BUSINESS PROCESS REENGINEERING

Transcription

1 BUSINESS PROCESS REENGINEERING Text and Cases R. Radhakrishnan S. Balasubramanian

2 Business Process Reengineering Text and Cases R. Radhakrishnan Vice Chancellor Anna University, Coimbatore S. Balasubramanian Director Centre for Intellectual Property Rights Anna University, Coimbatore PHI Learning Private Limited New Delhi

3 BUSINESS PROCESS REENGINEERING: Text and Cases R. Radhakrishnan and S. Balasubramanian 2008 by PHI Learning Private Limited, New Delhi. All rights reserved. No part of this book may be reproduced in any form, by mimeograph or any other means, without permission in writing from the publisher. ISBN The export rights of this book are vested solely with the publisher. Second Printing March, 2010 Published by Asoke K. Ghosh, PHI Learning Private Limited, M-97, Connaught Circus, New Delhi and Printed by Rajkamal Electric Press, Plot No. 2, Phase IV, HSIDC, Kundli , Sonepat, Haryana.

4 Contents Preface... xiii 1. Introduction to Business Processes Definition of Business Process 1 Dimensions of Business Process 1 Common Business Processes in an Organization 2 Definition of Business Process Redesign 2 Definitions of Various Management-Related Terms 3 Organizational Change 3 Project 3 Business Process Reengineering Project 3 Project Management 3 Process Orientation of Business 3 Business Processes 4 Teams 4 Overview of Business Process Reengineering 5 Business Process Improvement 6 Review Questions 7 2. Introduction to BPR History of BPR 8 Basics of BPR 9 Definition of Business Process Reengineering (BPR) 10 Informal Definition of BPR 10 Formal Definition of BPR 11 Emergence of BPR 12 The Need for Reengineering 13 Benefits of BPR 14 Role of Leader and Manager 15 iii

5 iv Contents Breakthrough Reengineering Model 16 BPR Guiding Principles 16 General Principles of Business Process Reengineering 17 Business Process Reengineering and Performance Improvement 18 Key Targets of BPR 19 Myths about BPR Created by the Popular Literature 19 What Reengineering Isn t 21 Review Questions BPR in Manufacturing Industry Introduction 22 Enablers of BPR in Manufacturing 22 Agile Manufacturing 22 Lean Manufacturing 23 Just-in-Time (JIT) 23 Collaborative Manufacturing 24 Intelligent Manufacturing 24 Production Planning 25 Product Design and Development 26 Supply chain Management 27 Review Questions BPR and Information Technology Introduction 29 Relationship between BPR and Information Technology 29 Role of Information Technology in Reengineering 30 Role of IT in BPR with Practical Examples 32 Information Technology Enables New Processes 32 Information Technology Tools Help to Facilitate Project Management 32 Information Technology Lets People Work Together More Closely 32 Information Technology Helps to Integrate Businesses 33 Criticality of IT in Business Process 33 BPR Tools and Techniques 34 Enablers of Process Reengineering 35 Tools to Support BPR 35 Future Role of IT in Reengineering 36 Review Questions BPR Implementation Methodology Reason for Implementation of BPR 37 Necessary Attributes of BPR Methodology 37 BPR Team Characteristics 38 Most Important Start-up Activities of BPR 38 Key Concepts of BPR 39 BPR Methodology 39 Different Phases of BPR 39

6 Contents v BPR Model 40 BPR Methodology Selection Guidelines 41 Recommended Approach 42 Implementation of Business Process Reengineering 42 Common Steps to be Taken for BPR Implementation 45 Phase 1: Beginning Organizational Change 45 Phase 2: Building Reengineering Organization 46 Phase 3: Identifying BPR Opportunities 46 Phase 4: Understanding Existing Processes 48 Phase 5: Reengineering Processes 49 Phase 6: Blueprinting New Business Systems 50 Phase 7: Performing Transformations 51 Different Business Process Reengineering Methodologies 53 Hammer/Champy Methodology 53 Davenport Methodology 54 Manganelli/Klein Methodology 55 Kodak Methodology 55 Comparison of Various Business Process Reengineering Methodologies 56 Consolidated BPR Implementation Methodology 57 Activity 1: Preparing for Reengineering 57 Activity 2: Mapping and Analyzing As-Is Process 58 Activity 3: Design To-Be Process 59 Activity 4: Implement Reengineered Process 59 Activity 5: Improve Process Continuously 60 Steps of Process Reengineering 60 Organizational Redesign Using BPR 60 Impact of BPR on Organizational Performance 63 Performance Measures of BPR 63 Business Process Rengineering Project Management 63 Reengineering Recommendations 64 Threads of BPR in Various Phases 65 Initiation 66 Acquisition 66 Implementation 66 Sustainment and Continuous Improvement 66 Review Questions Success Factors of BPR Reengineering Success Factors 68 Top Management Sponsorship 68 Executive Leadership 69 Strategic Alignment 69 Business Case for Change 69 Proven Methodology 70 Ten Steps to BPR Implementation 70 Change Management 70 Line Ownership 71 Process Ownership 71

7 vi Contents Reengineering Team Composition 71 Success Factors of Business Process Reengineering 72 Critical Success Factors of BPR 72 Reasons for BPR Project Failure and Success 73 Reengineering Drives Cause Many Changes 74 Review questions Managing Barriers to Business Process Reengineering Success Potential Project Implementation Success 75 Risks Associated with Business Process Reengineering Projects 76 Business Process Reengineering Implementation Barriers 76 Hard Implementation Barriers 76 Soft Implementation Barriers 77 Areas Generating Barriers to Business Process Reengineering Implementation 78 Project Related Causes 78 People-Related Causes 79 Organization-Related Causes 79 Environment-Related Causes 79 Root Causes to Information Technology Barriers 79 Some Root Causes of Internal Individual Resistance 80 A Framework for Barrier Management 81 Project Management 82 Barrier Management 82 Identify Root Causes 83 Review Questions BPR and Relevant Technologies Reengineering Vs Other Programmes 90 Differences between BPR and Process Simplification 90 Differences between BPR and Continuous Improvement 91 Difference between BPR and TQM 91 Review Questions Lean Manufacturing and the Environment History of Lean Manufacturing 92 Introduction 93 Definition of Lean Manufacturing 94 Importance of Lean Manufacturing 94 Production Resource Requirements and Costs 95 Velocity and Flexibility 97 Product Quality 98 Waste in Lean Methods 98 Tools and Methods Used for Lean Implementation 99 Kaizen Rapid Improvement Process 99

8 Contents vii 5S 99 Total Productive Maintenance (TPM) 100 Cellular Manufacturing/One-piece Flow Production Systems 100 Just-in-Time Production Systems/Kanban 102 Six Sigma 102 Pre-production Planning (3P) 103 Lean Enterprise Supplier Networks 103 Steps in Lean Manufacturing Implementation 104 Six Sigma 104 Difference between Six Sigma and Lean Production 105 Shortcomings of a Pure Lean Improvement Effort 106 Lean Implementing Experience 106 Mechanisms for Environmental Improvement through Lean Implementation 109 Lean Projects and Results 110 Saturn Kanban Implementation 110 Fairfax Assembly Paint Booth Cleaning 110 Application of Lean Methods to Administrative Processing in the Purchasing Group 110 Lean Enterprise Supply Chain Development 111 Steering Column Shroud PICOS Event 111 Thermoplastic Colour Purging PICOS Event 112 Case Studies 112 Apollo Hardwoods Company 112 Conventional Veneer Manufacturing 113 General Motors Corporation 115 Goodrich Corporation Aerostructures Group 116 Warner Robins Air Force Base 120 Review Questions Enterprise Resource Planning Introduction 123 Evolution of ERP 125 Need for ERP 125 Need to Change Business Methods 126 Cost 126 Package Suitability 127 Capacity of Computer Systems to Handle ERP 127 Major Characteristics of ERP 128 Three Approaches to ERP 128 Suppliers of ERP 129 Prominent ERP Vendors 129 Features of ERP 131 Components of ERP 132 BPR and ERP 132 Selection of ERP 133 Steps in Selecting the Right ERP Package 133 Implementation of ERP 134

9 viii Contents Common Approaches to Install ERP 135 Eight Steps for Success of Implementation 136 ERP Implementation Traps 137 Observations for Successful ERP Implementation 141 Plan to Succeed in ERP Implementation 145 Implementing ERP System 150 Easier ERP Implementation 152 Benefits of ERP 155 Payoffs of ERP 155 Reasons for Implementing ERP 155 ERP Adoption 156 Integration Takes Hold 156 Motivations for ERP Systems 156 Extending ERP 157 Link Your Supply Chain 157 Oracle ERP 158 Various Oracle Modules 158 Oracle Financials 159 SAP 159 SAP R/3 Functional Modules 161 SAP R/3 Approach to Production Planning 163 ABAP 164 SAP Enterprise System 164 ROI Calculation In ERP Implementation 165 Qualitative and Quantitative Aspects 166 Key Performance Indicators 167 Reports Created By ERP Packages 168 Bill of Material 168 Sales Forecasting 169 Sales and Operations Planning 169 Demand Management 169 Internet-Based Enterprise Resource Planning Solutions 170 Internet Forcing Companies to Re-evaluate Their ERP Systems 171 Entry into e-business 171 E-business and ERP Taken Together 171 Next Wave 172 Next Generation ERP is Web Enabled for E-business 172 Questions and Answers 174 How can ERP Help to Improve a Company s Business Performance? 174 How Long does an ERP Project Take? 175 What Things will ERP Correct in My Business? 176 Will ERP Fit into the Ways I do Business? 177 What does ERP Actually Cost? 177 When will I Get Returns from ERP and How much will it be? 178 What are the Hidden Costs of ERP? 178 Why do ERP Projects Fail Frequently? 180 How do I Configure ERP Software? 181 How do Companies Organize their ERP Projects? 181 How does ERP Fit with e-commerce? 182

10 Contents ix Case Study: Kirloskar Oil Engines Limited Implements Oracle ERP Solutions 183 Review Questions Functional Information System Introduction 185 Marketing and Sales 185 Production and Materials Management 187 Accounting and Finance 188 Human Resource Management 188 Review Questions Software Reengineering Introduction 190 Definition of Reengineering 190 Reengineering Objectives 191 Reengineering Concepts 192 Software Development Levels of Abstraction 192 General Model for Software Reengineering 192 Reverse Engineering 193 Forward Engineering 195 Reengineering Approaches 195 Big Bang Approach 195 Incremental Approach 196 Evolutionary Approach 197 Reengineering Phases and Tasks 197 Reengineering Team Formation 198 Project Feasibility Analysis 198 Analysis and Planning 198 Reengineering Implementation 199 Testing and Transition 199 Reengineering Risks 200 Hybrid Reengineering 201 Hybrid Reengineering Tracks 202 Hybrid Reengineering Approach 206 Hybrid Reengineering Risks 207 Hybrid Reengineering Benefits 207 Hybrid Reengineering Metrics 207 Reengineering Industry Applications 208 Results 208 Industry Lessons Learned 212 Conclusions 212 Review Questions Virtual Manufacturing Introduction 214 Virtual Lab for Product Creation 214

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