Lecture 7 - BPR Methodologies

Reference:

[1] Prasanta Kumar Dey, "Re-engineering materials management: A case study on an Indian refinery", Business Process Management Journal, Vol. 7 Iss: 5, pp.394 - 408, 2011

[2] S. Muthu, "Business process reengineering: A Consolidated Methodology", Proceedings of the 4th Annual International Conference on Industrial Engineering Theory, Applications and Practice, 01/11/1999

[3] Reviewing Reengineering Methodology, 17/03/2012,

http://www.prosci.com/bpr_method.htm

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Recap of the lecture:

Five Phases in BPR Methodologies [2]

Phase 1 - Visioning

• question on whether BPR is necessary/essential to the company
• involves great changes to the current situation to the company, needs in-depth planning from the top management to sustain the well-defined vision of the company
• know well about customers' expectation, the current area for improvements

Phase 2 - Mobilization

• balance between analysing as-is and to-be process, not to spend all time on to-be
• understand the current process
• importance of knowing the as-is: not neglecting the basic functionalities and required workflow after BPR
• prevent any dislocation of function

Phase 3 - Process redesign

• produce alternatives for the current situation, that fulfill the strategic goals
• involves evaluation of each alternative approach, people with similar backgrounds can help in giving opinion for betterment
• modeling and simulation can be used to compare outcome and efficiency of the alternatives

Phase 4 - Implementation

• IT infrastructure, organization and people's skills are adjusted to fit the to-be process
• opposition may occur for the re-engineer process
• development of transition plan for organization, IS and business policies.  this can be facilitated by using prototype and simulation techniques

Phase 5 - Monitoring and maintaining

• progress and result of the bpr has to be monitored continuously
• acceptance and feedback of personnels in the company are taken
• survey can be used to gather areas of improvement
• prepare moves for TQM

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Topic: BPR methodology phase revision

(Based on the case study of an Indian refinery)

Underlying reason for having BPR for Indian Oil Refinery – Mis-alignment of the conventional Materials Management

Materials constituted 60% of the total working capital of an industrial organization, however inefficient materials management has led to great loss of productivity.  Below is the illustration from case study on general BPR methodology (5 phases).

Phase 1:

With inefficiencies in the business process, many of the business process are running in unfavorable states.  These processes led to productivity decrease, loss of assets (e.g. materials) in the companies, rise in operating cost (e.g. accumulate of non-useful stock) etc.  The executive triggering issues are referenced below [1]:

Process prioritization

The prioritization was recognized by the overall scores of the attributes, which are graded according to the customer value structure.  CVS included the identification of customer in the process, and attributes of customers’ value.

Phase 2:

Mobilization: to formulate to-be processes, meetings were hold with participants in the BPR project.  It is used for understanding the areas for improvement for the current business processes.  In this case study, different functional groups’ executives were invited to a 5 day workshop.  Things to be discussed include the re-engineered process, as well as some essential steps such as mapping of current process (AS-IS), mapping re-engineered process (TO-BE), identifying assumptions, determining benefits and paradigm shifts etc.

This is one of the AS-IS process for investigation during the BPR meeting workshop [1].  Originally, a series of steps are gone through for one of the Material Management process.  The steps are illustrated by the case study.

Phase 3:

For the materials planning and procurement process, proposed process are formulated to fulfill the strategic goals of BPR, like increasing the overall efficiency.  Thus the process redesign are highlighted as following (2 are included here).

• Single window clearance
• More IT oriented system

Phase 4:

When talked about the implementation, the involved functional group and organization/people skills are adjusted to fit-in the implemented processes; in this case IT systems are incorporated.  From the above 2 re-engineered process, new unit called the CIPU was comprised into part of the IT system [1].  It retrieves specification for each material, which can be updated by correlated user departments (it also consists of an updated vendor database).  Thus, purchase proposals can be much easier done by the system after in-coming offers received.  Related personnel are trained to utilize the new CIPU system.

Phase 5:

Lastly, for monitoring and maintaining, the actual processes are evaluated.  Action projects are carried out to monitor the daily operation [1].

These projects ensured success practicing of new processes (TO-BE) within the business process.


Conclusion

There are quite a number of similar BPR methodologies practiced by many real world BPR projects, and they share common phases with only small differences.  Such differences can be due to the unique nature of certain businesses, which requires particular procedures/process re-designed to allow optimal BPR.  However, by looking at the Indian Oil Refinery case, we can easily identify the similarities of proposed BPR methodology learnt in class with the phases available above. 

Lecture 6 - Basics of BPR (2)

Reference:

[1] A Look at the Components of Leavitt's Diamond, S. Thakur, 31/07/2011

http://www.brighthub.com/office/project-management/articles/122495.aspx

[2] Total Quality Management, G. Viswanathan, retrieved 03/03/2012

http://ezinearticles.com/?Total-Quality-Management&id=1092615

[3] Business process management, Wikipedia, retrieved 03/03/2012

http://en.wikipedia.org/wiki/Business_process_management

[4] Just in time of McDonalds, 21/06/2011

http://www.youtube.com/watch?v=U84KXNuhs-I&feature=related

[5] HK McDonalds: New versus Old, 20/08/2008, http://blog.hoiking.org/2008/08/20/1206/

[6] McDonalds let me wait too long, 12/04/2010,

http://jasonblog.tw/2010/04/mcdonalds-let-me-wait-too-long.html

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Recap of the lecture:

The Leavitt Diamond

The Leavitt Diamond suggested that all organization is made up of 4 main components: People, Task, Structure and Technology.  It proposed the interaction between the 4 components determines the fate of an organization.  If one of the components is changed without complementary adjustment, an unbalance state will exist in the organization.  For example, update in an organization’s information system will require training of people to use the new system.  In this way swift handover to the new system can be guaranteed without sacrifice in efficiency, or chaos due to new adaptation. [1]

Total Quality Management (TQM)

TQM is the improvement of customers’ experience through continual improvement of quality of its products and services.  The objectives of TQM include providing superior quality at a cost the customer is willing to pay, and shortening response time to customer needs.  Other explanation and reasons for failure for TQM can be found in here [2] (Ezine Articles)

Business Process Management (BPM)

BPM is a management through processes method which helps to improve the company's performance in a more and more complex and ever-changing environment [3]

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Topic: Case study of Hong Kong McDonalds: how BPR cooperated with TQM helps food ordering process

In the old days, Hong Kong McDonalds prepared a base amount of food items in the ready-to-serve food rack.  Cashier served food by picking the corresponding food from the food rack, during each order taken.

BPR - Made for you (MYF) 

However, starting in year 2008, Hong Kong McDonalds practiced the Made-for-you food preparation flow.  Upon each customer’s order, the order will be shown immediately in the kitchen’s computer screen.  Kitchen staffs then prepare the food instantly, the “just-made” food items will then be fetched to the counter front.  Customers are then taking the food order in a food tray or take-aways.  The process’ criteria for success are planned to use 90 seconds or less.

This MFY business process can be regarded as the Business Process Regineering for the Hong Kong McDonalds franchise, which advertisement campaign were carried to advertise the betterment and freshness brought out using this new system (business process (BP)).  The MFY BP was actually originated in USA McDonalds in the early 1998.  With the aid of computer systems, POS system are linked to the kitchen computer screens, orders received can be transmitted to kitchen while those completed can be notified to the counter front, using touchscreen monitors.  The motivation of practicing MFY is to enhance food freshness (by preparing the food right after customers’ ordering, food is served hot and fresh) and significant reduction of food wastage (past: foods placing in the buffer area were discarded, if they were in the buffer for a prolonged time without customer’s order; now: will not happen).  The later also helps reduces McDonalds expenditure in wasted food material and disposal cost.

However, problems were generated such as:

• 90 seconds of food preparation target were often unmet
• Food order were taken quickly in the cashier, but food orders “piled up” as the bottle-neck occurred in the MFY food preparation [5]
• For customers, food completion queuing time was much lengthened.  Customers can no longer enjoy the instant food purchase experience (AS-IS) as in the past, and have to stand for a long time (TO-BE) [6]
• Exist chances of several staff fetching food for the same order (i.e. “Collision” occurs), time wasted due to coordination problem [5]
• Original counters staff swapped to be the food fetcher, some counter POS counters are closed.  Unused counter space are wasted [5]

The MFY was not always positively commented in Hong Kong, mainly with the following reasons:

• MFY cannot be applied in Hong Kong using same way of USA McDonalds.  Breakfast and lunch time is short to many people in HK, especially during rush hour.  People cannot afford to a long queuing time.
• MFY requires extra effort/kitchen manpower to tackle each unique order, but labor cost is not cheap in Hong Kong, it is no practical to hire more people in each store to reduce the time impact

TQM - PDA assisted food ordering, food preparation workflow optimization...

MFY on one hand, significantly improved the food quality and solved the food wastage problem; but on the other hand revealed area of optimization to the business process.  Thus, improvement measures are implemented in TQM to better the services quality, including the long waiting time problem.

Firstly, during peak hours such as afternoon in McDonalds (e.g. HungHum station, Admiralty center etc.), certain crew may circulate between the ends of queue.  Using a wirelessly connected PDA, the crews help queue end customers to pre-order their food, and produce a printout so that upon customer’s reaching to the counter, they can pay and take the pre-made “just made” food almost instantly, this reduced the queuing time for food fetching.

Another practice is the better control of food preparing crew’s workflow.  In order to prevent “collision”, crew can select their duties (fetch a particular order) before each fetching action.  This reduced the chance of 2 crew fetching food for the same order.

During accumulation of several orders in the same counter, the cashier may in turn help the fetch action, because the bottle-neck may exist between the kitchen and the counter.  Idle time for cashier can reduced using this optimized workflow.

BPM and role of IS in improving Quality

The use of wireless PDA ordering system helps simplify the food ordering processes, as well as significantly reduction in the cycle time of ordering food.  The improvement of service quality (in terms of short queuing time) can retain time sensitive customers.  Thus using the above mentioned TQM approaches, the benchmarking standards (90 seconds for food serving) can be met. 

Execution: Executes the required steps of the process

• Perform TQM practices, such as using PDAs to take order, improve exist casher-kitchen system (IT based)

Monitoring: Tracking of individual processes, so that information on their state can be easily seen 

• Identify areas of improvement after each improvement made

Optimization: Identifying the potential or actual bottlenecks and the potential opportunities for cost savings or other improvements

• Swap crew’s from idle to bottleneck areas, to optimize workload and reduce customers’ queuing time

Design: Identification of existing processes and the design of "to-be" processes

• The cashier can help with the fetch process

Modeling: Takes the theoretical design and introduces combinations of variables

• Draft policy: if paid order accumulated up to a certain number, the cashier start helping in the fetch process

Conclusion

BPR and TQM practices helps Hong Kong McDonalds outperform the other fast food chain’s record that also practiced JIT, such as MosBurger.  BPM continues to increase the value of service to customers and helps the overall business processes align with its corporate strategy and the business environment.