Application 1 – Analysis and Synthesis of Prior Research

Allied Academies International Conference page 95

Proceedings of the Academy of Educational Leadership, Volume 11, Number 1 New Orleans, 2006

A REVIEW OF TWO IMPROVEMENT INITIATIVES: BUSINESS PROCESS IMPROVEMENT (BPI) AND

BUSINESS PROCESS REENGINEERING (BPR) D. Adrian Doss, Belhaven College

Rob H. Kamery, Nova Southeastern University

ABSTRACT

This paper reviews business process improvement (BPI) and business process reengineering (BPR) as improvement initiatives. One may derive the conclusion that BPI and BPR rely upon strategic command and control measures, with respect to process improvement guidance, when considering customer focus and corporate goals as influential factors within customer perceptions of satisfaction areas of service operations. However, despite their beneficial contributions as process improvement tools within the context of operations and production environments, BPI and BPR do not address their improvement methodology from the perspective of process maturity and evolution. Hence, evidence is provided to further substantiate the notion that an additional framework is necessary to provide a managerial tool as a foundation for successful maturation and evolution of process management within the context of production and operations process improvement initiatives.

INTRODUCTION

The Federal Aviation Administration (FAA, 2001) defines business process improvement (BPI) as being a systematic approach to helping an organization make significant advances in the way its business processes operate and to aligning processes to better meet customer requirements. Harrington (1991) states that BPI also confronts problematic issues through eliminating waste and bureaucracy. Thus, the goal of BPI is to incite improvement through the streamlining of operations and production processes while retaining outputs of high quality.

BPI IMPROVEMENTS

Harrington (1991) indicates that such BPI improvements may be generated through implementation of the following phases:

1. Organizing for improvement--In this instance, improvement is fostered through building leadership, understanding, and commitment. Examples include training, effective communications, delineation of customer requirements, and process examination.

2. Understanding the process--In this instance, BPI advocates understanding all the dimensions of the business process. Examples include process definition, delineation of scope and boundaries, flow-charting, and further definition of customer expectations.

3. Streamlining--In this phase, BPI attempts to improve the efficiency, effectiveness, and adaptability of the business process. Examples include automation, standardization, elimination of bureaucracy, team building, and identification of improvement opportunities.

4. Measurement and controls--This phase of BPI implements a system to control the process for ongoing improvement. Examples include implementation of feedback systems, process auditing, elimination of poor-quality cost systems, and delineation of in-process measurements and targets.

page 96 Allied Academies International Conference

New Orleans, 2006 Proceedings of the Academy of Educational Leadership, Volume 11, Number 1

5. Continuous improvement--This BPI phase embraces the implementation of a continuous improvement process. Examples include benchmarking, provision of advanced team training, qualification reviews, process qualification, and periodic reviews.

STRATEGIC EMBELLISHMENTS

Thompson and Strickland (1996) suggest strategic embellishments for implementation with respect to process improvement initiatives. A synopsis of their recommendations may be given as follows:

1. Flow charts--Managers may develop a flow chart of the total business process, including its interfaces with other value-chain activities. As a result, a better understanding of activities within operations and production environments may be gained.

2. Simplification--Managers may attempt to simplify the process first, eliminating tasks and steps where possible and analyzing how to streamline the performance of what remains. As a result, streamlining may be achieved within production and operations environments.

3. Strategy--Managers may evaluate each activity in the process to determine whether it is strategy-critical or not. Strategy-critical activities are candidates for benchmarking to achieve best-in-industry or best-in-world performance status. Given this notion, a better understanding of the contribution of operations and production environments can be gained.

4. Automation--Managers may determine which parts of the process can be automated (usually those that are repetitive, time-consuming, and require little thought or decision). They may consider introducing advanced technologies that can be upgraded to achieve next-generation capability and provide a basis for further productivity gains down the road. As a result of implementing automation, streamlining of the production and operations environment may be generated.

BUSINESS PROCESS REENGINEERING

Davis, Aquilano and Chase (1999) state that business process reengineering (BPR) may be considered as being the process of rethinking and restructuring an organization. Gordon (1996) substantiates this definition through her observation that reengineering is the rethinking, reinventing, and redesigning of either single or multiple organizational business systems. Macintosh and Francis (2000) indicate that reengineering is the radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed. Malhotra (1998) defines BPR as being the discrete initiatives that are intended to achieve radically redesigned and improved work processes in a bounded time frame.

Reengineering surpasses normal refining of existing processes to identify the core processes and reorganize work to eliminate unnecessary steps instead of focusing upon individual personnel issues (Davis, Aquilano & Chase, 1999; Gordon, 1996). Gordon, Davis, Aquilano and Chase, Thompson and Strickland (1996), and Davenport (1993) cite the following improvements as being outcomes of reengineering initiatives:

1. Sheraton Hotels--Reengineering initiatives within the Sheraton Hotel corporate environment generated significant improvements within the operational structure. After elimination of processes that did not add value to running the hotel and elimination of paperwork that did not directly affect customer service, Gordon noted that Sheraton reduced the 40 managers and 200 employees required to run an average-sized hotel to 14 managers and 140 employees.

2. Citicorp Corporation--Reengineering efforts within the Citicorp environment, when coupled with traditional expense reduction methodologies, enabled personnel reductions of 15 percent and reduced operating expenses by 12 percent. The cumulative number of data centers was reduced from 240 to 60.

Allied Academies International Conference page 97

Proceedings of the Academy of Educational Leadership, Volume 11, Number 1 New Orleans, 2006

3. Chrysler Corporation--Reengineering to introduce process teams within the Chrysler environment allowed team responsibility of vehicle design from beginning to end. As a result, design issues were coordinated with manufacturing areas to generate models that were easier to build and allowed for regular consultation with purchasing agents regarding parts quality.

4. General Electric Corporation--Reengineering efforts within the General Electric circuit breaker division allowed dramatic gains in productivity and organizational capability. In this setting, the elapsed time from order receipt to delivery was cut from three weeks to three days by consolidating six production units into one, reducing a variety of former inventory and handling steps, automating the design system to replace a human custom-design process, and cutting the organizational layers between managers and workers from three to one.

5. Ford Motor Corporation--Reengineering efforts within the Ford Motor Corporation allowed significant restructuring and process linkage across functional boundaries. As a result, Davenport indicates that Ford reduced its accounts payable department by 75 percent.

Davis, Aquilano and Chase (1999) and Gordon (1996) state that nine attributes of reengineering efforts exist. These nine characteristics may be given as follows:

1. Combination of jobs--This BPR attribute involves implementation of horizontal work compression and eliminates errors that occur in transferring information from one individual to another. As a result, cycle time is significantly reduced because only one person is responsible for overseeing the entire process.

2. Worker decision-making--This BPR attribute involves implementation of vertical work compression, and it eliminates the need for the traditional and costly hierarchical organizational structure with its many layers of management. As a result, faster customer response, lower overhead costs, and increased worker empowerment are manifested.

3. Natural order of process steps--The tenets of BPR do not require that processes be forced into a sequential order, and they advocate a natural sequence of events based on what needs to be done next. As a result, parallel, concurrent operations may exist because many jobs may be performed simultaneously, thereby reducing the throughput time.

4. Logical work performance--This BPR characteristic favors the shifting of work across traditional functional boundaries as a method of allowing multiple entities to make decisions. As a result, efficiency may be increased with respect to local operations decisions.

5. Multiple versions of processes--This BPR tenet advocates multiple process versions to meet the unique requirements of different market niches as well as individual customers as a method of avoiding the inflexibility and standardized products of assembly lines.

6. Checks and controls--BPR advocates a reduction in checks and controls because checking the accuracy of processes often occurs at the end of a sequence of steps rather than at each step. As a result, judgment of workers' performance is based on results rather than on how well they followed the process.

7. Limited contact--This BPR tenet involves limiting contact with external groups to instances that are essential to the process. As a result, reduced disturbance is introduced into process implementation.

8. Point of contact--This BPR characteristic advocates determination of a single manager as a primary point of contact for the purpose of providing that person with all necessary information. As a result, one individual would handle all accounts of a client.

9. Structure type--This BPR attribute fosters both centralized and decentralized structures for the purpose of placing decision-making at the most appropriate level and position in the organization.

BUSINESS PROCESS MANAGEMENT

Because organizations may lose customer focus within their corporate structures, Harrington (1991) indicates that some business processes may became ineffective, out of date, overly complicated, burdened with bureaucracy, labor intensive, time consuming, and irritating to

page 98 Allied Academies International Conference

New Orleans, 2006 Proceedings of the Academy of Educational Leadership, Volume 11, Number 1

management and employees alike. Davis, Aquilano and Chase (1999) indicate that such occurrences may result in customer dissatisfaction if performance falls significantly short of expectations. Therefore, effective management must exist to govern process implementation and review as a method of countering such shortcomings for the purpose of generating acceptable levels of customer satisfaction.

Given these observations, organizational processes must be continuously examined to ensure that their performance is acceptable to both the firm and customer. As a method of accomplishing this task, firms may implement process improvement initiatives using business process management (BPM) tenets.

Eckes (2001) states that BPM may be considered as being the creation of an infrastructure to allow for successful process improvement through project teams as a critical component of quality improvement efforts with respect to processes. Eckes suggests that the following methodology be implemented to address process improvement from a team-based, process-related, project-oriented perspective:

Table 1: BPM Methodology

Step Title Description

1 Strategic Objectives BPM initiatives for process improvement must relate to corporate strategy and must have the support of corporate leaders.

2 Process Creation BPM initiatives must address the creation of core, key sub-processes and enabling processes.

3 Process Ownership BPM identifies the owners of all processes under consideration, and owners must be assigned to all core, key sub-processes and enabling processes.

4 Process Dashboards BPM requires the creation and validation of process dashboards as quantitative measures of process implementation and improvement.

5 Process Data Collection BPM requires data collection practices to be implemented with respect to the defined dashboards to accumulate quantitative metrics regarding improvement initiatives.

6 Selection Criteria BPM orders the improvement projects as a form of selection criteria derived from the analysis and assessment of quantitative data collected.

CONCLUSION

Within this methodology, Eckes (2001) indicates that customers travel through an organization through a series of processes, not through the functions or departments of the organization. Eckes further indicates that improvement initiatives must be chosen based upon their having the greatest impact on the business objectives of the organization. Given these concepts, managers implementing BPM as a form of process improvement initiative may address problematic situations from a perspective that considers both customer focus and corporate strategy using a logical method of improvement project ranking.

REFERENCES

Davenport, T. (1993). Process innovation. Boston: Harvard Business School Press.

Allied Academies International Conference page 99

Proceedings of the Academy of Educational Leadership, Volume 11, Number 1 New Orleans, 2006

Davis, M., N. Aquilano & R. Chase (1999). Fundamentals of operations management (Third Edition). New York: Irwin- McGraw Hill Publishing.

Eckes, G. (2001). The six-sigma revolution: How General Electric and others turned processes into profits. New York: John Wiley and Sons Publishing.

FAA (2001). Federal Aviation Administration. Welcome to the FAA business process improvement home page. Retrieved September 3, 2001, from http://www.faa.gov

Gordon, J. (1996). Organizational behavior: A diagnostic approach (Fifth Edition). Englewood Cliffs, NJ: Prentice-Hall Publishing.

Harrington, H. (1991). Business process improvement: The breakthrough strategy for total quality, productivity, and competitiveness. New York: McGraw-Hill Publishing.

Macintosh, R. & A. Francis (2000). The market, technological and industry contexts of business process re-engineering in U.K. business. Department of Management Studies, G12 8LF. Glasgow Business School, Glasgow, Scotland.

Malhotra, Y. (1998). Business process redesign: An overview. IEEE Engineering Management Review, 26(3).

Thompson, A. & A. Strickland (1996). Strategic management: Concepts and cases (Ninth Edition). New York: Irwin Publishing.

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.