Business process reengineering improves a company's efficiency, productivity, and quality by significantly changing its fundamental processes. It is implemented when business owners and managers believe adopting new business intelligence systems will prioritize clients, putting ahead their needs and demands.
This guide explains all you need to know about business process reengineering.
Table of Contents
- What Is Business Process Reengineering?
- How Does BPR Business Process Reengineering Work?
- When Should You Consider Adopting the Business Process Reengineering Approach?
- Benefits of Business Process Reengineering
- Business Process Reengineering Steps for Implementation
- What Are the Most Popular BPR Methodologies?
- 3 Business Process Reengineering Examples
- Key Takeaways on BPR Business Process Reengineering
- Business Process Reengineering FAQs
What Is Business Process Reengineering?
Business process reengineering (BPR) is a management approach that involves analyzing, redesigning, and fundamentally changing key organizational business processes. It improves efficiency, effectiveness, and overall performance by rethinking and redesigning how work is done.
BPR often involves eliminating unnecessary steps, automating tasks, reorganizing roles and responsibilities, and using technology to streamline processes and achieve better outcomes. It reduces high costs and removes an organization's redundant internal and external processes, closely reexamining current automated and human or manual workflows.
How Does BPR Business Process Reengineering Work?
A drastic change initiative within your enterprise, BPR business process reengineering involves:
- Repositioning your company’s mission, vision, and goals to underscore consumer needs
- Revisiting and redefining your organizational and people structure as well as the culture
- Reorganizing and reformulating core processes by leveraging business management software and other relevant technologies to assist with improvements
- Revising departmental and team functions
- Realigning long-term goals, responsibilities, and accountabilities
Your in-house team can execute BPR, or you can opt to employ the professional services of a business solutions company or business consulting firm to perform the redesign on your organization’s behalf.
When Should You Consider Adopting the Business Process Reengineering Approach?
Here are indicators that your company requires BPR business process restructure:
- Declining profitability and poor overall cash flow situation
- The falling customer satisfaction rate
- More complaints and frequent requests for refund
- Increasing distress among employees, resulting in rising attrition and turnover rate
- Inefficient management and general corporate governance
- Impactful marketplace shifts
- Unexpected competition imbalances
Benefits of Business Process Reengineering
Business process redesign is a radical, large-scale undertaking for any enterprise. However, outdated methods can lead to recurring mistakes, which can be more costly. BPR can be expensive, too, depending on the extent of the redesign and the number of processes involved.
When you detect indicators that you should carry out a BPR project, the initiative will be worth it. To ease any more apprehensions you may have, read through these benefits your whole organization will reap when you re-engineer your business processes:
- Streamlined, Well-Oiled Operations
- Company-Wide Increased Efficiency for Optimal Productivity
- Greater ROI
Streamlined, Well-Oiled Operations
At the end of a BPR project, your organization can experience and enjoy smooth-running, time-efficient, and labor-saving operations with the redundant steps taken out of the equation. Through business process restructuring, you and your workforce can better focus your attention and efforts on the most critical areas of your operations.
With clarity and transparency of objectives, each player on your teams and departments can have a vivid outlook of your company’s future path and plans.
Company-Wide Increased Efficiency for Optimal Productivity
You can sustain excellent quality standards of your products or services. With your newly tweaked and potentially digitized processes in place, your employees will be equipped with the right tools to deliver better results swiftly. As a result, you will get an increasing number of satisfied clients.
Greater ROI
Investing in business process repositioning and improvement can help maximize your revenues. Especially when working with a consultant, even a small business consulting firm, you can redirect more time and energy toward building a community for your consumers and establishing genuine rapport with them through more targeted goals, boosted efficiency, and heightened productivity.
In turn, you will get higher conversion and retention rates. This can even fortify your business and prepare it to be robust and resilient when faced with market shifts in the future.
Business Process Reengineering Steps for Implementation
It is imperative for you to maintain the transparency, effectiveness, and impartiality of the BPR techniques you choose for your business. Your teams and other stakeholders should clearly understand the changes in your organization and the new direction it is taking.
Below are the five general BPR steps:
- Map Out and Completely Figure Out Your Current Processes
- Properly Communicate All Gaps and Roadblocks
- Validate Your Opportunities to Improve
- Redesign Your Processes to Become Forward-Facing and Future-Proof
- Implement the Reengineered Processes
1. Map Out and Completely Figure Out Your Current Processes
Make sure you know the ins and outs of your current business processes and flowcharts and how these affect your company’s overall performance. Do this by collecting information from all available sources, including your people and the software tools you use.
During this phase of the BPR, you need to determine the following:
- Problematic, inconsistent, or broken processes that contribute to bottlenecks
- Value-adding and highly-impactful processes that drive the enterprise toward a well-fueled performance
Afterward, you refocus your priorities by outlining the correct performance measurements for each process. Redefining your KPIs enables you to monitor if these procedures bring about the anticipated changes and projected positive effects.
2. Properly Communicate All Gaps and Roadblocks
When you have your process maps thoroughly laid out, it is time to find the problem, i.e., the inefficiencies and the blockers holding back your business from growing, causing it to decline and weaken.
Sketch out every detail for a better run-through and analysis of issues, errors, and disconnects that disrupt the process flow. This will allow the management and leadership teams to arrive at sounder decisions and quicker solutions for BPR.
3. Validate Your Opportunities to Improve
At this stage of BPR, you should be able to discover ways of process enhancement and begin developing solutions to help boost your production process and business output. This step includes:
- Rethinking and elevating your KPIs
- Adjusting process maps
- Meticulously reviewing these process flowcharts
- Recognizing and weighing the advantages and disadvantages
- Trying out and validating the newly formulated KPIs and process maps, paying extra attention to whether or not all of them are necessary
In addition, it is vital to keep in mind and forecast the expenses incurred when you implement your techniques for business process reorganization.
4. Redesign Your Processes to Become Forward-Facing and Future-Proof
With your organization’s goals carefully considered, revise and reengineer your business processes. Illustrate the future state of the process flowcharts and maps. Highlight how the new methods will fix breaches, fill in cracks, and bridge gaps where the current state process previously missed and failed to stitch together.
5. Implement the Reengineered Processes
Get all stakeholders on board on how the re-engineered processes work. Inform your people and educate them about it.
Before an organization-wide implementation, test the new processes in one or two areas of the business and ensure you consistently track your previously defined KPIs. When the new process flow yields incremental improvements, you can put it into operation on a larger scale.
What Are the Most Popular BPR Methodologies?
Listed here are three of the most widely utilized BPR methodologies, together with the summarized business process reengineering steps for each:
The Hammer and Champy Methodology
The Hammer & Champy Method is a popular six-step approach to BPR.
- Step #1: The overall company head, typically the CEO, explains the present situation of the business and the future envisioned for the organization. The CEO relays the plan for a BPR to the whole workforce and proceeds to initiate it.
- Step #2: The core team dedicated to BPR visualizes and maps out the processes within the company and the external-facing work procedures.
- Step #3: Choose the specific processes with the most potential to add value to the business once they undergo reengineering.
- Step #4: Evaluate these select processes. Analyze how they are performing now vs. how they are expected to impact the company in the future after BPR positively.
- Step #5: Execute the BPR through creativity and lateral thinking.
- Step #6: Put into practice the redesigned processes.
The Davenport Methodology
With information technology as the core of business redesign, the Davenport BPR model also covers six business process reengineering steps:
- Step #1: Set the company’s vision of its process objectives in-depth.
- Step #2: Isolate the process flows and maps that require BPR. Following the standards of the Davenport Method, the number of processes for simultaneous redesign should not exceed 15.
- Step #3: Get an exhaustive understanding of the present functions and the performance of each selected process. Based on this, establish the new metrics or benchmarks for the prospective reengineered processes.
- Step #4: Investigate how integrating software and other technological applications can optimize the newly designed business processes. Incorporate the IT tools that are most relevant to the process of restructuring.
- Step #5: Produce a working business process prototype that your team can use and study so they can provide feedback about the aspects which may need modification for improvement.
- Step #6: After the prototype is tested and approved to be fully functional, implement the reengineered process across the company.
The Manganelli and Klein Methodology
According to the Manganelli & Klein Method, a business should only focus its process, rethinking initiatives on the most crucial areas affecting the strategic and tactical goals of the company and consumer requirements.
- Step #1: Define the purpose of executing a business reengineering project.
- Step #2: Select the core processes for reengineering.
- Step #3: Determine what you want to achieve with the future performance of your reformulated processes.
- Step #4: Develop a technological design and a new structure for your workspace that support the realigned process flows and maps.
- Step #5: Implement the BPR output within the entire organization.
3 Business Process Reengineering Examples
Let’s look at some real-life BPR examples:
1. Ford Motor Company
The most noticeable business process reengineering example is Ford Motors Company. In the late 1980s, Ford faced financial challenges: fierce competition, dropping sales, and rising costs. Ford implemented business process reengineering to improve its operations. Specifically, it focused on its accounts payable department, which processed invoices from numerous suppliers worldwide. The existing process was complex, time-consuming, and costly.
With the help of consultants, Ford redesigned the process using BPR principles. They implemented electronic scanning, optical character recognition (OCR), and centralized data matching to simplify and automate the process.
Ford's BPR success story highlights the importance of clear goals, stakeholder involvement, cross-functional teams, technology adoption, training, and performance monitoring for optimal outcomes. The results were significant: reduced steps, documents, processing time, and costs. The department's headcount decreased by 75%, while productivity increased by 300%.
2. Amazon
Amazon has undergone significant BPR to streamline operations, improve efficiency, and enhance the customer experience. Their efforts have focused on various areas:
In fulfillment and logistics, they introduced automation and robotics to their warehouses - robots started transporting items, and automated systems sorted and packaged them, improving the speed and accuracy of order fulfillment.
For order management and tracking, they started using sophisticated algorithms and data analytics to optimize inventory management and reduce delivery times.
Self-service options and automation, including automated chatbots and FAQs, improved customer service and support.
Amazon's personalized recommendation system is also a result of BPR efforts. This personalization is based on advanced algorithms and machine learning. It analyzes customers' data and tracks their online behavior to enhance the shopping experience and boost sales.
Through these BPR initiatives, Amazon improved operational efficiency, reduced costs, enhanced customer satisfaction, and drove innovation in eCommerce.
3. IBM Credit Corporation
IBM Credit Corporation, the financing arm of IBM, underwent a BPR initiative to improve the efficiency of its credit application processing. Previously, the application processing time ranged from six days to two weeks, with most of the time spent waiting for someone to review the application.
To address this issue, IBM Credit re-engineered the process with the following changes:
- Staff reduction: The four specialists who handled different aspects of the application were replaced by a single person - a generalist or “deal structurer”. He took charge of the entire application process using templates on a new computer system that provided all the necessary data and tools previously used by specialists.
- Collaboration: The generalist could consult specialists in cases requiring additional expertise or customization. They would collaborate to develop a customized package as needed.
The results of the BPR initiative were remarkable:
- Reduced turnaround time: The processing time for credit applications was reduced from seven days to just four hours. This significant time reduction improved customer satisfaction and accelerated business operations.
- Increased productivity: With fewer resources IBM Credit achieved improvement in productivity. They could handle 100 times the number of credit applications compared to before the BPR. This boost in productivity was due to the streamlined process and the elimination of unnecessary delays.
Key Takeaways on BPR Business Process Reengineering
Ultimately, initiating a BPR project aims to create efficiencies and eliminate redundancies, assisting with the progress of your organizational performance as a whole. The approach gears your business for imminent changes, whether in the ever-dynamic technologies or the marketplace itself.
This practice can be pricey and even risky. Yet, when done correctly, the forward-thinking BPR can give you an immense competitive edge in your industry, transforming your business into a leader in the market.
Business Process Reengineering FAQs
1. What is the primary purpose of business process reengineering?
The primary purpose of business process reengineering is to make fundamental changes and improvements in the company's operations and increase the efficiency, productivity, and overall quality of all core business processes. Its ultimate goal is to achieve better results and meet customer needs more effectively.
2. What is the first phase in the business process reengineering model?
The first phase in the business process reengineering model is known as the "Discovery" or "Assessment" phase. During this phase, you will examine and analyze the current state of your company processes to understand their strengths, weaknesses, and areas for improvement.
The first phase involves collecting data, conducting interviews and workshops with stakeholders, mapping current processes, and identifying pain points and bottlenecks. Gathered Insights are a foundation for the following phases of redesigning and implementing improved procedures.
