Business Process Re-engineering

Business Process Re-engineering (BPR) achieves radical improvement in performance by recognising and breaking away from outdated rules and assumptions underlying operations. Rather than seeking incremental improvement by cutting fat or automating existing processes, BPR challenges the rules and assumptions which made the business underperform in the first place.

Why might your business be underperforming?

Your processes and procedures were developed to support manual systems. Information Technology (IT) merely automated the manual systems rather than replacing them with redesigned ones.
Your business has changed since the business processes were designed.
The environment within which you operate has changed since the business processes were designed.

Example - Ford accounts payable

In the early 1980s the Ford Motor Company believed it could reduce the cost of its North American Accounts Payable function, which employed five hundred people, by about 20% by automating aspects of the work. At about this time Ford bout a 25% stake in Mazda and were surprised to discover that Mazda's Accounts Payable department was just five people. To achieve this sort of cost reduction Ford appreciated that radical change was required and they re-engineered their procurement process, eliminating the majority of paper transactions. Ford is a larger and more complex company than Mazda, so they did not manage to reduce the Accounts Payable department below one hundred and twenty five, but this was still a substantial saving. There were many other benefits too. For the full story read Hammer & Champy's book Reengineering the Corporation.

The seven basic principles of Business Process Re-engineering

There are seven basic principles for BPR:

Organise around outcomes, not tasks. Have individuals perform the whole job, not just some element of it.
Have those who use the output of a process perform the process.
Subsume information processing work into the real work which produces the information.
Treat geographically dispersed resources as though they were centralised.
Link parallel activities instead of integrating their results.
Put the decision point where the work is performed and build control into the process.
Capture information once at its source.

Benefits

The benefits achieved using BPR can be impressive. The UK health insurer Western Provident Association applied Business Process Re-engineering to its New Customer Applications process. The benefits realised were:

Each application was reduced from 7 people taking a total of 40
minutes over 28 days to 1 person taking 4 minutes in 4 days.
Staff were reduced from 400 to 260.
Salaries were increased by 8% in real terms over three years.
Service improved by 30%.
Staff turnover cut from 66% p.a. to 8% p.a.
Lapse rates reduced from 25% to 10%.
Productivity doubled over two years.

Source: Talwar, R. (1993), Business Re-engineering - a Strategy Driven Approach in Long Range Planning, Vol 26 No 6 pp22-40.

How can Sherpa Consulting help you?

BPR is a radical solution to productivity problems, and therefore requires great care in planning and execution. Sherpa will:

Help you to assess your business processes to establish the potential for BPR
Work with your staff to map out your value chain and to define the new structures and systems which will allow you to achieve radical improvement.
We will specify the IT requirements for the new processes with clarity and precision, ensuring that your IT provider is able to deliver systems which reinforce your new structures. If necessary, we will help you to select a new IT vendor or package