Importance of Business Process Reengineering - Essay Example

A Study on the Strategies for Business Process Reengineering Implementation Executive Summary: This report investigates the strategies for successful BPR implementation in the Knit Textiles Manufacturing Company in Malaysia for improving the operational efficiency of employees of the firm. BPR is adopted by many business organizations as a tool for attaining cost reduction and workers’ performance improvement. In this case study, as a management consultant, the researcher undertaking analysis of how successfully BPR implementation can be carried out by the Knit textiles MFG SDN BHD in the current business environment. The organization structure of the company is not well supporting efficiency improvement of the workers in the organization. From the interview with customers and employees of the company, data relating to the defaults in existing operations of Knit textiles is identified properly. The analysis of these data explores the need for reengineering the ongoing process model for improving the operational efficiency and customer service of the company. From this study we identified that better communication between managers and employees must be ensured for informing the organizational personnel about the ongoing change process and its consequences to the organizational personnel. The change management should be carefully deal by the Top management for removing the fear and after that restriction from organizational personnel towards the reengineering process. Introduction: In the global competitive business environment, business organization is required to follow continuous improvement in operational efficiency and cost control. Reengineering of the ongoing business process is recognized by many firms as an effective tool for achieving improvement in operational efficiency and performance of employees. But in many cases firms are failed to achieve the targeted performance improvement after the reengineering process. In this case study we deeply analyze the strategies for successful implementation of BPR in the Knit Textiles Company. Knit Textile Manufacturing Company (Malaysia): Knit Textiles is a modern garment manufacturing company in Malaysia, dealing with wide choice of garment products. High quality garment products are produced and supplied by them with low price. Market leadership is attained through low priced garment products with wide range of designs.  Operation cost is reduced by direct linking of production with marketing at shortest and cheapest ways. Cost reduction strategy is followed in all stages of operation. Contract manufacturing services is their key business. (Company Profile).  Problems with ongoing operational structure: Operational environment in the organization is not capable of enhancing the operational efficiency of workers. Workers have fixed location for their operations and they are dealing with same type of work in the organization. Monotonous working environment is badly affecting the performance of employees. BPR always result in changes in the organisational structure and performance efficiency.  Thus for the implementation of BPR, organisation have to face challenges with several factors. The successful implementation of BPR project may be restricted due to these factors. Organizational change resulting from BPR may be against the interests of organizational personnel. In this case study how successfully BPR can be implemented in the Knit Textile Manufacturing Company is kept under discussion.  Methodology: In this research, strategies for successful BPR implementation in the Knit Textile Manufacturing Company are analyzed deeply. The data relating to the ongoing operations of the company is collected from direct interviews with managerial personnel and company websites. In order to find out the needs and interests of customers and employees in the organization, a sample survey is conducted among the workers and employees through a well prepared questionnaire. It will be effective for identifying the restricting factors towards BPR implementation in the company. This will also be helpful to modify the BPR designs to keep up the interests of workers. The sample survey is conducted by selecting representative individuals from different group of customers and employees. The opinion of customers and employees regarding the performance of the firm in meeting their needs and interests is collected through this sample survey. Data relating to successful BPR implementation strategies is collected from internet sources. The defaults in the current business operations are analyzed through this research to identify the loopholes for implementing BPR in the company. The internal strengths and weaknesses of the company are collected through interview with managerial personnel of the company. Company websites are also used for this purpose. Pro Forma Questionnaire (See Appendix 1) Literature Review on BPR: Reengineering of business process is the redesigning of workflow in the organizations to attain optimum productivity and quality improvement. In 1880’s Frederic Taylor presented the idea of reengineer the existing process with best one for getting optimum productivity. In 1900’s Henry Fayol formulated the concept of reengineering. He had the view that advantages of all available resources have to be used for the reconstruction of existing process. Lyndall Urwick, a business engineer stated that “It is not enough to hold people accountable for certain activities, it is also essential to delegate to them the necessary authority to discharge that responsibility.” (Business Process Reengineering (BRR). 2003). In the 1990’s BPR gets acceptance as an effective tool for getting operational improvement. In the book of ‘Reengineering the Corporation’, Michael hammer and James Champy implemented the idea of process reengineering in the business field. They argued that through radical redesign and reorganization of enterprises the production costs can be lowered with improved quality. BPR is effective for attaining overall performance improvement in organizations. Hammer and Champy formulated seven principles for getting effectiveness in the business reengineering process. Hammer and Champy point out that BPR is “the fundamental reconsideration and the radical redesign of organizational processes in order to achieve drastic improvement of current performance in cost, services and speed.” (Business Process Reengineering (BPR). (2008).) According to the theory of Dr. Michael Hammer, "Business Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed." (Balasubramanian). In the view of Hammer, lack of constant management commitment and leadership control will result in reducing the operational efficiency and performance of workers in organizations. Unrealistic scope and expectations of workers may lead to resisting the changes in organizational structure at the lower level and top management would be forced to follow the entrepreneurial resource planning instead of BPR. (Business Process Reengineering. 2007). Hammer and Champy suggested that instead of functioning firm into different functional specialties and to look at the tasks that each functional unit performs, the complete process have to be identified. From collection of materials to production, marketing and distribution of finished products, a series of processes have to be formed to ensure smoothness in operations. Value creation is the leading factor of BPR and IT often plays an important role in its implementation.   In the concept of Davenport (1992) BPR model has five steps which are as follows: Step 1. Define the objectives and vision of the firm. Step 2. Identify the need for business process redesign Step 3. Identify existing defaults in operation. Step 4. Analyzing the capability of IT in influencing the BPR. Step 5. Design and build a prototype of the new process. (Business Process Reengineering: A Five Step Approach to Business Process Reengineering. 2008).  In BPR, application of information technology is a key content. It is considered as a way for organisational improvement. Modernized technology is adopted in BPR to increase the efficiency of operations. People and process are the main component of any business organization. For improving the performance of personnel, motivational force is a necessary factor. Along with the customer satisfaction, employee satisfaction is a major factor for getting operational improvement of the organization. Organizational performance can be improved with BPR. It is the transformation of operation of employees in the firm in the optimum process design manner. Organizational efficiency can be improved with changes in the operational environment of employees. The successful implementation of BPR requires detailed knowledge about the mission and objectives of the firm. The needs and interests of employees and customers also required to be identified for getting targeted return from the reengineering process. (Carter 2005). Business process improvement is important for sustaining the market growth and leadership in the industry. Always customers are demanding further improvement in products and services. There is large number of suppliers in the market and in order to become competitive, continuous improvement in operation is necessary. Many enterprises select the BPR model as ideal tool for improvement. Through this current process can be thoroughly understood and improvement can be made accordingly. In BPR concept, ongoing process structure is irrelevant for the business growth and it should be modified completely to cope up with the business objectives. According to Peter Carter, “BPR is the key to transforming how people work. What appear to be minor changes in processes can have dramatic effects on cash flow, service delivery and customer satisfaction. Even the act of documenting business processes alone will typically improve organizational efficiency by 10%.”(Carter 2005). BPR should be based on the requirements of the customers and employees and it should be competent to overcome the challenges with competitors. Five stages of reengineering process are identification of scope of project; learn from competitors; process redesign; plan transition and implementation. In BPR existing methods are completely avoided and it starts with a newly developed processing method. This will result in entire organizational change which may be against the interests of employees in the firm. “It is difficult to find a single approach exactly matched to a particular company's needs, and the challenge is to know what method to use when, and how to pull it off successfully such that bottom-line business results are achieved.” (Business Process Reengineering. 2007).  Information technology has a major role in BPR implementation. Information sharing can be effectively carried out through applying advanced information technologies. Worker empowerment is the central component of reengineering process. In the concept of Grover and others, for the successful implementation of BPR, change management is an essential factor. Along with this, process delineation and project management has to be undertaken success fully to get effectiveness in BPR process. The technological competence has to analyze deeply. Human resource requires adequate training for working in the new technological environment. Reengineering process is very complex in nature. Successful implementation of BPR requires support from management and technology should be competent to overcome the existing drawbacks in process. (Varun et al 1995). Successful BPR implementation in organization will enhance the organizational strength through restructuring the organizational structure and management systems that boost up the operational performance. In the changed organizational structure after the implementation of BPR, employee responsibilities and performance measurements will be changed alternatively. Incentive system may also be changed. A successful BPR would result in reduction of cost and business process time period.  Total quality in the process would also improve. Due to fail in implementing the BPR successfully, around 70% of the BPR projects were failed. Some of them have only nominal benefit through this process. (Dr. Balasubramanian) Cyert and March, viewed that organizational behaviour may be influenced by conflicting opinion of organizational personnel towards the reengineering process. Reconstruction of operation process may helpful to reduce cost and increase the process efficiency. But the efficiency improvement is not guaranteed in all cases. During the reengineering time, the capacity for future growth may be elapsed to the business firm. It can be explained with the case of BPR implementation in Star Vault Inc. Star Vault is a midsized entertainment company which adopted BPR in its organization. Through this they attained the short term profitability in operation by elapsed the internal production capability to develop new products. By identifying this loss of production capability, Star Vault was forced to revaluate its strategic direction to restore its efficiency. By removing the non value added expenses and changing the organizational structure appropriate to the strategy the company retained its market share in the industry. The strategy and reengineering process must be complementing each other. Otherwise it will only be a temporary efficiency exercises. In major cases, companies are learning from their earlier failures. This will be positively influence their further reengineering process. Support from top management is a necessary factor for successful BPR implementation. Resistance to change resulting from BPR must be managed by them efficiently and effectively. In the initial stages employees may be supportive to the BPR. Real impact of BPR is cleared only when it is implemented. Thus better communication between management and employees is essential to overcome the employees’ opposition towards the organizational change. Fears of employees must be removed by the management through explaining the real benefit from the BPR to the organization and its personnel. Co-ordination, facilitation and empowerment of employees must be carefully deal by the top management. (Business Process Reengineering. 2007). BPR is adopted by many organizations as a means to change their business operations more efficient. It is essential for the business firms to sustain in the global competitive scenario. The effectiveness of BPR in meeting the projected performance improvement is not realized in many cases mainly due to the defaults in the implementation process. From the critical point of view, BPR may lead to massive lay offs in the business operation. In the competitive business environment, it is not favourable for the growth of the firm. Organizations adopt BPR on the basis of the assumption that organizational performance is influenced badly by the ineffectiveness in production process only. This is not a factual assumption. In BPR, existing process is totally reengineered and the positive factors in the existing process are also considered as irrelevant. Reengineering process is done through a sudden change in the organizational and operational structure. In the competitive garment industry, gradual or incremental change in process is more favourable for the firm than a rapid change. The renewal process is mainly adopting newer technologies and it requires considerable technological and change management skills in the organization. (Business Process Reengineering (BPR). 2008). Analysis:   Manufacturing process model followed by Knit textiles is in consolidated structure. All stages of production are carried under one roof. In order to ensure the quality in production process, in house production is followed by the firm. Entire process is well planned in time efficient manner and it makes easy and faster respond to the market demand. Product development and technical sampling services is provided by the firm to its customers. State of the art Gerber technology’s Accumark system is used by the product development team of the firm to give advice in pattern grading, texture mapping, marker setting, and fabric consumption detail to its customers. Material sourcing is a core strength area of the firm. Unit Production System: Apparel manufacturing process in the enterprise is mainly based on ‘ergonomics’ and ‘usability’ concepts. Eton UPS solution is employed in the firm to transport product on a suspended system basis. The work process is ergonomically optimized and through this component pieces for manufacturing products are bought directly to the machine, and are sent on automatically. It improves the quality and efficiency in the materials management. Technical sampling facilities are arranged in the firm. Pre-cutting process and fabric inspection is kept automatically and it provides standardization in operations. Through trust and proven market performance, long-term customer relation ship in the market is created by the firm. (Company Profile)  Draw backs in current Business operations: From the sample survey conducted among the employees and customers of Knit Textiles, certain defaults in operation are identified and analyzed. One of the major drawbacks in operation is that the employee satisfaction is not carefully considered by the top management of the firm. Another default is relating to the customer groups. The lead time taken by the firm for the product delivery is in between 20 to 30 days. In the competitive industry the lead time reduction is very important for the firm. Employees are not well satisfied with the current operations as the current operational structure is monotonous to the workers. Workers were assigned to a specific area on the factory floor, dealing with same type of work. It badly affects their efficiency and productivity. To meet higher demand from the customers, firm often demand for doing overtime work by the employees. The talent and skills of workers are not well recognized or developed by the firm. Salary payment system followed by the firm is not considering or rewarding over production efficiency of skilled workers. Most of the labour intensive processes are mechanical in nature and employee satisfaction is not ensured in these areas. The production capacity of workers will be reduced by disruptive working environment. Information sharing: In the communication system of firm, advanced technology is not well implemented. Due to the increased demand from importers, they had to face problems with long lead time and delay in delivery. To reduce the lead time in product delivery, information technology can be effectively used. Though advanced communication technology, the demand for overstock of product from customers can be informed to the production department in time and this will enhance the product delivery and the lead time can be reduced. Discussion: Need for change: In the continuously developing textile manufacturing industry, Knit Textile Company has to follow BPR in their manufacturing division. Advanced technology must be implemented to bring about changes in the ongoing process. Sharing of information in the entire organization should be restructured by using advanced communication technology Reengineered Process Model: In the reengineered process model, the work on entire product line should be assigned to teams of multi-skilled labours from the beginning to the end. The salary payment system in the firm should be replaced by performance based payment system. Well performing and factory focused teams should be compensated for their performance. Advanced information system should be employed in the firm for strengthening the internal supply chain links. Advanced information technology in communication should be helpful for filling the gap in information sharing link. Egocentric attitude of teams can be changed by placing equal responsibility on the team managers for the entire product line. The performance evaluation should be based on over all performance of teams in the entire product line. Factors restricting the performance of the employees should be controlled by applying adequate techniques. The work environment in the factory site should be properly redesigned to cope up with the needs and interests of employees. The redesigned model should be capable of highly motivating the performance efficiency of them. It should facilitate the smooth flow of operations in the organization. Materials and product supply management should be redesigned with a pull system that will be capable of dealing the customer orders without delay. Adequate compensation should be provided to skilled and efficient workers. This will be capable of empowering the workers. Advanced technology should be adopted in all stages of production operation. Plant, process and supply chain management should be reformed with integrated technologies. Trial and error should be carried on for ensuring the capability of the reengineered structure to meet the projected return. Change Management: Employees’ attitude is the major obstacles to change in the organizational operation and payment system. Changes in the payment system will not be accepted by the workers without restrictions. The change management should be properly managed by the top management. Business and manufacturing process problems should be subjected to the detailed analysis of top management. This will be capable of finding the necessity of BPR implementation in the ongoing process model. Draw backs with existing technology and the need for change should be properly explained to the employees for resisting the restrictions from employees towards the BPR process. The support from top management is necessary for getting maximum return from the reengineered process. Process controlling and change management are the two fundamental duties of the top management in the reengineering process. The efficiency of the new business system should be measured with the ongoing business conditions in the industry. Through this success of the transformation process can be ensured before its implementation. Team work and communication is highly essential for the transformation of process model. All the team members have to get acquaintance with advanced technology for working in the transformed model. Process mapping is capable of informing the organizational personnel about the reengineered process model. Defects on the new model can be identified properly through process mapping. Conclusion: Continuous improvement in performance and efficiency of workers is essential for sustaining the market position/leadership in the industry. Customer and employee satisfaction is equally important for the successful functioning of the company. In order to get further improvement in production efficiency and quality of product together with satisfaction to the employees, BPR is an ideal tool. To attain global customer satisfaction, product quality should be improved with reduced cost. The product delivery system should be capable of minimizing the lead time. Through this case study we can conclude that reengineering of entire business process of the company should be capable of attaining efficiency production operation and supply chain management. Implementation of integrated technology in managing the plant, process and supply chain in the organization will be capable of enhancing the organizational efficiency in controlling the business operations in optimum manner. Carefully developed change plan is the primary ingredients of a successful BPR implementation. Periodical evaluation of the impact of new technology should help to measure the degree of success of the project in time. Thus corrective measures can be undertaken instantly. Recommendations: As a management consultant of the Knit textile Manufacturing Company, I recommend to the Managing Director of the company that the BPR can be effectively implemented in the company for removing the problems with the ongoing process in meeting customer satisfaction and employees’ efficiency. BPR may cause lay off in the business operations. In the competitive industry, it may result in loss of customers. Thus adequate steps have to be followed. Strategic Planning should be framed while implementing BPR in the company. IT must be used as a competitive tool to enhance the efficiency. Reengineering process must be based on the needs and attitudes of customers and employees. They are the essential components of any business concern. Internal direction and controlling must be ensured in the implementation process. External advices and consultancy is not favourable in BPR implementation. Proper communication between managers and employees has to be ensured. IT should be integrated in the BPR process from start to finish. Members in Top management should be co-operated with the implementation process from start to finish even after the implementation process. A time line should be fixed for tee scheduling the work, the corporate culture and business ethics must be considered while selecting the reengineering process. Communication will be helpful to get feed back on the reengineered process in time. Impact of the new technology should be evaluated periodically to recognize the ability of the system in attaining targeted efficiency return. Appendix 1: Pro Forma Questionnaires: (a)Pro-Forma Questionnaire to the Customers: 1. Company Nationality: USA UK France Others 2. State the primary reason for choosing the Knit Products Product Quality Reduced product price Good Customer Service All of the above 3. Rate the price of the products of Knit Textiles Low Priced Reasonably priced Expensive 3. Lead time in the product delivery by Knit Textiles Below 10 days 10- 20 days 20 to 30 days. More than 30 days 4. How satisfied are you with the products and services of Knit Textiles? 6. Is there any recommendation for improving the services? (b)Pro-Forma questionnaire to the Employees 1. Name: 2. Field of Work 3. How long are you employing in the Company? 4. Are you satisfied with your present job? 5. Is compensation for your work is adequate with the industrial norms? 6. Is the working condition is favourable? 7. State recommendations for improvement Bibliography BALASUBRAMANIAN, S. Dr. Successful BPR Implementation Strategy. [online]. Last accessed 4 January 2009 at: http://hosteddocs.ittoolbox.com/SB41806.pdf Business Process Reengineering: A Five Step Approach to Business Process Reengineering. (2008). [online]. 12 Manage. Last accessed 4 January 2009 at: http://www.12manage.com/methods_bpr.html Business Process Reengineering (BPR). (2003). [online]. BRR online Learning Centre. Last accessed 4 January 2009 at: http://www.prosci.com/intro.htm Business Process Reengineering. (2007). [online]. SearchCIO.com Definitions. Last accessed 4 January 2009 at: http://searchcio.techtarget.com/sDefinition/0,,sid182_gci536451,00.html Business Process Reengineering (BPR). (2008). [online]. 12 Manage. Last accessed 4 January 2009 at: http://www.12manage.com/methods_bpr.html CARTER, Peter. (2005). Business Process Reengineering: An Introductory Guide. [online]. TeamTechnology.co.uk. Last accessed 4 January 2009 at: http://www.teamtechnology.co.uk/business-process-reengineering.html CARTER, Peter. (2005). Business Process Reengineering: The Impact of BPR on Organizational Performance. [online]. TeamTechnology.co.uk. Last accessed 4 January 2009 at: http://www.teamtechnology.co.uk/business-process-reengineering.html Company Profile. [online]. Knit Textiles MFG. SDN. BHD. Last accessed 4 January 2009 at: http://www.knit.com.my/KTMSB_0701.pdf  VARUN, Grover et al. (1995). The Implementation of Business Process Reengineering. Journal of Management Information Systems. [online]. The JMIS. Last accessed 4 January 2009 at: http://www.jmis-web.org/articles/v12_n1_p109/index.html Read More