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faaiz will become famous soon enough
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Thumbs up BUSINESS PROCESS REENGINEERING - January 4th, 2008


Defined as
• Reengineering is defined as 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. As engineering discipline, reengineering can be applied to any process in manufacturing and service businesses, education, and the government.

• Business process reengineering (BPR) is focused on reengineering business processes.

Key Words in the Reengineering Definition

• Fundamental
• Why do we do what we do
• Ignore what is and concentrate on what should be

• Radical
• Fundamental Business reinvention

• Dramatic
• Reengineering should be brought in “when a need exits for heavy blasting”
• Companies in deep trouble
• Companies that see trouble coming
• Companies that are in peak condition

• Business Process
• a collection of activities that takes one or more kinds of inputs and creates an output that is of value to a customer


• The basic difference between TQM and BPR is
• TQM – TQM has emphasized on continuous and incremental improvement of processes that are in control .
• BPR – BPR is about radical, discontinuous change through process innovation
• Thus a given process can be enhanced by TQM until its useful lifetime is over.
• After that point that processes are reengineered

Principles of Reengineering

• Organize around outcomes, not tasks

 Combine several specialized task performed by different people should be combined into a single job
 The new job created should involve all the steps in a process that creates a well-defined outcome
 It provides a single knowledgeable point of contact for the customer
 E.g. banks

• Have those who use the output of the process perform the process

 Work should be carried out where it makes the most sense to do it
 This results in people closest to the process actually performing the work
 Relocating the work in this fashion eliminates the need to co-ordinate the performers and users of a process
 E.g. purchase

• Merge information-processing work into the real work that produces the information

 People who collect information should be responsible for processing it
 It greatly reduces the errors by cutting the number of external contact points for a process
 E.g. Account payable department

• Treat geographically dispersed resources as though they were centralized

 Parallel processing of work by separate organizational units that perform the same job

• Link parallel activities instead of integrating their results
 Link parallel activities that must come together instead of integrating their results
 E.g. quality and quantity check

• Put the decision point where the work is performed, and build control into the process
 Decision making should be made part of the work performed
 Control should be made part of each process

• Capture information once and at the source
 Information should be collected and captured in the company’ online information system only once – at the source it was created
Guidelines for implementation of BPR:
 Codification of reengineering
 Clear goals and consistent feedback
 High executive involvement in clinical changes


Defined as

• JIT can be defined as an integrated set of activities designed to achieve high-volume production using minimal inventories (raw materials, work in process, and finished goods)

• Parts arrive at the next work station just in time and are completed and move through the operations quickly It is based on the logic that nothing will be produced until it is needed

• JIT also involves the elimination of waste in production effort
• JIT also involves the timing of production resources (i.e., parts arrive at the next workstation “just in time”)

JIT and Lean Management

• JIT can be divided into two terms: “Big JIT” and “Little JIT”

• Big JIT (also called Lean Management) is a philosophy of operations management that seeks to eliminate waste in all aspects of a firm’s production activities: human relations, vendor relations, technology, and the management of materials and inventory

• Little JIT focuses more narrowly on scheduling goods inventory and providing service resources where and when needed

The Toyota Production System

The bench mark for lean production

 JIT production system was developed in Japan in Toyota company
 It was developed to improve quality and productivity
 It is based on two philosophies:

1. Elimination of waste
2. Respect for people

1. Elimination of waste

Waste in Operations

Fujio cho president of Toyota defined waste as anything other than minimum amount of equipment, materials, parts and workers, which are essential to production

Fujio cho identified following wastes:

• Waste from overproduction
• Waste of waiting time
• Transportation waste
• Inventory waste
• Processing waste
• Waste from product defects

Above wastes can be eliminated by the following

• Focused factory network :
Japanese build small-specialized plants rather than large vertically integrated manufacturing facilities

• Group technology :
• Group technology is a philosophy in which similar parts are grouped into families , and the processes required to make the parts are arranged in a specialized work cell
• GT considers all operations required to make a part and groups those machines together

Quality at a source :
• Philosophy of making factory workers personally responsible for the quality of their output
• Worker are expected to make the part correctly the first time and to stop the process immediately if there is a problem

JIT- Producing what is needed, when needed and no more

Uniform plant loading –
Smoothing the production flow to reduce the schedule variations
E.g. at Toyota monthly car style quantities are reduced to daily in order to compute a model cycle time

Minimized set up times-
Machines must be quickly set up to produce the mixed models on the line
Internal set ups must be done while machine is stopped
External set ups must be done while machine is running

Kanban production control system:
A kanban control system uses a signaling device to regulate JIT flows. Kanban means sign or instruction card in Japanese.

(Refer exhibit 11.6)
 When an assembly line takes the first part from a full container, a worker takes the withdrawal kanban from the container, and takes the card to the machine storage area.
 In the machine center area, the worker finds the container of part A ,removes the production kanban and replaces it with the withdrawal kanban
 Placement of this card on the container authorizes the movement of the container to the assembly line
 The freed production kanban is placed on a rack by the machine center , which authorizes the production of another lot of material
 The cards on the rack becomes the dispatch list for machine center

Other possible approaches:
 Kanban square: Marked places on the floor or on a table to identify where material should be stored, when the store is empty, the supplying operations are used authorized to produce

 Container system: container itself is used as a signal device

 Colored golf balls: when a part used in a subassembly is down to its queue limit, the assembler rolls a colored golf ball down a pipe to the replenishment machine center

2.Respect for people

 Permanent jobs
 Greater job security
 They contribute more in global achievements
 Unions maintain co-operative relations with management
 Two times bonus to employees by Toyota to increase productivity
 Focus on important improvement task by workers
 Bottom-round management involving all parties, seeking information and taking decisions
 Long term partnership with suppliers and customers
 Quality circle of employees to meet regularly and discuss their problems ,find solution and share the solution with management

JIT in services

 Organize problem solving groups
 Upgrade housekeeping
 Upgrade quality
 Clarify process flows – based on JIT themes
 Level the Facility Load- synchronize production with demand to avoid customers waiting
 Eliminate Unnecessary Activities
 Reorganize Physical Configuration
 Introduce Demand-Pull Scheduling
 Develop Supplier Networks
 Level the Facility Load

Toyota Production System’s Four Rules

1.All work shall be highly specified as to content, sequence, timing, and outcome
2.Every customer-supplier connection must be direct, and there must be an unambiguous yes-or-no way to send requests and receive responses
3.The pathway for every product and service must be simple and direct
4.Any improvement must be made in accordance with the scientific method, under the guidance of a teacher, at the lowest possible level in the organization


(Refer exhibit 11.8)

Design Flow Process
•Link operations
•Balance workstation capacities
•Redesign layout for flow
•Emphasize preventive maintenance –ensure that flows are not interrupted
•Reduce lot sizes
•Reduce setup/changeover time

Total Quality Control
•Worker responsibility
•Measure SQC
•Enforce compliance
•Automatic inspection

Stabilize Schedule
•Level schedule
•Underutilize capacity
•Establish freeze windows – refers to that period of time during which the schedule is fixed and no other changes arepossible
•Demand pull
•Reduce lot sizes

Work with Vendors
•Reduce lead times
•Frequent deliveries
project usage requirements
•Quality expectations

Reduce Inventory More

Improve Product Design
•Standard product configuration
•Standardize and reduce number of parts
•Process design with product design
•Quality expectations

Concurrently Solve problems
•Root cause
•Solve permanently
•Team approach
•Line and specialist responsibility
•Continual education

 When implemented properly links all the areas of the business
 When an order is received ,different departments like manufacturing, purchasing, accounting and sales get information and when transaction takes place, the system is updated
 Availability of timely information saves time and eliminates redundant jobs
 With a well designed ERP system new and better ways of running the business are possible but ERP system is complex and expensive
 The current ERP vendors have set new standards in information integration
 In early 1990s many companies realized that it was time to update their information systems to take advantage of new technologies
 Changes were inevitable and company known as SAP AG brought its product R/3 and this is considered as a good benchmark of comparing other company products

 SAP AG is a German firm is the world leader in providing ERP software. Its flagship product is known as R/3
 Many of the worlds largest companies use the software
 R/3 server is designed to operate in a three-tier client/server configuration
 R/3 application is fully integrated so that data are shared between all applications . Front-end servers are connected through respective application server to database server and vice-versa

 R/3 software consists of four major modules
 Financial accounting
 Manufacturing and logistic
 Sales and distribution
 Human resource

(refer exhibit-12.2)

R/3 application modules
The modules are integrated and use the common database, transactions processed in one area immediately update other areas

Financial accounting:
 Includes three major categories financials FI, controlling CO, asset management AM
 Includes accounts payable, receivable, general ledger, capital investments, financial statements ,costing , cost centers ,profit centers
Human resources:
 Contains the full set of capabilities needed to manage, schedule ,pay and hire the people who make a company run
 It includes payroll, benefits, administration, HRD planning ,schedule and shift planning ,time management and travel expenses

Manufacturing and logistics:
 Includes materials management ,plant maintenance, quality management, plant maintenance

Sales and distribution:
 Includes customers, sales, orders, distribution, export control ,shipping, billing

Implementing ERP
 Implementation of ERP is very costly due to actual cost and training of employees
 According to large survey conducted by Harvard Business School, a large percent of executive are not in favor of ERP due to following reasons
1.ERP could not support their business
2.Organsiation could not make changes as needed
 Some of the companies implemented with the desire to standardize and improve process and quality of implementation

Scope of materials management:
• Materials planning and programming
• Store keeping
• Purchasing
• Inventory control
• Simplification, standardization
• Transportation
• Material handling
• Disposal

MRP is an important function of materials management
Material Requirements Planning Defined:

•Materials requirements planning (MRP) is a means for determining the number of parts, components, and materials needed to produce a product

•MRP provides time scheduling information specifying when each of the materials, parts, and components should be ordered or produced

Objective of MRP:
To improve customer service by prompt delivery
To reduce inventory level and costs
To improve plant efficiency by proper utilization of resources

Need of MRP
 A manufacturing company produces goods to meet the demands with the availability of capacity and raw materials or purchase items
 There is a need to maintain these items stocks from which end products are produced
 One approach to manage these items by keeping high stock, but it becomes very costly
 An alternative approach to manage these dependent demand items by planning foe procurement or manufacturing as per the master production schedule
 The technique is known as materials requirement planning. It is a software in which MPS highlights the amount of raw materials ,parts, subassemblies needed to produce the end items in each time period
 From gross requirement of materials the net requirement of these materials is found by deducting inventory item available in store
 A schedule of orders is developed for purchase or manufacturing of items for a period of time

(refer exhibit 15.6 chase Jacob)

Operation of MRP system
MRP system has following elements
1.MRP system inputs:
 Master production schedule :specifies what end products are to be produced and when
 Bill of material file ( BOM) : provides information regarding all materials , parts and subassemblies to go into the end products
 Inventory status file: gives complete and up to date information regarding inventory on hand, gross requirements, scheduled orders

2.MRP system output:
 Planned order schedule: for purchase or manufacturing
 Inventory transaction data: issue or receipt of items
 Exceptional reports: require managements attention to control operations

Inventory status file

Inventory status
file Inventory transaction data
MPS file
Planned order schedule
BOM file Exceptional reports

Importance of MRP:
• MRP is a system which ensures well managed stock of material always on hand when needed without carrying excess inventory
• Highly dependent on computer technology
• This results in materials arriving exactly when needed for production and at the same time reduces the length of time when materials are held in stock
• MRP plans and controls goods on order and generates data for determining when and what specific materials will be needed to meet the previously planned production schedule
• MRP is useful when manufacturing environment is complex and uncertain, customers orders are erratic, lead time is uncertain
• MRP is useful for dependent and discrete demand items

Manufacturing resource planning (MRP II)
 When MRP is integrated to financial , accounting , personnel ,engineering and marketing information along with production planning control activities of basic MRP system, the broad based system is known as manufacturing resource planning
 MRP II is the heart of corporate MIS in many companies and provides information about inventory level ,plant capacity and need for expansion ,labour
Required, those are needed to co-ordinate marketing, financial engineering and manufacturing activities to achieve overall objectives
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ankitjain1983 is an unknown quantity at this point
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hi..can you please upload the .doc file for this helps in preserving the images..
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tonyukuk35 is an unknown quantity at this point
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hmm abstract seems good (; i should get it immediately...
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Kiran Kumar
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thanks a lot. going through it. hope it would be useful
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Pramod Kalkunte
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Abstract is good. Is there a document / PPT for the same?
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business, process, reengineering

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