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Business Process Re-Engineering
The manufacturing industry today is significantly challenged by slow growth and a tough global economy. In order to remain competitive in the global marketplace, manufacturers are adopting radical corporate strategies – like flattening the organization, globalizing production, forming strategic alliances with customers, suppliers and competitors, merging with other companies to form new structures, decentralizing business units, and creating global business units. Having to deal with a whole new set of non-traditional competitors can slow progress of even the sleekest of companies. This has necessitated Business Process Re-Engineering (BPR) for manufacturers of all sizes (Greenberg, 2004).
There a number of definitions of business process re-engineering (BPR). Klein and Manganelli in their book “The Reengineering Handbook” defines it as the “Rapid and radical redesign of strategic, value added business processes-and the systems, policies and organizational structures that support them-to optimize work flows and productivity within an organization (Greenberg, 2004).
. Johansson and McHugh in their book “Business Process Reengineering: Breakpoint Strategies for Market Dominance,” defines it as “The means by which an organization can achieve radical change in performance, as measured by cost, cycle time, service and quality, by the application of a variety of tools and techniques that focus on the business as a set of related customer-oriented core business processes rather than a set of organizational functions. Robert Jacobs in his book, “Real Time Strategic Change” defines strategic change (similar in concept to BPR) as an “Informed, participative process resulting in new ways of doing business that position an entire organization for success, now and into the future.” (Greenberg, 2004).
Analysis of Business Needs
The first step of any process is to define levels of process and the needs to meet these different stages of any business re-engineering plan. The reason we need to define and frame the set of goals or needs the business requires is to resolve the problem and not the symptom of any problem. This can easily be the case if in-depth analysis is not followed by asking the following questions broken up in 6 stages. (Greenberg, 2004).
Stage 1
Preparation: What is the level of organizational commitment; what are the expectations; what are the project goals? Who should be on the team? What are the required skill sets? How will results be communicated to the organization?
Stage 2
Identification: What are the major business processes? How do these processes interact with customer and supplier processes?;
Stage 3
Vision: What are the sub-processes, activities and steps that makeup the major business processes; How do resources, information and work flow through each process; Why do we do the things we do now (getting out of the box or mental prison);
Stage 4
Solution: Technical Design: What are the required technical resources and technologies needed in the reengineered process?
Stage 5
Solution: Social Design: What are the required human resources? What immediate, near term and long range opportunities exist
Stage 6
Transformation: How and when should progress be monitored? (Greenberg, 2004).
Risk of Investment
Risk of Investment or ROI is a big part of the analysis process. Without proper contingency to any possible outcomes faced, results could deviate from a very static to dynamic nature ending in financial failure. The main 5 failure points are listed below:
Failure Point 1
Spending megabucks on new technology while giving little or no thought to changing the organization’s underlying business processes. The later is often far more difficult since it involves invading political turfs and soul searching by the company’s key executives. (Greenberg, 2004).
Failure Point 2
Delegating the task of re-engineering to an outside consulting firm. Usually this firm has a little or no track record in reengineering or industry specific experience. The outside firm is a sort of “crutch”, relieving the organization from the sometimes arduous but always rewarding task of empowering and involving their employees at all levels in the reengineering process. Often this outside firm is used to help them in making the technology decision, a task they are usually only marginally qualified for. (Greenberg, 2004).
Failure Point 3
On the other hand, involving the right outside consulting firm can be critical in breaking down organizational barriers and providing a fresh, presumably objective organizational assessment. The outside firm can also facilitate team building which is critical to sustaining the reengineering process. All too many companies will tell me that they know their problems, so why bring in an outside firm. But do they really know their problems? Have they developed a clear methodology to address their reengineering needs? (Greenberg, 2004).
Failure Point 4
Inability to identify key breakpoints in core business processes. Breakpoints are defined as the achievement of excellence in one or more value metrics where the marketplace clearly recognizes the advantage, and where the ensuing result is a disproportionate and sustained increase in the supplier’s market share. (Greenberg, 2004).
Failure Point 5
Another common error, most companies fail to commit the resources, internal or external to the task. Their key executives are so busy “putting out fires”; they think they don’t have time to address BPR planning needs. BPR often addresses the most “screwed up” processes of a company. If these are not addressed they fester and can mean ultimate disaster. (Greenberg, 2004).
IT and Re-Engineering
Most analysts view reengineering and information technology as irrevocably linked. Wal-Mart, for example, would not have been able to re-engineer the processes used to procure and distribute mass-market retail goods without IT. Ford was able to decrease its headcount in the procurement department by 75% by using IT in conjunction with BPR, in another well known example. (Wiecher, 2002).
Despite studies that indicate over half of all reengineering efforts are initiated “because of a perceived information technology opportunity – the actual technological solution is far less important than educating employees to use IT as both a strategic initiative and as a tool in the re-engineering process.” (Wiecher, 2002).
Based on the above findings, some insist that when developing a reengineering strategy, the best companies “ignore information technology.” Only after the strategy is complete should innovative IT applications be benchmarked, since innovative applications often “stem from a combination of breakthrough ideas and from modifying several best practices.” (Wiecher, 2002).
During the implementation stage, it is recommended that companies follow these basic rules:
• Recognize that IT is only part of the solution: it allows managers to collect, store, analyze, and communicate and distribute information better.
• Cut and paste the IT tools needed.
• Bring in internal or external IT experts: their knowledge, skills, acumen, and experience are invaluable.
• After implementation, continually monitor IT performance and keep up with new IT developments. (Wiecher, 2002).
IT can prove useful during the reengineering analysis and design process. Graphics software and CASE tools can produce process maps; spreadsheets and costing software allow for activity-based cost analysis; databases can track customer satisfaction and complaints; “blind” e- mail bulletin boards can be used to capture employee suggestions. In addition e-mail and groupware can facilitate communication and coordination across geographical and organizational barriers. (Wiecher, 2002).
Up to the present, the dominant model of IT has been “that data streams can be deigned architecturally and engineered. This approach involves detailed modeling of information requirements and flows, and their relation to business activities and processes.” The traditional approach runs into difficulties when confronting environments that are fluid, dynamic, or characterized by dissent. Davenport argues that the basis of IT redesign must be the individual who uses the information. Data turns into information when it is placed in a human, behavioral context. (Wiecher, 2002).
The development and management through Re-Engineering will enable any manufacturing company to profit in efficiency and be rewarded financially. In the case of using software to manage process and design before implementation is not new. The use of 3-D modeling in such programs and ProE, AutoCAD, SolidWorks helps visually enable a process before integrated and realized. IT software will help generate and engineer a 3-D model and architecture that will streamline data and productivity in any manufacturing enterprise.
Weicher, M., Chu W., Lin, W., Le, V., Yu, D. Business Process Re-Engineering: Analysis and Recommendation. 2002. [University of Phoenix Custom Edition e-text]. Retrieved October 8, 2006, from University of Phoenix, rEsource. CIS319 – Computer Information Systems.
Greenberg, L. Re-Engineering and Integration. 2004. [University of Phoenix Custom Edition e-text]. Retrieved October 8, 2006, from University of Phoenix, rEsource. CIS319 – Computer Information Systems.