Beyond Industrial Engineering
R.P. Mohanty is General Manager at Associated Cement
Co. Ltd, Mumbai, India.
Abstract
Industrial engineering has been around for 50 years and has stood the test of time: BPR for less than ten. BPR has emerged because the world itself is now different – the pressures on organisations are much greater, having to compete in a global economy. Attempts to describe key features of BPR and factors affecting its successful implementation. Suggests ways in which BPR and IE may need to work together: the two are complementary rather than competitive.
Introduction
The major economic forces affecting countries and organisations over the last decade have been liberalisation, privatisation and globalisation (LPG). In turn, these have lead to a number of influences and pressures on national economies. Chief among these are the powers of:
• customers
• information
• global investors
• market place
• simplicity
• organisation.
The power of customers has been perhaps the most important factor shaping organisations. As a result, organisations have to continually learn, relearn and adapt to changing customers’ choice, and requirement. This power compels an organisation to move from a bureaucratic mode to a responsive mode of operation: to be flexible and lean, able to meet customer demands cost effectively. The power of information (largely arising from advances in communication and information
technology) can help an organisation in this continual learning and adaptation process. With the ability to transfer volumes of data globally from one organisation to another, knowledge networking and knowledge management becomes possible. The power of global investors offers a range of opportunities, no longer bounded by regional or national boundaries. Organisations can also develop by sourcing materials and other resources from a much wider area. The power of the marketplace generates fierce time-based competition. This either motivates an organisation to learn faster, to become better at providing quality and value – or it causes the complacent to fail. The power of simplicity is the move to streamline systems and procedures within the organisation and the move away from a ritualistic culture to an empowering and autonomous structure. This involves the reengineering/redesign of business processes and the forging of organic partnerships to eliminate delays and bottlenecks. The power of organisation is the ability to use self-knowledge, technology, and modern business practices to change the shape of the organisation. It is now possible to create much leaner, more agile organisations based on high performance teams.
In order to satisfy the needs of the customers and improve the performance of organisations, managers (often in partnership with consultants) have resorted to a variety of new methodologies and techniques including TQM, JIT, CIP, KAIZEN, BPR etc. Some, like BPR, have been in existence for some time and have gone through a number of development phases (and sometimes simply re-packagings). Thus BPR has spawned business restructuring, core process redesign, business process management, business process improvement, business transformation, etc. The attraction of BPR is that it can provide the means by which an organisation is able to achieve a radical change in performance. This is achieved by simplifying and streamlining the major business processes, by eliminating all redundant and non-value adding steps, by reducing the number of stages/transfer points of work and by speeding up the work flow – often through the use of information technologies and systems. Thus, fundamental attributes of BPR are that it:
• results in radical change;
• assumes clean slate change;
• focuses on end-to-end processes;
• is top-down directed;
• is information technology enabled.
The benefits of BPR may be simple and unidimensional, but are more likely to be complex and multi-dimensional. Often quoted benefits are improvement in: • Financial performance.
• Customer satisfaction
• Cost reduction
• Product/service quality
• Delivery performance
• Productivity
• Flexibility/responsiveness
• Process times
• Innovation
• Employee development
• Competitiveness
• Organisational flexibility
BPR involves consideration of fundamental questions such as :
• Why are we doing it?
• For whom are we doing it?
• Where should we do it?
• How do we organise and operate in order to do it? Those of you with long memories or a classical industrial engineering/work study education will recognise these as being extraordinarily similar to the basic questions of method study. So, what is the difference between “classical IE” and BPR? Is BPR more than a re-packaging of the old methodology.
Characteristics of BPR
Work that has been subject to BPR should:
• be performed where it makes sense;
• be subject to minimal checking and control;
• involve single activities which were previously distinct and separate;
• focus on the process and not the functional activity;
• involve multi-dimensional jobs;
• be performed by empowered individuals and teams;
• be measured by outcomes and not activity levels;
• be lead by coaches, not traditional supervisors;
• take place within a flat structure;
• be managed by leaders, not scorekeepers.
This is often the result of a much more holistic review than would have been achieved by “simple” method study.
The need for BPR The Indian economy, and organisations within it, are experiencing the same pressures for change as elsewhere, though, of course, with a particular “spin” resulting from its own culture and history. Thus, there are changes in:
• demographics;
• social values;
• the economic environment;
• the information technology available.
These pressures lead to four main imperatives:
(1) manage costs;
(2) improve quality;
(3) improve service levels;
(4) speed up actions.
Although these sound simple, actual projects and change processes involve complex interrelationships between a number of factors. Change projects involve a:
• structural dimension;
• management dimension;
• people dimension;
• system dimension.
All this is taking place in (and as a result of) a transition from a “providers’ market” to a “consumers’ market” in which the battle for customers’ business and loyalty is fought on the basis of:
• price;
• reaction time;
• quality;
• performance.
Traditional organisation structures (built as “vertical silos”) did have some advantages. The clear specialisation and intense supervision meant that an organisation could make extensive use of simple, uneducated, unskilled workers to accomplish most tasks. Everyone had responsibility for one limited aspect of the task; the higher levels, (control of) the system was maintained through a bureaucratic chain of command. This advantage – of the ability to exploit unskilled labour – was outweighed by the inherent inflexibility of those workers – and therefore of the organisations themselves. There was a natural tendency for no one person to take responsible for the whole process, for errors to occur, and for the control bureaucracy to lead to long process times.
TQM, JIT and BPR
These shortcomings have been addressed by some of the more modern approaches to process and work organisation. Of these, it is BPR that specifically attacks core business processes. (A core business process is a set of interlinked activities that crosses functional boundaries in addressing the needs and expectations of the marketplace.) BPR differs from TQM and JIT in the following significant ways:
• The adoption of TQM and JIT, though resulting in the re-balancing of operational activities and the removal of bottlenecks, fail to address the organisation barriers to performance improvement – the bureaucratic nature and ritualistic pattern of operating the business.
• BPR is predicated on a re-definition of operational excellence (and destruction of old tenets and values) to provide both internal drive and an external focus.
• BPR pushes the JIT and TQM approach both upstream and downstream to the customer and supplier (end-to-end) in order to either add (additional) value in the supply chain or to penetrate into markets more aggressively. • BPR requires corporate leaders to challenge the very purpose, principles and basic assumptions on which current systems are founded.
• TQM and JIT often fail to break down functional barriers. Of course, BPR, as a strategic cross-functional initiative can take advantage of others – including TQM and JIT. No approach should be omitted, no tool should be left unused. Competitiveness is a complex result of competitive assets and competitive processes. Perhaps, BPR, in embracing these other tools and techniques, can be considered as “TPQM” i.e. “total productivity and quality management”.
Key elements of BPR
In reviewing processes, there must be a completely fresh look at all the elements that make up the process: the people, the management/ leadership, the organisational structure and culture, the technologies – all in the context of the outcomes. What is the process designed to achieve?
People
It is axiomatic that people are the greatest asset to any enterprise. Too often, however, this is merely empty rhetoric. Companies that seek to create and pursue new paradigms, and attempt to remove functional barriers by redesigning process-driven workflows cannot hope to do so without the active co-operation of the workforce. The aim is to move beyond “empowerment”, to the development of truly “renaissance” employees who can move from one business process development team to another, using their skills and knowledge to enhance the performance of any project (gaining increased satisfaction for themselves along the way). Organisational culture The symbiosis of belief and value systems, and their interaction with and influencing of behavioural transactions is the essence of organisational culture. The kind of organisation that is more likely to succeed with a BPR initiative is one that already has a high degree of:
• inspirational leadership – that can articulate a vision, drive the values and create a harmonious climate in which business unit executives, managers, and line personnel.
can all share commitment and flourish equally;
• shared values;
• teamwork at all levels;
• connectivity between the various stakeholders – employees, shareholders, customers and suppliers;
• desire to dominate the market.
Management and leadership
Executives involved in BPR must take on the role of builder. Re-engineering demands new structures to replace existing non-responsive monolithic structures. This structural change must be accompanied by an appropriate culture. Changing culture requires a long-term commitment, leadership by example and an understanding of the all-embracing nature of culture. Changing culture is not for the fainthearted!
Organisation structure
The concept of a re-engineered organisation requires the structure to be closely related to, and underpinning, the cultural change required. This normally involves a shift from a mechanistic organisation to an organic one (and it is such change that helps distinguish the BPR approach from the classical IE approach) see Table I. This kind of shift obviously has tremendous implications for human resource management and development – including the development of industrial engineers! They need to exhibit:
• Systems thinking – they must be able to take a holistic view, to integrate hard and soft information, to combine analysis and intuition and balance the varied and multiple interest of the various stakeholders.
• Inter-cultural competence – both within and without the local organisation. As organisations become increasingly global and increase their dependence on other economies, an understanding of, and sensitivity to different cultures becomes an important requirement.
Performance indicators
Since reengineered processes are transfunctional, most (previous) key performance indicators are inappropriate. Concentration on outcomes, and on core processes actually simplifies performance measurement. Resulting measures should be clear and simple, such as:
• quality;
• lead time;
• cost;
• service.
Tools and techniques of BPR
The essential tools of BPR are the same ones that are needed and exploited in a range of productivity and quality improvement methodologies. The chief “technique” (if only life and BPR were that simple) is to manage change. Change is invariably perceived as a threat to existing ways of working and to job security. Industrial engineers, historically have been “change agents” advising on changes in methods, systems, procedures etc. Their approach has been rooted in strong technical skills. If BPR is to be successful, those strong technical skills have to be married to a strong understanding of the needs of the customer (at all stages of a process) and of the concerns and fears of those involved in the process. Systems analysis, value analysis, target costing, simulation, optimisation, method study, organisational analysis, scenario planning, environmental scanning, cause-effect analysis, faulttree analysis, bench marking etc. all may play their part – often simultaneously – but in the context of the transformation of people’s jobs, roles and place in society.
Implementation of BPR
It is useful to categorise processes and activities according to their perceived (or real) value, and to the costs they consume. Low value-added processes should obviously be removed or re-designed – especially if they are high cost. If, for some reason, it is not possible to eliminate them, a cost reduction exercise should be undertaken. Processes that deliver high value but at the same time incur high cost should be examined for innovative approaches to changing the ratio! Even processes that have high value and low cost should not be excluded from review: these may be the source of restructuring or re-investment to bring dramatic improvements in value. Within process reviews, the aims are to achieve dramatic cost reduction, to become “best in class” and to find “breakpoints” – where the rules of the game are actually changed and “the class” itself is changed. Others then have to emulate this new standard – clear evidence of superior performance in one or more value metrics clearly.
Mechanistic model (classical IE based) Organic model (BPR based)
Hierarchical and bureaucratic management Flattened and shortened chain of command
Vertical division of labour Decentralisation and devolution of responsibility
Centralisation of most divisions and of decision making, and fixation of process accountability
Separation of categories by status (manual workers, Blurring of status differences and trend towards
office staff, managerial staff, etc.) more equal status: creation of multifunctional process teams
Atomistic analysis of work and division of labour Enlargement and enrichment of tasks/trend towards
a more professional division of work
Concentration on core processes and outsourcing of
peripheral/support activities
Strict compartmentalisation of functions and services Close integration up and down stream between
functions like research, development, production
and distribution.
Concept of supply chain
Research, development, design and production Structures differentiated by product and product functions are differentiated one from another – lines division and functional structures Concept of value chain
Specialisation and compartmentalisation of Multi-disciplinary team working knowledge
Losse ties with suppliers Connectivity with suppliers and subcontractors Loose ties with consumer Great sensitivity to market demand, to buyers and consumers, and all stockholders, Standardisation products and production processes Structural, technological and organisational flexibility
Overall routines and rigidities Flexible thinking Formalised practices Continuous search for innovation and added value Structural inflexibility Production management is central Human resources development is central Conflict-based industrial relations Consensus-based partnership knowledge, skills, confidence and the right attitude. These staff are available and accessible at all “reasonable” times. A real breakpoint leads to new finishing lines for competition and changes the rules of the corporate Olympics! Searching for these breakpoints through BPR may be considered in three phases.
Phase 1: Discover
During this phase, the company may analyse current performance but more importantly it also discovers its own mission, values and strategic aims – and hence identifies the core processes that add the required value. It, in effect, decides what BPR must achieve.
Phase 2: Redesign
This is the major stage of innovation – using all appropriate investigative and creative techniques,
involving input from a wide variety of people. Ideas are generated and validated. It is here that any breakpoints will be created! This phase must end with a commitment to the change to be made.
Phase 3: Realise
The ideas now have to be translated into real results. This is often the hardest phase – of managing the change, of coping with resistance, of leading into the unknown. There must also be a realisation that BPR is
(hopefully) a revolutionary process – but it must be supported by evolutionary activity. A BPR exercise should try to create a culture, and a facilitating framework, for continuous improvement.
Evaluation of BPR
BPR is a comprehensive change management programme. Too often, companies introduce change management programmes in haste without making proper preparation – perhaps because they are the latest management “fad”. However, there is often only one chance to make real revolutionary change. Although
there is an urgency in the need for transformation in Indian organisations, most of them are not in a position to implement BPR. They mostly lack appropriate knowledge of the basic methodologies and tools, and although they can import this knowledge by employing consultants, they are often too naive to fully enter
into such a project and give the real commitment vital for success. Organisations are ready to implement BPR when :
• They have an appropriate mind-set. This arises from having a combination of the right values, structures, and performance measures that can drive and support change through the existing authority structure of
the organisation.
• There is a sense of urgency for abrupt change. This may be necessary if the organisation needs to redefine the business mission, shake up the existing power structure and/or delayer the existing senior management.
• They recognise, and want to emulate, industry leaders. This strategy can be used to bring about quick changes by identifying and following best industry practices (perhaps by benchmarking and other inter-firm
comparisons).
• They can direct efforts in multiple dimensions. Organisations with very strong core competencies plan their BPR efforts across a broad set of fronts. They design it top-down, focusing primarily on a number of direct
issues to generate the maximum immediate financial impact, and then move forwards to indirect and support issues.
• They can re-design systematically. A major contribution to BPR is the systematic, planned intervention in which efforts are made to analyse, investigate and redesign issue by issue – and then seek integration.
• They can mobilise front-line, high performance action teams. It is important to supplement top-down initiatives by promoting change by means of front-line problem solving teams. Conversely, BPR is likely to fail when:
• There is no compelling imperative for change.
• There is a lack of involvement of most people in BPR because it is seen as just another management-led initiative.
• Organisational power politics restrict the inputs of those with important knowledge or with a major stake in the success.
• Managers are simply looking for a quick fix.
• There is insufficient investment in either IT, IS and/or HRD. No attempt is made to build the organisation’s capacity to sustain change and on-going improvements in the long term.
BPR, like IE, involves the application of scientific thought to the solution of organisational problems. However, BPR can be said to have a broader charter: the integration of knowledge throughout the total organisation as a source of sustainable competitive advantage. The power lies not in knowledge but in the ability to use knowledge for the benefit of the stakeholders. BPR, by the very nature of its process orientation, requires executives to evaluate knowledge potential, interdepartmental cooperation and
teamworking abilities. However, executives have not developed appraisal systems to measure
the so-called unmeasureables. Traditional measures used as the basis for appraisal will prove both seductive as well as deceptive. Seductive, because organisational development interventions are often conditioned to focus on financial returns and other outcomes, but not on processes to maximise value. Deceptive, because the limited ability to measure improvements in internal processes, often relegates process issues to secondary importance. Summary
Industrial engineering as a discipline has been around in a number of forms and under a number of titles for the last 50 years. It has primarily been concerned with:
• the pursuit of organisational efficiency through methods improvement and resource-saving;
• organizational reform through business, market and technology development. BPR today borrows much of the approach of traditional IE. However, its aspirations are
much higher. BPR aims not simply at reform and improvement, not at evolutionary change – but at a total transformation of the organisation. IE is certainly not dead – BPR needs the important underpinnings of IR, and needs IE to maintain the results of the BPR exercise and to support the subsequent phase of continuous improvement.
