Business Re-engineering

Understanding the distinction between activities and processes is key to successful reengineering. Processes relate to desired outcomes while activities relate to the things we do to achieve desired outcomes. Imagine a company exploring reengineering of supplier relationships. The issues and alternatives explored are dictated by what is being reengineered. If activities are being reengineered, discussions tend to center around reducing the number of purchase order copies, changes to the distribution and filing of these documents and improving the management of purchase order changes.

If the company is reengineering processes within their supplier

relationships, they will discuss their procurement process that involves communicating appropriate production and shipment signals to suppliers. This may or may not involve purchase orders. Indeed, the issue is not how many purchase order copies are required but whether purchase orders are the appropriate solution at all. By focusing on outcomes (what we are trying to accomplish) we afford ourselves the opportunity to design solutions that carry none of the traditional, non-value-added baggage.

The greatest obstacle to business reengineering is our own understanding of our customers and business. We have developed, through experience, a set of fundamentals with which we intuitively test business issues. We consider solutions only within the limits of these rules and, as a consequence, fail to embrace many viable, though perhaps somewhat revolutionary, alternatives.

It's difficult to forget all the rules learned through years of solving problems successfully in an industry. Fortunately, we don't need to forget them. These rules make an important contribution to a reengineering effort in that they often reflect real problems and business issues that have not been overcome in the past. The key is to look behind rules to the underlying reasons for their existence.

I recently worked with a manufacturer of seasonal apparel that wanted to reengineer their business. Customers had made it clear that quick response was highly regarded. The product required only three minutes of production time to produce, yet lead times of six weeks were being routinely quoted to major customers due to built in safety times and an assortment of process, handling and paperwork issues. Because of the seasonal nature of the product, sales were often lost once into the retail selling season due to an inability to ship product within a week of receiving customer orders. In addition, suppliers of raw materials quoted lead times of three to six months and the quality of delivered material had been identified as the major problem in attempting to meet production plans. Other supplier issues related to supplier processes that dictated minimum order quantities for selected raw materials far exceeding this manufacturer's regular material requirements.

It took only an hour with this company to learn (at the client's insistence) that suppliers could not ensure the quality of product, could not produce inside of existing lead times, and could not produce in smaller lots that currently negotiated. In addition, production on the shop floor required large lots and work orders had to be sent to the shop floor three weeks prior to the required completion date. The biggest problem this company confronted was everything they already knew from their years of experience.

In order for this manufacturer to satisfy the expectations of its customers it needed to shed the mental limits it had imposed upon its problem solving process. Challenging fundamental assumptions can overcome unnecessary constraints and rules that have been built into systems and procedures currently in place.