8.1 The essence of Process Redesign

• Motivations and trade-offs of redesign.

Why Redesign?

• Business process redesign is about improving the quality of products/services by rethinking and re-organizing business processes.

  • If someone wants to improve the quality of a product/service from the perspective of a customer, the best way to go is to improve the related business process.
  • A customer-oriented organization becomes a process-centered organization.

• Why would anyone like to redesign business processes?

  1. All business processes evolve over time. (organic nature)
     • People who do the day-to-day operations are usually not inclined or equipped to start rethinking the overall processes.
     • People who do the day-to-day operations usually only know the activity they do, and before and after them.
     • Even managers are more concerned with the day-to-day execution than structural improvement.
  2. The world evolves.
     • New competitors
     • Different preferences of customers.
     • So when there is still a strategic incentive to keep offering a product or service, the best way to keep competitive is to do a process redesign.

What is redesign?

• Redesign = Any change to an existing progress.
• Framework of items to think about with process redesign
  1. The Customers of the business process (internal or external)
  2. The Business Process Operation view:
     • How a business process is implemented.
     • The number of activities that are identified in the process.
     • The nature of the activities.
  3. The business process behavior view:
     • How a business process is executed.
     • In which order activities are executed .
     • How the activities are scheduled and assigned for execution.
  4. The organization and the participants in the business process:
     • Organization structure (elements: roles, users, groups, departments, etc.)
     • Organization population (individuals who can execute activities)
  5. The information that the business process uses or creates.
  6. The technology the business process uses.
  7. The external environment the process is situated in.
• Process redesign extends to:
  • Processes
  • Organizations
  • External environment
  • Information
  • Technology
  • Products delivered to the customers
• Process redesign excludes activities such as training people for their new/edited activities.
• Not each business domain is equally suitable for (application/business) process redesign
  • Manufacturing domain: transforming raw materials to products using robots an sophisticated machinery.
  • Services domain: Mostly knowledge is involved in the processing of information to deliver a particular service.
  • Properties of service organizations:
    • Making a copy is easy and cheap (on paper or electronically).
    • No limitations on the in-process inventory (stored in a database, require not much space).
    • Less requirement with respect to the order in which activities are executed
    • Quality is difficult to measure.
    • Quality of end products may vary.
    • Transportation of electronic data is timeless.
  • More freedom in redesigning a business process in the services domain than the manufacturing domain.

The Devil`s Quadrangle

• Available directions for improvement
  • Time (lower is better)
  • Cost (lower is better)
  • Quality (higher is better)
  • Flexibility (higher is better) (How a process can deal with variation)
• Improving one property can decrease another.
  • Ex. Doing something what increases quality, adds more time to the production.
• Redesign Heuristics = Common approaches to improve business processes.

How to redesign?

• Levels of abstraction for methods for process redesign
  • Methodologies
    • collection of problem-solving methods with principles and a common philosophy.
    • Field of consulting firms which developed these.
  • Techniques
    • Precisely described procedures for achieving a standard task.
    • Ex. Fishbone diagram, pareto analysis etc.
    • Redisigning/ creativity techniques
    • Ex. Brainstorming, flowcharting, data modeling, role-playing, simulation etc.
  • Tools
    • A computer software package to support one or more techniques.
• Intensity of a methodology = Pace that one aims with changing the process.
• Starting point of the redesign effort:
  • OPTION A: Start from scratch
    • Easyer to get rid off the inefficiencies in the current process.
    • Better chance to create a new truly innovative process alternative.
  • OPTION B: From traits of the existing process that is to be redesigned
    • Most popular approach
    • No need to cover all exceptions, or to forget steps.
    • Level of detail is already inplemented.
  • OPTION C: Use a good general design (Reference Model)
    • Use of a blueprint or reference model.
    • Developed by consultancy and IT companies
    • Gives an up to date and standardized view on how to carry out a business process.