IE673Session 8 - BPR1 Business Process Reengineering (BPR)

IE673Session 8 - BPR2 Value Metrics Quality Service Cost Cycle Time

IE673Session 8 - BPR3 Value Metrics Value = Quality X Service Cost X Cycle Time

IE673Session 8 - BPR4 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.

IE673Session 8 - BPR5 First Driving Force - Customers Demand products/services designed for their unique needs. Expect product configured to their needs, manufacturing plans, and convenient payment terms.

IE673Session 8 - BPR6 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

IE673Session 8 - BPR7 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

IE673Session 8 - BPR8 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?”

IE673Session 8 - BPR9 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.

IE673Session 8 - BPR10 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.

IE673Session 8 - BPR11 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 “process- oriented” –They are focused on tasks, on jobs, on people, on structures.

IE673Session 8 - BPR12 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.

IE673Session 8 - BPR13 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)

IE673Session 8 - BPR14 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/{ } = 5.0/8.8 = FOE = 0.90 x 0.80 x = 0.409

IE673Session 8 - BPR15 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

IE673Session 8 - BPR16 Affinity Diagram Gathers large amounts of data and organizes it into groupings based on the natural relationship between each item.

IE673Session 8 - BPR17 Interrelationship Diagraph

IE673Session 8 - BPR18 Tree Diagram Systematically maps out the full range of tasks/methods needed to achieve goal.

IE673Session 8 - BPR19 Matrix Diagram Displays the relationship between necessary tasks and people or other tasks, often to show responsibility for tasks.

IE673Session 8 - BPR20 Data Matrix Analysis Temp Humidity

IE673Session 8 - BPR21 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

IE673Session 8 - BPR22 Additional Tools/Methods Benchmarking Process Simplification Concurrent Engineering Demand Flow Technology Activity Based Costing Eliminate Non-Value Added Activities