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by Ronald Zink, Director of Consulting
ADP-GSI Logistics & Distribution
To many corporate managers and their employees, re-engineering is just like the Frankenstein monster: Out of control. Ruining the lives of a lot of innocent people. And it doesn't even do what it's supposed to.
The reason that many in the business community shrink from hearing the very word "re-engineering," is that far too many re-engineering programs have created so much turmoil that they ended up failing to accomplish the company's objectives.
Re-engineering is a process in which a business looks at how it is currently operating compared to how it could operate with optimum productivity and efficiency, then changes the company to conform to that ideal. At its best, re-engineering not only enhances the effectiveness and productivity of the company, it also develops mechanisms for continually improving the re-engineered company in the future. It enables the company to make rapid adjustments to the constantly changing business and economic environment in which it will operate in the coming years.
There are five basic steps to re-engineering:
Three common myths about re-engineering seem to lead to most of the problems managers have when they try to improve how their companies operate:
Let's take a look at how these myths can have a negative impact on the re-engineering process.
Re-engineering is not a matter of buying technology and firing people. Re-engineering that begins with the goal of replacing people with machines is doomed to failure. At the heart of re-engineering is changing the basic way the company views its activities from one that is defined by departments to one that is defined by business processes.
Traditionally, organizations have been divided into departments, each of which represents a function. But most of the important activity in a business spills over functional boundaries. For example, filling an order could entail actions by employees in sales, customer service, warehousing, traffic and sometimes manufacturing.
Re-engineering defines what a company does into a number of processes. Then the functions of the company, the current barriers to doing a better job, the key business issues and even the competitive advantages and disadvantages are mapped onto the process or described in terms of the process.
Once a company understands those processes, it can create a model for the improved process. The model should focus on measurable improvements, e.g., reducing inventory, shortening cycle time or increasing same-day shipments.
Often the way to improve a process involves new technology, and in particular, advanced information technology (IT). When improvement leads to productivity gains, the result is sometimes a sudden surplus of staff. But equating re-engineering with means and side effects will lead to a failed effort.
There aren't that many processes in any business. Many companies begin the re-engineering process essentially by renaming everything they do in terms of a process vocabulary. We know of one large company that decided it had 179 processes. It doesn't take much more than common sense to realize that there just aren't 179 things that any company does. There may be 179 different jobs, or 179 different job functions, but not 179 discrete processes.
A process begins with an event, for example, an order from a customer. The process does not end until the initiator of the event has obtained the objective he or she wanted, e.g., when the order is delivered in full. Everything that happens to help obtain that objective is part of the process. Typically, even the largest company will have just seven to 15 processes that represent the collective efforts of everyone in the organization.
Re-engineering doesn't have to bring cataclysmic change. Most re-engineering failures stem from a company's desire to do everything at once. It didn't work for Mao Zedong during the Cultural Revolution in China, and it certainly won't work in a business organization.
Even if the target process model is dramatically different from the current process model, it doesn't mean that dramatic change is the only way to get there. Most people have a high comfort level with doing things the way they have always been done, so ordering them suddenly to do things in a completely different way will likely backfire.
Once a company has defined an ideal business process model in terms of discrete, measurable actions, the game plan it puts together to achieve that model should be as minimally disruptive as possible. For example, changes that can be completed without new technology are often easier, and less expensive to implement. The knee jerk reaction is to make the change that will improve the bottom line the fastest. But if that change also makes employees unhappy or confused, it may prove counterproductive. Instead, by making changes that are easy and/or inexpensive, the organization demonstrates to employees that re-engineering can actually work and make their lives easier.
The company may prefer to phase in necessary capital purchases over time. For example, ADP-GSI recently helped one company re-engineer its process of getting products from the manufacturing floor to customers. Re-engineering customer service will require the company to implement electronic data interchange (EDI) technology, so we are working first on improving inventory management, which will not require new technology.
When it works, re-engineering can help a company in many ways. It can make sure resources are being used most effectively. It can focus the company's collective efforts on producing quality and serving the customer. And it can make certain that the company not only has the business processes to meet today's business challenges, but also to respond to unexpected changes quickly in the future.
But re-engineering requires a new vision for the entire company, from top to bottom. It requires people to start thinking about not just their jobs functions, but also how those job functions contribute to meeting essential company objectives. It likely means doing things in new ways, and using a new generation of information tools and technologies. All of this new thinking will be exhilarating, but it will be hard for the business organization and its employees. Don't make it even harder by buying into the false perception that re-engineering must be immediate, dramatic and painful.
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Ronald Zink is Director of Consulting at ADP-GSI Logistics & Distribution in Pittsburgh, Pennsylvania. He formerly served as Director of Information Services and Quality at a Xerox subsidiary.