What is Business Process Reengineering (BPR)?

Business process reengineering is a crucial element in the agenda of many large as well as small companies in many industries, with manufacturing and banking/ finance being the leading sectors. It allows organizations to view their business processes from a fresh perspective in order to understand how to redesign them to improve the way they work.

In this guide, we aim to simplify the concept of business process reengineering by explaining what it is and the process steps. We have also provided business process templates that you can use right away to kickstart your own BPR project.

• What is Business Process Reengineering
• Steps in Business Process Reengineering
• Benefits of Business Process Reengineering
• Principles of Business Process Reengineering
• BPR Implementation | Business Process Reengineering Steps
• BPR Methodologies
• Business Process Reengineering Case Studies

What is Business Process Reengineering

Business Process Reengineering (BPR) is a strategic management approach that overhauls and redesigns existing business processes to enhance efficiency and effectiveness. It involves analyzing workflows, identifying bottlenecks, and deploying innovative solutions. BPR optimizes operations, cuts costs, and boosts productivity, fostering organizational growth and competitiveness.

In addition to the redesigning of business processes, it also involves the redesigning of associated systems and organizational structures.

Usually, reasons like new market opportunities, increasing competition, poor financial performance, and decreasing market share trigger the need for a business process transformation.

BPR involves the analysis and transformation of several major components of a business. These include,

• Strategy
• Organization
• Process
• Technology
• Culture

BPR includes three phases; analysis phase, design phase, and implementation phase. It is also referred to as business process redesign, business process change management, and business transformation.

Steps in Business Process Reengineering:

1. Identify the scope and goals of the reengineering initiative.
2. Map and analyze the current processes, identifying inefficiencies, bottlenecks, and areas for improvement.
3. Redesign the processes, focusing on eliminating non-value-added activities, optimizing workflows, and leveraging technology.
4. Develop a detailed implementation plan, considering resource allocation, timelines, and change management strategies.
5. Implement the redesigned processes, involving training, communication, and stakeholder engagement.
6. Monitor and evaluate the outcomes and performance of the reengineered processes, making adjustments as necessary.

Refer to the diagram below for further reference,

Benefits of Business Process Reengineering

BPR plays a major role in organizational performance improvement in terms of cost, quality, delivery, employee productivity, etc. It also helps

• Improved efficiency: BPR focuses on eliminating non-value-added activities, simplifying processes, and reducing waste. This leads to improved efficiency and productivity, as resources are better utilized and workflows are streamlined.

• Cost reduction: By eliminating redundancies, optimizing workflows, and leveraging technology, BPR helps organizations reduce costs associated with labor, materials, and operational inefficiencies.

• Enhanced customer satisfaction: By reengineering processes to deliver products or services faster, with higher quality and improved customer experiences, organizations can enhance customer satisfaction and loyalty.

• Increased agility and flexibility: BPR encourages organizations to adopt more agile and flexible processes. This enables them to respond quickly to market changes, customer demands, and competitive pressures.

• Quality improvement: BPR emphasizes the identification and elimination of defects and errors in processes. By redesigning processes with quality in mind, organizations can improve product or service quality, reduce rework, and enhance overall process reliability.

• Enhanced innovation: BPR encourages organizations to think critically about their existing processes and challenge traditional assumptions. This mindset fosters a culture of innovation, where new ideas and approaches are welcomed.

• Improved employee engagement: By engaging employees in process improvement efforts, organizations can tap into their knowledge, expertise, and creativity, leading to higher employee engagement and satisfaction.

• Better alignment with business goals: BPR ensures that processes are closely aligned with the organization’s strategic goals and objectives.

• Competitive advantage: By optimizing processes, reducing costs, enhancing customer satisfaction, and fostering innovation, BPR can give organizations a competitive advantage in the market.

Principles of Business Process Reengineering

The 7 rules of Business Process Reengineering (BPR) were originally proposed by Michael Hammer and James Champy in their book “Reengineering the Corporation.” These rules provide guidance for organizations undertaking BPR initiatives. Here are the 7 rules of BPR:

1. Organize around outcomes, not tasks: BPR emphasizes structuring processes based on desired outcomes or results, rather than individual tasks or functional departments. This ensures a focus on delivering value to customers and stakeholders.

2. Identify and eliminate non-value-added steps: BPR aims to eliminate non-value-added activities that do not contribute to the desired outcomes. It encourages organizations to streamline processes, reduce waste, and eliminate unnecessary tasks or bottlenecks.

3. Combine steps: BPR advocates for combining multiple steps or activities into integrated and streamlined processes. This helps to simplify and accelerate process flows, reducing handoffs and delays.

4. Empower workers: BPR emphasizes empowering employees who perform the processes. It encourages organizations to delegate decision-making authority and provide employees with the necessary skills and resources to take ownership of their work.

5. Capture information once and at the source: BPR promotes capturing and storing information at the point of origin to avoid redundant data entry and improve accuracy. It advocates for leveraging technology to automate data collection and integration across systems.

6. Link parallel activities: BPR suggests connecting parallel activities to enable simultaneous or parallel processing. This reduces wait times and accelerates the overall process timeline.

7. Put decision making where the work is performed: BPR encourages organizations to decentralize decision-making authority and push decision-making to the lowest level possible. This enables faster and more efficient decision-making, as individuals performing the work have the necessary knowledge and context.

To learn about these principles in more detail, refer to this resource.

BPR Implementation | Business Process Reengineering Steps

Reengineering a process focuses on redesigning a process as a whole which includes fundamentally rethinking how the organizational work should be done in order to achieve dramatic improvement. That’s what differentiates BPR from process improvement which only focuses on functional or incremental improvement.

Reengineering might not be appropriate in all situations, especially if your processes only require optimization and if your organization is not looking to undergo dramatic change. In such a case, you can opt for a process improvement technique.

Step 1: Set the vision and business goals

This is where the senior management needs to identify the business situation; customer expectations, competition, opportunities, etc.

This will make it easier to understand the need for change and create a clear vision of where the company needs to be in the future. Then clarify the objectives in both qualitative and quantitative terms.

Step 2: Establish a competent team

The team you select needs to be cross-functional because expertise and perceptions from all levels of the organization are necessary to minimize the chances of failure.

It should be the responsibility of the top management to have a clear vision of the activities that need to be carried out and provide strategic direction. You also need to have an operational manager who knows the ins and outs of the processes. It is equally important to have the right engineers with different expertise from various fields to make the team complete.

At this stage, it is important to have the goals and strategies outlined properly. You can also carry out surveys and benchmarking activities to identify customer needs and analyze the competition.

In this step, it’s also necessary to communicate the business case for change and the objectives of the project to the rest of the employees. This will encourage their feedback as well and help them get ready for what’s to come.  

Step 3: Understand the current process

In this step, you need to select the process(es) that you will be redesigning. Such processes that are broken, cross-functional, value-adding, have bottlenecks or have high-impact on the organization, etc. can be prioritized.

Once you select them, map them out using flowcharts or process maps to analyze them thoroughly to identify the gaps, inefficiencies, blockers, etc.

Then define the right KPIs for the processes in order to monitor that the process has gained the desired effect once you implement them.

Step 4: Redesign the process

Keeping your vision in mind, redesign a new process that effectively overcomes the inefficiencies of the previous process. Here you will create a future-state map that highlights the solutions you have identified for the issues of the current state process.

Step 5: Implement the reengineered process

Once the process has been redesigned, you can run a small test to see how it works by monitoring with the KPIs you defined earlier. This will allow you to make necessary adjustments to the process before implementing it company-wide. If the new process works better than the current one, you can implement it on a larger scale.

BPR Methodologies

There are several business process reengineering methodologies out there, and we have listed some of them below, along with the steps. They highlight more ways of reengineering business processes in addition to what we have discussed above.

• Hammer/ Champy methodology
• The Davenport methodology
• Manganelli/ Klein methodology
• Kodak methodology

Hammer/Champy Methodology

The methodology introduced by Hammer and Champy popularized business process reengineering. It involves six steps.

Step 1: The CEO who initiates the reengineering process should introduce it to the employees by explaining the current situation of the company and his/her future vision for the company.

Step 2: Identify business processes in terms of how they interact within the company and in relation to the outside world. Here process maps can be used to visualize the processes.

Step 3: Select the processes that have the potential to bring value to the company once reengineered and those that are easy to be re-engineered.

Step 4: Analyze the current performance of the processes as opposed to what is expected from them in the future.

Step 5: Redesign the selected business process using creativity, lateral thinking and imagination.

Step 6: Implement the redesigned processes.

The Davenport Methodology

Davenport puts information technology at the heart of business reengineering. The Davenport model covers six steps.

Step 1: Develop business vision and process objectives.

Step 2: Identify the business processes that should be reengineered. Davenport advises selecting not more than 15 processes at a time.

Step 3: Understand the functioning and performance of the selected processes. And set up performance benchmarks for the re-engineered processes.

Step 4: Study how information technology tools and applications can be applied to the newly designed business processes.

Step 5: Design a functioning prototype of the new business process. Allow the team to study the prototype and identify areas for improvement.

Step 6: Implement the tested prototype across the organization.

Manganelli/ Klein Methodology

Manganelli and Klein state only to focus on those business processes that are crucial to the strategic goals of the company and customer requirements.

Step 1: Ask everyone involved to define goals and prepare for the business reengineering project.

Step 2: Select the key business processes for redesign.

Step 3: Study the current performance of the selected processes and determine the future performance that you want to achieve.

Step 4: Develop information technology design to support new processes. And design new work environments for the people.

Step 5: Implement the redesigned processes and the new work environments within the organization.

Kodak Methodology

Developed by the international Kodak organization, the Kodak methodology is applied across all Kodak facilities worldwide.

Step 1: Plan the process of the reengineering project and define all project administration rules and procedures.

Step 2: Bring together your project team,  assign project managers, and design a comprehensive process model for the organization.

Step 3: Redesign the selected processes. This step should conclude with a plan of a Pilot Implementation of the redesigned processes.

Step 4: Implement the newly designed processes across the organization. Adjust the organization’s infrastructure to the requirements of the new processes.

Step 5: The last step is performed parallel to the other steps. Here the project team should find ways to deal with the obstacles that may occur during the reengineering project.

Business Process Reengineering Case Studies

Here are two detailed case studies that highlight specific challenges, solutions, and outcomes of Business Process Reengineering (BPR) projects in different industries:

General Electric (GE) Aircraft Engines

Challenge:

GE Aircraft Engines faced challenges in reducing engine development time, improving quality, and achieving cost savings.

Solution:

• GE implemented BPR to streamline its engine development process. They adopted a concurrent engineering approach, bringing together cross-functional teams at the early stages of design.
• They implemented computer-aided design (CAD) tools and simulation software to accelerate the design and testing phases.
• GE also focused on standardizing and modularizing engine components to simplify manufacturing and reduce costs.
• They collaborated with suppliers to improve the supply chain, optimize inventory levels, and reduce lead times.

Outcome:

• The BPR initiative resulted in a significant reduction in engine development time, from 60 months to 18 months.
• Quality improved, with a 50% reduction in defects, resulting in fewer post-production modifications.
• The streamlined processes and supplier collaborations led to cost savings of over $1 billion.
• GE Aircraft Engines gained a competitive advantage by delivering high-quality engines faster and at lower costs.

Amazon.com

Challenge:

Amazon.com faced challenges in improving order fulfillment processes and enhancing customer satisfaction.

Solution:

• Amazon.com implemented BPR to optimize its order fulfillment process. They introduced advanced warehouse automation technologies, such as robots and conveyor systems, to improve efficiency and speed.
• They redesigned the warehouse layout and implemented intelligent inventory management systems to minimize travel time and enable accurate order picking.
• Amazon.com invested in data analytics and forecasting tools to predict customer demand and optimize inventory levels.
• They implemented customer-centric processes, such as one-click ordering and personalized recommendations, to enhance the overall customer experience.

Outcome:

• The BPR initiatives enabled Amazon.com to significantly improve order fulfillment speed, reducing delivery times and increasing customer satisfaction.
• Warehouse efficiency and accuracy improved, resulting in faster and more reliable order processing.
• The advanced inventory management systems reduced stockouts and improved inventory turnover.
• Amazon.com became a leader in e-commerce, renowned for its efficient operations and excellent customer service.

What are Your Ideas on BPR?

We hope that this guide has helped you get the hang of business process reengineering. Got more questions? Do share it in the comments section below.

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