Managing a business is not as easy as everyone may think of. There are many things to deeply understand and effectively practice as well as carefully analyze. In these areas, business process reengineering is one of the must-learn strategy within the organization.
Truly, business process reengineering or people popularly call it as BPR is a business management strategy that was pioneered originally in the early 1990s. This strategy was emphasizing the analysis and the design of workflows along with the business processes within an organization.
If you are running on a business, no matter big or small the scale is, understanding BPR is a must. To help you with it, here we come with the detailed explanation about the topic so you can analyze, improve and achieve the goals as well as compete in the world of business.
Below are the detailed description about the things related to business process reengineering to learn:
- 1 Definition of Business Process Reengineering
- 2 Purpose of Business Process Reengineering
- 3 How Business Process Reengineering Works
- 4 The Detailed Business Process Reengineering Steps
- 5 Examples of Business Process Reengineering
- 6 Final Words
Definition of Business Process Reengineering
Business process reengineering (BPR) is the practice of rethinking and redesigning the way a work is done to support the mission of organizations and reduce the cost. There are two key areas that the business should reengineer. First, they use the modern technology to enhance the data dissemination and decision-making process. Second, they modify the functional organizations to form the functional teams.
Purpose of Business Process Reengineering
As we mention, business process reengineering is a kind of strategy used for managing a business. The primary purpose of BPR is to help organizations fundamentally rethink how to do their work in order that they can improve customer services, cut the operational costs and make the business become the world-class competitors.
This business process reengineering is also aimed to help companies restructure their organizations radically by emphasizing the basic design of the business processes. According to Thomas H. Davenport (1990), the early BPR proponent, a business process is a pack of tasks that are related logically. These tasks should be performed to achieve the outcome of a defined business.
Meanwhile, reengineering focuses on the business goals and how the process of relating them, encouraging the full-scale recreation process instead of optimizing the sub-process.
How Business Process Reengineering Works
Business process reengineering involves a dramatic change initiative consisting of five main steps that the managers should take:
- Refocus the values of the company on the needs of the customers.
- Redesign the core processes by using the information technology to perform the improvements.
- Reorganize the business into a cross-functional teams by applying end-to-end responsibility for a process.
- Refigure out the basic organizational and people issues.
- Improve the business processes across the organization.
These steps are like the framework how you start doing the business process reengineering.
The Detailed Business Process Reengineering Steps
As we have mentioned, making up a business process reengineering is not an easy task. It is time-consuming, expensive and risky. If you are not carefully manage the process of doing the steps, you may attempt to fail.
So here are the detailed business process that you can follow:
Step 1: Identify and Communicate The Need
If you have just a small business, then it would be easy to carry out the first step. However, if you have a corporation, it can be a bit harder because there will be some individuals that are just happy with the things and some others that are too afraid of such investment. So, take your part to convince everybody that reengineering the business is essential for the company.
Typically, doing research is the primary thing to do in order to find out which process might not be working in the company, whether your competitors are doing better than you or even worse. Through the research, you will identify the information.
Once you have all of the information, you must communicate it with your team and come up with the comprehensive plan and involving the leaders from each of the departments.
Step 2: Create A Team of Experts
To carry out a successful business process reengineering, it is crucial to put together a team of experts. This is because the process of business reengineering needs a team with the high skill. Notice, the motivated teams and the members are the big support to reengineering process.
In this regards, consider the team consisting of a senior manager, operational manager, and reengineering experts. The senior manager usually makes a major change. They will engage in the team to get in touch one to another.
Operational managers will play the role to identify the ins-and-outs of the reengineering process. This way, the operational managers work with the process and give contribution with their big knowledge.
The engineering experts are usually the expertise from a number of different fields, ranging from IT to manufacturing. While the cases are usually varying, right change can also be anything such as hardware, software, workflows and etc.
Step 3: Find The Inefficient Process and Determine The Key Performance Indicators
The third step in carrying out the business process reengineering is to find out which of the processes that are not efficient and determine the Key Performance Indicators (KPI). This step can be started when the team is ready.
In this regards, there are two ways of mapping out the process. First, use the process flowcharts. Take a pen and paper to write down the process steps by steps. Secondly, use the business process management software. Notice, it would be a lot easier to use the software to digitalize the process, set the deadlines and etc. Using the software simply leads to easier collaboration between the employees.
Step 4: Reengineer The Processes and Compare KPIs
When you are finished with the analysis and planning, next you can start doing the implementation about finding the solutions and making the change on a small scale. This is the first important point that you should accomplish since it will show you how you keep putting your theories into practice and get the result of how KPIs hold up.
If the KPIs show that the new solutions you have implemented work better, you can slowly start scaling the solution, bring it into real action within more and more processes performed by the company.
On the other hand, if KPIs show that the solutions do not work well, you can go back to the board and start writing some new potential solutions.
Examples of Business Process Reengineering
To complete your understanding of the business process reengineering, it would probably necessary to look at an example. In the history, there have been many business process reengineering initiatives. One of the best examples is Ford.
Ford is an automobile manufacturing company which is one of the most referenced example for business process reengineering. In 1980, this company was in a terrible depression. In order to stand out, the company had an attempt to cut the costs and scrutinize some of their departments to recognize the inefficient processes.
The result was the inefficient accounts payable department. As the best solution, Ford management set out the quantifiable goal that is reducing the number of clerks working in accounts payable departments. At that moment, there were hundreds of employees.
Ford decided to apply the business process reengineering initiative to think why the department was overloaded with the staff. After analyzing the case, Ford digitally recreated the process.
All in all, business process reengineering is terribly necessary when a company or organization find a problem impacting the future workflows. Thus, rethinking and redesigning are done to find the solution. The way of rethinking and redesigning as well as setting up a solution is called business process reengineering.
Along with the examples given, it is expected that you will completely understand not only about the reengineering but also finding solutions. If you find this information helpful, don’t feel any doubt to share.