W10 - Redesign Principles(1)

Source / Reference:
1) El Sawy's Redesign Principles and Tactics

 http://higheredbcs.wiley.com/legacy/college/turban/0471229679/add_text/ch09/el_sawy.pdf

Subject:
In Lect 10 -  Redesign Principles(1)
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Response:

Introduction

In Lecture 10, three generic ways for redesigning a business process have been introduced together with several principles and tactics for redesign. In this blog post, a brief introduction of ways to redesign a BP will be given first. Then a detailed analysis of the principles and tactics for redesign will be given, followed by a conclusion.

 

Analysis

Learned from the lecture, there are 3 generic ways for redesigning a business process including

• Restructuring the process - Restructuring and reconfiguring the process
• Informating the process - Changing the information flows around the process
• Minding the process - Changing knowledge management around the process
  

For each way, there are several principles and tactics associated with it, the following is a summary:

Restructuring

Principle #1: Lose Wait

Reduce waiting time in process links to create value

        -       Concurrency

        -       Closed-Loop

        -       Not Gating Main Process

        -       Continuous Flow

        -       Upstream Relieves Downstream

Minimizing the cycle time is usually the major goal for redesigning a process. In many processes, especially for processes adopting water flow approach, people often spend time on waiting. For example, waiting to be served in a bank, waiting for the completion of previous task in production line. 

However, waiting is a non-value added activity. Therefore, in order to increase the efficiency of a process, it is necessary to reduce the waiting time in process. Among the above tactics for reducing waiting time, I think concurrency is the most effective and widely-used one. Concurrency means redesign time-sequential activities to be executed concurrently. It also means parallel processing which is highly recommended to reduce cycle time. Just take the bank as an example, nowadays, most banks open several counters at the same time, this arrangement has shorten the waiting time of customers significantly. 

Principle #2: Orchestrate

Let the swiftest and most able enterprise execute.

        -       Partnering

        -       Outsourcing

        -       In-Sourcing

        -       Routing through an Intermediary

For each enterprise, there must be some areas which they are not familiar with. For example, H&M is a leading retailer but it is not an expert on establishing a supply chain system. In order to fulfill some unfamiliar functions and activities required to run a business, firms should rely on others instead of doing themselves. Outsourcing is one of the way which means to outsource a process to another enterprise. For example, some enterprise may hire a CPA to handle the financial and accounting issues. It would be a cost-reduction method if the company does not have the technology or expertise in this area. Thus, sometimes it is better to let the swiftest and most able enterprise do the execution.

Principle #3: Mass-customize

Flex the process for any time, any place, any way.

        -       Flexing Time

        -       Flexing Space

        -       Modularity

        -       Dynamic Customization

High customer satisfaction is always the key success for a business. Mass-customize is the most effective way to increase customer satisfaction. Mass-customize can increase the flexibility of a process, in other words, it increases the accessibility of customer to specify product or service. It would inevitably increase sales revenue and profit. Wal-mart is a good example of proving mass-customized service. Except for physical stores, Wal-mart has developed an online purchasing system which allows customers to shop online 24 hours a day, regardless of the location. This has significant increased the availability of the service and customer satisfaction as it brings much convenience to the customers. Dell is also successful in this area as it provide customers to design their own computers which has greatly increased customer intimacy.

Principle #4: Synchronize

Synchronize the physical & virtual parts of the process.

        -       Match Offerings

        -       Common Process Platforms

        -       Track Movement

Synchronization is important for every organization as it allows the physical part of a process to be complied with the virtual parts. Taobao has shown its effort in synchronization by allowing customers to track the movement of their purchased items electronically.

Informating

Principle #5: Digitize and Propagate

Capture information digitally at the source & propagate it throughout the process.

        -       Digitize at Source

        -       Make the process paperless

        -       Make Information Accessible Upstream and Downstream

        -       Shrink the Distance between the Information and the Decision

Digitization has become more and more popular these years. There is an increasing trend for companies to digitize all information. One common example of digitize and propagate is the issuance of passport. In Hong Kong, citizens can apply for a passport by only few steps through the internet, including accessing the government website, inputting the required information and choosing the delivery address. The whole process is digitally mediated. The process has become more efficient and convenient by digitization.

Principle #6: Vitrify

Provide glass-like visibility through fresher and richer information about process status.

        -       On-demand Information Tracking

        -       On-the-fly Reporting and Analysis

        -       Standard partner interface

        

It is proved that company with high transparency would be regarded as more reliable to customers. Providing adequate information to customers will greatly increase their desire to spend money on the business. FEDEX is one of the examples. It provides a tracking system for customer to track their packages. It makes the process highly transparent and increases the confidence of customers on the service. 

Principle #7: Sensitize

Fit the process with sensors and feedback loops to prompt action.

        -       Process dysfunction loops

        -       Monitor environmental change 

As the environment changes fast, it is important to be sensitive to the change of the surrounding. Process management is necessary to ensure the process run smoothly and correctly. Hertz has put some effort to achieve this by providing a sensitive pricing process. 

Conclusion

Although firms may differ in nature, the above principles and tactics are applicable for most processes. To successfully redesign a BP, it is possible to adopt several approaches at the same time. The key factor is to choose the one complies with the firm's structure. Also, it is possible to fine-tune the tactics so as to meet your requirements.