Lean Manufacturing via Business Process Reengineering 

This is a very crucial phase in any reengineering activity. Key activities include identifying and articulating the need for change, determining the true potential for reengineering, identifying and prioritizing core process, enlisting the executive sponsor who has the necessary clout and commitment to carry this through, and identifying the process owners and project team members.

The foundation for successful transition is built in this phase through identifying and articulating the need for change. First and foremost, the company must establish a change imperative. The need for change has to be so compelling that it serves to sustain the much needed momentum throughout all phases. Tremendous discomfort with the status-quo must be established. Most reengineering efforts seem to fail for lack of this rallying point. Although one may get started into a major reengineering effort, organizational focus and commitment will not be sustained unless there is a strong sense of urgency. In the case of Chrysler, for example, the change imperative was simple: change or go out of business. Senior management plays a key role in establishing this environment and in frequently communicating this into the organization.

Even after the need for change has been established, the vision that is compelling, specific, and measurable must be broadly communicated. Vision must first be validated in terms of its relevance, particularly from a strategic value point of view. For example, if the firm decides to reengineer customer processes, customer perspectives may be very important to formulate the vision. Designing from the outside in may be a prudent approach. In the case of AT&T, the company enlisted several customers who served as the focus group, critiqued plans, participated in trial runs and gave regular feedback.2

In order to achieve the levels of performance breakthrough, it is essential to identify all activities that drive key elements of performance. The fact that most businesses

are organized along functional lines only makes it harder to identify appropriate processes that drive performance. Thomas Davenport defines a process as a structured, measured set of activities designed to produce a specified output for a particular customer or market. It implies a strong emphasis on how work is done within an organization, not emphasizing only what is being done.3

Typically, there are only a few (five to seven) core processes in any enterprise that delivers value to its customers. Order fulfillment, which may include the traditional manufacturing functions, is a good example of a core process. This process typically includes order entry, order management, manufacturing and logistics functions. In many instances billing and receivable functions have also been included.

Many corporations involved with reengineering have also deployed quality initiatives of one kind or the other. At American Express, Total Quality Management (TQM) was a major focus at the time reengineering was being introduced. This caused a major debate about which one of the two was more important. There was a perception that the reengineering was replacing the TQM methodologies. These two methodologies maintain different perspectives. The TQM approach focuses on imp roving the current functions, whereas the reengineering approach fundamentally questions why that particular function should exist and whether it should be eliminated. At American Express, process mapping issues got bogged down into disputes. Says Randy Christofferson, VP of Quality and Reengineering at American Express, "we burned up an inordinate amount of time arguing over how many processes and how big the boxes were."1

American Express was apparently not prepared to deal with this conflict. Finally the disputes were resolved by redefining reengineering with Baldridge award terminology. Essentially reengineering was positioned to be a subset of TQM. Lessons learned from similar experiences show us that these issues have to be proactively addressed and the reengineering effort appropriately positioned to avoid significant time and energy loss.