Occasionally, businesses need to up their game. Perhaps there has been a string of customer complaints, a dramatic fall in profitability, or the HR department has become overwhelmed with staff turnover.
If any of this sounds all too familiar, it could be time for a Business Process Reengineering (BPR) project.
What do you mean by business process reengineering?
Business process reengineering involves a radical reconstruction of all core business processes.
The goal?
To achieve substantial improvements to all areas such as quality, cycle times, and productivity. Unlike business process improvement, which involves minor tweaks and changes to existing processes, reengineering involves a complete revamp of the system, taking a blank canvas and starting completely afresh.
In one of the most influential Harvard Business Review articles of all time: ‘Reengineering Work: Don’t Automate Obliterate, Michael Hammer stated the essence of reengineering as being:
‘recognising and breaking away from the outdated rules and fundamental assumptions that underlie operations. Unless we change these rules, we are merely rearranging the deck chairs on the Titanic’
And this is where the revolution of business process reengineering began.
What are the steps in business process reengineering?
How many stages are there in business process redesign? There are typically five steps to reengineering business processes.
Identify & Define Objectives: The very first step involves members of the senior management team identifying the current state of business affairs – including competition, customer needs, and expectations – and as a result, creating business objectives, and helping to reinforce reasons for change and spur on creative ideas which may have been hiding in the woodwork.
Establish a Highly-skilled Team: The team chosen to coordinate these changes needs to be highly skilled with a range of competencies. With a multi-skilled and cross-functional team at the forefront, senior management providing strategic direction, and an Operations Manager running the project day to day, the project will have the best chance of success.
Analyse Current Processes and Create Corresponding KPIs: Using process mapping or flowcharts, the team identifies processes that have the highest impact on the organisation. They also identify processes that are failing, causing bottlenecks or causing the system to run inefficiently—creating KPIs at this point as a way of measuring the success of the new processes.
Redesign the Process: Offering a great team-building exercise requiring creativity, problem-solving, and effective decision-making. This is where the fun begins – the team overhauls previous processes by introducing new solutions. Techniques such as nemawashi can help facilitate a smoother, more productive, team decision-making process.
Implement the reengineered process: Now’s the time to put your creative thinking to the test. Do a patch test first – and if your KPIs prove it’s a successful change – roll the changes out to the wider organisation.
The Key Principles Process Reengineering
Michael Hammer defined seven key principles of business process reengineering. These were to be applied when redesigning processes:
Organise around outcomes, not tasks
This principle states that one person should have their job designed around a single outcome rather than a task, eliminating the assembly-line approach to working. For example, a company could adopt a single person to become a ‘customer service representative,’ who would oversee an order from start to finish. They will always know the status of the order and be the customer’s principal contact.
Have those who use the output of the process perform the process.
Departments need to work less as separate entities and perform tasks usually outsourced to a specialised department, such as purchasing. His thoughts were that each team should be responsible for purchasing smaller items, avoiding the long, bureaucratic process between departments.
Process information at the source
Trusting a single department to process the information they produce requires trust. This isn’t normally the case. For example, production lines would usually be review by the quality assurance team. Hammer suggests that the team can and should be trusted to perform these checks themselves.
Centralise geographically dispersed resources
Combining departments into one centralised source despite geographical location. Although there may be limitations to flexibility, iron these out with technologies and databases, and there can be several benefits, such as bulk-buying discounts.
Parallel activities instead of integrating their results upon completion
This principle proposes that step coordination before completion. For example, think of all the separate roles required to make a computer. There’ll be one team responsible for the design, one for the motherboard, the hard drive, etc. Instead of each team completing their tasks separately and integrating once finished, this principle suggests that teams talk to one another and coordinate their processes as they go along. Resulting in dramatic time reduction in production cycles.
Build decision-making and control into where the work is performed
The majority of workers rarely have the opportunity to make key decisions about the work they are doing. It usually comes from above – supervisors, managers, executives. Hammer, however, suggests that organisational hierarchy should be flattened somewhat, with workers able to make decisions regarding their workload.
Capture information once – at the source
Why waste time and resources on all the different teams collecting data when retaining all the data in one place? A single source of knowledge is exactly what every business needs, and with the extent of technology these days, this is highly viable.
Can all business processes be redesigned?
Of course. Whether the business process needs or should be is a different question entirely.
In some businesses, good business process management and/or improvement would be more suited.
Pros of BPR:
- The focus of BPR is on customer needs, and this is an appropriate focus of any business.
- BPR helps businesses to think and operate more strategically.
- It reduces short-sighted approaches, which often come about from too much focus on one particular area.
- Eliminating wasteful processes can reduce the complexity of the organisation.
- It ensures processes can be integrated and function well together.
Cons of BPR:
- BPR is suited to larger organisations with larger resources.
- Sometimes just one department can benefit at the loss of several others.
- It can require substantial investment, especially in the area of IT. Along with the need for exceptional teamwork and implementation – this can be too difficult to ask for some businesses.
- BPR is not an immediate resolution – the process can take months to implement. Certainly not a quick-fix solution, and it would be too late if the ship is already sinking!
- There is a risk of job losses due to process automation. On the flip side, this is a natural development of a business. Automation could lead to an employee changing their job to something more interesting and fulfilling if done properly.
Ford: Successful case of business process reengineering
Lastly, let’s end with one of the most reputable companies in the world that adopted BPR with successful results: Henry Ford.
The objective of BPR was to reduce administrative and overhead costs. When researching their smaller competitor Mazda, they were shocked to discover that their accounts payable department only employed five people. Ford, on the other hand, currently had 500 on their books!
They realised that with an update to technology and documentation automation, they could cut that number to just 100. By eliminating unnecessary steps and human interaction, Ford achieved their goal and cut its costs.
The proof is in the pudding. Along with other businesses such as Honeywell and AirBnB, Ford overthrew the way their business worked to create something better in their process innovation.
Could it do the same for you? Checkify can help you document processes, automate processes and help identify where process improvements can be made.