Q 310. What is Business Process Re-engineering (BPR)? How do you select a process that is suitable for BPR? Is DMADV roadmap suitable for BPR projects?

 

Note for website visitors - Two questions are asked every week on this platform. One on Tuesday and the other on Friday.

• All questions so far can be seen here - https://www.benchmarksixsigma.com/forum/lean-six-sigma-business-excellence-questions/
• Please visit the forum home page at https://www.benchmarksixsigma.com/forum/ to respond to the latest question open till the next Tuesday/ Friday evening 5 PM as per Indian Standard Time. Questions launched on Tuesdays are open till Friday and questions launched on Friday are open till Tuesday. 
• The best answer is always shown at the top among responses and the author finds honorable mention in our Business Excellence dictionary at https://www.benchmarksixsigma.com/forum/business-excellence-dictionary-glossary/ along with the related term

 

What is Business Process Re-engineering (BPR)? 
The complexity associated with any new business model is often staggering. Many organizations tend to miscast tactics or speculate meanings. Hammer and Champy provide the most extensively used definition for Business Process Reengineering (BPR) in their best-selling book "Re-engineering the Corporation" which reads as follows;
"The fundamental re-thinking and radical re-design of business processes to achieve dramatic improvements in contemporary critical measures of performance, such as cost, quality, service, and speed."

How to select a process that is suitable for BPR? 
An adequate BPR integrates people, technology, and business processes under the guidance of strategy and methodology. Those who take a critical aspect of these building blocks should recognize that people, technology, and business processes are existing elements within the business enterprise. BPR is accurately the mechanism by which strategy and methodology can effectively utilize and restructure these resources, adding value to both process & product. Therefore, strategy and methodology have the most significant overall influence on BPR implementation and balance how the other business elements (people, enabling technology, and business processes) are integrated.

a) PEOPLE;
Even with an increased emphasis on technology and automation, people still represent BPR's most robust contributing resource. The bulk of process and business process knowledge resides with individuals who can collectively support or derail a BPR effort. How people interact with business processes through information technology and process technology solutions significantly impacts business processes' operational efficiency. BPR reserves not to remove people from the business (i.e., staff reductions), yet as a consequence of BPR application, the abundance of people required to implement a process may decrease. Performing processes more efficiently often means using fewer resources (including people) to finish required activities. BPR aims to drastically improve process performance over time by combining people and technology as enablers.

 

b) BUSINESS PROCESSES;
All businesses have functioning business processes. Business processes represent the engine by which a business operates, with information, people, and materials being the fuels/resources necessary to stay the engine running. Hammer and Champy would argue that BPR's goal is not to repair existing business processes but to revamp (change) a business process completely. In short, they recommend a whole engine overhaul or replacement. Irrespective of whether fixing or redesigning a business process is required, rethinking business processes is critical. Information is acknowledged as a part of the business process building block since information is created, maintained within, and output from processes. As explained, information plays a significant role in modifying a business process during re-engineering.

 

c) TECHNOLOGY;
To remain competitive, an organization must continuously appraise its machinery, control systems, information systems, communication resources, and methods. Each portion of the overall system must be regularly upgraded to incorporate efficient new technologies and methods. Most of today's technology is obsolete long before it crumbles. Besides, many market developments will lead to systems that are obsolete before they are completed. An inadequate solution is also proposed for an enormous problem, or inordinate amounts of personnel, time, and money could also be squandered on a grandiose development scheme. As a consequence, complete systems and associated processes often neglect to satisfy customer needs and expectations. There is no such entity as a perfectly designed system or process that will meet all possible customer needs over an extended period without change. Ideally, a newly upgraded computerized system is configured to adapt to fulfill changing requirements without complete replacement. Planning and diligent up-front attention to applying appropriate technologies will help ensure that automation is appropriately aligned with the business process workflow. Frequently, automation is becoming the cornerstone of any process improvement effort. 

 

d) STRATEGY & METHODOLOGY;
However, without any strategy and methodology, business process improvement would essentially be guesswork. 

 

BUSINESS PROCESS RE-ENGINEERING CRITICAL FACTORS

1. Top management must be supportive of and involved in re-engineering attempts to eliminate barriers and drive success.
2. An organization's culture must be responsive to re-engineering goals and principles. 
3. Significant improvements and savings are realized by specializing in the business from a process perspective instead of a functional perspective.
4. Processes should be chosen for re-engineering supported by a transparent opinion of customer needs, anticipated benefits, and potential fulfillment.
5. Process owners should manage re-engineering projects with cross-functional teams, maintain a correct scope, specialize in customer metrics, and enforce implementation timeliness.

Is the DMADV roadmap practical for BPR projects?

 

A Six Sigma DMADV project focuses on reducing variation and streamlining the processes to realize customer satisfaction. It is going not necessarily to change the whole process flow. Prefer it takes place in BPR. The critical difference between Six Sigma and BPR.

 

 

However, Six Sigma DMADV uses an "align and develop" five-step method to spot the basis causes and does not entirely redesign the BPR method. By using Six Sigma in BPR projects, we will get:

• Statistically essential tools and methods to develop quality processes and knock out variation
• The process improvements are data-driven, using baselines, scorecards, dashboards, and metrics
• A typical process improvement language
• Stage-gating, ensuring that every one deliverable undergo DMADV (Define, Measure, Analyze, Design and Verify) phases
• The exclusion of process defects, scrap, and rework so costs decrease
• The sigma quality level that compares processes and describes the internal customer voice

Using Six Sigma in BPR projects enables the "customer inward" approach, an end-to-end strategy mainly driven by the customer's voice. It should enable collaboration by all business segments, even external partners, and be well-managed to define success. 

Business Process Reengineering (BPR) is a game changer to any business to increase profits and drive growth. This could be a rescue approach especially for a failing or stagnating company. It is a change management initiative involving redesigning of business processes, mainly focusing on improving productivity, efficiency, quality, service, speed or reducing costs. BPR also involves redesigning of associated systems and organizational structures.

 

BPR involves the study and transformation of major components of a business that generally include Strategy, Organization, Process, Technology and Culture.

 

Indicators/Need for Business Process Reengineering in a Company:

• When the profitability of a company is falling
• When Company is struggling for Cash flow
• When Inventory levels are rising
• When Turn around time for Customer Orders are poor/not met
• When there is lack of Corporate Governance
• When Sales leads are not being followed up upon quickly
• When there is high employee turnover, employee stress and disputes
• When there are high customer complaints and refund requests
• When there is high Chaos in the process when experienced employees go out of office or leave the company.

There could be many more, but the above are the most common indicators.

 

Steps involved in Business Process Reengineering:

Many people have explained the steps in different ways, however below is the approach that is adapted in common.

 

1) Create a Vision: It is important to understand the need/reason for the change and create a vision accordingly as to where the company need to be in the future. The objectives must be then clarified in both qualitative and quantitative terms. Once the objectives are clear, its important to communicate and convince the employees about the same and the changes needed are necessary.

 

2) Establish a Competent Team: The team selected must be cross functional as the expertise and perceptions from different levels of the organization are important and required to minimize the chances of failure. In most cases the team selected will consist of Senior Manager, Operational Manager and Reengineering Experts. Having a diverse team is important as we may get diverse perspectives and ac curate diagnosis as creativity is essential in analyzing current business processes and developing new ones.

 

3) Select and Understand the Current Process: Here the process/processes that is intended to be redesigned must be selected. Once selected, the same must be mapped out by using flowcharts or software (Done either manually or many tools available in the market to perform the job , such as epiplex etc.) to study the gaps, inefficiencies, blockers etc. The Key Performance Indicators(KPIs) can then be linked to the respective process in order to understand if the process has the desired effect. Process Mapping will help in identifying the non value added activities. The KPIs with the same indicators are used at later stage as well for the new process implemented in order to monitor if the new process has achieved the desired effect.

 

4) Develop/Redesign the New Process (Mapping the Future State Process): A new process is designed or mapped that can effectively overcome the inefficiencies of the current state process. Here the future state process map is created highlighting the solutions that are identified to address the issues of the current state process. The future state process map is more customer oriented.

 

5) Implement the New Process/Reengineered Process: Once the analysis and planning is complete, the feasible solutions identified can be implemented on a small scale as a pilot run or a test run. Based on the results and performance, necessary adjustments can also be made at this stage. Further, the results and effects of the new process must be closely monitored using the KPIs. If the KPIs shows that the new solutions implemented makes the process perform better than the previous one, then the same can be implemented on a larger scale. Every stakeholder must be informed about the new process and must proceed with the implementation only once necessary sign offs from senior management is received, proper new process training is provided to employees. 

 

6) Evaluate: Sometimes the KPIs can give a different picture over a period of time if the process environment is highly dynamic and subject to lot of changes. Hence its important to monitor the KPIs to identify any inconsistencies that may arise if any and fix the same accordingly.

 

Business Process Reengineering is part of Six Sigma Approach towards Project Management

As BPR talks about radical redesign of the process, DMADV is the most ideal six sigma technique used to bring quality assurance and continuous quality improvement in BPR. DMADV is often used for designing a brand new process or redesigning an existing one from scratch to meet the customer wants. As mention earlier this is a Customer Oriented Approach. 

We can aligned the above mentioned BPR steps to DMADV approach as below:

• Define (D) - Create a Vision; Establish a Competent Team
• Measure (M) and Analyze(A) - Select and Understand the Current Process ( Current Process analyzed by studying the problems, root causes, identifying non value added activities and  also analyzing the KPIs) 
• Design (D) - Develop/Redesign the New Process(Mapping the Future State); Implement the New Process/ Reengineered Process
• Verify(V) - Evaluate

Thus integrating Six Sigma with Business Process Reengineering will improve the processes in the organization from customer's perspective, as both focuses on improving quality by providing the best to the customer by redesigning, measuring and improving the process.

 

Successful Famous Examples of BPR Initiatives: 

• Ford Motors
• GTE
• Bell Atlantic
• Bank Of India
• Mahindra
• ICICI Bank
• Taco Bell
• Hallmark

Business Process - set of sequential steps followed to obtain a desired result. Whereas Business Process Re-engineering - steps taken to de-design the current process in order to meet Organization’s goal and objective (cost, quality, service, speed so on). This concept is adopted in early 1990.

 

  

BPR is a 4 step methodology:

  

 

 

Step 1 is to identify process

One of the toughest questions is to identify the process. There are several processes in an organization which can be categorized as “Core and Support process”. BPR concepts should be applied on Core process for the better results.

Core processes are those which are related to vision of the organization. Core process (es) provides organization competitive advantage, creates value for customer and are aligned to organization vision

 

Eg- In Banks core process is providing financial services. For a food processing company any process related to production, packaging and shipment of food are core processes. For a back office completing the transaction on time and with minimal error are the core processes. All the other process could be termed as Support process

 

Step 2 Review and Analyze

In step 2 “As-is” core processes is reviewed and if required perform some process improvement and see if the output is improving. Even after the changes if the output (desired result) is not impacted much analyze the reason for the low output. Use tool like 5Why analysis to analyze the root cause of the As is processs

 

Step 3-Design To be

As part of this step “Design To be process” which might require changes in People/Processes/Technologies. Tools used here to design new process as “Benchmarking” the process which best in class within same industry or different industries

 

Step 4 -Test and Implement

Once “To be” process is defined, next step is pilot testing (the new concept is tested on a very small area or in controlled environment). Once the pilot testing is successful, implement the “To-be process in one go (if process identified is small) or in phased manner (if the process is lengthy). Post successful implementation start from Step 1 for the new process re-engineering.

In case of failure of pilot test (means that either analysis or the “To-be” process is not right, hence it is re-commended to start from the beginning)

 

DMADV-(Define, Measure, Analyze, Design and Validate)

Since BPR focuses on re-think and re-design the process hence traditional Six Sigma DMADV would be on line with the concept. Integration DMADV will enhance the BPR study as Six Sigma focus on the variation reduction and is a customer/business centric approach.

 

Once the core process is identified in Step 1 of BPR its advantageous to introduce DMADV which will help in:

1)      Introduction of DMADV will help business to view the process end-to-end from business and customer value point. Hence focus will be more than cost reduction

2)      DMADV is a structure approach and is a robust methodology, which also emphasize on cross –functional groups and better stake holder management

3)      DMADV will be more focused towards the area where the solution are unknown

4)      It’s a metric driven approach hence post improvement using Six Sigma concepts will help in analyzing the actual benefit in terms of metric movement

5)      Apart from the as a practice in Six Sigma – it also focuses on sustenance of the improvement

 

Hence DMADV will complement BPR and will result in better yield to the vision of the Organization.

Sanat Kumar has provided the best answer to this question by providing explanation to what is BPR, objective pointers for selection of the process for BPR and linking DMADV with BPR.

 

Other answers are also an interesting read.