RE-ENGINEERING WITH QUALITY
A RESULTS ORIENTED APPROACH
By: José Sánchez
Senior Partner
Management Resources, Inc. (MRI)

Figure 1 shows a schematic of the process that is most effective in re-engineering efforts. It compares both models, and evaluates the needs of the processes to satisfy all stakeholders. This methodology assures that the teams have looked at all aspects of the processes, have analyzed benefits, cost, barriers or aids to implementation, and determined whether the organization itself needs to change in order to make the new process and philosophy work.

The 9 steps to re-engineering are as follows:

1. Define management's needs

2. Define the needs of the customers of the process

3. Identify the functional objectives of the process

4. Analyze the existing process

5. Develop the "ideal" process

6. Evaluate the changes needed

7. Design the new process

8. Determine cost/benefit and barriers and aids to implement the new process

9. Develop implementation strategy

The following is an expansion of these 9 Steps.

1. DEFINE MANAGEMENT GUIDELINES
a. Guidelines and restrictions

The senior management team must clearly define what to expect from the process re-engineering effort:

• Increased customer satisfaction?
• Reduction in cost?
• Streamline the process?
• Launch new products?
• Comply with new requirements?
• Faster delivery?
• A more secure product or process?
• Reduce levels of management?
• All of the above?

There are always some restrictions to the redesign effort. It is important to identify these restrictions. They can be:

• political
• social
• labor
• costs
• new markets
• interface with others
• staffing
• location
• technology 

b. New philosophy

Management needs to look ahead and provide ideas on:

• new business philosophies (partnering, outsourcing, contracting, decentralizing, etc.)
• new guidelines on how to implement the changes.
• limitations on how far to go with the changes.
  

Ideally, the re-engineering effort should be free of any constraints and senior management should address this by placing very few limits on their new policies.

2. DEFINE CUSTOMER NEEDS

A process has to be designed to meet the needs of the customer who uses its products or services. To find out these needs, look at the five quality elements of every product or service:

1. Quality - produced with no defects and according to the expectations of the customer

2. Delivery - the product must be delivered on time and in the correct amount

3. Cost - at a fair and just cost

4. Safety - the product must be safe to its users and to those that produce it.

5. Corporate responsibility - the producer must be conscious of its responsibility to society (i.e., values, ethics, ecology, etc.)

    Often the customer will not mention everything needed. Therefore, it is very important to have "visionary" participants in the re-engineering team. They need to look at providing a new level of satisfaction, a new aspect that will continuously delight the customer. Because of the global impact, Senior Management should be the driving force in establishing these needs.

3. IDENTIFY PROCESS FUNCTIONAL OBJECTIVES
    Begin with a clear definition of what the process is supposed to achieve based on what was defined in Step 2 above. Describe the objective in a general way to include the customer's (final consumer) and the company's valid requirements.
    Based on an analysis of these requirements define the objective of the process. For a company selling exercise equipment, the following could be an example:

Respond timely, satisfactorily and effectively to the customer's orders for exercise equipment while achieving the assigned sales quotas.

    Notice that the words bolded represent the key requirements of the process. Those underlined represent what the customer is looking for.

    These attributes are very important because they represent the basic quality elements of the product or service being delivered. They have been identified through the CNA and represent those things that must be done to satisfy the customers. Notice that in this example the requirements of the external customer (timely, satisfactorily and effectively) and of the internal customer (owners who want to meet the assigned sales quota) are included.
    In the above example, it is not enough to merely sell the exercise equipment. The best outcome will be timely service that will result in customer satisfaction, in addition to being successful in the sales goals.
    Sometimes it is necessary to expand the current objective of the core process to include additional quality elements important to the customer. New requirements the customer may have can also be identified by looking toward the future in anticipation of a change in the environment.
    For example, the core objective may not take into consideration that in order to maintain the current market share in the future, a higher level of service will be needed. A minor revision to the process objective would be:

Respond timely, satisfactorily and effectively to the customer's orders for high grade exercise equipment while achieving the assigned sales quotas.

    This minor wording change in the objective could alter significantly the equipment designed, manufactured and sold. This improvement in grade of output or level of service is what makes good companies great. This kind of thinking should be considered whenever a process is redesigned.

4. ANALYZE EXISTING PROCESS
    All processes exist because of methods, practices and policies accumulated throughout the years. So, rethinking an entire process includes being sensitive to the historical development of the process.
    There are usually many requirements, customers or ties to other processes that must be considered. In other words, be very careful when eliminating or modifying any process.
    Look at existing processes based on the following:

A. NEW NEEDS

1) Are the customers' present needs satisfied?

• If yes, question why the process is being analyzed (i.e., technology)
• If no, is the problem
  • in the process?
  • with the people doing the work?
  • an unknown need?

2) Will customers' future needs be satisfied?

• A Customer Needs Analysis (CNA) must be done. The CNA can use market data, benchmark with other companies, scan the environment, etc.
• Questions to ask would be similar to the following:
  • Are there emerging needs the existing process will not satisfy?
  • Is there some new product or service that can be provided with minimum changes to our existing processes?
    

3) What is the competition doing?

• Benchmarking with successful companies can provide great insight into process improvement.
• What are other industries doing in similar processes?
• What are the results?

B. PROBLEMS AND OPPORTUNITIES

1) What technological changes will affect the process?

    Technology is one key ingredient in redesign. For example as paper documents were replaced by computer files, many processes had to be redesigned.
    Many corporate processes are open to changes using new information technologies. The arrival of the Personal Computers coupled with the computer literacy of new college graduates have sped up change. New computer systems are not necessarily simply an automation of what was done manually. Much of the time a new system will eliminate entire processes while adding new capabilities with which the customer will be delighted.

2) What activities exist to control the process?

• Many activities (and sometimes departments) have been created to control a process or to assure its quality.
• Are the controls really needed?
• Can the controls be placed with the person responsible for the activity?
• What other ways exist to do it?

3) What are the key decision points?

• Key decision points in the flowchart almost always suggest corporate policy.
• What is the policy that supports them? On what is this policy based?
• Who makes the decisions? Based on what?
• What is the assurance that the decisions are made correctly?

4) What is the validity of the existing flows?

• Are activities in series or in parallel?
• Is there a better sequence?
• Are there problems because of distance between groups?

5) Where are there bottlenecks, reworks, duplications, sources of error, redundancies?

• What causes them? Time, resources, signatures, policies?
• Are there dependencies on other work groups?
• Is there a policy to assign priorities?
• Is information lacking? Overloaded?

6) Why are all the groups, sections, departments, high level management needed?

• Is there duplication of efforts?
• Have they been created to reward some one and bypass personnel policies?
• Do they contribute to bottlenecks, delays, errors?
• Is there a difference in type of personnel?
• What is their value added?

C. PRODUCTS AND SERVICES

1) What are the activities that directly produce the product or service?

• Why are they done this way now?
• What new ways exist to do them?

2) What are the activities that do not add value to the product or service?

• These are the activities that do not directly produce the product or service but add a certain value to someone else in the organization.
• Are they really needed?
• Why are they done this way now?
• What new ways exist to do it?
  

5. DEVELOP THE "IDEAL" PROCESS
The "IDEAL" process should be based on satisfying the functional objectives determined in Step 3. For this, use a "relations" or needs diagram (see figure 2.) Dream!!

Start the "ideal" by identifying the "outcome attributes" of the process. In our example they are:

Respond timely,
satisfactorily
and effectively
to the customer's orders for exercise equipment
while achieving the assigned sales quotas.

    Then, select one of the attributes, "timely", for example. Identify what "timely" means and the events that must be realized to meet "timely". "Timely" will translate to having the equipment ready, transportation available and the correct address. What is necessary for each event to happen is identified.

    The result is a complete diagram of all the needs of the process, despite who does it, where or how it is done. This diagram gives us a model to follow in designing the new process. It serves as a road map of where to go.

Analyzing the Relations Diagram:

    What are the needs shown that are not met today?

• Sometimes another work group provides them
• What is the impact of not meeting these needs?
• What suffers as a result?
• Is there another activity that replaces it?
• What are the principal process indicators identified?
• How can they help manage the process?
• Are they being used today? How?
• Is there any "needs branch" that is under the responsibility of another organization today?
  • This highlights a potential bottleneck
  • What is the reason it is under someone's else responsibility? Policy? Tradition?
  • Is there any duplication between some branches?
    • This shows the possibility of concentrating these activities under only one work group.
  • Which are the critical branches to achieve the results?
    • These are the candidates for process control
  • Are all the needs identified under the control of the "owner" of the process today?
    • If not, these are potential problem areas
    • Is it the result of policy, tradition or process needs?
    • Are there any needs that can be provided by an outside source?
      • contractors?
      • outsourcing?
    • Are there any needs that can be completed in parallel?
      • This will help reduce the time and the bottleneck's
    • Which activities can be automated?
      • Need to consider new technologies such as computers, PC, fax, voice mail, E-mail, Internet Web Site, etc.
    • Is it possible to combine different needs into one activity?
      • This would allow more efficiency
    • Which are the critical dependencies?
      • This will require careful attention to assure they work correctly
    • Which are the "branches" that require long times to complete?
      • The new process should look at reducing these times
    • Which are the branches that require heavy effort or resources to complete?
      • These branches are candidates for efficiency measures to assure low cost.

6. EVALUATION

Matching the needs diagram and the existing process flowchart

• What has been the experience in each branch of the relations diagram?
• Does the actual operation follow the diagram? Why not?
• Are there other elements in the process today that do not form part of the diagram of needs?
• How similar is the existing process to the relations diagram?
• If there are differences, why?
• What are the changes required in the existing process to support the needs identified?

7. DESIGN NEW PROCESS
    Now that present situation versus the "ideal" process has been analyzed, design the new process. Here are some factors to consider in this design:

• Empowerment for change.
• What are the factors and existing business conditions that affect the redesign of the process?
• New organization changes? How can they help?
• New technological developments?
• Human factors or conditions?
• It is important to realize that changes cannot take place without a careful planned interaction between new technology and people.
• Brainstorm new ideas relating to the "philosophy" supporting the process
  • The purpose is to develop creative, practical and pragmatic new designs.
  • What changes in process philosophy are possible?
    • Eliminate levels of hierarchy?
    • Reduce levels of approval?
    • Reduce controlling activities?
    • Eliminate unnecessary activities?
    • Combine different jobs? Change job classifications?
    • Assume more and different responsibilities?
    • Empower employees to make more decisions?
    • Contract out some functions? Make vendors or suppliers part of the process?
    • New computer systems? Be careful and do not assume that just by introducing a new computer system you are making the changes necessary.
    • Autonomous employee teams?
    • Corporate culture?

Brainstorm new ideas relating to the flow of the new process

• Is there a sequence of activities that would produce the desired results more efficiently?
• Is there a need for existing organization boundaries?
• Can physical distances be reduced or eliminated?
• Can some activities be done in parallel?

Brainstorm new ideas relating to the work content

• What activities can be eliminated?
• What contingency activities can be eliminated?
• What non-value-added activities can be eliminated
• What redundant or repeated activities can be eliminated?

Brainstorm ideas relating to bottleneck's and delays

• What dependencies can be eliminated?
• What changes are required in the assigning of priorities?
• Are there "batching" activities that can be eliminated?
• Can long process times be reduced?

Brainstorm ideas relating to material aids

• Is the lack of proper material, tools, equipment, etc. a problem? What alternatives exist?
• How can problems with physical space, layouts, location, etc. be resolved?
• How can information be accessed quicker and more efficient?
• Identify improvement opportunities. Can the following be improved?
  • Policy, philosophy?
  • Work content?
  • Work flow?
  • Material aids?
  • Bottlenecks?
    

Set goals and targets

• Identify what is expected to be achieved in each indicator measuring the functional objectives.
• Set new business strategies.
• Define new jobs and roles.
• This step will provide:
  • A new process flowchart
  • A new proposed organization
  • An analysis of the resources required
  • A new process outcome indicator and various upstream indicators

8. JUSTIFICATION

Every redesigned process must be justified based on:

• How it meets the customer's requirements?
• Is the new redesign an improvement over the old one?
• How does it meet management's guidelines?
• Is this a "leaner" organization?
• Is the cost of the process lower than before?
• Are there new benefits that justify new resources?
• What are the barriers to implementation? Can they be overcome?
• What are the existing factors that will aid implementation?
• What is the confidence level that the new process will work?
  

9. IMPLEMENTATION STRATEGY
    Many re-engineering efforts fail because the steps necessary for a full implementation were not planned throughly. Organizational, and not technical, barriers present the major problems to a successful implementation of a re-engineering effort. The results can only be achieved by managing the behavioral changes with the same details as the structural changes. These changes can only be managed by Senior Management and should never be delegated to others in the organization.
    Some behavioral issues that need to be addressed are:

Changes in people's behavior. For example, greater cooperation between different groups, a true supporting role by staff groups, a focus towards results and not efforts, etc.

Changes in paradigms. Many times power balances are shifted and people become threatened by them. Also, the emphasis on results usually requires the decentralization of "power" to lower level in the organization. Management must trust the capability of their employees to exercise such power.

Changes in coordination. Re-engineering usually requires new levels of cooperation among the different units in the company. The use of new technologies, processes and tools requires that everyone in the organization fulfills their roles in supporting the final customer, regardless of their own interests. Their mission now becomes one, rather than different ones pointing in all directions.

Duration. Change takes time, especially in large organizations with a multitude of functional units. Since the changes are based on transforming attitudes and behavior, it usually takes a long time (2 years) to fully implement recommendations. If an organization finds itself with "too many ideas" working at the same time it is wise to approach the implementation efforts slowly.

Restructuring. This is perhaps the most touchy issue of all. It will cause many affected employees to feel under-valued. And, often the members of the re-engineer team come out on top. This can be quite negative.

Using re-engineering as an excuse. Some large Fortune 500 companies have used the engineering efforts as an excuse to downsize the organization. In one case it was used as an excuse to remove those loyal to the previous CEO.

Many re-engineering efforts. Some organizations who are trying to jump onto the re-engineering bandwagon usually try to attack many processes at the same time. The best method is to rank processes and redesign systematically.

In addition to the behavioral issues, the implementation team needs to look at:

Training on the new methods and procedures.

All those affected, including suppliers, need to be fully trained in the new process.

Documentation of the new process.

Documentation usually gets lowest priority. But the changes must be fully documented and made part of the corporate publications.

Development of measurements.

The new process needs to be measured (hopefully with the indicators used in the current process.) This way benefits can be more visible.

Resource requirements

It is very easy to overlook this part, or be too conservative in its impact. Resources are costly and contribute to added bureaucracy.

Roles and responsibilities

Everyone involved has to know what is expected of them and what are they responsible for.

New policies

Any policy change needs to be fully explained to all those affected. New policies causes problems among people if they are not fully understood.

Status reporting

It is important to develop a means of reporting the status of the implementation, the problems encountered, the corrections made, etc.

Contingency plans

Conclusion

    True re-engineering causes a shift in paradigms, changes the business culture and focuses on results to satisfy customers.
    To be successful, a prescriptive methodology must be followed that will allow the changes be made based on facts and not on suppositions or personal beliefs.