W8 - Redesign Process

Re-engineering business processes means tossing aside existing processes and starting over. Business process redesign (re-engineering) is defined as “the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance such as costs, quality and speed”. This definition contains four key words:  

Fundamental

Reevaluate the primary goals of the company, ignoring rules and assumptions formulated in the past.

Radical

Do not try to improve the existing situation, invent completely new ways of accomplishing work.

Dramatic

Do not use business process redesign to obtain marginal improvements, aim at order-of-magnitude improvements.

Process

Focus on the business processes instead of organisational structures.

What are the prime objectives of a company or business unit? An attempt to re-engineer a business process should always start with this question.

When we have determined what a company should do, we have to determine how to do it. Again we should not be hampered by existing rules and assumptions. Processes, not organisations, are the object of BPR. Processes in a company correspond to natural business activities, but they are often fragmented and obscured by organisational structures. If we have found a process to be redesigned,we should give this process a name and determine the input and output of the process. Then we determine the work that has to be done between the start and finish of the process, i.e. all the required steps are identified. We can think of a such step as a task or an activity. Then we determine the ordering of these steps. A number of guidelines are given to support this activity:

1. The steps in a process should be performed in a natural order.
2. Avoid fragmentation of related activities.
3. If possible, several steps are combined into one.
4. If possible, tasks are allowed to be executed in parallel.
5. Avoid complex processes to cope with complex activities.
6. Reduce checks and controls as much as possible.
7. Make processes generic, i.e. use multiple versions of the same procedure.
8. Check whether modern information technology allows you to omit steps.

The result of applying these guidelines will be a partially ordered set of tasks of steps. We will use the term procedure to refer to this result.

Finally,we have to decide who is going to do the work and in what order. By allocating resources (often employees) to tasks, we are scheduling the business process. We can use advanced scheduling techniques to optimize this allocation. However, in practice simple and robust heuristics are more appropriate. Therefore, we list a number of guidelines to support the construction of these heuristics.

1. Reduce the number of people involved in the execution of tasks related to one job. Thus avoiding communication and set-ups.
2. Tasks are performed where they make the most sense.
3. There should be a balance between specialisation and generalisation.
4. There should be a balance between centralization and decentralization.

Source / Reference:

1)  M. Hammer and J. Champy, "Re-engineering the corporation", Nicolas Brealey Publishing, London, 1993

2)  T. H. Davenport, "Process Innovation: Re-engineering Work Through Information Technology", Boston: Harvard Business School Press, 1993