor
what the customer may actually want.
 Rethink & redesign BPs for sharp improvement (radical
change) in performance, costs, cycle times & quality.
 "If you want to get to Heaven, I wouldn't start from here."
Start with a clean sheet of paper
Imperatives
 evaluate core business activities
 consider BPs cross-functionally
 re-design radically, don't just tinker
 aim for sharp improvements in performance levels

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BPR serves

 the aspirations of business strategy makers & implementors.

 target better operating ability to satisfy customers - radical
change may be needed.
 adesired
BPR programme is a tactic, a programme to achieve
results.
 BPR in isolation from strategic plans will not work.
Commitment of strategic managers is essential.
 isolated BPR efforts will lack direction and will get lost.

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BPR as Neo-Taylorisim?

 The aims, processes and outcomes

of BPR have roots in various
organisational efficiency, productivity
and competitiveness movements.

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BPR, TQM & the March of Ind. Engineering

 George Siemens (1839-1901)

information & measurement systems.
 Sci Mgt. work and method study FW
Taylor, Frank & Lillian Gilbreth
 Frederick Herzberg - Job enrichment
 Systems analysis for computer systems
 Deming et al - TQM and Kaizen
 InWaterman)
Search of Excellence (Peters &

 Value-added analysis (Porter)

 Creativity, lateral thinking, brain-storming

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BPR and Information Processing Systems

 Large software systems growing old,

 Limitations of early construction tools
 millions of lines of patched code to maintain.
 New tools (client server databases, graphic interfaces, 4GLs) cut
development and maintenance costs
 more knobs, buttons, access & processing power

 Slow change in operational/administrative methods because of

dependency on complex mainframe applications.
 New technologies timely to re-design business processes
 Why generate a new IT system without improving the business
process it serves?

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Is BPR different from CQI?

Continuous improvement BPR

•Incremental gradual change •Radical change

•Low investment •High investment
•People-practices focus •People & technology focus
•Improvement on existing •Scrap and rebuild
•Work-unit driven •Champion driven

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BPR Phases

Organising
Undestanding Streamlining Measurements Continuous
for
the Process and Costs improvement
improvement

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BPR Project

 An organisational change project with three components : business strategy,

business process and information systems
 BPR must be linked with business strategy and information system

Business Strategy

Business Process

Information System

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Steps in process analysis

1.target the process area for change

Business process
Task process
2. form a team. Select project leader
3. decide on the objectives of the analysis
4. define customers & suppliers
5. analyse (identify/ chart) the process elements & steps in the
process flow
6. describe the existing transformation process
7. develop improved process design
8. gain management approval of the improved design
9. implement new process design

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Participants in BPR Project

Process Owners

Process
Participants

BPR Project
Sponsors
Core BPR Project

Team
BPR facilitators
& consultants

IT & e-commerce
specialists
Human resources
specialist

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Identify process elements

 raw materials
 product (output) design
 job (sequence, simplification, discretion etc)
 processing steps used
 management control information
 equipment or tools
 people – actors (direct/indirect staff, customers,
supply relationships (internal & external)

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PHASE 1: Organising for improvement

Objective: build leadership, understanding & commitment

Activities
 establish Executive Improvement Team (EIT)
 Appoint BPR champion
 provide executive training
 develop an improvement model
 communicate goals to employees
 review business strategy and customer requirements
 select the critical processes
 appoint process owners
 select BPR Team members

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PHASE 2: Understanding & redesign the process

Objective: understand all dimensions of current business process

Activities
 define process mission, scope and boundaries
 provide team training
 develop a process overview
 define customer/business measurements & expectations for the
process
 identify improvement opportunities
errors and re-work high cost
poor quality long time delays/backlog
 Record/chart the process
 collect cost, time & value data
 perform walkthroughs on new process
 resolve the differences (existing/new, ideal/realistic)
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Process definition and charting

Analyse (identify and chart)

the process elements and
steps in the process flow

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PHASE 3: Implementation

Objective: secure efficiency, effectiveness and adaptability of

the business process on implementation
Activities
 eliminate bureaucracy and no-value-added activities
 simplify the process and reduce process time
 standardise and automate
 up-grade equipment
 error proof the process and document it
 select and train the employees
 Plan/schedule the changes

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PHASE 4: Measurements and controls

Objective:
develop a process control system for on-going improvement

Activities
 develop in-house measurements and targets
 establish a feedback system
 audit the process periodically
 establish a poor-quality cost system

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PHASE 5: Continuous improvement

Objective:
to implement a continuous improvement process

Activities
 Qualify/certificate the process
 perform periodic qualification reviews
 define and eliminate process problems
 evaluate the change impact on the business and on
customers
 benchmark the process
 provide advanced team training

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Process Chart Symbols

Operation (a task or work activity)

Inspection (an inspection of the product for

quantity or quality)

Transportation (a movement of material from

one point to another)

Storage (an inventory or storage of materials

awaiting the next operation)

Delay (a delay in the sequence of operations)

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Method Study Questions for Process Analysis

What does the customer need?, operations are necessary?

Can some operations be eliminated, combined, or simplified?….

Who is performing the job? Can the operation be redesigned to

use less skill or less labor? Can operations be combined to enrich
jobs? ….

Where is each operation conducted? Can layout be

improved? ….

When is each operation performed? Is there excessive delay

or storage? Are some operations creating bottlenecks? …..

How is the operation done? Can better methods, procedures,

or equipment be used? ….

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BPR and Bench-marking

 The BPR team may benchmark another company's process to

determine

 process objectives
 innovative practices
 tried and tested methods

 Benchmarking partners need not be from the same industry.

 A photocopying firm on re-engineering its order processing system
compared itself to mail-order firms as well rival photocopy
companies.

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BPR Problems

 Starting with a clean sheet

 Preoccupation & commitment to existing business processes
 Thinking the problem thru. in the light of new methods &
s
technologies
m e
 Choice of the target
g r a m
process - too big, too small
 The “power p r
ando resourcing of the cross functional team”
BBPRPinRisolation from strategic andteopsam . will not work.
plans
 Top commitment
d e d o f s
essential. Short-termism
y
of decision makers
 t e n
Isolated efforts
o
will u
lacktdirection
a
and w
will a
get lost.
 Done r u nof stress andoanxiety
n e
oat times
T the BPRPteam
 Keeping R g
on target e?
John Gall,

sasB a b l “Systemantics” -
 BPRHteam a io n
action researchers
h
If it works, don't
 Costs of the
n f a
changes change it!

 - u
Vaccination against change + another quick fix
 Finding the time and energy
 We need to keep the old, existing core systems running
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BPR for e-Business

 “rethinking/ redesigning business processes at both

enterprise & supply chain level to take advantage of
Internet connectivity & new ways of creating value”
 Redesign front-office processes that interact with
customers & back-office processes (across entire supply
chains)
 Changing the way the organisation operates, handling
physical & e- business processes and how people work

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Redesigning Business Processes

1.Customer-facing
2.provide value to process recipient
3.outputs used by external or internal customers
4.Cross-functional, cross-department, cross-enterprise
5.completed task handed to another do next task in sequence
6.Altering dynamics of information flows
7.Knowledge that participants need created around the process
(data, reports, trends, exceptions, FAQ & ideas)
8.Multiple versions of business processes rather than one-size-fits
all
9.Degree of structure of a process –highly structured or fluid & not
tightly determined

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