ERP and Business Process Reengineering Chapter 3

Modern ERP

• Modern ERP systems are advanced business systems designed to be selected, implemented, and used effectively

Chapter 3: ERP and Business Process Reengineering

Business Process Reengineering (BPR)

• BPR is a fundamental and radical redesign of business processes to dramatically improve key performance measures such as cost, quality, speed, and service
• The focus is not on how a process is done but why it is done
• Involves identifying, designing, implementing, and reviewing process improvements
• BPR aims to achieve significant improvements through process redesign, not just incremental adjustments

Example of BPR

• A manufacturing company struggling with long production lead times might use BPR to redesign its production processes
• Following analysis of the current state, the company might introduce automated systems to manage inventory, reallocate resources, and eliminate bottlenecks in the supply chain

Steps in Business Process Reengineering

• Identify and map current processes to understand pain points, inefficiencies, and redundancies
• Define objectives and goals such as reducing lead times, improving quality, or enhancing customer experience
• Analyze processes for improvement by identifying bottlenecks, redundancies, and non-value-adding activities
• Design and model new processes to optimize efficiency, eliminate waste, and incorporate automation and new technologies
• Implement changes by rolling out new processes, often supported by new technologies, training programs, and change management initiatives
• Monitor and optimize the redesigned processes by continuously assessing effectiveness and making necessary adjustments

Benefits vs. Challenges of BPR

• Benefits:*

• Cost reductions

• Improved customer satisfaction

• Improved agility

• Increased profitability and reputation

• Challenges:*

• Resistance from employees

• Cost losses

• Job losses

• Traditional and cultural issues

• Time requirements

• Lack of management support

• Risks to managers

• Retraining

Types of Reengineering

• Clean Slate Reengineering:*

• Process design starts with a clean slate, often referred to as "starting from scratch"

• Theoretically, there are no limits

• Technology-Enabled Reengineering:*

• A particular technology (or portfolio of technologies) is chosen as a tool to facilitate reengineering

• The technology itself drives the reengineering process

Clean Slate Reengineering - Advantages and Disadvantages

• Advantages:*

• Not constrained by a particular tool

• Not constrained to a limited set of processes

• Evolution is not limited by a particular technology

• Can result in unique processes, providing a competitive advantage

• Encourages a free flow of ideas

• Disadvantages:*

• Costly

• Requires significant time and resources, making it challenging for smaller companies

Technology-Enabled Reengineering - Advantages and Disadvantages

• Advantages:*

• ERP systems provide the tools and structure for change, leading to less time

• ERP bounds the design, eliminating difficult decisions

• Design is feasible and proven

• Less risk

• Disadvantages:*

• Constrained by the technology chosen

• May not be unique, potentially lacking competitive value

• Other companies may have access to a similar design

Business Process Reengineering Principles

• Those who use the output perform the process
• Workers are empowered
• Geographically dispersed resources are treated as centralized
• Parallel activities link instead of integrating results
• Organize around processes, not tasks or functional areas
• Self-service is implemented
• Decision making takes place where work is performed, integrating controls into the process
• Information is captured once at the source

Targets for Reengineering

• Processes as Part of a Core Competency
• Key Performance Indicators
• High Volume, Low Margin Activities
• High Defect, High Reward Activities (and Quality Controls)
• High Skill, Time-Intensive Activities
• High Complexity, Specialized Resource Activities (KISS)
• Processes Built around Obsolete or Changing Technology

Lessons Learned through BPR

• Low-cost labor
• Scalability (up and down)
• Thinking outside the functional box to connect silos
• Learning from other companies with similar processes
• Recognizing that a process is just one aspect of success
• Delivering sooner rather than later, focusing on short-term goals

Reengineering Challenges

• Employee resistance
• Cost
• Job losses
• Tradition and culture
• Time requirements
• Lack of management support
• Risks to managers
• Retraining

Constituents for Reengineering

• Customers
• Employees
• Information Technology Staff
• Business Partners
• Upstream Supply Chain
• Auditors
• Regulators
• Interested Parties

Explore Chapter 3 of Modern ERP, focusing on Business Process Reengineering (BPR). Understand the critical aspects of redesigning business processes to enhance performance measures like cost, quality, and service. This quiz will delve into the principles and examples of BPR in modern business systems.