(BMB OM02) Unit 1: Introduction to Business Process Re-engineering

Introduction to Business Process Re-engineering (BPR)

Concept of BPR

Business Process Re-engineering (BPR) means rethinking and redesigning business processes to achieve dramatic improvements in performance such as cost reduction, quality improvement, speed, and customer satisfaction. It focuses on how work is done within an organization and aims to eliminate unnecessary steps, reduce duplication, and use technology effectively.

In short:

BPR = Rethink + Redesign + Improve performance drastically.

Definition of BPR

Author	Definition
Michael Hammer (1990)	“BPR 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.”
Davenport & Short (1990)	“BPR is the analysis and design of workflows and processes within and between organizations.”

Simple Meaning: It’s about starting from zero and designing processes from scratch instead of making small improvements.

Evolution of BPR

Period	Development
1950s–1970s	Focus on automation and efficiency through mechanization and computerization.
1980s	Growth of Total Quality Management (TQM) and Just-in-Time (JIT); focus on continuous improvement.
1990s	Introduction of BPR by Michael Hammer; shift from incremental improvement to radical change.
2000s onward	Integration of BPR with ERP systems, IT, and digital transformation for faster decision-making.

In summary
TQM = Small continuous improvements
BPR = Big radical redesign

Objectives of BPR

Objective	Explanation
1. Improve performance	Achieve dramatic improvement in cost, quality, service, and speed.
2. Eliminate inefficiencies	Remove redundant steps and bottlenecks in business processes.
3. Increase customer satisfaction	Design processes keeping customer needs at the center.
4. Reduce cost and time	Simplify workflows to reduce processing time and operational cost.
5. Enhance flexibility	Make the organization adaptable to changes in the market.
6. Utilize technology	Use IT and automation to support redesigned processes.

Significance of BPR in Operations Management

Area	Significance
Productivity	Streamlines operations, increasing output with fewer resources.
Quality	Improves consistency and reduces errors through standardized processes.
Cost Efficiency	Reduces waste, rework, and administrative expenses.
Customer Orientation	Focuses on meeting customer expectations effectively.
Speed and Flexibility	Enables faster response to market and customer changes.
Technology Integration	Aligns IT systems with business goals for better performance.

Example: When Ford Motor Company re-engineered its accounts payable process, it reduced staff from 500 employees to 125, achieving a 75% efficiency gain.

Scope of BPR in Operations Management

BPR can be applied to all major functions within an organization:

Area of Operations	Example of Re-engineering
Production	Automating assembly lines using robotics and sensors.
Supply Chain	Integrating suppliers through ERP and SCM software.
Inventory Management	Using real-time inventory tracking to minimize stock levels.
Customer Service	Implementing CRM systems to handle customer issues efficiently.
Procurement	Shifting from manual purchasing to e-procurement platforms.

In short: BPR applies to any process that affects cost, time, quality, or service.

Key Features of BPR

• Focus on radical change, not gradual improvement.
• Emphasizes processes, not departments.
• Involves use of IT as a major enabler.
• Requires top management support and employee involvement.
• Leads to organizational transformation.

Benefits of BPR

• Reduced process time and cost
• Improved product/service quality
• Enhanced customer satisfaction
• Streamlined workflows and better communication
• Competitive advantage through innovation

Limitations of BPR

• High risk and cost of implementation
• Employee resistance to change
• Failure if not supported by strong leadership
• May lead to job losses and morale issues

Summary Table

Aspect	Details
Full Form	Business Process Re-engineering (BPR)
Introduced by	Michael Hammer (1990)
Nature	Radical redesign of processes
Goal	Dramatic improvement in cost, quality, service, and speed
Focus	Processes, not departments
Tools Used	ERP, IT, Workflow automation
Outcome	Efficiency, productivity, and competitiveness

Example Case - Ford Motor Company

• Old Process: Manual invoice matching between departments.
• New Process: Automated database linking purchasing, receiving, and accounts payable.
• Result: 75% reduction in staff and faster payment cycle.

Principles and Philosophy of BPR

Philosophy of BPR

The philosophy behind Business Process Re-engineering (BPR) is based on the belief that “incremental improvements are not enough.” Organizations must redesign their core business processes from the ground up to achieve dramatic improvements in performance.

In simple terms:

BPR focuses on rethinking how work should be done, not just improving how it is currently done.

The philosophy rests on radical change, customer focus, and use of technology as key enablers of efficiency and competitiveness.

Principles of BPR (Michael Hammer’s Principles)

Principle	Explanation (in simple terms)
1. Organize around outcomes, not tasks	Focus on the result, not on small tasks. One person or team should handle a complete process from start to finish.
2. Have those who use the output perform the process	If possible, let the end-user or customer directly perform or control the process (e.g., online ticket booking).
3. Integrate information processing into the real work	Don’t separate information collection and data entry—make it part of the work itself (e.g., employees entering data directly into the system).
4. Treat geographically dispersed resources as centralized	Use technology (like cloud or ERP systems) to manage global resources as if they are in one place.
5. Link parallel activities instead of integrating their results	Coordinate processes simultaneously rather than merging results at the end (e.g., design and production teams working together).
6. Put the decision point where the work is performed	Empower employees to make decisions instead of passing everything to higher management.
7. Capture information once and at the source	Enter data only once to avoid duplication and errors (e.g., one-time customer data entry used across departments).

Additional Supporting Principles

Principle	Meaning
Customer-Centric Design	Redesign processes around customer needs, not company convenience.
Use of Technology as an Enabler	Technology should simplify and speed up the process.
Elimination of Non-Value Activities	Remove steps that don’t add value to the customer.
Cross-Functional Teams	Encourage teamwork across departments.
Continuous Improvement Post-Reengineering	After reengineering, keep monitoring and improving.

Key Philosophical Beliefs of BPR

Belief	Description
Radical Change is Necessary	Small improvements won’t bring major results. A complete redesign is needed.
Processes are More Important than Functions	Focus should be on workflows, not departmental boundaries.
Customer is the Starting Point	All processes should begin with what customers want and end with their satisfaction.
Information Technology is a Key Driver	IT enables faster, smarter, and integrated processes.
People Empowerment	Employees should be empowered to make decisions and take ownership of their work.

Traditional vs. Re-engineered Processes

Aspect	Traditional Process	Re-engineered Process
1. Approach	Incremental improvement (small changes).	Radical redesign (complete transformation).
2. Focus	Departmental efficiency.	Process effectiveness across departments.
3. Structure	Hierarchical, top-down control.	Flat structure with team-based responsibility.
4. Process Flow	Sequential and slow.	Parallel, fast, and integrated.
5. Information Flow	Paper-based and manual.	Digital and automated through IT.
6. Decision-Making	Centralized with multiple approvals.	Decentralized and employee-empowered.
7. Objective	Maintain stability and control.	Achieve dramatic performance improvements.
8. Role of Technology	Supportive (back-office use).	Core enabler of process transformation.
9. Customer Orientation	Company-focused.	Customer-focused.
10. Change Nature	Gradual and evolutionary.	Sudden and revolutionary.

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Example: Traditional vs. Re-engineered Process

Scenario	Traditional Approach	Re-engineered Approach
Bank Loan Approval	Multiple departments review separately → takes weeks.	One cross-functional team handles end-to-end process → takes hours.
Order Processing	Manual paperwork, multiple approvals, delays.	Online automated system, real-time approval, faster delivery.

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Summary Table

Topic	Traditional Approach	BPR Approach
Goal	Incremental improvement	Radical improvement
Focus	Tasks, functions	End-to-end processes
Customer Role	Passive receiver	Active participant
Information	Slow and fragmented	Instant and shared
Technology	Supportive role	Strategic enabler
Change Speed	Gradual	Quick and dramatic

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In Short

• Traditional Process = “Do things better”
• Re-engineered Process = “Do better things”

Role of BPR in Enhancing Organizational Competitiveness

Business Process Re-engineering (BPR) helps organizations gain a competitive edge by redesigning processes to improve speed, quality, cost-efficiency, and customer satisfaction.
It allows businesses to operate smarter, faster, and more efficiently in today’s competitive market.

How BPR Enhances Competitiveness

Area	How BPR Helps	Example
1. Cost Reduction	Eliminates unnecessary steps and duplication in processes, lowering operational costs.	Toyota reduced production waste through process redesign.
2. Quality Improvement	Standardizes processes and uses automation to reduce errors and improve product/service quality.	GE used Six Sigma and BPR to improve product reliability.
3. Faster Response Time	Streamlines processes and reduces decision layers, leading to quicker customer response.	Banks process online loans within minutes.
4. Better Customer Service	Redesigns processes around customer needs and preferences.	Amazon uses AI-driven process design for faster deliveries.
5. Increased Productivity	Integrates technology and empowers employees to make decisions.	ERP systems reduce manual workload in retail companies.
6. Innovation & Flexibility	Encourages creative thinking and adaptability to market changes.	Apple restructured its design and supply process to launch products faster.
7. Integration Through IT	Connects departments using digital tools for real-time collaboration.	SAP ERP integrates HR, finance, and supply chain systems.
8. Global Competitiveness	Helps companies compete internationally by standardizing and digitizing operations.	Infosys reengineered its processes to serve global clients efficiently.

Key Benefits of BPR in Competitiveness

• Lower operational cost
• Faster service delivery
• Higher customer satisfaction
• Improved employee morale
• Stronger market position
• Enhanced innovation and technology use

Critical Success Factors (CSFs) for Effective BPR

For BPR to succeed, certain key factors must be present in the organization:

Factor	Description (in simple terms)
1. Strong Leadership and Commitment	Top management must support and lead the BPR process.
2. Clear Vision and Objectives	The organization must define what it wants to achieve (cost reduction, speed, customer service, etc.).
3. Customer-Centric Approach	Focus on improving value for customers, not just internal efficiency.
4. Effective Communication	Keep all employees informed and involved to reduce resistance to change.
5. Employee Involvement and Empowerment	Involve employees who understand current processes — their insights are valuable.
6. Use of Information Technology	IT is a key enabler for process automation and data integration.
7. Cross-Functional Teams	BPR works best when people from different departments work together.
8. Change Management	Proper handling of resistance, fear, and adaptation to new systems is crucial.
9. Continuous Improvement	After reengineering, processes must be reviewed and updated regularly.
10. Adequate Resources and Time	Sufficient financial, human, and time resources must be allocated.

Common Myths Related to BPR

Myth	Reality / Truth
1. BPR is the same as automation	❌ False – BPR uses technology as a tool, but its main goal is redesigning processes, not just computerizing them.
2. BPR means downsizing or layoffs	❌ Not true – The goal is efficiency, not reducing employees. It focuses on value creation, not job cuts.
3. BPR is a one-time project	❌ Wrong – It’s a continuous improvement journey, not a one-time fix.
4. BPR can be done without top management support	❌ Impossible – Leadership commitment is essential for success.
5. BPR only affects the operations department	❌ Incorrect – It impacts all business areas (finance, HR, marketing, IT).
6. BPR is only for large companies	❌ Myth – Even small and medium businesses can reengineer processes to improve efficiency.
7. BPR eliminates the need for human judgment	❌ False – It empowers employees with better data and decision-making tools.
8. BPR success is guaranteed if technology is used	❌ Not necessarily – Technology alone doesn’t ensure success; proper planning and people involvement matter.

Summary Table

Topic	Key Points
Definition	Radical redesign of core business processes for dramatic improvements.
Role in Competitiveness	Improves speed, quality, cost, customer focus, and innovation.
Critical Success Factors	Leadership, vision, IT, employee participation, change management.
Common Myths	Not about automation, downsizing, or one-time effort. It’s continuous and people-driven.

In Short:

“BPR makes a company faster, cheaper, and smarter by rethinking how work is done — not just by automating what already exists.”