Reengineering : An Imperative Reengineering : An Imperative

for Survival
INTRODUCTION
Indian companies forced to change themselves if they are to
be included in the new world
In the Post Liberalization & Post protectionist market :
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be included in the new world
Changes are needed because of :
Inefficiency : an inevitable gift from protected market
Too much short-sightedness : myopia?
Unchecked, unbridled & unnecessary growth in
size resulting in the creation of inflexible & unwieldy
behemoths : Is this why dinosaurs became extinct?
INTRODUCTION (contd.)
Mercifully, the answer is an emphatic NO
Is this change phenomenon restricted to Indian companies only?
Even Ford Motor Co. once faced business extinction
One process that has been indicated as a major source
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One process that has been indicated as a major source
of survival & success is BUSINESS REENGINEERING
Coined by Michael Hammer
WHAT IS IT?
BUSINESS REENGINEERING is the fundamental rethinking and
radical redesign of business processes to achieve dramatic
improvement in critical, contemporary measures of performance,
such as cost, quality, service and speed
INTRODUCTION (contd.)
Mercifully, the answer is an emphatic NO
Is this change phenomenon restricted to Indian companies only?
Even Ford Motor Co. once faced business extinction
One process that has been indicated as a major source
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One process that has been indicated as a major source
of survival & success is BUSINESS REENGINEERING
Coined by Michael Hammer
WHAT IS IT?
BUSINESS REENGINEERING is the fundamental rethinking and
radical redesign of business processes to achieve dramatic
improvement in critical, contemporary measures of performance,
such as cost, quality, service and speed
INTRODUCTION (contd.)
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USA : THE REENGINEERING IMPERATIVE
Henry Ford : I WILL GIVE THE CUSTOMER ANY COLOR HE
WANTS SO LONG AS ITS BLACK ! Why did he succeed?
The Business Climate that necessitated Reengineering in the USA
Less Competition => products had a willing customer
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Practically Nil Global Competition
The Assembly Line Model of Production ideal for
customers who waited in line for delivery
WHAT WERE THE JAPANESE DOING WHEN
USA WAS WIELDING MIGHTY INDUSTRIAL
POWER (1960S) ?
Rebuilding their economy piece-by-piece
USA : THE REENGINEERING IMPERATIVE (Contd.)
They realized, early on, that to become a major economic
power theyll need to step out from their small market into a
global market
Why were the Japanese smarter than the Americans?
They embraced QUALITY as the foundation of their
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They embraced QUALITY as the foundation of their
manufacturing philosophy
They were the harbingers of waste-minimization
techniques like JIT INVENTORY, MULTIPLE SUPPLIERS, &
EXTERNAL INSPECTION
WHAT WAS THE RESULT?
The world started noticing that the Japanese can
provide high quality / low cost products on a regular
basis to the world markets
USA : THE REENGINEERING IMPERATIVE (Contd.)
Economies of Time > > Economies of Scale : respond quickly
to changing customer needs
The Japanese advantage lay in the adopted paradigm:
Introduction of Multi-skilling : Discarding the concept of
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Introduction of Multi-skilling : Discarding the concept of
division of labor & functional specialization
Primary objective moved to Customer Response from
Customer Growth : thus, they won the battle in the
customers mind !
HOW DID THE AMERICANS RESPOND WHEN THEY REALIZED THAT
EXTANT BUSINESS PROCESSES COULDNT BE SUSTAINED?
American CEOs embarked on a radical redesign of Business Processes :
LEANER, FLATTER, COST-CONSCIOUS, TIME-CONSCIOUS, CUSTOMER-
ORIENTED organizations emerged
EUROPE : THE REENGINEERING SCENARIO
Order Delivery Time reduced from 42 days to 19 days
REENGINEERING EXAMPLE # 1: A LARGE OIL COMPANY (Lubricants Div.)
Inventory holding costs reduced by $200 million p.a.
Ultimate aim is to reduce operating expenses by 35% by
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Ultimate aim is to reduce operating expenses by 35% by
reengineering the entire supply chain business process
Aim is to fulfill 90% of customer orders within 2 weeks
REENGINEERING EXAMPLE # 2: ROVER (A Car Manufacturing Company)
Focus was on reengineering 9 key business processes,
ranging from new product introduction to business
planning
As a result, Rover was the only European car-maker to
reverse the falling output and sales trend (during the first
5 months of 1993)
INDIA : THE REENGINEERING IMPERATIVE
Terms like TQM, ISO, Corporate Restructuring etc. relatively new terms in India
Terms got introduced with sighting of competition on the corporate horizon
THE ROLE OF IT : The Essential Enabler for Reengineering
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THE ROLE OF IT : The Essential Enabler for Reengineering
Computers are in India since the early 1970s, but the full
potential was never exploited
Typically, the attempt has been to fit I T to existing
business processes and not vice versa
INSTANCES OF REENGINEERING IN INDIAN ORGANIZATIONS
A Leasing & Finance Company in South India that reengineered
the sales closing process : Now sales concludes in 1 day as
EXAMPLE # 1
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the sales closing process : Now sales concludes in 1 day as
opposed to the previous 7 days
EXAMPLE # 2
A Manufacturing Company in Western India that brought down
order fulfillment process from 8 weeks to 8 days
INSTANCES OF REENGINEERING IN INDIAN ORGANIZATIONS (contd.)
Co. XYZ : CONSUMER DURABLES MANUFACTURING COMPANY
REAL LIFE EXAMPLE
Distributed its products through door-to-door salespersons, who
booked orders
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booked orders
Orders were sent to the branch office, which were then sent to
nearest depot for dispatch of ordered goods
Concerned Salesperson would return to customer; present the
invoice and collect payment
Once in 6 months, a market researcher would gather customer
feedback
INSTANCES OF REENGINEERING IN INDIAN ORGANIZATIONS (contd.)
REAL-LIFE EXAMPLE
ORDER INFO
INVOICE
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ORDERS
DISPATCH ORDERS
GOODS
PAYMENT
INSTANCES OF REENGINEERING IN INDIAN ORGANIZATIONS (contd.)
Co. XYZ : TOOK HARD LOOK AT PERFORMANCE LEVELS OF 3 MAJOR
PROCESSES :
REAL LIFE EXAMPLE : THE REENGINEERING EXERCISE
1. Customer Orders : Took too long to procure, record and
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1. Customer Orders : Took too long to procure, record and
transmit for execution
2. Customer Service : Error-prone, time consuming and suffered
from stock-out problems
3. Customer Feedback : Not regular, done only on a sampling
basis
INSTANCES OF REENGINEERING IN INDIAN ORGANIZATIONS (contd.)
Co. XYZ :
REAL LIFE EXAMPLE : THE REENGINEERING EXERCISE
Only One Customer Executive, performing a triple role :
salesman, services/installation technician, & market researcher
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salesman, services/installation technician, & market researcher
Hand-held terminals provided to each for booking orders,
providing service / installation, & recording customer
response / feedback
Customer Executive sending orders to the nearest depot, that
doubles up as offices
Such depot-cum-offices maintaining liaison with Regional
Marketing Manager
Information Technology capabilities fully exploited
INSTANCES OF REENGINEERING IN INDIAN ORGANIZATIONS (contd.)
Co. XYZ :
REAL LIFE EXAMPLE : THE REENGINEERING EXERCISE
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ALL PERFORMANCE PARAMETERS
IMPROVED BY MORE THAN 200%