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.