Business Process Reengineering for Competitive Advantage - MBA Knowledge Base (2022)

In business processes reengineering all the outdated processes of the business are redesigned along with the connected systems and entity’s structures with an aim to reach at a remarkable performance level along with business improvements. The corporate basis for creating these changes possibly will comprise deprived performance in terms of competition, financial aspects and reduction of market share of emerging market opportunities. Business process reengineering just not mean to introduction of new technology, automation, reorganization, and downsizing of business process etc but also involve change assessment various business components such as culture, entity, technology, processes and strategies.

(Video) Business Process Re-engineering explained - Simplest Explanation Ever

The relationship between a company and its customers is not limited to just the buying and selling of a product or service. It has gained new dimensions and expanded from the buying and selling of products and services to a whole range of business practices form customer service, consulting and pricing to production and distribution. Customers have become increasingly selective due to the availability of a wide range of products and services. These changes in the market place have forced companies to rethink about their business processes. Business process reengineering (BPR) makes companies more customers focused and responsive to changes in the market place. These results are achieved by reshaping the corporate structure around the business processes. Business process reengineering (BPR) achieves this transformation, not by automation of the business processes, but by rethinking the company’s tasks in a holistic and process oriented manner.

(Video) BPR principles and Methodology

The various stages that a typical business processes reengineering implementation program goes through are:

(Video) ACCA P5 Business Process Re-engineering Revision Theory

  1. Identify the needs for the BPR package: The first stage involves the identification of the needs to be satisfied by adopting the BPR package. Once these needs are identified, organizations can evaluate how ERP implementation can help satisfy these needs. Transforming the labor and machinery based productivity into knowledge and information based productivity can be the examples of the needs that a BPR can satisfy.
  2. Evaluating the “as-is” situation of the business: The next stage involves the identification of various processes involved in the working of the organization. Then, the detailed processes in business activities should be listed. Process mapping can be helpful in detailing the processes. It provides information about the time taken to complete a process, the number of decision points, the number of reporting points and flow of information, etc.
  3. Decisions about the desired “would-Be” situations for the business: Once the structure of the current processes is identified, the next stage involves the identification of the desired attributes for each of the processes. Performance standards are set for each process by using benchmarking techniques. Benchmarking ensures that the desired organizational attributes are comparable with the best business practices in the industry.
  4. Reengineering of business processes to achieve the desired results: In order to achieve these desired standards in business processes, organizations need to reengineer their current processes. The objectives of business process reengineering including reducing the process cycle time, reducing the number of decision points, optimizing the information flow between different functions and departments, etc.

To gain competitive advantage, organizations should understand the scope of a particular market and identify the various inherent differences between various markets. They need to understand what is required to become qualifiers and order-winners. Qualifiers are the most basic attributes that an organization must possess before any customers will decide to deal with them. For instance, ISO standards have become on e of the key qualifiers for any organization with global markets. Qualifiers provide the initial impetus to customers to deal with an organization but, in order to close a deal, organizations must have order-winners. The order-winners could be price advantage, quality, etc. BPR enables the organizations to optimize and organize different qualifiers and order-winners by redesigning the complete processes so as to gain competitive advantage in the market.

(Video) What is Business Process Reengineering?

Some of the order-winners and qualifiers, which apply to most companies, are discussed below:

(Video) Business Process Reengineering #BIS #ShihabudheenKK

  1. Price: As price is one of the key order-winners in most markets, the BPR package can help identify the cost centers and assist in redesigning processes to reduce production costs. Setting up tough cost targets and putting in place a rigorous monitoring system can help a company become cost-efficient. Therefore, BPR implementation should focus on the areas in which significant costs are involved so that appropriate resource allocations can be made and management attention can be focused on them. When a company uses price reduction as an order-winner, it should also change its corporate strategy accordingly. It needs to assess changes in lead-times, investment implications and cost-reduction potential in several areas. Without assessing these factors, the changes in the strategy will be inappropriate.
  2. Delivery reliability and speed: Delivery reliability has also become one of the criteria on which customers judge an organization’s competitiveness. BPR can make more efficient the procurement and distribution activities and reduce the process lead time involved in purchasing the raw materials and distribution of finished products. BPR helps to reduce the time in coordinating activities among all the entities of the supply chain through the smooth flow of information between them. With the help of BPR, the lead time required to process an order is reduced significantly. The need to provide information to customers and suppliers has forced BPR vendors to implement their applications with e-commerce also.
  3. Quality: The concept of quality no longer denotes just a state of being free from defects. Today, quality encapsulates many dimensions like performance, features, reliability, conformance, durability, serviceability and aesthetics. BPR by its redesigning capabilities can bridge the gap between the existing process and the implementation of the best process can help an organization achieve its quality objectives.
  4. Product range: In today’s competitive world, organizations need to provide products in different shapes and sizes that satisfy the requirements of the different segments of the markets. They need a variety of products in their product line. But as the product range increase, the cost and time of production increases due to the modification of production process to accommodate the changes required for each product range. BPR, through reducing the process defects and be making the old labor and machinery system to knowledge and information systems, help in integrating the functionalities and a common database, enhances the capabilities that assists organizations in this direction.

Business process reengineering is different from other IT systems/models in that its implementation is not restricted to a single functional domain. In order to take full advantage of the profitable benefits of the BPR package, organizations may/need to follow the guidelines given below:

(Video) Chapter 8.6 ll Business Process Reengineering ll SM for CA IPCC / INTER

  1. Define corporate needs and culture: In order to implement a BPR system successfully, a complete overhaul of the business organization is needed. Organizations should assess their readiness for change and the possibility of the implementing change in the organization. The level of difficulty in bringing about change depends on the amount of change involved. Project leaders should assess the level of difficulty they are likely to face. The top management should provide complete support for the implementation of the BPR package. Implementing a BPR package may also involves the redefinition of the roles of different functional departments, and the authority and responsibility of individuals throughout the organization.
  2. Complete business process change: The organization should be aware of the required changes in business process and skills and attitudes for BPR implementation. It may have the willingness to adopt changes but may not be able to assess the implications of the changes. Therefore, the organization should undergo a brief business process redesigns exercise before the actual implementation. The redesigning exercise should be carried out on the basis of the structure of the BPR package, so that there is no mismatch between the required functionalities and the functionalities provided by the BPR package.
  3. Communicate across the organization: Communication allows different entities involved or affected by BPR implementation to be aware of its effects on their jobs. Proper communication optimizes the implementation process, as the employees are aware of what is required of them. Besides, feedback provides the management with information needed to allay the concerns of the employees. Communication should not overstate or understate the functionalities of the new system. Overstating the functionalities would raise employees’ expectations unrealistically, while understating them may leave employees unprepared for the changes required for BPR implementation.
  4. Provide strong leadership: Strong leadership is an important success factor in implementing a BPR package. The difference between and informal support and active leadership can be the difference between the success and the failure. Therefore, the members of the steering committee members should be able to understand the business redesign and integration. Though these may be complicated processes, the right modeling tools can help them make simpler to follow. The steering team should be trained in process mapping and reengineering methodology and it should be fully involved in the process redesign so that it can guide the team members (implementation team) properly.
  5. Select a balanced team: The size and complexity of BPR implementation and maintenance necessitates a balanced team of professionals. In general, the BPR implementation team consists of personnel from IT, finance, marketing, sales and production. Most companies hire external BPR consultants who provide information about the operational aspects of the new BPR system and assist the internal team.
  6. Select a good method of implementation: As the implementation of a BPR package involves the participation of all the departments, a proper sequence of steps should be identified to define the implementation process. Project leader should set the milestones to be achieved in the various phases of the implementation and review progress continuously against the milestones. They should define clearly the scope of the project and develop the work breakdown structure (WBS), and estimate the time required to complete each activity identified in the WBS. This will help them reach a realistic project plan. They need to ensure that there is no compromise with the quality of the new process/system.
  7. Organization-wide training: BPR is a complex and organization wide system that requires some amount of training so that full advantage of the capabilities of the new process can be taken. The steering team should be trained in process analysis and redesign. The staff in the information technology department should be made aware of the package architecture, design and configuration. Functional managers should learn how the new process performs and how it can be useful in the decision-making process. The training varies across the different levels, and is based on the requirements of the persons using the new system or process.

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(Video) Business Process Reengineering Tips

FAQs

What are the 7 phases of business process reengineering? ›

Also called Business Process Redesign, it's an approach to structurally changing your process workflows. What are the 7 steps of BPR implementation? Vision, Hypothesis, Mining, Design, Simulation, Go Live, and Monitoring.

What are the five key principles of business process reengineering? ›

5 Key Factors in Making a Business Process Reengineering Initiative Successful
  • Agency/Leadership Commitment and Sponsorship. ...
  • Inclusion of the Right People. ...
  • Clear Understanding of the Business Needs. ...
  • Crucial Change Management. ...
  • Ongoing Continuous Improvement.
11 Feb 2020

How does business process reengineering contribute to the competitiveness of the company? ›

Increased competitiveness – BPR can give businesses a competitive advantage by improving their process efficiency and quality. Increased productivity and efficiency – BPR can help companies to achieve higher performance levels by streamlining processes and eliminating wasteful steps.

What are the competitive advantages of using business processes? ›

Companies that have implemented business process management (BPM) strategies have seen many benefits: increased control; cycle time predictability; improved visibility into processes; improved morale; fewer manufacturing errors; greater throughput; and more.

What is the main principle of Business Process Reengineering? ›

A major aim of BPR is to analyze workflows within and between business functions in order to optimize the end-to-end business process and eliminate tasks that do not improve performance or provide the customer with value.

What is BPR methodology? ›

The traditional definition is that Business Process Reengineering Methodology involves the radical redesign of core business processes to achieve dramatic improvements in productivity, cycle times and quality.

What are the four basic components of process reengineering? ›

4 Components of an Organisation for Business Process...
  • Leader of BPRE Team: ...
  • Process Owners: ...
  • Reengineering Teams: ...
  • Non members (other employees) involved in the reengineered process:

What is the most important factor in BPR success? ›

According to the results, having the BPR project motivated by customer demand and competitive pressure, on the average, is considered to be more important for project success than the use of industry specialists or other outsiders.

What is importance of re engineering? ›

Benefits of reengineering business processes

Through reengineering, companies can identify materials, production processes, and equipment contributing to waste in the company. Similarly, reengineering helps identify redundant roles among staff, which companies can merge or remove.

What is business process reengineering with example? ›

Business process reengineering is the act of recreating a core business process with the goal of improving product output, quality, or reducing costs. Typically, it involves the analysis of company workflows, finding processes that are sub-par or inefficient, and figuring out ways to get rid of them or change them.

What are the 4 competitive advantages? ›

The four primary methods of gaining a competitive advantage are cost leadership, differentiation, defensive strategies and strategic alliances.

What are the 6 factors of competitive advantage? ›

Competitive advantages are attributed to a variety of factors including cost structure, branding, the quality of product offerings, the distribution network, intellectual property, and customer service.

What are the 5 areas of competitive advantage? ›

Five types of competitive advantage
  • Cost-based advantage. This is the most obvious way of achieving competitive advantage. ...
  • Advantage from a differentiated product or service. ...
  • First mover advantage. ...
  • Time-based advantage. ...
  • Technology-based advantage.

What is re engineering explain? ›

Re-engineering is the examination and alteration of a system to reconstitute it in a new form. This process encompasses a combination of sub-processes like reverse engineering, forward engineering, reconstructing etc.

What is the first phase in BPR? ›

BPR Cycle: Plan, Discover, Analyze, Re-Model and Implement are the five steps of BPR. BPR implementation completes in three phase; first phase-process consulting, second phase-change management, and third phase- project management.

Which of the following is the concept of reengineering? ›

Reengineering is most commonly defined as the redesign of business processes—and the associated systems and organizational structures—to achieve a dramatic improvement in business performance.

How do you implement BPR? ›

Five steps of business process reengineering (BPR)
  1. Map the current state of your business processes. ...
  2. Analyze them and find any process gaps or disconnects. ...
  3. Look for improvement opportunities and validate them. ...
  4. Design a cutting-edge future-state process map. ...
  5. Implement future state changes and be mindful of dependencies.

What are the requirements for re engineering? ›

The key requirements for successful reengineering are: clear definitions of objectives and methods; realistic expectations about results and requirements; appropriate sponsorship; a project scope commensurate with the sponsorship; adequate resources; speed in execution; and balance.

What are the six critical success factors for re engineering? ›

The factors are teamwork and quality culture, quality management system and satisfactory rewards, effective change management, less bureaucratic and participative, information technology/information system, effective project management and adequate financial resources.

Why is BPR necessary? ›

BPR allows companies to redesign their processes by enabling cross-functional teams to work together to determine areas of improvement and ways to optimize them for maximum value.

What causes business process reengineering to fail? ›

BPR process may fail due to change management and factors including are; problems with communication i.e. change may not be communicated properly, failure may be due to poor communication or lack of reward and motivation, resistance to change is one of the common factor faced by most of the organization and one of the ...

What causes business process re engineering fail? ›

Planning Requirements

A root cause of failure amongst many BPR projects in the past has been poor planning. Planning is as necessary to BPR as air is to you and I – BPR will not work without adequate planning and preparation. Existing processes must be analyzed and measured rigorously.

Who developed the concept of business process reengineering? ›

Business Process Reengineering was first developed by Michael Hammer, a former MIT professor, in the 1990s. [1] He argued that a "radical redesign" of business processes was needed to keep up with the fast-paced changes in markets and technology occurring during that decade.

What are the three phases of BPR describe each? ›

BPR includes three phases; analysis phase, design phase, and implementation phase. It is also referred to as business process redesign, business process change management, and business transformation.

What are the barriers to the success of BPR? ›

Following inadequate approach, affected people not informed, culture of construction firms, using inappropriate tools, using external consultants, undefined core processes, and fear and resistance to change are the most important barriers to successful BPR endeavours.

What do you mean by business process? ›

A business process is a collection of linked tasks that find their end in the delivery of a service or product to a client. A business process has also been defined as a set of activities and tasks that, once completed, will accomplish an organizational goal.

What are the 3 types of competitive advantage? ›

Michael Porter, the famous Harvard Business School professor, identified three strategies for establishing a competitive advantage: Cost Leadership, Differentiation, and Focus (which includes both Cost Focus and Differentiation Focus)[1].

What are the 3 basic competitive strategies? ›

According to Porter's Generic Strategies model, there are three basic strategic options available to organizations for gaining competitive advantage. These are: Cost Leadership, Differentiation and Focus.

What is the importance of competitive advantage? ›

The purpose of having a competitive advantage is to distinguish a company from its competitors by offering something different and of superior value to its customers. Competitive advantage also means the business can outperform its competition in the market and make a higher profit.

What are the two key pillars of competitive advantage? ›

Michael Porter defined the two ways in which an organization can achieve competitive advantage over its rivals: cost advantage and differentiation advantage.

What is competitive advantage example? ›

For example, if a company advertises a product for a price that's lower than a similar product from a competitor, that company is likely to have a competitive advantage. The same is true if the advertised product costs more, but offers unique features that customers are willing to pay for.

How do you measure competitive advantage? ›

For example, if we have two firms, A and B, A has a competitive advantage over B if the economic value created by A exceeds the economic value created by B. The magnitude of A's competitive advantage is given by the difference between the economic value created by each firm.

What are the 4 major competitive strategies? ›

4 Types of Competitive Strategies
  • Cost leadership strategy. It suits large businesses that can produce a big volume of products at a low cost, and that is why Walmart implemented this strategy. ...
  • Differentiation leadership strategy. ...
  • Cost focus strategy. ...
  • Differentiation focus strategy.
15 Jul 2022

What are 8 ways to achieve competitive advantage? ›

Terms in this set (8)
  • Reduce costs. ...
  • Raise barriers to market entrants. ...
  • Establish high switching costs. ...
  • Create new products or services. ...
  • Differentiate products or services. ...
  • Enhance products or services. ...
  • Establish alliances. ...
  • Lock in suppliers or buyers.

What is business process reengineering with example? ›

Business process reengineering is the act of recreating a core business process with the goal of improving product output, quality, or reducing costs. Typically, it involves the analysis of company workflows, finding processes that are sub-par or inefficient, and figuring out ways to get rid of them or change them.

What is BRP in ERP? ›

Now another fellow Enterprise Irregular, Sig Rinde introduces a new interpretation of ERP: Easily Repeatable Process. Of course he contrasts that with his new acronym, BRP (not to be confused with BPR, another 90's favorite), which means Barely Repeatable Process.

What is the first step of redesigning a business process? ›

STEP 1: Defining the need for change

No matter how hard business process reengineering efforts you make, it won't make sense if you don't state clearly the need for change.

What is the first page in BPR? ›

Q._________ is the first phase in BPR.
B.identifying bpr opportunities.
C.reengineering the process.
D.blueprint the new business system.
Answer» a. begin organizational change.
1 more row

Why is BPR necessary? ›

BPR allows companies to redesign their processes by enabling cross-functional teams to work together to determine areas of improvement and ways to optimize them for maximum value.

When was BPR introduced? ›

Business process re-engineering (BPR) is a business management strategy originally pioneered in the early 1990s, focusing on the analysis and design of workflows and business processes within an organization.

Are ERP tools used for BPR? ›

As ERP systems achieve seamless integration through information flow across the various functional areas of an organization, this technology tool enables BPR. Thus, ERP system qualifies as a potential candidate for IT-based BPR in organizations [15] .

What is the difference between ERP and BPR? ›

Enterprise resource planning (ERP) is a software platform that helps business owners determine how to best use their available resources. Business process re-engineering (BPR) involves observing and analyzing how the business works to determine changes that may streamline operation at the business.

What are the basic components of process reengineering? ›

BPR includes three phases; analysis phase, design phase, and implementation phase. It is also referred to as business process redesign, business process change management, and business transformation.

What is the most important factor in BPR success? ›

According to the results, having the BPR project motivated by customer demand and competitive pressure, on the average, is considered to be more important for project success than the use of industry specialists or other outsiders.

Which is first phase in BPR? ›

BPR Cycle: Plan, Discover, Analyze, Re-Model and Implement are the five steps of BPR. BPR implementation completes in three phase; first phase-process consulting, second phase-change management, and third phase- project management.

Videos

1. Chapter 8.6 ll Business Process Reengineering ll SM for CA IPCC / INTER
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