Bpr - Erp Unit 4 - Ppt

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ERP enabled Business Process Re-engineering Re-engineering

Lear Le arni ning ng Ob Obje jecti ctive vess of th thee uni unitt : Explai Expl ain n the the rol rolee of Bu Busi sine ness ss Pro Proce cess ss Reengineering (BPR) within the organization Understan Unders tand d the the origi origins ns and key char charact acteri eristi stics cs of  of  BPR  ERP ER P & BPR BPR,, Work Work Flo Flow w Man Manag agem emen ent. t. FIV FI VE ST STAGE ± AS IS IS / TO TO BE BE AN ANALY LYS SIS IS..

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What is BPR ?

Reenginee Reengi neerin ring g is is the the fun fundam dament ental al rethi rethinki nking ng and radical redesign of business processes to achieve dramatic improvements improvements in critical, contemporary measures of performance, such as cost, quality, service and speed. (Hammer & Champy, 1993)

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The Need for BPR Customers Custom ers (kno (know w what what the they y want want and and are are willi willing ng to pay for it) Competitio Compet ition n (Contin (Continuou uouss incre increas asee will will resu result lt in changes to price, quality, selective service, and delivery) Change (co Change (conti ntinue nuess to occ occur ur in in peopl peoplee & cultu culture, re, organizational structures, policies & procedures, and technology)

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The Need for BPR Techniques lag behind technology (Technologically capable, but not functionally operational) Significant gap between the actual and desired results, creating a business Problem. Fragmented piecemeal systems (focus on vertical functions, with the existence of redundancies of effort and actions). Integration across departmental and organizational  boundaries (information and operations are needed).

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BPR is Not? Automation Downsizing Outsourcing Process improvement projects / activities Continuous Improvement Activity Reorganizing

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BPR Versus Process Simplification

Process Simplification

Process Reengineering

Incremental Change Process-Led Assume Attitudes & Behaviors Management-Led Various Simultaneous Projects

Radical Transformation Vision-Led Change Attitudes & Behaviors Director-Led Limited Number of Initiatives

(Source Coulson-Thomas, 1992)

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BPR Versus Continuous Improvement

Continuous

Improvement

Incremental Change People Focus Low Investment Improve Existing Work Unit Driven

Process Reengineering

Radical Transformation People & Technology Focus High Investment Rebuild Champion Driven

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T Q M and Reengineering

Rate of change TQM: continuous improvement Reengineering: dramatic improvement

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TQM versus Reengineering

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What is a Process? A specific ordering of work activities across time and space, with a beginning, an end, and clearly identified inputs and outputs: a structure for  action. (Davenport, 1993)

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What

is a Business Process???

A collection of activities that take one or more inputs and turn that into a product that adds value to a customer  A group of logically related tasks that use the firm's resources to provide customer-oriented results in support of the organization's objectives

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Why Organizations Don¶t Reengineer? Complacency Political Resistance New Developments Fear of Unknown and Failure

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Performance BPR seeks improvements of  ± Cost ± Quality ± Service ± Speed

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Key

Characteristics

Systems Philosophy Global Perspective on Business Processes Radical Improvement Integrated Change People Centred Focus on End-Customers Process-Based

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Key

Characteristics

Several jobs are combined into one Employees are empowered to make decisions Steps in business process: natural order  Process may have multiple versions Work is performed where it makes the most sense

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Key

Characteristics

Controls, checks, other non-value-added work is minimized Reconciliation is minimized - minimize external contact points Hybrid centralized / decentralized operation is used A single point of contact is provided for the customer 

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Systems Perspective

Feedback 

Inputs

Transformation

Environment

Outputs

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Process Based Added Value  ± BPR Initiatives must add-value over and above the existing process

Customer-Led  ± BPR Initiatives must meet the needs of the customer 

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Radical Improvement Sustainable  ± Process improvements need to become firmly rooted within the organization

Stepped Approach  ± Process improvements will not happen over night they need to be gradually introduced  ± Also assists the acceptance by staff of the change

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Integrated Change Viable Solutions  ± Process improvements must be viable and practical

Balanced Improvements  ± Process improvements must be realistic Enterprise

integration

 ± Departments are consolidated  ± Several jobs are combined into one job  ± \

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People-Centred Business Understanding Empowerment & Participation Organizational Culture Worker empowerment  ± There is both horizontal and vertical reorganization  ± Handoffs are eliminated  ± There are fewer rules and less coordination is required

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Focus

on End-Customers

Process improvements must relate to the needs of  the organization and be relevant to the endcustomers to which they are designed to serve

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Re-engineering Redesign of processes (Fundamental change in business  processes) From mass production to mass customization (Mass  production of the same products --- Mass production of  different products) Cycle time reduction (Change in the time it takes to complete a process from start to end; time can provide competitive advantage Restructuring organizations (May need to restructure the entire organization to reap the benefits of BPR)

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BPR Symbols

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Business Process Flowchart Symbols

An Activity

A Document

A Decision

Data (input as outputs)

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Business Process Flowchart Symbols

A Predefined Process

Start

The Start of a Process

End

The End of a Process

Representing a Relation

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Business Process Flowchart Symbols

Continuation of the process at the same page at an equal symbol with the same number. Used when a relation arrow crosses another relation arrow

Off-Page Connector - Process will continue on the next page

Integration Relation - A relation to another module is identified and described

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Data Flowchart Symbols

Manual Data Item

A Database File

Representing a Relation

Continuation

Off-Page Connector 

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Rules For Data Symbols

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Rules For Data Symbols Start

Symbol used to identify the start of a business process

Generate Purchase Order 

OK?

Activities must be described as a verb

Yes

Decisions have only two possibilities (Yes & No)

 No Crossing lines are not allowed

End

If one side of the decision has no further processes defined this symbol has to be used

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Rules For Data Symbols I

Purchase Order 

A

Posting of Bonus

Continuation symbol within the same number must be  present twice on the same page

 Name the document

Off- Page Connector is used to continue a process at the next page or to let the process to flow over at the previous to the next page. If more than one is needed use A, B, C, D«

 Name the data

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Rules For Data Symbols

Sub-Process Delivery

BC 4.04

Predefined Processes always have a relation to level and stream by a number in the line below a sub-process description A predefined process must be described in a different flowchart. To make the relation clear between the  predefined process and the belonging flowchart a unique alpha numeric number should be assigned to this  predefined process.

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Version Management For different versions of a business process or   data flow some mandatory information must be on the flowchart. ± Name of the business process ± Unique number of the business process  ± Revision number  ± Date of last change ± Author  ± Page number with total pages

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Implementing a BPR Strateg y

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Key

Steps To BPR

Initiation - Select The Processes Documenting the processes Understand The Current Process ± AS IS Develop & Communicate Vision Of Improved TO BE Processes

IMPLEMENTATION of ERP enabled BPR 

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Initiation - Select the Process

Crucial Tasks  ± Persuasive ± Case for Action ± WHY BPR ?  ± Select the Processes to be Reengineered  ± Sponsorship / budget established  ± Appoint the Project Team to Lead the Reengineering Initiative committed (full time Core team with extended team for support).  ± Develop Project scope, plan and milestones  ± A communication plan ± information flow

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Select the Process Review Business Strategy and Customer  Requirements Select Core Processes Understand Customer Needs Don¶t Assume Anything

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 Appoint

the Process Team

Appoint BPR Champion Identify Process Owners Establish Executive Improvement Team Provide Training to Executive Team

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Core Skills Required

Capacity to view the organization as a whole Ability to focus on end-customers Ability to assume individual and collective responsibility Ability to challenge fundamental assumptions Courage to deliver and venture into unknown areas

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Documenting the Current Processes Document a Process using Michael Porter¶s Value Chain

Michael E. Porter 

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The Porter¶s Value Chain Support  activities

Primary activities Inbound logistics Operations Outbound logistics Marketing and Sales Service Corporate infrastructure Human resources management Technology Development Procurement

Materials receiving, storing, and distribution to manufacturing premises Transforming inputs into finished products. Storing and distributing products Promotions and sales force Service to maintain or enhance product value Support of entire value chain, e.g. general management planning, financing, accounting, legal services, government affairs, and QM Recruiting, hiring, training, and development  Improving product and manufacturing process Purchasing input   4

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Porter¶s Value Chain

Administrative Coordination and Support Services SIS: Collaborative Work Systems

Support Processes

Human Resources Management SIS: Employee Skills Database Systems Technology Development SIS: Computer-Aided Engineering and Design Procurement of Resources SIS: Electronic Data Interchange with Suppliers

Competitive

Advantage Inbound Logistics

Primary Business Processes

SIS: Automated Just-in-Time Warehousin g

Operations

SIS: ComputerAided Flexible Manufacturing

Outbound Logistics

SIS: Online Point-ofSale and Order  Processing

Marketing and Sales

Customer

SIS: Interactive Targeted Marketing

SIS: Help Desk Expert System

Service

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Porters Value Chain

Primary Activities:

    

Inbound Logistics: Inbound activities to receive, store and distribute inputs to the product, such as material handling, inventory control, warehousing and contact with suppliers. Operations: Production activities to create the product such as machining, packaging, printing and testing. Outbound Logistics: Outbound activities to store and distribute the product to customers, including warehousing, order processing and vehicle scheduling. Marketing and Sales: Activities associated with providing a means by which buyers can purchase the product and be included to do so (advertising, selling, pricing, merchandising and promotion). Service: Activities for providing service or maintaining product value, including installation and training.

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Porters Value Chain

Support Activities:

 Procurement: Purchasing input.  Technology Development: Not just machines and processes but also expertise, procedures and systems.

 Human Resource Management: Activities involved in recruiting, training and staff development.

 Infrastructure: General management, finance, planning and quality assurance. Infrastructure supports the whole value chain.

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Porter¶s Value System

SUPPLIER  VALUE CHAINS

FIRM VALUE CHAIN

CHANNEL

BUYER  VALUE CHAINS

VALUE CHAINS

In the ³value system´ supplier, firm, distributor, and buyer value chains overlap. The supplier¶s outbound logistics is the firm¶s inbound logistics. The Distributor¶s inbound logistics is the firm¶s outbound logistics, etc.

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IT managers care about these models The models provide a ³map´ to help managers Find where they are Find where they should go

You are here

The road to competitive advantage

Goal

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Stage 3 ± Focus on  AS ± IS Processes Develop a Process Overview Clearly define the process ± Mission ± Scope  ± Boundaries Set business and customer measurements Understand customers expectations from the process (staff including process team) Carefully resolve any inconsistencies  ± Existing -- New Process  ± Ideal -- Realistic Process

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Stage 3 ± Focus on  AS ± IS Processes

Clearly Identify Improvement Opportunities  ± Quality  ± Rework 

Document the Process (PROCESS MAPS) ± Cost ± Time  ± Value Data

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Stage 3 ± Focus on  AS ± IS Processes PROCESS ASSESSMENT LOOK FOR ELIMINATING REDUNDANCY, BUREAUCRACY, NON-VALUE ADDING ACTIVITIES, ERRORS / DEFECTS, REDUCE CYCLE TIME,

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Develop & Communicate Vision of Improved Process

Communicate with all employees so that they are aware of the vision of the future Always provide information on the progress of  the BPR initiative - good and bad. Demonstrate assurance that the BPR initiative is  both necessary and properly managed

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Develop & Communicate Vision of Improved Process

Promote individual development by indicating options that are available Indicate actions required and those responsible Tackle any actions that need resolution Direct communication to reinforce new patterns of desired behavior 

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Identif y  Action Plan Develop an Action Plan Appoint Process Owners Simplify the Process to Reduce Process Time Remove any Bureaucracy that may hinder  implementation

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Identif y  Action Plan Remove no-value-added activities Standardize Process and Automate Where Possible Up-grade Equipment Plan/schedule the changes Construct in-house metrics and targets Introduce and firmly establish a feedback system Audit, Audit, Audit

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IMPLEMENT Plan Qualify/certify 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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ERP & BPR

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Benefits From ERP Assists the Implementation of Business Processes  ± Access to Global Best Practices for various  processes which are proven and standardized.  ± Provides integrated approach enhancing the focus on customer requirements / fulfillment  ± Improve Operational Efficiency  ± Coordinate with Vendors & Customers in the Process Chain  ± ERP & BPR go hand in hand. ERP to be used to Innovate.

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ERP IN MODELLING BUSINESS PROCESSES

Focus  ± Business Processes  ± Process Redesign  ± Process Implementation Integration of all functions / across divisions Information flow ± accurate & on-time MIS reports for facilitating decision making/actions Used to automate transactional and laborious business  processes.

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W ORK FLOW M AN AGEMENT SYSTEM IN ERP Work Flow (Routing) system in ERP is an automated organizational process facilitating communication of work  content, coordination between departments / people and control of   processes. WFM integrates : ± Technology  ± Organization / divisions  ± Methodology (processes)  ± Collaboration of Business processes.  ± Communication within / outside using SCM / CRM etc.,  ± Human interaction reqd. to meet customer requirements.

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TASKS of the Re-engineering team

1) determine measures of performance 2) install measures of performance 3) delineate entire existing process in all its gory detail 4)

perform process value analysis and activity-based costing 5)

benchmark processes by comparison with other processes

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Cont¶d

6) design re-invented process 7) simulate re-invented process 8) prepare report with recommendations 9) install re-invented process 10) measure improvements

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BPR Challenges

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Continuous

Evaluation

Is reengineering truly transformational? Will reengineering improve customer relations? Has reengineering cut across the organization? Is information technology playing an integral role in the reengineering solution? Does it hurt?

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Common Problems Process Simplification is Common - True BPR is  Not Desire to Change Not Strong Enough Starting Point is the Existing Process & Not a Blank Slate Commitment to Existing Processes Too Strong Quick Fix Approach

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Common Problems wit h BPR Process under review too big or too small Reliance on existing process too strong The Costs of the Change Seem Too Large BPR Isolated Activity not Aligned to the Business Objectives Allocation of Resources Poor Timing and Planning Keeping the Team and Organization on Target

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Managerial Issues Ethical issues (BPR projects may lead to the need to lay-off, retrain, or transfer employees) BPR implementation (Few organization-wide BPR  effort) Incremental improvement programs BPR tools (Often uses existing tools rather than creation of new tools) Role of IT (IT should be a supportive, not lead role in BPR projects) Failures (Big projects tend to increase failure rates)