HBT 2401; BUSINESS PROCESSING RE-ENGINEERINGBusiness Process ReengineeringBusiness Process Reengineering involves changes in structures and in processes withinthe business environment. The entire technological, human, and organizational dimensions may be changed in BPR. Information Technology plays a major role in Business Process Reengineering as it provides office automation, it allows the business to be conducted in different locations, provides flexibility in manufacturing, permits quicker delivery to customers and supports rapid and paperless transactions. In general it allows an efficient and effective change in the manner in which work is performed.

What is the Business Process Re-engineeringThe globalization of the economy and the liberalization of the trade markets have formulated new conditions in the market place which are characterized by instability andintensive competition in the business environment. Competition is continuously increasing with respect to price, quality and selection, service and promptness of delivery. Removal of barriers, international cooperation, technological innovations cause competition to intensify. All these changes impose the need for organizational transformation, where the entire processes, organization climate and organization structure are changed. Hammer and Champy provide the following definitions:Business process reengineering (BPR) has been receiving attention from industries as well as the academic community, because it is likely to change management practice and working processes in organizations in the future. However it is commonly agreed that BPR is important but also problematic. BPR is known by many names, such as core process redesign, new industrial engineering or working smarter. All of them imply the same concept which focuses on integrating both business process redesign and deploying IT to support the reengineering work. Generally BPR involves discovering how business processes currently operate, how to redesign these processes to eliminate the wasted or redundant effort and improve efficiency, and howto implement the process changes in order to gain competitiveness. The aim of BPR, is seeking to devise new ways of organizing tasks, organizing people and redesigning IT systems so that the processes support the organization to realise its goalsReengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed.Business process redesign as: ... the analysis and design of workflows and processes within and between organizations. Business activities should be viewed as more than a collection of individual or even functional tasks; they should be broken down into processes that can be designed for maximum effectiveness, in both manufacturing and service environment.These definitions suggest that we should concentrate on processes rather than functions (or structures) as the focus of the re-design and management of business activity. Process as: a collection of activities that takes one or more kinds of input and creates an output that is of value to the customer.In BPR, the process to be reengineered is the so-called business process. Davenport describes a business process as simply a structured, measured set of activities designed to produce a specified output for a particular customer or market. Riemer (1998) describes business processes in an object-oriented style: business processes are series of steps that change states of business objects (that is, customers, orders and inventory), thereby causing business events. However we should note that BPR is concerned with customer-orientation. Thus the outputs of business processes should not only achieve the companys objectives, but also need to satisfy customers requirements. From these definitions we can conclude that business processes start and end with customers, and the value of business processes is dependent upon customers.The Origins of BPRSome researchers argue that the original concept of reengineering can be traced back to the management theories of the nineteenth century. As one report in The Financial Times (1994): The purpose of reengineering is to make all your processes the best-in-class. Frederick Taylor suggested in the 1880s that managers use process reengineering methods to discover the best processes for performing work, and that these processes be reengineered to optimise productivity. In the early 1900s, Henri Fayol originated the concept of reengineering: To conduct the undertaking toward its objectives by seeking to derive optimum advantage from all available resources .BPR -That is, organizations make such radical changes when they meet competitive pressures which challenge their current processes. BPR can be viewed as a response to such change and therefore fits in the classical school of strategy where organizations adjust themselves to new forms in order to maximise their profits. The concept of BPR is widely regarded as having been introduced as a perceived solution to the economic crisis and the recession of the late 1980s and early 1990s (Butler, 1994; Arnott and ODonnell, 1994). As Butler describes it: the 80s were a time for financial reengineering ... the 90s are for technological reengineering. Hammer and Champy (1993) propose that BPR can help organizations out of crisis situations by becoming leaner, better able to adapt to market conditions, innovative, efficient, customer focused and profitable in a crisis situation. Before BPR emerged (and even today), it was widely accepted by industries and business enterprises that a work should be broken down into its simplest (and most basic) tasks. This leads to the structure of enterprises becoming hierarchical or functional in order to manage such divided tasks. These hierarchical or functional structures were commonly used for a period. However enterprises of these structures later encountered some problems, especially when the competitive environment has changed beyond what we can recognize. Today, many enterprises face competition from the global business environment as well as the fact that the taste of customers is becoming complex. As Hammer (1990) argues, in order to achieve significant benefits, it is not sufficient to computerize the old ways, but a fundamental redesign of the core business processes is necessary. New organisational structures, which are more suitable to todays environment in which enterprises can understand their current activities and find potential problems, are needed. MacIntosh and Francis suggest that it is becoming more important to develop new products effectively than to produce old products efficiently. By introducing fast developing information technology, enterprises try to redesign their structures and seek new ways of operation, which results in many enterprises moving toward combination but not division of labour. Hammer and Champy conclude that previously divided tasks are now being re-unified into coherent business processes. Thus one reason why BPR becomes popular is that it provides a mechanism to make the changes better to fit the competitive environment to which the enterprises must adapt themselves in this new and post-industrial age.

The Key ConceptsBPR seeks to break from current processes and to devise new ways of organizing tasks, organizing people and making use of IT systems so that the resulting processes will better support the goals of the organization. This activity is done by identifying the critical business processes, analysing these processes and redesigning them for efficient improvement and benefit. Vidgen et al. (1994) define the central tenets of BPR as: radical change and assumption challenge; process and goal orientation; organizational re-structuring; the exploitation of enabling technologies, particularly information technology.That is, by focusing on business objectives, we analyze the processes of the organization, eliminate non-essential or redundant procedures, and then use IT to redesign (and streamline) organizational operations.

BPR as Radical ChangeBPR is a radical change, rather than incremental change. Re-engineering is ... about rejecting the conventional wisdom and received assumptions of the past. Reengineering is the search for new models of organizing work. Re-engineering is a new beginning. ... To succeed at reengineering, you have to be a visionary, a motivator, and a leg breaker.

Radical change is] the only means of obtaining the order-of-magnitude improvements necessary in todays global marketplace. ... Existing approaches to meeting customer needs are so functionally based that incremental change will never yield the requisite interdependence. One reason the change in BPR is radical rather than incremental is to avoid being trapped by the way things are currently done. Rapid IT innovation and increasingly intensive global competition are two main reasons why organizations have had to consider the introduction of radical change. Even such radical changes are not limited to inside one organization but forge with other organizations, which generate new views of an organization: Possible [radical] changes to the organization are not limited to internal re-orderings ... Links can be forged with other organizations even though they are competitors. This leads to a view of the organization as a fluid mix of interests rather than a fixed entity with an objective existence. It is recognized in the BPR literature that advances in technology bring opportunities that were difficult to imagine before the technology had been created. There is a sense of innovatory solutions looking for problems and the exploitation of unexpected consequences that cannot be predicted by a purely conceptual approach. At its best, BPR can be seen as a mix of conceptual thinking and practical experience gained through creative experimentation and faith.Process-Orientation: From Structure to ProcessMany current business processes with their functional structures were designed to enable efficient management by separating processes into small tasks that could be performed by less skilled workers with little responsibility. Under this structure, the important decisions were made by the higher skilled and more trusted managers. Traditional (structural) approaches to business engineering generally follow this sequential order: firstly business strategy is proposed, then the business structures and processes are planned, and finally they are implemented with IT. In comparison, BPR is regarded as process-oriented which is trying to overcome some problems raised by hierarchical structures. That is, BPR as a process-orientation changes the structural relationships between management and employers into the interactive processes between them. BPR aims to break radically the existing process structures and replace them by fundamental and innovative solutions. The functional structure is a vertical structure in which there may exist barriers to separate the functions in organizations. BPR emphasises business processes which are regarded as horizontal flows and cut across organizational functions. Human Factors in BPRFocus of the BPR literature is on IT and process redesign techniques. However there are other complex issues such as human, organisational, cultural and political issues. Some researchers determine that one of the main reasons for BPR failure is the neglect of the human element the approach takes too much account of the scale of changes and fails to consider such change through people. It focus on business processes, many researchers have highlighted the lack of attention given by [BPR] to the human dimensions of organising, emphasizing how employees, not just processes must be re-engineered or debugged if they are to run effectively in systems.

Resistance to ChangeBPR aims at the change in the organization that is for the best. However as BPR is a radical rather than incremental change, it is not surprising that resistance to change has been identified as a major barrier to the success.Some of the interviewees pointed to the fact that employees were expected to agree and go along with goals and changes in working life that have been determined by senior management, and that they were the last to know about how change would affect them For these people, BPR is perceived as a threat to their jobs, either a threat directly to their existence or a threat to the quality and content of their jobs, or as causing the lack of promotion. People commonly asked: Why change if it is working?. Downsizing, i.e. sacking people, is the most obvious dark side of BPRPersonal View of ChangeThe people in business either employees or designers take a very personal view of the radical change of BPR. For example, the BPR designers design BPR based on their perception, explanation and understanding of the organization. The solutions they propose for BPR problems are derived from the theories or frameworks of BPR literature, as well as their understanding and attitudes to the organization context. However each designer or even participant of an organization has different knowledge and perceives the organization in different ways their individual contexts are different. Further, the participants have different experiences, theories and beliefs about why and how a process is operating and organized. We should note that the behaviours of participants generally come from their old contexts. This may cause conflict as newly designed processes can be so radical that they may not fit the participants old experiences and contexts. Without their participation, BPR designers will not know the cause effect relationships and how to modify the processes

Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of erformance such as cost, quality, service and speed.Process is a structured, measured set of activities designed to produce a specified output for a particular customer or market. It implies a strong emphasis on how work is done within an organization. Business processes are characterized by three elements: the inputs, (data such customer inquiriesor materials), the processing of the data or materials (which usually go through several stages and may necessary stops that turns out to be time and money consuming), and the outcome (the delivery of the expected result). The problematic part of the process is processing. Business process reengineering mainly intervenes in the processing part, which is reengineered in order to become less time and money consumingFor example, if a bank

manager completes an application for a loan in electronic form, which in turn is submitted through the network to the next team member, the credit control director, who examines the credit status of the customer. If the credit status is not satisfactory the rejection of the loan is approved by the credit manager and a rejection form is filled and it is returned to the case manager. The case manager explains to the customer the reason that his application was rejected.On the other hand, if the credit status of the customer is satisfactory, the application is submitted electronically to the next team member, who calculates interest rates and payment tables. The application is then submitted to the credit manager for approval using a digital signature. The approval of the application along with the payment table is delivered to the customer by the case manager.Most importantly, while the loan application team was processing the loan application,the case manager "triggered" the account team to open a savings account and the ATMteam to supply the customer with an ATM card. The customer leaves the bank having aresponse for his loan application, a new savings account and an ATM card, And all thesewithout having to move around the desks for signatures and documents. All thecustomer's requests were satisfied at the same time in parallel motion.Using BPR the company will be organized based on processes. The company will organize an order processing team, braking the departmental barriers. The team would be composed of a case manager to respond to the customers requests, and employees from the accounting department, the logistics department and the production department. The process must be designed to trace an order step by a step electronically and provide an answer back to the customer quickly. THE CUSTOMER MUST SPEAK WITH ONE PERSON, the case manager. All internal controls are the responsibility of the order processing team.BPR focuses on team building operations around processes and building a company mentality to personnel. The objective of the technique is to build customer-oriented effective organizations. The customer does not care if the accounting department works adequately, he wants to see his order processed as it should be.

If the management of the company overheard this conversation, they would be desperately seek for a solution to the problem. Most frequently they would change around the organizational chart and would replace people in the company hierarchy or would modify the roles and responsibilities of some employees. Businesses continuously are overcoming some major or minor changes in the way they operate without having the desired outcome. Their effort is crashed on the departmental barriers and the employee mentality to protect their personal or functional interests.How can BPR be applied to an organization?When British Telecom had announced their Business Plan, all competitors were eager to find out who would be the new CEO of the organization. To the surprise of all the new CEO it was the customer. The company had decided to transform all the operations of the organization the way customers wanted them to operate. The most important action in applying BPR is the company's strategic goal to provide customer oriented services. BPR is a technique used to implement this type of organizational structure.Having the management commitment for change, another very important factor for implementing BPR, is the enabling role of Information Technology. The way that businesses are organized around departments is very logical since, for instance, there were physical barriers in the communication of the accounting department with production department. (The warehouse could be in another location in the part of the city). So it wasn't possible for a cross-functional team to communicate efficiently. In the 90s when telecommunication technologies were becoming abundant and low costing. BPR was becoming a world-wide applicable managing technique for business upgrade, enabled by the technology. Employees can easily operate as a team using intranets/extarnets, workflow and groupware applications, eliminating distances. We can work together even though we are located in different places.Empowering people. Empowerement means giving people the ability to do their work: the right information, the right tools, the right training, the right environment, and the authority they need. Information systems help empower people by providing information, tools and training.

Providing Information. Providing information to help people perform their work is a primary purpose of most information systems although they provide information in many different ways. Some systems provide information that is essential in informing a business process, such as the prices used to create a customers bill at a restaurant. Other systems provide information that is potentially useful but can be used in a discretionary manner, such as medical history information that different doctors might use in different ways.

Providing Tools. In addition to providing the right information, empowering people means giving them the right tools. Consider the way planning analysts produce consolidated corporate plans based on plans of individual divisions and departments. If the plans are submitted on paper, it is a major task to add up the numbers to determine the projected corporate bottom line. When the plan is changed during a negotiation process, the planning analyst has to recalculate the projected results. With the right tools, the numerical parts of the plans arrive in a consistent, electronic format permitting consolidation by a computer. This leaves the analyst free to do the more productive work of analysing the quality of the plan.Providing Training. Since information systems are designed to provide the information needed to support desired work practices, they are often used for training and learning. As shown by an expert system and a decision simulator, they sometimes provide new and unique training ethods. IBM developed an expert system for fixing computer disk drives. The expert system was an organized collection of the best knowledge about fixing these disk drives, and it fostered rapid and efficient training. Before the system was developed, technicians typically took between 1 and 16 months to become certified, but with the expert system, training time dropped 3 to 5 months.Eliminating Unproductive Uses of Time. Information systems can reduce the amount of time people waste doing unproductive work. A study of how professionals and managers at 15 leading U.S. corporations spent their time concluded that many professionals spent less than half of their work time on activities directly related to their functions. Although the primary function of sales people is selling, the time breakdown for sales people averaged 36 percent spent on prospecting and selling, 39 percent spent on prospecting selling, 3 percent on servicing accouts, 19 percent on doing administrative chores, and 6 percent on training. Better use of information systems could save much of their unproductive time performing chores such as collecting product or pricing information, determining order status for a customer, resolving invoice discrepancies, and reporting of time and expenses.Eliminating Uneccesary Paper. One common way to improve data processing is to eliminate unnecessary paper. Although paper is familiar and convenient for many purposes, it has major disadvantages. It is bulky, difficult to move from place to place, and extremely difficult to use for analysing large amounts of data. Storing data in computerized form takes much less physical space and destroys fewer forests, but that is only the beginning. It makes data easier to analyze, easier to copy or transmit, and easier to display in a flexible format. Compare paper telephone bills with computerized bills for a large company. The paper bills identify calls but are virtually impossible to analyze for patterns of inefficient or excessive usage.

Eliminating Unnecessary Variations in the Procedures and Systems. In many companies, separate departments use different systems and procedures to perform essentially similar repetitive processes, such as paying employees, purchasing supplies, and keeping track of inventories. Although these procedures may seem adequate from a totally local viewpoint, doing the same work in different ways is often inefficient in a global sense. Whenever the systems must change with new technology, new regulations, or new business issues, each separate system must be analyzed separately, often by someone starting from scratch.Minimizing the Burden of Record Keeping, Data Handling, and General Office Work.Since processing data is included in most jobs, improving the way people process data is an obvious place to look for information system applications. Focus on basic data processing tasks: Reducing the burden of record keeping means being more efficient and effective with the six components of data processing. Those components are capturing, transmitting, storing, retrieving, manipulating, and displaying data. Capture data automatically when generated: Capturing data automatically at the time of data generation is especially important in minimizing the burden of record keeping.In depth, BPR assumes that the current processes in a business are inapplicable and suggest completely new processes to be implemented by starting over. Such a perspective enables the designers of business processes to disassociate themselves from today's process, and focus on a new process. The BPR characteristics - outcomes include the following:

Several jobs are combined into one. Decision-making becomes part of the job of employees (employee empowerment). Steps in the processes are performed in natural order, and several jobs get donesimultaneously Processes have multiple versions. This enables the economies of scale that resultfrom mass production, yet allows customization of products and services Work is performed where it makes the most sense Controls and checks and other non-value-added work are minimized Reconciliation is minimized by cutting back the number of external contact pointsand by creating business alliances A single point of contact is provided to customers A hybrid centralized/decentralized operation is used.

BPR is achieving dramatic performance improvements through radical change in organizational processes, rearchitecting of business and management processes. It involves the redrawing of organizational boundaries, the reconsideration of jobs, tasks, and skills. This occurs with the creation and the use of models. Whether those physical models, mathematical, computer or structural models, engineers build and analyze models to predict the performance of designs or to understand the behavior of devices. More specifically, BPR is defined as the use of scientific methods, models and tools to bring about the radical restructuring of an enterprise that result in significant improvements in performance.Redesign, retooling and reorchestrating form the key components of BPR that are essential for an organization to focus on the outcome that it needs to achieve. The outcome pursued should be an ambitious outcome (as for instance, are a 24 hour delivery to any customer anywhere in the world, approval of mortgage loans within 60 minutes of application, or ability to have on-line access to a patient's medical records no matter where they are in any major city in the world). These types of visionary goals require rethinking the way most organizations do business, careful redesign. They will additionally need very sophisticated supporting information systems and a transformation from a traditional organizational structure to a network type organization. In resuming, the whole process of BPR in order to achieve the above mentioned expected results is based on key steps-principles which include redesign, retool, and reorchestrate. Each step-principle embodies the actions and resources as presented in the table below.

Creating the new enterprise involves considerable change in virtually everything to do with people's working lives. Rather than fixing the old, we set out to create the new. There is a fundamental transformation occurring in business - in terms of its structure, processes, people, and technology. The table following presents the changes in that occur in the business under BPR

Objectives of BPRWhen applying the BPR management technique to a business organization the implementation team effort is focused on the following objectives:Customer focus. Customer service oriented processes aiming to eliminate customer complaints.Speed. Dramatic compression of the time it takes to complete a task for key business processes. For instance, if process before BPR had an average cycle time 5 hours, after BPR the average cycle time should be cut down to half an hour.Compression. Cutting major tasks of cost and capital, throughout the value chain. Organizing the processes a company develops transparency throughout the operational level reducing cost. For instance the decision to buy a large amount of raw material at 50% discount is connected to eleven cross checkings in the organizational structure from cash flow, inventory, to production planning and marketing. These checkings become easily implemented within the cross-functional teams, optimizing the decision making and cutting operational cost.Flexibility. Adaptive processes and structures to changing conditions and competition. Being closer to the customer the company can develop the awareness mechanisms to rapidly spot the weak points and adapt to new requirements of the market.Quality. Obsession with the superior service and value to the customers. The level of quality is always the same controlled and monitored by the processes, and does not depend mainly on the person, who servicing the customer.Innovation. Leadership through imaginative change providing to organization competitive advantage.Productivity. Improve drastically effectiveness and efficiency.

Methodology of a BPR project implementation / alternative techniquesBPR is world-wide applicable technique of business restructuring focusing on business rocesses, providing vast improvements in a short period of time. The technique implements organizational change based on the close coordination of a methodology for rapid change, employee empowerment and training and support by information technology. In order to implement BPR to an enterprise the followings key actions need to take place: Selection of the strategic (added-value) processes for redesign. Simplify new processes - minimize steps - optimize efficiency -.(modeling). Organize a team of employees for each process and assign a role for process coordinator. Organize the workflow - document transfer and control. Assign responsibilities and roles for each process. Automate processes using IT(Intranets, Extranets, Workflow Management) Train the process team to efficiently manage and operate the new process Introduce the redesigned process into the business organizational structureMost reengineering methodologies share common elements, but simple differences can have significant impact on the success or failure of a project. After a project area has been identified, the methodologies for reengineering business processes may be used. In order for a company, aiming to apply BPR, to select the best methodology, sequence processes and implement the appropriate BPR plan, it has to create effective and actionable visions. Referring to 'vision' we mean the complete articulation of the future state (the values, the processes, structure, technology, job roles and environment) For creating an effective vision, five basic steps are mentioned below.- the right combination of individuals come together to form an optimistic and energized team- clear objectives exist and the scope for the project is well defined and understood- the team can stand in the future and look back, rather than stand in the present and look forward- the vision is rooted in a set of guiding principles.All methodologies could be divided in general 'model' stages:The Envision stage: the company reviews the existing strategy and business processes and based on that review business processes for improvement are targeted and IT opportunities are identified.

The Initiation stage: project teams are assigned, performance goals , project planning and employee notification are set.The Diagnosis stage: documentation of processes and sub-processes takes place in terms of process attributes (activities, resources, communication, roles, IT and costs).The Redesign stage: new process design is developed by devising process design alternatives and through brainstorming and creativity techniques.The Reconstruction stage: management technique changes occur to ensure smooth migration to the new process responsibilities and human resource roles.The Evaluation stage: the new process is monitored to determine if goals are met and examine total quality programs.

Alternative techniques to BPRTotal Quality management, often referred to as total quality management (TQM) or continuous improvement process (CIP), refers to programs and initiatives that emphasize incremental improvement in work processes and outputs over an open-ended period of time. In contrast, Reengineering refers to discrete initiatives that are intended to achieve radically redesigned and improved work processes in a bounded time frame. The major differences between the two

Expected Results / Benefits Expected Results / BenefitsThe expected results for a company that implements business process reengineering arethe following: Reallocation of jobs and processes so as to be combined into fewer, to be executed innatural order, simultaneously and by the least possible number of employees Reorganization of the company's structure (downsizing) and employee empowerment. Jobs and processes become flexible so as to be executed according to the needs of each case, company's and customer's need's (hybrid centralized/decentralized operations)

The above changes will bring reductions of costs in the company, better quality (as far as price, promptness of delivery and offerings of related services) in the products and services provided to the customers. BPR shows that there is 'more than one way to skin a cat' and enables a fresh view without ingrained prejudice affecting judgement. It can produce huge initial savings where a business is struggling and often has the affect of turning around an unprofitable operation. Also, it leaves the business with a fully documented model of the operation, which is invaluable if embarking on a quality programme.The expected outcome from a successful BPR process should the desired one for the favor of the business concerned. The dramatic changes that are caused involve people's jobs and working relationships as it is very often that jobs are eliminated and the entire process is not as beneficial for all.Types of firms / organizations that BPR can be appliedBRP could by implemented to all firms (manufacturing firms, retailers, services, etc.)and public organizations that satisfy the following criteria: Minimum Number of employees: 20 (at least 4 in management positions). Strong management commitment to new ways of working and innovation. Well formed IT infrastructure (requirements are presented in paragraph 2.4).Business Process Reengineering could be applied to companies that confront problems such as the following: High operational costs Low quality offered to customers High level of ''bottleneck" processes at pick seasons Poor performance of middle level managers Inappropriate distribution of resources and jobs in order to achieve maximumperformance, etc.Forces Driving Corporate ChangeCustomersFor most of this century the idea of a mass market has allowed sellers to treat their customers as if they were more or less the same. Even if they were not, and of course they never were, those that were not satisfied had little choice because the market was primarily national and the few competitors offered more or less the same products and services. Henry Ford summed up the attitude of mass market suppliers with his famous remark, They can have any color carthey want as long as its black. Now however, the balance of power in the seller-customer relationship has shifted. Sellers no longer have the upper hand; customers do. Customers nowtell suppliers what they want, when they want it, how they want it, and what they will pay. The customers newfound power is precipitating profound change in firms who have known only mass markets.Now that they are unleashed, customers are demanding products designed for their unique needs. The mass market has fragmented, with some markets now consisting of only a single customer. Suppliers can no longer think in general about the customer; they must think about a specific customer, the one they are serving at a given point in time.CompetitionThe nature of competition is also much different than it was in the mid-1980s. It used to be straightforward: the company that could get to market first with an acceptable product or service at the best price would get the sale. Markets were national and there were generally a small number of competitors who knew each other intimately. All this has changed. Similar goods compete in different markets according to local rules. In one market, competition may be based on price, in another selection, and in a third, on a combination of quality and service. Falling trade barriers have made the marketplace global, with strong competitors driving out the weaker ones, and the best price, highest quality, or best service available has become the standard for all competitors. Size is no longer automatically an advantage. Startup companies can enter a market with the next generation of product or service and garner significant market share ahead of the existing suppliers. A particular kind of product, such as computers, permits even small companies the reach previously enjoyed by only large companies with extensive distribution networks.Constant ChangeIt may seem circular to talk about how change itself is an important change agent in reshaping organizations; after all, it is not as though the environment was ever truly static. What is significant about the last 10 years is the change in the nature and rate of change. Global markets, technology, shrinking product life cycles, and niche competitors have all combined to make the environment more dynamic than ever, forcing organizations to consider new ways ofstructuring themselves to provide the required flexibility and responsiveness.Hierarchic organizations were designed to provide control over rapid growth and expansion in a period of rising incomes and strong demand. The hierarchic organization was well suited for this because it was inherently scalable. When a company needed to grow, it added workers at the bottom of the organization and the required number of managers in the layers above. Change was discouraged because it increased cost by rendering equipment obsolete, reducing managerialcontrol, increasing the complexity of individual jobs, and producing waste and error.Work in these organizations was based on division of both professional and manual labor into narrow task-based specialties. Accountability was based on the individual task rather than overall results. The customer was taken for granted as workers focused inward to their manager and organization.The shortcomings of hierarchic organizations have been well documented but, to summarize, they are generally regarded as inflexible, unresponsive, lacking in customer focus, obsessed with activity rather than results, and costly because of the overhead associated with linking the task-based activities.New organization designs are starting to emerge and overcome these shortcomings. In these new designs, work is organized around processes, not activities. Team-based structures spanning functional units overcome barriers between functional organizations. The members of these teams are frontline employees who monitor their competitive environment continuously, obtaining information from a variety of sources, including customers, suppliers, and competitors. Team members are empowered not only to redesign old, task-based processes, but also to continuously improve the redesigned processes. This type of control requires less supervision, reduces organization layers, and so improves responsiveness.A Model for Business ProcessesThe business process has become a key organizing principle of the new organization style and the primary means by which the organization executes its strategy and delivers value to its customers. Almost equally important, it is the mechanism through which the organization gathers, analyzes, and conveys the information necessary for continuous process improvement.The Human ElementUnderstanding the nature of business processes is important because they extend the conventional concern for tasks, activities, and data and focus on the dimension of people and their accountabilitiestheir roles, agreements, and relationships. Business processes also provide business people with a useful tool for gaining new insights into their operations and dealing with concerns such as:QualityCustomer satisfactionCycle timeEmployee accountabilityEmployee empowermentSupplier relationsThe use of computer automation to support businessEmployee trainingBusiness processes are a key link between the concerns of the business person and the information technologist. They provide a common language that allows business people to express the design of their business processes in a way meaningful to them while providing clear direction for supporting information technology.Although automation of business processes is the primary use of information technology in organizations, few computer applications are designed and built with explicit consideration of the business process they will support. Most computer applications are designed by focusing on the procedures and data. The primary objective of the design process is to show the relationship between procedural elements (both computer-based and manual) and the use of data.The people who perform the business processes and, more importantly, those for whom they are performed, usually customers, are often not explicitly recognized or appear as data records, input-output mechanisms, or substitutes for programs.The Customer-Supplier RelationshipScherrs process definition technique focuses on people and the accountabilities that arise from their roles, agreements, and commitments. The term accountability is developed more fully in the following section but refers to what an individual is held responsible for by others. Scherr thinks consideration of accountabilities is vital and adds another dimension to understanding business processes not found in procedural and data-based approaches. He believes conducting business is fundamentally the conveying of commitments, with an understanding of where the accountability lies for fulfilling the commitments, in addition to the procedures and data. This is essential for a clear understanding of the business processes.Customer-Supplier CommunicationsScherr describes the conduct of business as fundamentally the conveyance of commitments. A customer who places an order, a supplier who accepts the order, and the supplier who provides a product the customer accepts and pays for are all enacting different elements of commitment. Thus, an order is a commitment by the customer to accept what is being ordered and to pay for it.The suppliers acceptance of the order conveys a commitment to deliver. If the supplier does not deliver an accepted order, the failure is considered a broken commitment. An examination of the following typical business transactions indicates that commitment is the key element of the communication between customer and supplier:Applying for a loan (asking for a commitment from the bank)Approving an engineering change request (agreeing that a change is to be effected)Requesting a salary increase for an employee (seeking commitment from management)Process MeasurementWhen the customer-supplier approach is used to define processes, a consistent set of measurements can be developed for each customer-supplier relationship. These standard measurements consist of three basic types of information:Time for each phase, overall time, timeliness of the supplier completion,Overall outcome and the history of moves leading to it, andCustomer satisfactionBusiness Process DefinitionUsing the customer-supplier approach, each one of the customer-supplier relationships has its own conditions of satisfaction and four-phase (opening, negotiation, performance, assessment) sequence. However, the relationships are interdependent. For example, the customers original request (the order) would not be accepted by the salesperson without confirmation from theorder-fulfillment manager that the ordered items could be shipped within the time requested by the customer. The balance of the process might proceed as follows:The customer gives an order (request) to the salesperson. Conditions of satisfaction are item quantities, prices, and the date the items are required.The salesperson checks prices and, if correct, requests a delivery commitment from the inventory manager.The inventory manager determines if the requested items can be supplied by the requested time. This determination involves checking inventories and the manufacturing plant. If there is insufficient inventory new manufacturing

Performance MeasurementPerformance measurement. Performance measurement is the regular systematic collection, analysis, and reporting of data that tracks resources used, work produced, and whether specific outcomes were achieved by an organization. Tracking such data is imperative to maximize the effectiveness of local government service provision.Performance Measurement should be based on program goals and objectives that tie to a statement of program mission or purpose. The performance measurement systems must produce measurable outcomes directly related to specific programs. Those outcomes are used as indicators for resource allocation comparisons over a period of time, e.g. a decision-making tool.Performance measurement provides for resource allocation comparisons over time and measures efficiency and effectiveness to encourage continuous improvement.Measurements must be verifiable to ensure their validity and usefulness is not questions; they must be understandable or they risk being wrongly applied or wrongly interpreted; and they must be timely to ensure conditions have not changed since the measurements and the measurements are available in a time frame to assist in making management decisions, particularly budget preparation. Measurements must be consistent throughout and applicable to the strategic plan, the budget, and the current accounting and reporting systems.NOTE: In Performance Measurement It is important to remember the difference between efficiency and effectiveness.Efficiency is related to cost effectiveness, i.e. the lowest costs for a given output level. In performance measurement, the ratio of total input to useful output or outcome is referred to as efficiency. I can also be described as the production of the desired effects or results with minimum waste of time, effort, or skill.Effectiveness is related to if the service level meets the demands of the citizens. An effort is effective if it is adequate to accomplish a propose and produces the intended or expected resultsBuilding the Performance Measurement SystemFour Principles 1 : Establish broad goals to guide government decision-making.Probably the best place to start is to review the organizations Strategic Plan, Land Use Plan, Capital Plan, and any other plans which provide an indication as to what are the near-term and long-term goals for the community. This is the basis for developing policies, programs, service types, and service levels to be provided. The goals should be developed after an assessment of community conditions, a review of all applicable plans, and a review of internal operations.2: Develop approaches to achieve goals.Set specific policies, plans, programs, and management strategies to define how long term goals will be achieved. 3: Develop a budget with approaches to achieve goals.Develop and adopt a financial plan and budget that move toward achievement of goals with the constraints of available resources. The preparation of a financial plan, capital improvement plan, and budget options are part of this effort. In that financial plan, a borrowing plan that takes advantage of favorable interest rates at points where the government can afford to borrow to achieve pre-determined projects is critical to financial success. 4: Evaluate performance and make adjustmentsThis is where well spend the remainder of this manual, How to do this. Program and financial performance should be continually evaluated and adjustments made to achieve goals. Budgets, policies, and/or plans may all need to be adjusted based on performance data. However, a word of caution; it is easy to fall into a trap of chasing the target when attempting to achieve goals. Small, incremental changes based on performance data are more effective than quick, major changes that may prove to be over reactions that cause more damage that improvement. Measured responses to data are more likely to produce the desired results.Performance IndicatorsPerformance indicators are specific numerical measurements for each aspect of performance which is under consideration. A point that must be remembered is that, for performance measurement purposes, the amounts that are actually used, not the amounts budgeted, are the relevant numbers Performance indicators generally include the following:InputOutputEfficiencyService QualityOutcomesInput Indicators. Input indicators represent the resources allocated to and expended bya program. They include costs, both direct costs and fringe benefits, and labor hours. For instance, if the police DARE program is considered, input indicators might include the person-hours expended by the DARE officer, vehicle costs, costs of DARE shirts, and cost of presentation materials, to name a few. Inputs are the resources used to produce outputs and outcomesOutput indicators. Output indicators relate to the quantity of units produced; how muchwork has been done. They are the products and services delivered and are typically under managerial control. Outputs include not only the products and services produced by your organization but also by contractors. Examples might be:How many miles of sewer pipe have been visually inspected?How many citizens have been served?How many fires have been responded to?How many arrests have been made?Efficiency Indicators. Efficiency indicators are determined by using the ration of inputs used per unit of output (or output per unit). Examples might be:Cost per unit:Cost per ton of refuse collectedCost per mile of street or road pavedCost per prisoner boardedCost per counter transactionProductivity:Hours per customer complaintPlans reviewed per reviewerArrests made per officerWater bills processed per clerk Service Quality Indicators: Service quality indicators relate to how satisfied customers/citizens are; how accurately a service is provided; and/or how timely a service is provided. Examples might be:Percentage of respondents satisfied with serviceFrequency of repeat repairsAverage wait time.Outcome Indicators: Outcome indicators are the qualitative results associated with programs and services. Outcome indicators are the result of your program efforts and resource expenditures; the accomplishment. They focus on the why of providing a specific service. While outputs are what work the organization does, outcomes are what these outputs accomplish. Examples might include:Reduction in fire deaths/injuriesIncrease in job trainees who hold a job for more that six monthsDecrease in low birth-rate babies.Contract cost growthFire lossesPercent of late bills collectedBenchmarkingIn performance measurement, benchmarks are used as the standard by which you measure your performance; what you compare your actual performance with to help determine whether youre meeting your established goals. Benchmarking is a process that enables comparison of inputs, processes or outputs between institutions (or parts of institutions) or within a single institution over time. Benchmarking, in practice, tends to be more about sharing good practice than undertaking formal comparative measurements.Formal benchmarking is the continuous, systematic process of measuring and assessing products, services and practices of recognized leaders in the field to determine the extent to which they might be adopted to achieve superior performance.Benchmarking is the practice of being humble enough to admit that someone else is better at something and wise enough to try and learn how to match and even surpass them at it.Benchmarking can be divided into four categories:InternalExternalOperationalStrategicInternal benchmarks are those where the current year is compared with a previous year/years performance. For instance, if your code enforcement department performed 65 inspections last year, you may use that number for the benchmark to which you compare the number of inspections the code enforcement department performs this year. You can also use an average of data from a number of previous years as your benchmark for comparison.External benchmarks are a comparison of your performance versus that of a similar organization. External benchmarks may not only be comparisons with other similar governments but can compare with different levels of government, governments in other states, or private industry.Operational benchmarks relate to your recent annual or periodic performance.Strategic benchmarks relate to long term performance, commonly directly related to your strategic plan.Setting targets/goalsYou will need to select targets when comparing your performance to selected benchmarks. Some recommendations to consider might be:Set a target based on previous performance. Preferably some level of improvement that is reasonably attainable.Consider benchmarking against the best. How are we doing compared to the best, most efficient people providing the same services? If that is too daunting, benchmark against the average with a target of exceeding the average performance.Consider the outcomes achieved in the past by other sections of your own organization.Consider the performance levels achieved by other jurisdictions or private firms with similar activities, workloads, and/or customers.Ensure your selected targets are feasible based on your staffing levels and budget.Be cognizant of any changes or new developments which may affect your ability to achieve a selected target.Targets do not have to be for a single value; a target range is fully acceptable, especially in areas where there is a good deal of uncertaintySMART GoalsSet your goals using SMART. A SMART target or goal is:Specific Is the goal clear and to the point?Measurable Can you tell if it has been accomplished?Attainable Is it a realistic goal?Relevant Is it a priority of the organization?Trackable Results are compared over time?

A conceptual model explaining the major components of BPR is shown .This model demonstrates the link between organizational restructuring and behavioural changes with the help of Information Technology for reengineering business processes, and hence effective process delivery systems, with the objective of improving customer satisfaction.BPR requires organizational restructuring (include the facility location, capacity, types of products, technology, people) and changes in employees behaviour (training, education, job enrichment, job enlargement, and employee empowerment) with a view to accommodating and facilitating radical changes for achieving dramatic improvements in business performance. IT, such as the Internet, E-Commerce, CAD/CAM, CIM, MRP and ERP, would help to restructure an organization and promote changes with acceptance from employees on any radical changes in the company. The reengineering of a business process will result in improved process delivery systems and hence an improved customer service level. Organizational restructuring by standardization and simplification eliminates barriers for a smooth flow of information and materials along the supply chains. The smooth flow of information can be facilitated by the use of various ITs to improve the integration of various functional areas. The basic aim of BPR is todeliver quality goods at competitive prices in a timely fashion. Therefore, a manufacturing system as well as a business organization should be modified emphasizing coordination of the basic business processes in the chain, from suppliers to customers,as opposed to the existing complex structures of the functional hierarchies. The behavioural changes should precede the reengineering. Therefore, issues such as training and education, employee empowerment, teamwork and incentive schemes should be given priority in BPR.

PRODUCTIVITYWhen successfully implemented, the 20 Keys approach leads to improved productivity, greater attention to detail and quality, better workplace environment, and improves the businesses ability to respond to changing market conditions.The Keys component of productivity1 Cleaning and Organizing:This is the start and the finish. Housekeeping, so to speak, but not from the top down. It is to be a team process, ingrained into the employees with the understanding that cleaning and organizing at EVERY stage in EVERY place makes the work more efficient and easier. This is the foundation for success in every other key.2 Rationalizing the system:This is essentially business planning at finer and finer detail as the process carries on. Detailing exactly the activities that need to be accomplished, expectations and goals of each team so that everyone knows what their contribution is and how it will be measured.3 Kaizan Groups (Team Activities):Giving ownership over activities to the teams that will actually be performing the work. The job of management is to guide and support. Give easy jobs at first to gain experience and confidence.4 Reducing Inventory:All the inventory between arrival of raw materials and finished produce (work in progress inventory). In line with Lean Manufacturing, you want to eliminate any process, or steps that a customer wouldnt want to pay for (space for midprocess inventory).5 Quick Changeover:The ability of a business to switch its production line to produce a different product is akin to the businesses ability to respond to customer needs. This requires very precise business process engineering.6 Method Improvement / Value Analysis:Examining every step, activity and the flow of production to eliminate anything that doesnt add value. This is definitely a process that teams should be involved with. And, it neednt be restricted to production processes. This process applies to: product development, order systems, distribution etc.7 Zero Monitoring:Eliminating any processes requiring human oversight. The goal is for full automation. Where this doesnt make sense (due to scale or type of business) there may be improvements to be made where staff do monitor equipment or each other!8 Coupled Processing:Coupling points are those stages of the production process where one team hands off product to a client team. In line with JIT processing, the teams want to ensure they only hand over enough to meet the needs of the client team.9 Maintaining Equipment & Machines:Establishment of scheduled maintenance to ensure no downtime.10 Time Control & Commitment:Building work schedules for staff that allow them to work productively and efficiently the entire time that they are present. This does not necessarily look like a typical forty hour work week.Why Benchmark?+ Identify opportunities+ Set realistic but aggressive goals+ Challenge internal paradigms on what is possible+ Understand methods for improved processes+ Uncover strengths within your organization+ Learn from the leaders experiences+ Better prioritize and allocate resources

Keys to Successful BenchmarkingWhat You Need to Make Benchmarking Effective Focus on the processes that are critical to your business Desire to use benchmarking in conjunction with strategic planning Willingness to admit that youre not the best Openness to new ideas from potentially unexpected sources Commitment to provide resources and to overcome resistance to change Recognition given to successful benchmarking teams Understanding of the benchmarking process Communication to the organization about the objectives of the benchmarking projectUNDERSTANDING THE CURRENT PROCESS Use process mapping tools to define your current process Identify customer expectations for your process Determine current process performance Use analysis tools to understand the causes for inefficiencies in the process Identify targets based on analysis

Expected results / benefits / pitfallsBenchmarking offers the following benefits to companies and organizations: Highlights areas of practice and performance requiring attention and improvement Identifies strengths and weaknesses to other respondents Establishes companys true position versus the rest, making thus easier for the company to raise the organizational energy for change and develop plans for action Helps measure current company performance Prevents reinventing the wheel (Why invest the time and costs when someone else may have done it already -and often better, cheaper, and faster?) Accelerates change and restructuring by:o using tested and proven practices,o convincing sceptics who can see that it works, ando overcoming inertia and complacency and creating a sense of urgency when gapsare revealed Leads to "outside the box" ideas by looking for ways to improve outside of the industry Forces organizations to examine present processes, which often leads to improvement in and of itself Makes implementation more likely because of involvement of process ownersIMPLEMENTATION PROCEDURE3.1 Steps / PhasesThe steps taken for the Benchmarking process are illustrated in the following diagram anddescribed below:1. Identify what is to be benchmarked; it can be a service, process, or practice.2. Create the benchmarking team in the organization3. Identify the organization(s) you want to benchmark against. It can be other operating units within the company, competitors or unrelated companies. However, they should be a leader or "best in class" in the area being benchmarked.4. Determine the indicators and the data collection method5. Collect data6. Determine current performance levels; this includes identifying gaps between your organization and your benchmarking partners.7. Determine future performance levels; forecast the expected improvements of benchmarking partners so that goals set for the improvement program will not become quickly outdated.8. Communicate the benchmark findings and gain acceptance from senior management and employees who will be asked to make improvements; present the methodology, findings and strategy for improvements.9. Develop an action / improvement plan based on the strategy developed10. Implement specific actions and monitor process; this includes collecting data on new levels of performance; using problem-solving teams to investigate problems; and adjusting the improvement process if goals are not being met.11. Recalibrate benchmarks; benchmarks are re-evaluated and updated, based on themost recent performance data.

Objectives of BPRWhen applying the BPR management technique to a business organization theimplementation team effort is focused on the following objectives:Customer focus. Customer service oriented processes aiming to eliminate customercomplaintsSpeed. Dramatic compression of the time it takes to complete a task for key businessprocesses. For instance, if process before BPR had an average cycle time 5 hours, afterBPR the average cycle time should be cut down to half an hour.Compression. Cutting major tasks of cost and capital, throughout the value chain.Organizing the processes a company develops transparency throughout the operationallevel reducing cost. For instance the decision to buy a large amount of raw material at50% discount is connected to eleven cross checkings in the organizational structure fromcash flow, inventory, to production planning and marketing. These checkings becomeeasily implemented within the cross-functional teams, optimizing the decision makingand cutting operational cost.Flexibility. Adaptive processes and structures to changing conditions and competition.Being closer to the customer the company can develop the awareness mechanisms torapidly spot the weak points and adapt to new requirements of the market.Quality. Obsession with the superior service and value to the customers. The level ofquality is always the same controlled and monitored by the processes, and does notdepend mainly on the person, who servicing the customer.Innovation. Leadership through imaginative change providing to organizationcompetitive advantage.Productivity. Improve drastically effectiveness and efficiency.In order to implement BPR to an enterprise the followings key actions needto take place: Selection of the strategic (added-value) processes for redesign. Simplify new processes - minimize steps - optimize efficiency -.(modeling). Organize a team of employees for each process and assign a role for processcoordinator. Organize the workflow - document transfer and control. Assign responsibilities and roles for each process. Automate processes using IT(Intranets, Extranets, Workflow Management) Train the process team to efficiently manage and operate the new process Introduce the redesigned process into the business organizational structureMost reengineering methodologies share common elements, but simple differences can have a significant impact on the success or failure of a project. After a project area has been identified, the methodologies for reengineering business processes may be used. In order for a company, aiming to apply BPR, to select the best methodology, sequence processes and implement the appropriate BPR plan, it has to create effective and actionable visions. Referring to 'vision' we mean the complete articulation of the future state (the values, the processes, structure, technology, job roles and environment)For creating an effective vision, five basic steps are mentioned below.- the right combination of individuals come together to form an optimistic and energized team- clear objectives exist and the scope for the project is well defined and understood- the team can stand in the future and look back, rather than stand in the present and look forward- the vision is rooted in a set of guiding principles.All methodologies could be divided in general 'model' stages:The Envision stage: the company reviews the existing strategy and business processes and based on that review business processes for improvement are targeted and IT opportunities are identified.The Initiation stage: project teams are assigned, performance goals , project planning and employee notification are set.The Diagnosis stage: documentation of processes and sub-processes takes place in terms of process attributes (activities, resources, communication, roles, IT and costs).The Redesign stage: new process design is developed by devising process design alternatives and through brainstorming and creativity techniques.The Reconstruction stage: management technique changes occur to ensure smooth migration to the new process responsibilities and human resource roles.The Evaluation stage: the new process is monitored to determine if goals are met and examine total quality programs.Alternative techniques to BPRTotal Quality management, often referred to as total quality management (TQM) or continuous improvement process (CIP), refers to programs and initiatives that emphasize incremental improvement in work processes and outputs over an open-ended period of time. In contrast, Reengineering refers to discrete initiatives that are intended to achieve radically redesigned and improved work processes in a bounded time frame. The major differences between the two

1.4 Expected Results / BenefitsThe expected results for a company that implements business process reengineering arethe following: Reallocation of jobs and processes so as to be combined into fewer, to be executed innatural order, simultaneously and by the least possible number of employees. Reorganization of the company's structure (downsizing) and employeeempowerment Jobs and processes become flexible so as to be executed according to the needs ofeach case, company's and customer's need's (hybrid centralized/decentralizedoperations)The above changes will bring reductions of costs in the company, better quality (as far as price, promptness of delivery and offerings of related services) in the products and services provided to the customers. BPR shows that there is 'more than one way to skin a cat' and enables a fresh view without ingrained prejudice affecting judgement. It can produce huge initial savings where a business is struggling and often has the affect of turning around an unprofitable operation. Also, it leaves the business with a fully documented model of the operation, which is invaluable if embarking on a quality programme.The expected outcome from a successful BPR process should the desired one for the favor of the business concerned. The dramatic changes that are caused involve people's jobs and working relationships as it is very often that jobs are eliminated and the entire process is not as beneficial for all.Types of firms / organizations that BPR can be appliedBRP could by implemented to all firms (manufacturing firms, retailers, services, etc.)and public organizations that satisfy the following criteria: Minimum Number of employees: 20 (at least 4 in management positions). Strong management commitment to new ways of working and innovation. Well formed IT infrastructure (requirements are presented in paragraph 2.4).Business Process Reengineering could be applied to companies that confront problemssuch as the following: High operational costs Low quality offered to customers High level of ''bottleneck" processes at pick seasons Poor performance of middle level managers Inappropriate distribution of resources and jobs in order to achieve maximumperformance, etc.Process Management toolsWorkFlow Analyzer is an industry leading BPR tool that combines process modeling and simulation in one integrated package. Using WorkFlow Analyzer, you can study your current business process in detail, pinpoint critical paths and bottlenecks and identify opportunities for improvement. Before you implement any changes, WorkFlow Analyzer lets you predict the effects of those changes. And after your new process is up and running, WorkFlow Analyzer lets you modify it in response to changing conditions.Structured Visual ModelingFacilitates communication between business analysts and IT professionals. Captures the complexity of actual business processesAutomatically Generates Simulation Model From Business Process ModelProduces simulation results with easeValidates new designEnsures consistencyIntegrates BPR and Workflow ProductionBuilds operational workflows automaticallyReduces implementation time and costGraphical Reporting Plus AnimationResults that everyone can understandBottleneck analysisPerformance measurementCost-benefit tradeoffsActivity based costingScaleable and ModularUse same tool for both large and small projectsPromotes model re-useFacilitates model maintenanceOpen Interface - PC and Workstation BasedIntegrates with existing

Lean ManufacturingMany of the ideas behind what is now termed lean thinking were originally developed inToyotas manufacturing operations. The Toyota Production System spread throughtheir supply base during the 1970s and their distribution and sales operations duringthe 1980s.The term lean manufacturing was popularised in the book, The Machine that Changedthe World by Womack, Jones and Roos, which illustrated for the first time thesignificant performance gap between the Japanese and western automotive industries.It described the key elements accounting for this superior performance as leanproduction - lean because Japanese business methods used less of everything(human effort, capital investment, facilities, inventories and time) in manufacturing,product development, parts supply and customer relations.The key lean-thinking principles include the following. Recognise that only a fraction of the total time and effort in any organization actually adds value for the end customer. By clearly defining value for a specific product or service from the end customers perspective, all the non-value activities - or waste - can be targeted for removal. For most production operations only 5% of activities add value, 35% are necessary non-valueadding activities and 60% add no value at all. Eliminating this waste is the greatest potential source of improvement in corporate performance and customer service. Few products or services are provided by one organisation alone, so waste removal has to be pursued throughout the whole value stream - the entire set of activities across all the firms involved in jointly delivering the product or service. New relationships are required to eliminate inter-firm waste and to effectively manage the value stream as a whole. Instead of managing the workload through successive departments, processes are reorganised so that the product, or design, flows through all value-adding steps without interruption. Obstacles to uninterrupted flow are identified and removed using the toolbox of lean techniques. Activities across each firm are synchronised by pulling the product or design from upstream steps at just the time when required to meet the demand from the end customer. Removing wasted time and effort represents the biggest opportunity for performance improvement. Creating flow and pull starts with radically reorganising individual process steps but the gains become truly significant as these process steps link together. As this happens more and more layers of waste become visible and the process continues towards the theoretical end point of perfection, where every asset and every action adds value for the endcustomer. In this way, lean thinking represents these process steps link together. As this happens more and more layers of waste become visible and the process continues towards the theoretical end point of perfection, where every asset and every action adds value for the endcustomer. In this way, lean thinking represents The organisation must view itself as just one part of an extended supply chain and think strategically beyond its own boundaries. Because value streams flow across several departments and functions within an organisation, it needs to be organized around its key value streams. Stretching beyond the firm, some form of collective agreement or organisation is needed to manage the whole value stream for a product family, setting common improvement targets, rules for sharing the gains and effort and for designing waste out of future product generations. This collective group of organisations is called a lean enterprise. Lean thinking can be applied to any organisation in any sector. Although the origins of lean thinking are firmly rooted in an automotive production environment, the principles and techniques are transferable, often with little adaptation. Lean Thinking by Womack and Jones illustrates how firms in several industries in North America, Europe and Japan followed this path and have doubled their performance while reducing inventories, throughput times and errors reaching the customer by 90%. These results are found in all kinds of activities, including order processing, product development, manufacturing, warehousing, distribution and retailing.Many of the tools and techniques associated with lean ways of working emerged from the Toyota Production System, while others have since been developed by research organisations such as the Lean Enterprise Research Centre (LERC) based at Cardiff Business School.The mission of the LERC is to be a world-class lean-thinking and supply-chain research centre. The LERC is dedicated to: developing pioneering, leading-edge lean-thinking research tools and techniques; helping organisations achieve world class performance through the application of lean-thinking principles and techniques; and disseminating lean-thinking knowledge through a broad range of education programmes and management courses and by communicating with the broader management population.ERP SystemsEnterprise Resource Planning (ERP) systems are software solutions that integrate andprovide data in real time to users in any part of a manufacturing enterprise. A welldesigned ERP system will have separate components to control data related to eachaspect of an enterprises operations while simultaneously providing an overall orintegrated view of the entire enterprise. The components of a typical ERP system are: finance/accounting manufacturing planning/scheduling human resources distribution management customer order management cost management shop-floor management inventory management procurement management production control.Manufacturing control systems have undergone a major transformation since the earlyintroduction of Material Requirements Planning (MRP). The industry standard forcomputing support of MRP II implementations has been the traditional closed-loopmaterial requirements planning (MRP) and Capacity Requirements Planning (CRP)system. The output of the MRP process served as the input for a CRP process. Thesetraditional MRP/CRP systems are still widely available todaySupply Chain ResponsivenessRecent research on supply chain management in general has focused on the subject ofcloser relationships between customers, suppliers and other relevant parties in thepursuit of competitive advantage. Within any supply chain, companies from rawmaterials suppliers to manufacturers and even retailers should work together toachieve a level of supply performance that is beyond the capabilities of any individual company.The control of a supply chain is usually carried out by the organisation that performs the last significant transformation of the product before it reaches the customer. For the organisation in control, supplier development is vital to maintain an integrated supply chain. However, SMEs sometimes lack the engineering resources, equipment, information systems and employee skills needed to carry out the suggestions for improvement generated by such supplier-development programmes. Ways in which larger companies are looking to overcome these difficulties include the following. Looking for quick wins To minimise investment, high-impact but low-cost areas of improvement should be identified and actioned. The productivity improvement areas listed in this report are areas for consideration. Utilising larger companies resources where possible For example, the larger company may be able to offer personnel support in areas that are lacking in the SME. Building training centres A further development of the provision of personnel support would be for the larger company to set up a training centre. The training centre could consist of a facility dedicated to providing training to internal groups, customers and suppliers.3.4 The InternetIt has been identified that barriers to the adoption of Internet-based opportunities for SMEs include the following: a lack of understanding of the opportunities available to SMEs; a lack of understanding of how to implement these techniques; a lack of skills amongst the workforce in using them; the prices of the technology.Programmes such as AutoLean, which sought to introduce Internet-based information and communication technologies (ICT) into the business processes of automotive component SMEs based in the West Midlands, have been set up to assist SMEs to exploit the technology available.The use of both email as a communication medium and the World Wide Web as a source of information are both areas that SMEs need to take full advantage of in order to continue to be effective players in any major supply chain. In addition to the existing supply chain implications, the World Wide Web offers exciting new opportunities for SMEs to extend their customer base into the global marketplace. Three generic on-line business models that have been identified are: virtual face a primary point of access to the entire business and its products; virtual alliance a group of businesses, collaborating and pooling resources;and virtual community a large collection of firms, possibly even including customers4.0 Perceived Barriers to Tackling Productivity ImprovementsVarious concerns may deter SMEs from implementing productivity improvements. Thefollowing are among them.. Cost Perhaps the natural for an SME is to react by saying, We just cant affordit, but it may be better to focus on cost savings that result from potentialimprovements when considering a productivity improvement drive. The questionshould be Can we afford not to improve productivity? View short-tem cost as alonger-term investment to reduce more significant costs to the organisation. Employee resistance to change. Even though SMEs are identified as havingpeople who are open to change, the reverse can also be true. In particular, ifcertain employees have been with the SME since the organisation wasfounded, it may be difficult to persuade them that the way they have alwaysdone things is not in fact the most effective way of working. From theperspective of the SME, this way has been successful, so it may be hard toaccept that these productivity improvements are not just the latest managementfad. Personnel resource It can be difficult to release employees for training in anSME if they are multi-skilled and cannot easily be covered for by other staff.Larger companies may have staff dedicated to productivity improvement, whocan dedicate their time to training and implementing productivity improvementinitiatives. One way to get around the difficulty in SMEs is for management tolead by example. If other members of staff see them initiating and implementingimprovements as a part of their job, they may get an understanding of what theorganisation is trying to achieve. Specialist knowledge Larger companies may have staff who are dedicated toproductivity improvement and have gained the knowledge necessary tochampion improvement initiatives. It then becomes vital for senior staff tobecome acquainted with at least the basic principles of some of the productivityimprovement tools and techniques outlined later in this report. Activities not standardised Larger companies will tend to have industrialengineering departments that have formulated standard operating procedures(SOPs) for each process. This may not be the case for SMEs. A central themeof continuous improvement or kaizen is that the starting point is always a well documented SOP. The action of drawing up standard procedures itself can identify areas for potential improvements.5.1.3 JUST-IN-TIMEThe American Production and Inventory Control Society (APICS) defines just-in-time(JIT) as:In practice, JIT can be applied at two levels in an organisation:1. The manufacturing process, where the aim is to have synchronised operationswith minimum quantities of raw materials, work-in-progress (WIP) andconsumables, throughout the process; and2. Related activities, applied to all functional areas of the business and all levels ofthe organisation from the board of directors to the shop floor. The philosophicalview is concerned with the reduction of waste (i.e. non-value-adding activities)throughout the organisation.In the factory, JIT continually focuses attention on waste and in particular on the timespent on all aspects of the manufacturing process. The goal is to minimise the standardlead-time by adopting a keep-it-moving approach to manufacturing. This will not beachieved by reacting to latest developments; it requires careful planning, testing andagreement as to how all those involved with both manufacturing and support functionswill act.The basic aim of JIT in a factory is to: reduce lead times minimise inventory reduce the defect rate to zero and accomplish all of the above at minimum costThere are three essential ingredients to effective manufacturing excellence through JIT: JIT manufacturing techniques, which aim to promote a rapid response tocustomer demand while minimising inventory for example, pull systems, shortchange-over times, small transfer batch sizes and plant layouts that supportshort movements of materials; a total quality culture, an approach to running the organisation which pursuesexcellence in both the product and every area of the business, includingcustomer service, purchasing, order taking, accounting, maintenance, design,etc.; and people involvement, that is the involvement of all employees in the developmentof the organisation through its culture and its manufacturing and other businessprocesses.To maintain continual improvement, appropriate performance measures and targetsshould be in place. These may include: factory lead time factory change-over times percentage of products right first time work-in-progress (WIP) or stock turns some measure of people involvement or contribution.Traditionally, Western manufacturing plants utilise a push system of inventory control,whereby work is released and processed at previously scheduled times, typically by amaterial requirement planning (MRP) system. As a result, work is planned, managedand tracked to provide a finished product which meets required due dates. A push system can control WIP by limiting the release of new orders to the shop floor.However, the amount of WIP often builds up to provide comfort stock betweenoperations. This can lead to: long lead times the need for additional prioritising systems progress chasing slow feedback of quality issues.These problems can be overcome by the use of a pull system. Pull-system controlsare an integral part of most JIT implementations. Under a pull system, work isperformed at an operation only when the next operation is signalling that it is ready toaccept it long lead times the need for additional prioritising systems progress chasing slow feedback of quality issues.These problems can be overcome by the use of a pull system. Pull-system controlsare an integral part of most JIT implementations. Under a pull system, work isperformed at an operation only when the next operation is signalling that it is ready toaccept itThe following principles are recognized as essential for continuous improvement. Traceability In order to identify root causes and prevent them recurring theremust be a system in place to trace defects back to their source. In assemblymanufacturing, this normally means tracing components by lot and vendor backto the problem assembly stage. In process manufacturing, this means tracingcontrol conditions by critical process step for the lots affected by the defect. Design of experiments The most effective way of improving process steps inorder to increase yield, shorten cycle time or make the process more robust. Stop-in-time When defects are detected on the production line, the defectivematerial must be stopped immediately. If a second, similar defect is discoveredthe process step must be stopped immediately and corrective action taken. Thisprevents adding waste to the defective product and prevents production offurther defects. Root cause detection Statistical data collection is a method of identifying rootcauses. The five Ws (who, what, where, when, why) and two Hs (how, howmuch), also help track down the root cause of any problems in complexproduction environments.5.1.6 WASTE REDUCTIONThe reduction of waste is a key area in the application of low-cost productivityimprovement ideas. Taiichi Ohno originally developed the seven categories of wasteconcept within a manufacturing organisation. The following list should be considered acomplete collection rather than a list of individual categories of waste. Any wasteminimisation program should aim to tackle all of the following rather than any one inisolation. Overproduction The aim of any manufacturing operation should be to producewhat the customer requires at the right time and at the right level of quality.Producing more than is required leads to undesirable stock levels. In somesituations companies overproduce and move away from the idea of just-in-timeto the safety of just-in-case. Some bonus systems that reward performancebased on targets exceeding what is actually required will naturally encourageoverproduction. In both cases high stock levels and thus waste may result. Waiting Waste categorized as waiting occurs in situations such as thefollowing: when raw materials wait in goods-inwards stock before processing if theyare not delivered when required; when products wait internally between operations because the flow ofproduction is not smooth or balanced and operators are left waiting for work(and so are not contributing or adding value to the product); and when products wait for longer than necessary as finished goods to beshipped to the customer if delivery schedules are not optimised. Transport Product movement within the manufacturing operation is oftenunavoidable, but adds no value to the finished item and so should be minimisedwherever possible. Transporting the product not only wastes time and effort butcan also result in damage during transit. Transport waste is visible and can beeasily identified through product-flow studies. Drawing a physical diagram of theproduction flow and clearly marking product movement is one method ofrevealing transport waste. This simple exercise can often highlight areas ofproduct movement which may have evolved without consideration to the effecton total distance travelled by a product during the manufacturing life cycle.Often, re-location of key operations can yield large savings in transportationwastes. Inappropriate processing In carrying out a job, it is wasteful to use tools andmachinery that are not the most appropriate for instance, CNC machinery,with its v