OCD BPR & TQM Dr.

Sriparna Basu

BPR: What is it?

A set of logically related tasks performed to achieve a defined business outcome (Davenport & Short, 1990) A process is a structured measured set of activities designed to produce a specified output for a particular customer or market Processes have two important characteristics: o They have customers (internal or external) o They cross organizational boundaries i.e. they occur across or between organizational subunits Example of identifying business process in an organization is the value chain method proposed by Porter & Miller (1985)

Business Process Contd.

Processes are generally identified in terms of beginning and end points, interfaces, and the involvement of organizational units, and target audience Every process has a process owner who develops new products, orders goods from the vendors, and even creates the marketing plan Processes may be defined based on 3 dimensions: a) Entities: processes take place between organizational entities. They could be inter-organizational, inter-functional, or interpersonal b) Objects: processes result in manipulation of objects. These objects could be physical or informational c) Activities: processes may involve two types of activities: managerial and operational
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Successful Process Re-engineering Requires

1st step is to address culture issues such as employee empowerment, encouraging teamwork, and developing communication programs Introducing teamwork and empowerment cannot be done unless it is consistent with the culture of the organization With BPR, a new culture evolves BPR determines jobs and structures that are managed and measured to shape values & beliefs To successfully conduct the BPR process, leaders must create the right environment, ensuring the BPR process fits into the culture

2 types of Culture
Ensures participative management Open communication Greater employee satisfaction Employees also get involved in BPR

Empowermentoriented

Controloriented

Reduced employee involvement Hierarchical structure Narrow span of control BPR can work where jobs are protocol bound and technology plays a significant role in achieving quality & effectiveness

Example: McDonalds
Core philosophy is to achieve worldwide the same quality the same level of service. To ensure these, the company has developed standard operating procedures (SOPs), detailing each and every activity and sub-activity. Employees are supposed to perform their jobs along the lines of SOP details, and cannot be innovative. Innovation-based BPR through employee empowerment cannot fit in McDonalds type of organization.

3 Phases of BPR

Discover: initial phase Important to Consider values & Culture

Redesign: organization systematizes the process

Realize:
Organization creates the new corporate culture

BPR Impact on Organizations

McKinseys 7S Framework

Strategy

Structure
Shared Values or Superordinate goals

Systems

Staff

Skills

Style

The 7 S: What do they Mean?

Strategy: determine allocation of resources and to commit the organization to a specific course of action Structure: determine the number of levels & authority centers Systems: organizational processes, procedures, reports & routines Staff: key human resource groups and to classify them demographically Style: determine the manner in which managers should behave for achieving organizational goals Super-ordinate goals: shared values for building concepts that the organization instills in its members Skills: determine the abilities of people in an organization

Mc-Kinsey 7-S Model

Strategy Structure Systems Style Staff Skills Super-ordinate goals

Hard S: Factual and easy to identify. They can be found in strategy statements, corporate plans, organization charts & other documentation

The Soft Ss are difficult to describe, they are continuously developing and changing. They are highly determined by people at work in the organization

Effective HR Formulation & Implementation Source: Luis R. Gomez-Mejia et al

Organizational Strategies
C o n s i s t e n c y

Consistency Environment
C o n s i s t e n c y

Fit

Fit

HR Strategies

Fit

Fit

Organizational Characteristics
Consistency

Organizational Capabilities

Principles for determining the basis for BPR or BPM in Organizations (Peters & Waterman, 1982)

A bias for action (excellent firms make things happen) Closeness to the customer Autonomy & entrepreneurship Productivity Hands-on, value-driven management Stick to the knitting (always deal from strength) Simple form lean staff Simultaneous loose-tight properties (de-centralize decisions while maintaining tight control)

Some BPR experiences of Organizations

Ford: Re-engineered business from just manufacturing of cars to manufacturing of quality cars Re-engineering process saved millions of dollars on recalls and warranty repairs The basis re-engineering was done (1) first in each and every part that goes in the car assembly (2) thorough scanning for any missing parts in the assembled car This restored Fords confidence in providing quality car to such extent that the company was able to give a 3 year guarantee to their customers, which helped to reposition Fords car in a competitive market worldwide

Example 2: P&G
Being an innovation driven organization with 300 branches worldwide, P&G cannot afford to stop its brand portfolio increase They re-engineered the brand management activity introducing the innovating innovation program P&G used a scorecard to evaluate which innovative idea can payoff better This approach helped the company to introduce selectively the innovative brands to suit the market The digital scorecard significantly improved the overall performance of P&G P&G expects to conduct 90% of its R&D in virtual mode, and the remaining 10% only for physical validation of results

Criticism of BPR
BPR may lead to large-scale layoffs in organizations BPR is often perceived as a downsizing tool Often BPR mentality becomes that the existing performance of the company is not good, without examining existing processes thoroughly It focuses on technological efficiency, ignoring people There may be lack of support for implementation, or exaggerated expectation of benefits It does not consider resistance from people There is lack of focus on strategy alignment

Lean Management & Culture The Lean Enterprise Institute at Cambridge, UK defines lean as: a business system for organizing and managing product development, operations, suppliers, and customer relations that require less human effort, less space, less capital, and less time to make mass production