Business process reengineering acquired great popularity during the 1990’s following the publication of an article in the Harvard Business Review and his 1993 book (with JA Champy) Reengineering the Corporation: A manifesto for Business Revolution. Hammer and Champy define business process reengineering as “the fundamental rethinking and radical design of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service and speed.”
BPR begins with a vision statement of what would constitute the ideal process. It outlines the goal towards all activities are focused. The impact of these changes is examined. What will happen to the organisation with BPR? Will it be able to sustain its current profitability and jobs? By contrast, the impact of the BPR is outlined.
One of the fundamental ideas of BPR is that operations should be organised around processes rather than functional business areas. The entire business process should focus on identifying the best way to produce what the customer needs. Existing business structures often present barriers to maximising efficiency in production.
BPR applies a set of principles to achieve its goals.
- Several jobs or tasks may be combined into one moving decision making to the people doing the job. Those that do the work are those that must control the work. Decision points belong where the work is performed.
- Processes are arranged into a natural sequence of steps – work must be organised around the natural flow of information towards outcomes rather than tasks. This may include re-arranging the locations where the various steps take place so as to optimise this flow.
- Radically rethink the entire process to achieve the desired outcomes.
- Flexibility is built into each process so that a variety of similar tasks can be performed in the same process. Various steps involving
checking or quality control are eliminated. Safeguards against defects are built into the processes themselves. Often a BPR will involve identifying the core competencies of an organisation and the core values chains required to produce the required outputs. Non core activities such as computer systems may be outsourced to a supplier that specialises in those activities.
Most organisations employ the services of business consultants when undertaking a BPR. In many cases companies simply use BPR as a means to reduce the staff complement with little change to actual processes. One organisation invested major resources into its BPR exercise. The entire organisation was reorganised into a number of value chains. The main problem was that the value chains bore a striking resemblance to the departmental structures that they replaced. Nothing had really changed!
BPR requires a major commitment from management and employees throughout the organisation. It favours moving towards an empowered environment where decisions are taken at the point of work. There are too many examples of organisations that have been through a BPR process simply reverting to the old and established practices once the process is over.
Often the approaches of continual improvement, kanbans, just-in-time manufacturing and Demming’s process ideas produce better results without the huge disruption caused by a full-scale BPR.