Week 10 - Redesign Principles (1)

Source / Reference:

1. A. Albadvi (2003), "Customer Relationship Management (CRM)"

http://sharif.edu/~albadvi/Crmses4.pdf

2. El Sawy's Redesign Principles and Tactics (2001)

http://higheredbcs.wiley.com/legacy/college/turban/0471229679/add_text/ch09/el_sawy.pdf

3. M&M

http://www.mymms.com/utility.aspx 


4. Dell
http://www.dell.com

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To have a more viable process redesign,  principles and tactics can be used as a checklist for suggesting ways of process redesign as well as triggering ideas for change implementation so as to maximize the value adding. There are 3 types of redesign principles as shown as below, the first 2 types are introduced in this lecture. 

Principle #0 : Streamline

Principle : 
Removing waste, simplify and consolidate similar activities. 

Tactics : 
1. Reducing complexities
2. Eliminating unnecessary activities (e.g. paperwork and other repetitive tasks)

Example : 




McDonald offers real time / just-in-time food production, is one of the example. It produces the food instantly when customer order arrived. Waste of products can be avoided. Meanwhile, the food ordering business processes can be simplified using the computerized system and screen display. 

Restructuring process

Principle #1 : Lose Wait

Principle : 

Reducing waiting time in process to create value

Tactics : 

1. Turning time-sequential activities into concurrent execution

2. Creating closed-loop teams 

3. Not allowing a support activity to gate a core value-adding process

4. Designing for continuous flow / real time processing instead of batching processing

5. Modifying upstream practice to relieve downstream bottleneck

Example :  

The check in process of the airport industry can illustrate the "concurrency". Several counters are opened for segmenting different types of travelers, operating in parallel. Efficiency can be enhanced. The waiting and cycle time can also be greatly reduced. The banking sector (e.g. HSBC) and travelling agency are another example.

Principle #2 : Orchestrate

Principle : 

Let the swiftest and most able enterprise execute

Tactics:

1. Partnering

2. Outsourcing

3. In-sourcing

4. Routing through an intermediary

Example :

    

To demonstrate the "in-sourcing", United Parcel Service (UPS) is an good example. As TOSHIBA was criticized for long time delay in repair pickup and fixed product delivery, it has in-sourced the maintenance and repairs logistics process to UPS. Both parties gain from the in-sourcing. For TOSHIBA, its service time is shortened. Its reputation is gradually improved as well. For UPS, its transportation time and cost are reduced. Moreover, since maintenance skills is an emphasis of the in-sourcing, it equips the workers with more knowledge on this aspect, thus enhancing the company diversity.  

   

For outsourcing, more offices in the commercial industry prefer to outsource the cleaning process to some specialized cleaning company. Another cleaning process outsourcing example is the KMB. Since cleaning is definitely not the core competence of these business, outsourcing can reduce the cost, improve the flexibility as well as process efficiency.  

Principle #3 : Mass-customize

Principle :

Flexing the process in terms of time, place and way.

Tactics :

1. Expanding time window for the process

2. Creating more physical space options

3. Creating modular process platforms

4. Pushing customization to occur closest to the customer

5. Offering dynamic customization

Example :

The service "Create Yours" offered by the M&M company is a good example illustrating this principle. Apart from the standardized packaged chocolates, the customers can create their unique set of chocolates for different purpose and occasions (e.g. birthday, wedding, etc.) Customers can choose to customize the color, image and packaging according to their preference. "Dynamic customization" is achieved under the adoption of "build-to-order". Upon M&M received the online order, the M&M chocolate with specific customized pattern will be produced.

Here is one of the example of designing chocolates for marriage proposal. Apart from selecting picture from clip-art, customers can even choose to import their own picture or write message over the chocolate.

Below are the steps of my trial for making my own chocolate. (It is really user-friendly with just few simple clicks!)

After that, customers can then choose to "add to cart" and select the payment and delivery method.With the use of the effective online store and design platform, the tactics "flexing time" and "flexing space" can also be realized. Since the webpage is on 24-hour operation with location independence, the temporal and spatial limitation can be eliminated. It can enhance the accessibility as well as convenience of the service and facilitate transaction. Dell is another example reflecting the usage of this principle. its online ordering system enable customers to select components (e.g. processor, operating system, media storage device, etc.) of its product, which provides customers with convenient and customized online shopping experience.
Below is an example of an online order with various components selection.http://configure.us.dell.com/dellstore/config.aspx?oc=bpctmsaio&c=us&l=en&s=bsd&cs=04&model_id=optiplex-390
Principle #4 : SynchronizePrinciple:Synchronizing the physical & virtual parts of the process.Tactics:
1. Matching physical & virtual parts of the process offerings 2. Creating common process platforms
3. Tracking physical products movement electronically Example:The online store ebay is a successful example illustrating the tactic "product movement tracking". After checking out, an email containing tracking information of the product will be received. It can be used for checking the shipping status of the items purchased on the shipping company's website.
Changing information flows around processes
Principle #5 : Digitize and PropagatePrinciple:
Capture information digitally at the source & propagate it throughout the process.Tactics:
1. Shifting data entry to customers and digitizing it
2. Making process paperless
3. Making information more easily accessible upstream & downstream
4. Shrinking the distance between information & decisionExample:Fortress is another online store which can show the application of this principle. With the use of online ordering, self-service is enabled where customers have to register, enter personal information and review online catalogue on their own. In other word, the data entry is shifted to the customer. On the other and, the information collected will be automatically entered into the database and transferred to other department for later processing. Since centralized computer system and database are used, information can be directly accessible and retrievable online. The digitization can enhance the efficiency of the transaction processing and reduce the possible human error, leading to improved customer satisfaction and profitability.Principle #6 : VitrifyPrinciple:
Provide glass-like visibility through fresher & richer information about process status.Tactics:
1. Providing on-demand information tracking
2. Providing reporting capabilities with on-the-fly analysis
3. Designing standard partner interface Example:
FedEx is a shipping company which offers a tracking system for customer to track their package delivery.  In this case, the transparency of the shipping process increases, leading to the improvement of the reliability and customer loyalty.Principle #7 : SensitizePrinciple:
Fit the process with sensors & feedback loops to prompt actionTactics:
1. Building in customer feedback loops to detect process dysfunction
2. Enabling software smarts to trigger quick business reflexes
3. Attaching environmental probes to the process to monitor changeExample:Walmart is a multinational supermarket which offers superior online purchasing service. To maintain the smooth operation of the business, Walmart takes significant consideration on customer satisfaction. It provides a feedback e-form which is easily accessible on its webpage. Customers' opinion towards the online ordering system is encouraged. It aims at providing customers with high quality online shopping experience.

Week 7 - BPR Methodologies

Source / Reference: 

1. M. Stoica, N. Chawat, N. Shin (2004), "An Investigation of the Methodologies of Business Process Reengineering"

http://proc.isecon.org/2003/2123/ISECON.2003.Stoica.pdf

2. R. Maull, S. Childe (1993), "Business Process Regineering : An Example from the Banking Sector"

http://www.scribd.com/doc/18923790/BPR-an-Example-From-Bank

3. L. K. Gaafar, Business Process Regineering

http://www1.aucegypt.edu/faculty/gaafar/MENG%20344/BPR.ppt

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The Five Phase approach, which is one of the BPR Methodologies, is introduced in this lecture. 

Phrase 1 : Triggering & Executive Visioning

In this phrase, the business direction, vision and objectives are first defined. Triggers, which can be classified as internal and external, are then discovered. For internal, The inefficiencies in existing business processes will be identified and examined. Some example are complicated steps, late in completion and much lead time. For external, environmental change and pressure from competitors are some of the example. Organizational objectives will be prioritized according to the re-engineering opportunities and customer impact.

Phrase 2 : Mobilization

After the essential processes identification and prioritization, human resource should be assigned appropriately. (e.g. selecting the leader and forming the team with tasks allocation) 

Phrase 3 : Process redesign

5 Steps are involved in this stage, namely Scoping, Modelling, Analysis, Redesign and Integration. The best redesign "To-be" options will be chosen among its alternatives.

Phrase 4 : Implementation

After the selection of the redesign process, IT infrastructure, organization and skills will be adjust so as to fit the process.

Phrase 5 : Monitoring and Maintaining

Finally, continuous monitoring of the new process is incurred. Modification is needed when necessary.

Reflection: Which phrase is the most important?

The five phrase approach gives us a clear and systematic guidelines to organization transformation and problem solving. Obviously, all phrase is critical towards the success of the BPR. I indeed believe that the first phrase (Visioning) is the most essential element. "If you fail to plan, you plan to fail." Planning and preparation are always the most vital factors for any business activities to be successful. Before we start, we should have a clear understanding regarding the objective and the trigger of the project and stick to that throughout the whole BPR. A comprehensive visioning can assist in the smooth operation of BPR and avoid wasting any resources.

Summary of BPR methodologies from other contemporary literature (refer to ref. 1)

There are many other BPR methodologies definition suggested by other researchers, which will be summarized as below:

Notes: 

Methodology #1 : Unknown (1997)

Methodology #2 : Harrison and Pratt (1993)

Methodology #3 : Furey (1993)

Methodology #4 : Mayer & Dewitte (1998)

Methodology #5 : Manganelli & Klein (1994)

All methodology has its own merits and can assist in the the BPR project design.

Case study:  Eastman Kodak Company (refer to ref. 3)

Kodak is an American multinational company which offers imaging and photographic equipment, materials and services. Before the implementation of BPR, Kodak achieved considerable improvement in cost, cycle time and quality. However, the improvement was not dramatic. BPR project was therefore planned to be executed with the use of methodology as below:

Phrase 1 : Project initiation

- Project planning

- Definition of all project administration rules and procedures

Phrase 2 : Process understanding

- Set the project team

- Design comprehensive process model for the organization

- Assign process managers who are responsible for the redesigned process after execution

Phrase 3 : New process design

- Redesign of selected Business Processes

- Consider the potentials of Information Technology

- Plan of a Pilot Implementation of the redesigned processes

Phrase 4 : Business Transition

- Implementation of the newly designed processes within the organization

- Adaptation of the organization's infrastructure to the requirements of new system

Phrase 5 : Change Management

- Perform parallel to step 1-4

- Handling of barriers by the project team

More example can be found in the reference 3.

To conclude, as we all know the importance of BPR in business improvement. However

simply planning and execution of the strategy is insufficient to develop a comprehensive and effective BPR project. Therefore, it is highly recommended that the companies should follow the systematic BPR methodology in establishing the BPR project. It is believed that the failure rate and risk of project implementation will definitely decrease by doing so.

Week 6 – Basics of BPR (2)

Source / Reference: 

1. S. Thakur (2011), "A Look at the Components of Leavitt's Diamond"

http://www.brighthub.com/office/project-management/articles/122495.aspx

2. D. J. Paper, J. A. Rodger, P. C. Pendharkar (2001), "A BPR case study at Honeywel",  

http://www.bus.iastate.edu/nilakant/MIS538/Readings/BPR%20Case%20Honeywell.pdf

3.  R. D. Reid, M. R. Sanders (2005), "Operations Management: An Integrated Approach"

http://www.wiley.com/college/sc/reid/chap5.pdf

4. R. T. Domingo, "TQM in Banking"

http://www.rtdonline.com/BMA/BSM/7.html

5. S. Harvey, B. Millett (1999), "OT, TQM and BPR: A Comparative Approach"
http://www.usq.edu.au/extrafiles/business/journals/HRMJournal/AJMOBarticles/OD-TQM-BPR.pdf 

6. Business Process Regineering

http://www.omnex.com/members/standards/bpr/business_process_reengineering.aspx

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Apart from the concept of BPR and the Leavitt Diamond framework, Total Quality Management (TQM) and Business Process Modeling (BPM) are introduced in the lecture as well.

The Leavitt Diamond

This Leavitt Diamond suggests that every organization system comprises 4 components, namely People, Process, Structure and Technology.  It is an interactive approach which is useful in managing organizational transformation through balancing these components. Any change in one of the elements will cause an direct impact on the other elements where complementary adjustment is required. 

Let me take the change of technology as an example. For instance, if a new database system with the use of new software application is developed.

Change of People: 

Extensive training or hiring new skilled employees may be needed so as to handle the software efficiently without error. 

Change of Process: 

The way and sequence of doing things may be changed. The use of database may replace the manual effort beforehand. Tasks will be altered so as to accommodate the use of database and cover the technology cost.

Change of Structure:

New job post or department may be created for processing and analyzing the database. Changes may be needed in interdepartmental coordination or communication pattern.  

This website gives me a more detailed analysis on the framework:
http://www.brighthub.com/office/project-management/articles/122495.aspx

Total Quality Management (TQM)

Through continual improvement of the quality of products and services, TQM emphasis on customer satisfaction. It is an integrated effort designed to improve quality performance at every level of the organization.

There are 8 principles which can help illustrate the concept of TQM:

1. Define quality in terms of customers and their requirement

2. Pursue quality at the source

3. Emphasize objectives instead of subjective measurement & analysis

4. Emphasize prevention instead of detection of defeats

5. Focus on process rather than output

6. Strive for zero defects

7. Establish continuous improvement 

8. Make quality as everyone's responsibility

Walt Disney Company (refer to ref. 3) is a good example demonstrating the use of TQM.

In general, it focuses on quality and customer satisfaction in operation of theme parks.

To be specific, it focuses on the role of employees in service delivery. Employees are regarded as the most critical organizational resource, where great care is taken in employee hiring and training. In other words, employees are extensively trained in customer service, communication and quality awareness.

On the other hand, continual monitoring of quality is considered as essential. To achieve this, employees meet regularly in teams to evaluate their effectiveness. All these contribute to the success of the theme park.

Another good example to show the increasing importance of TQM is the banking industry. (refer to ref. 4)

In the past, it is often believed that banks are in the finance industry rather than service industry. Emphasis is usually being put on the financial capability instead of the service quality. In other words, resources are devoted more to managing assets & cash rather than customers and service.

However, merely superior financial capability is definitely insufficient, the key to the business success is the service quality, which customers most aware of. The fact is that banks depend on customer satisfaction and loyalty for their survival nowadays. To implement the TQM, the following things are some of the points which the banking sectors should consider to improve so as to facilitate their business.

- Processing times of major products and services

- Waiting times (e.g. downtime, queuing time, etc.)

- Response to customer complaints (written/ verbal)

- Promptness in responding to customer inquiries (e.g. answering phone)

- Friendliness & efficiency of staff & system  

- Accuracy & timeliness of statements of accounts & records

Through applying the TQM, it is believed that the bank is on its way to becoming a genuine world-class bank.

Business Process Regineering (BPR)

After analyzing the concept of BPR in the last journal, I want to share a case study (Honeywell - refer to ref.2) which I have read for the journal presentation to further illustrate the point. 

Honeywell is a conglomerate company that produces a variety of commercial & consumer products, engineering services and aerospace systems. To implement the BPR, a factory-focused program called TotalPlant (TM) is introduced.

The mission of TM is to unify business and control information so as to facilitate global satisfaction based on 4 principals of success, namely Process Mapping,  Fail-safing, Teamwork and Communication.

There are 10 lessons that we can learnt from the Honeywell, which will be shown below:

1. IT is necessary but insufficient enabler

- Not guarantee project success -> Support business & production

2. People is the key enablers of change.

- Training, facilitating and nurturing of employee 

3. Bottom-up/ empowered implementation

4. Question everything

- "Dramatic improvement" -> question the existing state to discover the defect of the business process for improvement

5. Dissatisfaction culture & team ownership
- Problem identification -> team ownership establishment : everyone is accountable for the project

6. Management attitude & behavior

- Management support 

- Criticism : based on reasonable justification

7. Systematic methodology

- Common language

- Keep people focused for radical change

8. Business-driven & continuous

- Align with objective

- Continuous evaluation & change according to external environment

9. Stretch goal setting

- A bit higher than capability

- With the lead of manager based on past experience

10. Execution

- Implementation rather than merely planing

- Sufficient resources/ time/ energy dedication

Reflection:

I indeed agree with the lesson 3 empowerment, which I think is the key point contributing to the success of the BPR. Although top level management is often equipped with high qualification and experienced in setting strategy, getting low level worker involved is critical to the project success. Front-line or production worker are the one who actually get in touch with the customers and implement the job. 

This important concept can be realized by applying lesson 4, 5, 6 (Question everything/ dissatisfaction culture & team ownership/ Management attitude & behavior) where low level worker should be encouraged to voice out their opinions & dissatisfaction towards the business processes. Management support is essential to offer the chance of doing so. Their ideas with reasonable justification should be confronted and accepted.   

After further analysis of BPR & TQM, what are the difference between them? Here we go!

 

This is a comparison between TQM and BPR stated by S. Harvey & B. Millett (refer to ref. 5) In other words, both BPR and TQM share a cross-functional relationship. The major difference is that TQM tend to focus on incremental change & gradual improvement of processes, while BPR seeks radical redesign & drastic improvement of processes. Both approaches are not mutually exclusive and can be applied simultaneously.

After knowing the importance and the positive impact that BPR & TQM can bring to the business, BPM is another complementary approach which can facilitate the success of BPR & TQM. Keep reading!

Business Process Modeling (BPM)

Here comes a video demonstrating the concept of BPM clearly.

BPM is a process-centric approach for improving business performance that combines IT with governance methodologies. It provides a methodology and tools for understanding and dealing with BPR & TQM.

Below is the BPM cycle.

 
Design -> Modelling & Simulation -> Execution -> Monitoring -> Optimization

Successful BPM can generate the following benefits to the business:

- Increased visibility (easy to monitor & control critical BP )

- Identify bottlenecks
(further improvement/ reassign resources to meet customers' demand)

- Optimization
(identify areas for improving customers' satisfaction/ lower transaction cost)

- Reduction of lead-times (faster response time)

- Definition of Roles

To conclude, both the BPR, TQM and BPM are approaches which the company can apply so as to improve its business. However, they  cannot guarantee benefits generation unless appropriate execution and continuous evaluation according to the change in external environment are involved.