Businesses today face a dynamic environment filled with evolving customer needs, competitive threats, and technological innovations. Staying relevant in such a change calls for re-thinking, and that’s Business Process Re-engineering (BPR).
BPR is not just a buzzword; it’s an essential strategy. It’s the compass that guides businesses through the labyrinth of transformation, aligning processes with emerging technologies to create value.
Through this guide, join us as we embark on the meaning, types, phases, and practical examples of Business Process Re-engineering.
Meaning of Business Process Re-Engineering
Although the term Business Process Re-engineering (BPR) might sound complicated, it’s actually a practical approach to revamping an organisation. This strategy involves overhauling business activities and processes to enhance performance measures like cost, quality, service, and speed. Unlike BPM, which focuses on incremental improvements, BPR completely redesigns processes.
When a business agrees to re-engineer its processes, they undergo different types of changes and business process re-engineering. Learn what those types of BPR are in the next section.
Here are some of the key advantages of Business Process Re-engineering:
- BPR can drastically improve the efficiency of a business.
- BPR often results in better product and service quality.
- BPR can enhance customer service by making processes more responsive to customer needs.
- By streamlining processes and removing inefficiencies, BPR can lead to significant cost savings.
Types of Business Process Re-Engineering
In the context of BPR, work change revolves around the reassessment, redesign, and reimplementation of business processes to improve performance metrics such as cost, quality, and service. This type of change is critical for BPR as it forms the crux of the re-engineering strategy. It signifies shifting away from outdated processes and moving towards optimally efficient and effective processes in achieving the desired outcomes.
Planned vs. Reactive Change
BPR can be categorised into two types based on the impetus for change: planned and reactive.
Planned Change: This is a deliberate, well-thought-out shift in direction. It stems from a strategic decision to enhance or overhaul business operations for improved results. For example, in BPR, a planned change could be adopting a new IT system that streamlines various processes across different departments.
Reactive Change: This happens in response to unexpected situations or market conditions. In the context of BPR, a reactive change could occur due to a sudden market disruption or the emergence of a game-changing technology.
Technological change refers to the adoption or modification of new technology to improve business processes. In BPR, technology plays a crucial role in reshaping traditional business operations. It offers opportunities to automate repetitive tasks, integrate systems for seamless data flow, and even leverage advanced technologies like Artificial Intelligence and Machine Learning to streamline decision-making processes.
Now that you know the different types of business process re-engineering, the success lies in the implementation. When businesses implement these different BPR, they follow seven methodically designed phases. Jump to the next section to understand these phases deeply.
Phases of the Business Process Re-Engineering
The process of BPR typically consists of several distinct phases, each playing a crucial role in the overall transformation of the organisation. From initial planning and assessment to implementation and continuous improvement, these phases guide businesses through a systematic and purposeful journey toward reimagining their operations. We will now break down each of these phases for better understanding.
The Vision phase is the first and pivotal phase of Business Process Re-Engineering. This step is where the organisation articulates a clear vision for the future, reflecting what the re-engineered process should achieve.
In this stage, organisations develop hypothetical models for improved processes. These hypotheses articulate how changes in the process may lead to desired improvements. For instance, they could introduce automation, eliminate redundant tasks, or enhance collaboration among teams.
Process Mining involves the in-depth analysis of existing processes to understand how they operate. In this phase, advanced tools are used to extract and analyze process-related data from various systems.
The Design phase involves taking the information gathered from the previous stages to create new, re-engineered processes. The focus is on designing processes that are more efficient, cost-effective, and aligned with the organisation’s objectives.
During the Simulation phase, the newly designed processes are tested in a controlled environment to assess their effectiveness before they are implemented in the real world.
The Go Live phase marks the roll-out of the re-engineered process. It involves training staff on the new procedures, migrating to new systems if needed, and transitioning from old processes to new ones.
The final stage, Monitoring, is crucial to the success of Business Process Re-Engineering. After the new processes have been implemented, they need to be continuously monitored to assess their performance against the defined KPIs. Monitoring allows organisations to identify any gaps or issues that may arise and make timely adjustments.
Examples of Business Process Re-Engineering
Several globally renowned companies have successfully implemented Business Process Re-engineering (BPR) to streamline their operations, improve efficiency, and increase customer satisfaction.
Nike Company Example
Nike, a global leader in sportswear, was facing challenges with its supply chain management, operating 27 different applications worldwide. Issues such as unbalanced production and demand, inaccuracies in order shipping, excessive inventory, and decreased revenue highlighted the need for significant changes.
To address these concerns, Nike decided to implement an Enterprise Resource Planning (ERP) system, SAP, to increase design manufacturing, boost company margins, cut shipping times, and reduce inventory stock. However, this transition wasn’t smooth, and problems arose due to SAP ERP’s lack of customisation and poor demand forecasting.
Undeterred, Nike took a step back and started redesigning its business processes to align with the ERP system. Nike shifted its supply chain management strategy from a “make to sell” to a “make to order” model. They slowed down the ERP implementation, favouring a roll-out approach rather than a ‘big bang’. A globally approved business process template was created to standardise processes across the organisation.
Despite initial hurdles, the business process re-engineering at Nike led to significant improvements. As a result, Nike was able to streamline its operations, reduce inventory, and better meet customer demand, thereby improving its overall efficiency and profitability. This example reinforces how BPR, though challenging, can drive impressive results when executed with patience and a strategic approach.
Ford Motor Company: Ford is another classic example of a successful BPR application. The company re-engineered its accounts payable process, reducing its headcount in that department by 75% and moving towards an “invoiceless processing” system inspired by a similar system used by Mazda.
As we conclude this blog on Business Process Re-engineering (BPR), it’s clear that this concept is more than a mere buzzword in today’s rapidly transforming business environment. Instead, it’s a tool, a strategy, and indeed a necessity for companies seeking to remain competitive and innovative.
As we’ve seen, BPR has the potential to streamline operations, improve efficiency, and drive growth. However, BPR is not a silver bullet or a quick fix. It requires a careful, methodical approach grounded in a clear understanding of the company.
What are the 3 R’s of business process re-engineering?
The three Rs of Business Process Re-engineering (BPR) typically refer to “Re-engineering,” “Redesign,” and “Restructure.”
Re-engineering: This involves rethinking an organisation’s existing processes and procedures.
Redesign: This is where businesses conceive, plan, and test new processes to achieve the goals set out at the start.
Restructure: This might involve organisational restructurings, such as changes to team structures, roles, or reporting lines. Again, the aim is to align the organisation’s structure with its new, optimised processes.
What are BPR tools?
Business Process Re-engineering (BPR) tools are software applications, techniques, and methods that help organisations radically redesign and improve their business processes. Here are some of the most commonly used BPR tools:
- Organisational charts
- Workflow Analysis
- Business Process Modeling Notation (BPMN)
- Enterprise Resource Planning (ERP) Systems
What are the golden principles of BPR?
BPR stands on several foundational principles, which are as follows:
- Organise around outcomes, not tasks.
- Identify all processes in an organisation and prioritise them in order of redesign urgency.
- Integrate information processing work into the real work that produces the information.
- Treat geographically dispersed resources as though they were centralised.
- Link parallel activities instead of integrating their results.
- Put the decision point where the work is performed, and build control into the process.
- Capture information once and at the source.
Is BPR a Kaizen tool?
No, while Business Process Re-engineering (BPR) and Kaizen are both methods for improving business processes, they are not the same thing, and it wouldn’t be accurate to say that BPR is a Kaizen tool.
BPR and Kaizen have different origins, methodologies, and scopes of application. As a result, they are distinct but complementary tools that can be used for different purposes in a business.
What is the BPM lifecycle?
The Business Process Management (BPM) lifecycle is a series of steps organisations follow when they want to understand, improve, and manage their business processes. Here are the stages in the BPM lifecycle:
Design: This phase involves the identification and design of processes that need to be created or existing processes that need to be improved.
Modelling: In this phase, the designed process is tested under different scenarios to identify potential improvements.
Execution: The optimised process is implemented in a real-world scenario.
Monitoring: After the process has been implemented, it is important to track its performance against the objectives set in the design phase.
Optimisation: After analyzing the data collected during the monitoring phase, the process has been improved for better performance.
What is the Six Sigma approach in BPR?
The Six Sigma approach in Business Process Re-engineering (BPR) is a strategy for improving the quality of outputs in a business process. It identifies and mitigates defects and minimises process variability. Six Sigma is often aligned with Design for Six Sigma (DFSS) in BPR for designing a new process or radically redesigning an existing one to meet customer needs.
In the real-world application of Six Sigma to BPR, the DMAIC methodology (Define, Measure, Analyze, Improve, Control) is often used in tandem with traditional BPR efforts.
How is TQM used in BPR?
Total Quality Management (TQM) is used in Business Process Re-engineering (BPR) to foster a culture of continuous improvement and a commitment to quality across all organisational levels. While BPR focuses on radical changes to improve process efficiency and effectiveness, TQM emphasizes incremental, consistent advancements in quality over time.