Business Process Reengineering
Part 2 of 6 

Fourth, firms have been made aware of the importance of processes as a result of such recent developments as ISO 9000, Total Quality Management, Kaizen, Theory of Con­straints, Activity Based Costing, Mass Customization, JIT, Time Based Competition (TBC) and Benchmarking. Each of these developments requires that the firm and its managers uncover the various processes, document them, analyze them and act directly on these processes to bring about the desired changes. For some developments such as ISO 9000, the firm must demonstrate that the people understand the formal processes and that what they do on a day-to-day basis is consistent with these processes.

In addition, interest in processes has been heightened as a result of the well-documented success of those firms who are process-oriented. Companies such as Hewlett-Packard, Xerox, Ford, Taco Bell and Hallmark have experienced great recent success by changing the appropriate processes within their systems. In the case of Wal-Mart, we see a company that has been able to change the various processes so that it can order products, get them into the stores and on the shelves and get them sold to its customers within 20 days while offering its suppliers terms for payment of 45 days. The result is that Wal-Mart's processes enable it to create a situation where its suppliers essentially finance and manage its inventory.

A fifth factor which has forced managers to recognize the importance of processes involves the combined effects of increased demands now placed on firms, international competition and an eroding profit margin. Firms are now finding themselves faced by the need to simultaneously reduce lead times, improve quality, enhance customer responsiveness, develop and deliver new products to its customers faster, reduce costs and improve overall flexibil­ity. As an example of this factor, consider Lean Manufac­turing (LM). At the heart of LM is the notion that the firm can do more with less—less people, less money, less time and less overhead. In part, these pressures reflect the increasing availability of substitutes, both domestically and internationally. If we do not respond appropriately, our customers can always find a more willing supplier somewhere else. As more demands are placed on the firm's processes combined with the increasingly availability of alternative suppliers, managers find the overall profit levels falling. In many cases, this fall in profit cannot be adequately corrected by small changes to the current processes. What is often required is a dramatic and radical change to existing processes.

BPR is at once both a new concept and an old concept. In its current form, the term was first coined by Hammer (1) and explored in greater detail by Hammer and Champy in their book on BPR (2). However, other contributors to this concept include Rummler and Brache (6). However, it is also an old concept. When we look at Henry Ford and the invention of the modern assembly processes for the car or when we read about Alfred P. Sloan and his work at General Motors, what we are seeing are historical ex­amples of BPR in practice.

Because BPR is a relatively new concept to many manag­ers, it is not unusual that we find that it is surrounded by a great deal of confusion. While we have examples of successful BPR implementations at such firms as Ford, IBM Credit, Capital Holdings, Kodak, Bell Atlantic and Taco Bell, we find that there are few concrete guidelines for how to undertake such a program. To better understand BPR, we must first define it and its critical traits. We must then examine a framework by which BPR can be carried out.

What is Business Process Reengineering? Simply stated, it is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in

critical contemporary measures of performance, such as cost, quality, service and speed. (2, p. 32) In other words, BPR is process-oriented. BPR begins by identifying in very specific and precise terms what types of outputs the customer wants and demands. It then develops a process that delivers the exact outputs. It is not interested so much in what is as it is in what should be.

Business Process Reengineering is a process which brings together three elements in rethinking the process. These are: (1) A Vision Statement; (2) An Impact Statement; and, (3) Reengineering the process.

The Vision Statement: Simply put, the vision statement describes the ideal state of th process. It identifies the "what should be." It becomes the goal and vision towards which all of the BPR activities are directed.

To be Continued