Group 11 : Management Accounting Seminar

1510534002 Ramadhani Sardiman International Accounting

1510534013 Retno Ladyta Andalas University

Reaction Paper of Accounting for Time :

Reengineering Business Process to Improve Responsiveness

Process reengineering is redesigning or reinventing how we perform our daily work,

and it is a concept that is applicable to all industries regardless of size, type, and location. The
first question in process reengineering is “Why are we doing this at all?” Answering this
question is the beginning of the immediate, dramatic change and the application of supporting
technical and behavioral concepts and tools that are necessary to implement process
reengineering. To accomplish this, organizations must foster an environment that encourages
quantum leaps in improvement by throwing out existing systems and processes and inventing
new ones. The intent of process reengineering is to make organizations significantly more
flexible, responsive, efficient, and effective for their customers, employees and other
stakeholder.

Once you’ve learned about business process re-engineering (BPR), it’s easy to
wonder why you’d want to do it. After all, it can require some significant changes to your
organizational structure. Are the payoffs worth it, or are you spending time and money on a
process that will only bring a minimal amount of improvement?

The business process is required to be reengineered because of the following reasons :

The processes the company is using might have become outdated or holds no relevance in the
current market scenario; Often, the sub-divisions in the organization aims at improving their
respective division performance and overlook the resultant effects on the other departments.
This might lead to the underperformance of the firm as a whole; Due to the
departmentalization, each employee focuses on the performance of his respective department
and may overlook the critical issues emerging in other areas of the firm, and therefore, the
need for re-engineering arises so that the role of the employees could be broadened and shall
be made more responsible towards the firm; The existing business process could be lengthy,
time-consuming, costly, obsolete, therefore, is required to be redesigned to match it with the
current business requirements; The technology keeps on updating and in order to catch up
with it, reengineering is a must. Thus, the business process reengineering focuses on

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obtaining the quantum gains in terms of cost, time, output, quality and responsiveness
towards customers. Also, it emphasizes on simplifying and streamlining the business process
by eliminating the unnecessary or time-consuming business activities and speeding up the
workflow by making the use of high-tech systems.

Process reengineering is a valuable concept for organizations that are willing to

undergo dramatic change and radical process redesign. It can co-exist with ongoing gradual
process improvement efforts because not all processes can be radically redesigned at once. In
process reengineering, as in all improvement initiatives, assessments should be made in terms
of cost/benefit analysis, and risk analysis. However, even the assessments should be done
with a sense of urgency since process reengineering requires speed as well as radical
redesign. Documentation of results will serve as the baseline for future improvements.

Reference :

Young, S. Mark (MY). 2001. Readings in Management Accounting, 3th Edition. Prentice
Hall Inc. 2001.