Business Process Reengineering
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Business Process Reengineering
(BPR)
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Value Metrics
• • • • Quality Service Cost Cycle Time
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Value Metrics
Quality
X
Service
Value
= Cost X Cycle Time
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The Crisis
• Often the efficiency of a company’s parts come at the expense of the whole • Work that requires the cooperation and coordination of several different departments within a company is often a source of problems. • Even when the work involved has major impact on the bottom line, companies have no one in charge.
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First Driving Force - Customers
• Demand products/services designed for their unique needs. • Expect product configured to their needs, manufacturing plans, and convenient payment terms.
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Second Driving Force - Competition
• • • • • More different kinds Niche competitors Falling trade barriers Adequate is no longer good enough. Start-up companies
– Carry no excess baggage – Do not play by the rules
• Technology changes the nature of competition
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Third Driving Force - Change
• Pervasive and persistent • It is normality • At an accelerating rate
– Ford Model T - an entire generation – Computers - two years
• Executives think their companies have change sensing radars
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Quick Definition of BPR
• Means: “Starting Over” • Does not mean: Tinkering with what already exists or making incremental changes • Ask: “IF I were recreating the company today, given what I know and given current technology, what would it look like?”
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Formal Definition of BPR
Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as quality, cost, speed, and service.
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Four Key Words
• Fundamental
– Why we do what we do? – Why we do it the way we do it?
• Radical
– Disregarding all existing structures and procedures – Inventing completely new ways of accomplishing work.
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Four Key Words (cont’d)
• Dramatic
– Not for marginal or incremental improvements – Only when need exists for “heavy blasting”
• Processes
– Most business people are not “processoriented” – They are focused on tasks, on jobs, on people, on structures.
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What BPR Is Not
• It is not another name for downsizing or some other business fix of the month. • Downsizing or restructuring only means doing less with less. • Reengineering means doing more with less.
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Total Productivity Maintenance
Y= yield (%)
t(u) = Up-time (%)
t(s) = Set-up time t(rt) = Theoretical run time t(ra) = Actual run time M(eff) (%) = t(rt) /{t(rt) + t(s)}
Factory Overall Efficiency (FOE):
FOE = Y x t(u) x M(eff)
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Example
Y = 90 %, t(u) = 80 %, t(rt) = 5.0 hours
t(ra) = 7.3 hours, t(s) = 5.0 hours M(eff) = 5.0/{7.3 + 1.5} = 5.0/8.8 = 0.568 FOE = 0.90 x 0.80 x 0.568 = 0.409
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The 7 New Quality Tools
• General Planning – Affinity Diagram – Interrelationship Diagraph • Intermediate Planning – Tree Diagram – Matrix Diagram – Matrix Data Analysis • Detailed Planning – Process Decision Program Chart – Arrow Diagram
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Affinity Diagram
Gathers large amounts of data and organizes it into groupings based on the natural relationship between each item.
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Interrelationship Diagraph
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Tree Diagram
Systematically maps out the full range of tasks/methods needed to achieve goal.
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Matrix Diagram
Displays the relationship between necessary tasks and people or other tasks, often to show responsibility for tasks.
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Data Matrix Analysis
Temp
Humidity
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Process Decision Program Chart (PDPC)
Maps out every conceivable event and contingency that can occur when moving from a problem statement to possible solutions.
Problem Statement
Solution x
Things that can go wrong
Countermeasures
Solved
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Additional Tools/Methods
• • • • • • Benchmarking Process Simplification Concurrent Engineering Demand Flow Technology Activity Based Costing Eliminate Non-Value Added Activities
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