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Operations Consulting Skills &


Business Process Re-engineering

Chris Jarvis

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Overview

Operations management Consultancy stages Some Tools Principles of BPR

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Operations consulting

- an expertise and research service to clients, assisting them to:

develop operations strategies e.g. product


Chris Jarvis

leadership, operational excellence, quality, justin-time, BPR etc. improve production & service delivery processes Internal (management services, operational research) and external

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Example Operations Consulting projects

Plant, location and facilities management


Parts/Supplier Network

Adding & locating new plant Expanding, contracting, or refocusing facilities Make or buy decisions Vendor selection decisions Technology evaluation & implementation Process improvement & reengineering Quality improvement Setting/revising work standards

Processes

People

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Planning and Control Systems


Supply chain management Outsourcing ERP Work flow control and scheduling Logistics, warehousing and distribution Source: Chase and Aquilano

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Roles within Consulting Firms

Partners
(Finders)

Service departments Finance, Marketing, HR

Managers
(Minders)

Consultants
(Grinders)

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Source: Chase and Aquilano

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Stages in Consulting Process

Feasibility Analysis and Unfreezing Sales & development proposal Detailed Problem Analysis New system design and modeling Develop performance measures Evaluate options Present report recommendations Join team to implement changes Fine tune and ensure client satisfaction Review what has been learnt
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Decision point

Decision point
Decision point

Decision point Decision point

Decision point

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Tools 1: Heuristic Problem solving

Analyse situation Problem definition

Trend, urgency, size Actual vs symptoms Objectives/resources

Generate and Compare solutions Implementation planning

Options/criteria/costs

Review systems

Info systems/visibility

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Tools 2: Surveys/Data gathering

Plant observation/audits Work sampling & analysis Flow charting Organisation charts Method study

Information systems analysis

Methods Issue trees 5 forces competitive advantage Supply chain Value-added QualServ Systems analysis Customer & employee surveys Gap analysis Prototyping Technical vs human

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BPR Introduction

Why does so much IT investment seem not produce


1. Faulty measurements 2. Information Technology 3. Organizational process, structure and design

corresponding increase in productivity and performance?

Hammer & Champy radically redesign key business processes

Reengineering The Corporation: A Manifesto for Business Revolution Davenport & Short highlight the relationship between IT and BPR relationships: The New Industrial Engineering: Information Technology and Business Process Redesign

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Business Process Reengineering (BPR)

Making processes
effective - producing the desired resulted
efficient - minimising the resources used adaptable - to changing customer & business needs.

BPR Philosophy Radical, cross functional, dramatic

Focus on & organise around outcomes Provide direct access to customers (internal & external) Harness technology Control through policies, practices and feedback Enable independent and simultaneous work Build in feedback channels

Hammer and Champy, Re-engineering the Corporation, Harper Collins, 1993

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BPR Focus

on end-to-end business process that extends all to the way to a customer

(external or internal) who receives some value from the process on essential processes that deliver outcomes
- moving flow - cross-functional in scope within enterprise - cross-enterprises

assumptions about performance improvement thru. reengineering


1. clean-sheet rethinking 2. quantum improvements > incremental improvements 3. use IT to re-engineer process in qualitatively different ways 4. maximum value-added in process, minimise everything else 5. measure value thru. surrogate performance measures 6. Change work environment to fit reengineered process
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What is a Process?

Definition: A specific ordering of work activities across time and place, with a beginning, an end, and clearly identified inputs and outputs: a structure for action (Davenport, 1993) A collection of activities that takes one or more kinds of input and creates an output that is of value to a customer (Hammer& Champy, 1993)

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What is a business process?

. a group of logically related tasks using the firm's resources to provide customer-oriented results to support organisation's objectives. ..an operational or admin. system that transforms inputs into valued outputs - typically a task sequence arranged as a procedure perhaps involving machines, depts. & people. making sandwiches to order seeing a sales order through from beginning to end stock replenishment procedures aircraft maintenance e.g. in hanger or on tarmac between flights

. includes service support processes e.g. engineering change or payroll process, manufacturing process design.
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Kinds of process:

Operational (production) directly achieves operational objectives Control goal to maintain a state relating to another process Generic applicable to any group member (an abstraction or class, essentials of a process that may be shared) Customised adaptation of a generic process to suit specific objectives and using identified resources Enactable defined + executed using process technologies Meta-process concerned with another process(es)

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System Thinking

Systemic: of a bodily system as a whole (medically oriented definition) of or concerning a system as a whole
A framework of thinking, analysis and synthesis

the ability to see the world as a complex system


these are connected to those and everything else you cant just do this without those being affected

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Systems view of business

Environment
Inputs

Entropy
Transformation Process
Information Feedback Outputs/outcomes

Adaptation

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Leavitt Diamond (adapted)

IT Use

A conceptual framework for evaluating & balancing IT-enabled change

Business Processes

Organisational Form

Requisite People Skills

Change one variable & adjust others e.g. new IT & business processes need to be changed. New skills & organisational form to match the IT?
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Leavitt Diamond (cont.)

BPR as well as successful organisational change needs a balance of all these elements in a viable combination IT-driven perspectives emphasise importance of integrated IT architecture Organisational design perspectives focus on finding new organisational form Human resource perspective emphasise empowerment, rewards systems and training BPR perspectives focus primarily on business processes

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Evolution of BPR

Degree of enabling IT

Knowledge Management
Web-enabled e-business Time-based competition

1st-wave BPR TQM

2nd-wave BPR

Richness of business transformation


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BPR requirements
Need process owners - accountable for how well the process performs well-defined boundaries (process scope), internal & external interfaces & responsibilities well-documented procedures, work tasks & training measurement & feedback controls close to point of performance customer-related measurements & targets known cycle times formalised change procedures performers to know how good they can be.

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BPR - process innovation

Existing, long-in-the-tooth practices (solutions to past


problems) may no longer reflect core business concerns nor what the customer may actually want. Rethink & redesign BPs for sharp improvement (radical change) in performance, costs, cycle times & quality. "If you want to get to Heaven, I wouldn't start from here." Start with a clean sheet of paper Imperatives evaluate core business activities consider BPs cross-functionally re-design radically, don't just tinker aim for sharp improvements in performance levels


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BPR serves

the aspirations of business strategy makers & implementors. target better operating ability to satisfy customers - radical change may be needed. a BPR programme is a tactic, a programme to achieve desired results. BPR in isolation from strategic plans will not work. Commitment of strategic managers is essential. isolated BPR efforts will lack direction and will get lost.

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BPR as Neo-Taylorisim?

The aims, processes and

outcomes of BPR have roots in various organisational efficiency, productivity and competitiveness movements.

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BPR, TQM & the March of Ind. Engineering

George Siemens (1839-1901) information & measurement systems. Sci Mgt. work and method study FW Taylor, Frank & Lillian Gilbreth Frederick Herzberg - Job enrichment Systems analysis for computer systems Deming et al - TQM and Kaizen In Search of Excellence (Peters & Waterman) Value-added analysis (Porter) Creativity, lateral thinking, brain-storming
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BPR and Information Processing Systems

Large software systems growing old, Limitations of early construction tools millions of lines of patched code to maintain. New tools (client server databases, graphic interfaces, 4GLs) cut development and maintenance costs more knobs, buttons, access & processing power Slow change in operational/administrative methods because of dependency on complex mainframe applications. New technologies timely to re-design business processes Why generate a new IT system without improving the business
process it serves?
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Is BPR different from CQI?

Continuous improvement

BPR

Incremental gradual change


Low investment People-practices focus

Radical change
High investment People & technology focus

Improvement on existing
Work-unit driven

Scrap and rebuild


Champion driven

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BPR Phases

Organising for improvement

Undestanding the Process

Streamlining

Measurements and Costs

Continuous improvement

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BPR Project

An organisational change project with three components : business strategy, business process and information systems BPR must be linked with business strategy and information system
Business Strategy Business Process Information System

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Steps in process analysis

1. target the process area for change Business process Task process 2. form a team. Select project leader 3. decide on the objectives of the analysis 4. define customers & suppliers 5. analyse (identify/ chart) the process elements & steps in the process flow 6. describe the existing transformation process 7. develop improved process design 8. gain management approval of the improved design 9. implement new process design
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Participants in BPR Project

Process Owners Process Participants BPR Project Sponsors

Core BPR Project Team


BPR facilitators & consultants

IT & e-commerce specialists

Human resources specialist

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Identify process elements

raw materials product (output) design job (sequence, simplification, discretion etc) processing steps used management control information equipment or tools people actors (direct/indirect staff, customers,
supply relationships (internal & external)
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PHASE 1: Organising for improvement


Objective: build leadership, understanding & commitment Activities establish Executive Improvement Team (EIT) Appoint BPR champion provide executive training develop an improvement model communicate goals to employees review business strategy and customer requirements select the critical processes appoint process owners select BPR Team members


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PHASE 2: Understanding & redesign the process


Objective: understand all dimensions of current business process Activities define process mission, scope and boundaries provide team training develop a process overview define customer/business measurements & expectations for the process identify improvement opportunities errors and re-work high cost poor quality long time delays/backlog Record/chart the process collect cost, time & value data perform walkthroughs on new process resolve the differences (existing/new, ideal/realistic)



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Process definition and charting

Analyse (identify and chart) the process elements and steps in the process flow

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PHASE 3: Implementation
Objective: secure efficiency, effectiveness and adaptability of

the business process on implementation


Activities eliminate bureaucracy and no-value-added activities simplify the process and reduce process time standardise and automate up-grade equipment error proof the process and document it select and train the employees Plan/schedule the changes

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PHASE 4: Measurements and controls


Objective:

develop a process control system for on-going improvement Activities develop in-house measurements and targets establish a feedback system audit the process periodically establish a poor-quality cost system

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PHASE 5: Continuous improvement


Objective:

to implement a continuous improvement process Activities Qualify/certificate the process perform periodic qualification reviews define and eliminate process problems evaluate the change impact on the business and on customers benchmark the process provide advanced team training


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Process Chart Symbols

Operation (a task or work activity) Inspection (an inspection of the product for
quantity or quality)

Transportation (a movement of material from


one point to another)

Storage (an inventory or storage of materials


awaiting the next operation)

Delay (a delay in the sequence of operations)


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Method Study Questions for Process Analysis

What Who Where When How


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does the customer need?, operations are necessary? Can some operations be eliminated, combined, or simplified?. is performing the job? Can the operation be redesigned to use less skill or less labor? Can operations be combined to enrich jobs? . is each operation conducted? Can layout be improved? . is each operation performed? Is there excessive delay or storage? Are some operations creating bottlenecks? .. is the operation done? Can better methods, procedures, or equipment be used? .

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BPR and Bench-marking

The BPR team may benchmark another company's process to


determine

process objectives innovative practices tried and tested methods

Benchmarking partners need not be from the same industry.

A photocopying firm on re-engineering its order processing system compared itself to mail-order firms as well rival photocopy companies.

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BPR Problems

Starting with a clean sheet Preoccupation & commitment to existing business processes Thinking the problem thru. in the light of new methods & technologies Choice of the target process - too big, too small The power and resourcing of the cross functional team BPR in isolation from strategic and ops plans will not work. Top commitment essential. Short-termism of decision makers Isolated efforts will lack direction and will get lost. Done at times of stress and anxiety John Gall, Keeping the BPR team on target Systemantics If it works, don't BPR team as action researchers change it! Costs of the change Vaccination against change + another quick fix Finding the time and energy We need to keep the old, existing core systems running
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BPR for e-Business

rethinking/ redesigning business processes at both


enterprise & supply chain level to take advantage of Internet connectivity & new ways of creating value Redesign front-office processes that interact with customers & back-office processes (across entire supply chains) Changing the way the organisation operates, handling physical & e- business processes and how people work

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Redesigning Business Processes

1. 2. 3. 4. 5. 6. 7.

Customer-facing provide value to process recipient outputs used by external or internal customers Cross-functional, cross-department, cross-enterprise completed task handed to another do next task in sequence Altering dynamics of information flows Knowledge that participants need created around the process (data, reports, trends, exceptions, FAQ & ideas) 8. Multiple versions of business processes rather than one-size-fits all 9. Degree of structure of a process highly structured or fluid & not tightly determined

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