CASE 1: Reengineering at IBM Corporation

IBM Credit Corporation provides financial services to IBM Computers, software and services. The process was designed to handle difficult applications and required four highly trained specialists and a series of hand offs, assuming that every application was unique and difficult to process. The actual work took only 1 to 5 hours; the rest of the time was spent in transit or delay. Most of the time the process took about 7 hours.

CASE 2: Reengineering at insurance company

When the customer called the home office about an insurance problem, the call was taken by the incoming calls department. The problem was entered into the computer and passed electronically to one of the several departments: accounting, policy service, loans and etc. The problem was waited in line, often for several days until a clerk had time to check it out. In some cases, the customer’s problem had been routed to the wrong department and had to be routed to another department again taking several days in the queue. If the problem required more than one department to answer the question, the process of waiting was repeated .Finally someone in the customer service would get back to the customer after several weeks. In many cases, the original question was not completely answered or answered wrongly.

CASE 3: Reengineering at Pepsi – Cola

Certain routes experienced stock-outs of as much as 25 percent of the products by the end of the day. Many other routes would return with overstock increasing the handling costs.

CASE 4: Reengineering at Ford Motor

Ford Motor Company is the world’s second largest manufacturer of cars and trucks with products sold in more than 200 markets. The company employs nearly 400,000 people worldwide, and has grown to offer consumers eight of the world’s most recognizable automotive brands. In the early 1980s, when the American automotive industry was in a depression, Ford’s top management put accounts payable- along with many other departments- under the microscope in search of ways to cut costs. Accounts payable in North America alone employed more than 500 people.

Ford was enthusiastic about its plan to tighten accounts payable- until it looked at Mazda. While Ford was aspiring to a 400-person department, Mazda’s accounts payable organization consisted of a total of 5 people. The difference in absolute numbers was astounding, and even after adjusting for Mazda’s smaller size, Ford figured that its accounts payable organization was five times the size it should be.

The existing system in Ford’s purchasing department wrote a purchasers order, it sent a copy of the receiving document to accounts payable. Meanwhile, the vendor sent an invoice to accounts payable. It was up to accounts payable, then, to match the purchase order against the receiving document and the invoice. If they matched, the department issued payment. The department spent most of its time on mismatches, instances where the purchase order, receiving document, and invoice disagreed. In these cases, an accounts payable clerk would investigate the discrepancy, hold up payment.

• IBM Credit corporation was able to replace the specialist by a single individual supported by a user friendly computer system that provided access to all the data and tools

CASE 2

• This process was reengineered by completely reorganizing the entire insurance operation around customer services representatives who would handle the customer’s request on the phone, using detailed computer protocols.

• The customer service representative checked with other specialists and got back to the customer within 3 to 4 days.

• This greatly improved the speed and accuracy of the service while saving millions of dollars.

• It also provided a single point of contact and less hassle for the customer.

CASE 3

• By redesigning the system to computers, the customer representatives could confirm and deliver that day’s order and also take a future order for the next delivery to that customer.

• CASE 4

• Rationalizing processes and installing new computer systems, it could reduce the head counts.

• To prevent the mismatches, Ford instituted “invoice less processing.”

• When the purchasing department initiates an order, it enters the information into an on-line database. It doesn’t send a copy of the purchase order to anyone. When the goods arrive at the receiving dock, the receiving clerk checks the database to see if they correspond to an outstanding purchase order.

• If so, he or she accepts them and enters the transaction into the computer system. (If receiving can’t find a database entry for the received goods, it simply returns the order.)

• Under the old procedures, the accounting department had to match 14 data items between the receipt record, the purchase order, and the invoice before it could issue payment to the vendor.

• The new approach requires matching only three items- part number, unit of measure, and supplier code- between the purchase order and the receipt record.

• The matching is done automatically, and the computer prepares the check, which accounts payable sends to the vendor.

• The new process cuts head count in accounts payable by 75%, eliminates invoices and improves accuracy. Matching is computerized

General Example

• GEMA Global Engineering Manufacturing Alliance.

• Completed automated. 275 employees in place of 600-2000.

• Culture—anyone can do any work ,anytime ,anywhere.

• Electronic screens – alerts on replacing spare parts.

• MBO – managers ,TL ,Engineers ,same uniform ,shop floor .SELF MANAGED/LEADERLESS TEAM