Techniques of Value Analysis and Engineering
Hammer and Champy (1993) describe business process re-engineering (BPR) as “the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service, and speed.” With the guarantee of quantum improvements in performance, numerous companies worldwide have embraced this innovative form of business transformation.
A substantial literature highlights that organizations have conventionally been organized hierarchically, with specialization into functional areas. While this structure helps exception-based decision-making also the need for authority and control, it ignores the “white space” between the functional areas in the organization. In other words, the operations of each functional area may work well by themselves, but the links between these functional areas perhaps less than satisfactory. When that happens, the output from one functional area may not mesh well with the needs of other functional areas downstream.
In addition, the wait time between functional areas for any transaction may be considerably longer than the actual processing time within an area. In brief, for the reason that no one owns, manages, and co-ordinates the various functional areas in a hierarchical organization, the co-ordination that gives way smooth operations from beginning to end of the process is usually missing.
If co-ordination is significant and demanding for corporations within a single nation, the stakes as well as difficulties are magnified in multinational companies. As researches point out, International Network Corporations (INCs) deliberately establish distributed operations in a variety of international locations to take advantage of the markets and specialized resources that each location offers. Though, this distribution comes at a cost: an INC has to reconcile the diversity of perspectives and interests it intentionally fosters integrate the extensive assets and resources it intentionally disperses, and co-ordinate the roles and responsibilities it deliberately differentiates.
Additionally, the strategies it uses to do so depend on whether what is to be co-ordinated are goods, resources, or information. Given these additional complexities of transnational flows, having a good understanding of co-ordination becomes mainly critical for the successful operation and process and redesign of an international network corporation.
To resolve co-ordination problems, whether domestic or international, several BPR experts advocate a process rather than a structural view of an organization. In a process orientation, the actions of numerous functional areas are co-ordinated to attain the customer’s goals. Problematic handoffs plus communications between the traditional functional areas are eliminated or redesigned to permit those transitions to be done quickly and easily. Fundamentally, streamlining takes place by managing the “white space” that is ignored in conventional organization charts. To that end, Hammer and Champy (1993) suggest a number of heuristics for BPR:
- Combine numerous jobs into one;
- Let workers make decisions;
- Improve processes into multiple versions;
- Carry out work where it makes the most sense;
- Lessen checks and controls;
- Reduce reconciliation.
These recommendations appear hard to argue with as techniques for creating lean, proficient organizations. And though BPR’s annals do contain a number of glowing and oft-repeated success stories, these contrast sharply with reported failure rates of forty to seventy percent. Why have these failures took place, and how can managers learn from them? According to some surveys, poor change management strategies as well as implementation are one major reason. Given the magnitude of BPR-induced change, employees’ fears and their resistance to organizational change are not unexpected barriers.
We believe that two additional factors contribute to BPR failures. One is the danger of radical change. In spite of some practitioners’ recommendations that one redesign from scratch, companies’ histories cannot be ignored; at the same time as critical resources, for instance expertise and power, cannot easily be altered or shifted.
The other major culprit is the failure to consider the human issues involved in reengineering. That is, several re-engineering projects focus on the more accessible daily operations, ignoring the critical social and political elements that contain the organizational context in which the process operates. These elements are mainly critical in multinational firms, where social and political systems differ across the firm’s operating entities, adding a level of complexity to the BPR task.
Now we consider the degree to which, if at all, BPR’s systematic approach to work, organizations and IT systems offers an effective solution to the problem of organizational change. In examining the practical presuppositions of BPR, consequently, we are not seeking to make, let us say a moral point about downsizing, etc., however attempting to assess whether BPR can and does live up to its radical promise in terms of delivering all the materials that are required to attain change.
The first point we wish to raise involves the underpinnings of BPR—what commentators like Burrell and Morgan might call its ontological stance. This innovative division is between what one might think of as sociologically informed organizational research such as Participative Design, and more economistic stances in BPR. We use the term economistic for the reason that its conventional alternative, ‘rationalism’, though a valid description of what stands behind much economic theory, tends to be used as a gloss when applied to change-management techniques.
It is obvious, not to say blindingly clear, that the significance of ‘value chains’ and related concepts in change-management literatures, along with the centrality of measurement, has much to do with economic thinking as opposed to sociological thinking. It is not so obvious, taking a quote from an orthodox and by now quite elderly text on value analysis that ‘rationalism’ does sufficiently explain the analytic stance of BPR and related approaches. Hence:
“Value analysis is a problem-solving system implemented by the use of a specific set of techniques, a body of knowledge, and a group of learned skills. It is an organized creative approach that has for its purpose the efficient identification of unnecessary cost, i.e., cost that provides neither quality nor appearance nor customer features (…). It focuses engineering, manufacturing and purchasing attention on one objective— equivalent performance for lower cost”. (Miles 1972:3)
This stance illustrates itself in numerous ways. First, this economist stance can be seen to have substantial pedigree. Certainly, it is hardly a revelation that elements of BPR have been around for some time. They can be distinguished in literature on ‘value’ and ‘quality’ going back some time. The more cynical might be forgiven for feeling that what has been reengineered is the wheel.
Even so, amongst its distinctive features, and one which perhaps elucidates its attractiveness (and saying much about its dangers) is it’s assert to socio-technical systematicity. Leaving aside this entire means for the moment, one thing this systematicity doe’s involve is effective measurement. This is why technology is so central in the BPR literature. Even though BPR can be variously typified as a recipe for basic change or as a more modest and progressive modification of business objectives in terms of core processes (Harrington 1991), the role of IT is more or less universally seen as critical. Particularly, IT is significant since it is able of magnifying the accuracy and the scope of measurement. Thus:
“Measurements are key. If you cannot measure it, you cannot control it. If you cannot control it you cannot manage it. If you cannot manage it you cannot improve it”. (Harrington 1991:82)
However, in spite of placing IT at the centre of the change-management process, BPR is predicated on the recognition that traditional design has, in many instances, failed to produce the productivity gains anticipated for business, particularly in its ‘white collar’ sectors. That is, at the same time as being fundamentally a method for changing the organization, implicitly at least, BPR problematises and challenges orthodox approaches to systems design. BPR proponents make a distance from the modeling activities related with traditional design by arguing that:
“All these techniques come from the computer world. It is as though we learned to think in a way that works for computer systems, and we realized we could apply the same way of thinking to describe an organization…we find this unacceptable…we shall introduce… the basis for a modelling technique for people, not machines”. (Jacobson et al. 1995:36)
The difference between BPR and traditional approaches to design is further established by an argument which underlines the difference between ‘what actually happens now’ also what procedures (or processes) may be in specifications. While certain approaches as structured design have to a greater or lesser extent lessened the difference between the actual and the ideal, BPR wants to re-establish the problematic relationship between the two, something that ethnographers have as well tried to do. In other words, like ethnography, BPR is interested in the gap between actual practice and idealized conceptions of practice. Therefore, Davenport argues that BPR:
“Implies a strong emphasis on how work is done within an organization, in contrast to a product focus’s emphasis on what”. (Davenport 1993:5)
Harrington (1991) offers an account of the suitable methods for understanding actual work. Key are ‘process walk-throughs’; this is a principle method for understanding how work is done. Stowell (1991) explains:
“One of the key activities in the walk-through process is to observe the activity being performed. Immediately after the interview, the interviewer and the interviewee should go to the work area to observe the activity discussed in the interview. Observing the individual tasks being performed will stimulate additional questions. As Dr H. James
Harrington puts it, ‘You never really understand the activity until you do it yourself. If that isn’t possible, the next best alternative is to observe the activity while it is being performed, and ask a lot of questions”. (Stowell 1991:266)
Such insights would, at first glance, appear modest and to some extent unoriginal were it not for the extra dimension which BPR seems to offer, that of socio-technical systematicity. That is, in its ‘problem specifications’ also its solutions, the focus is on comparison between the formal process and actual practice; the differences in the way employees carry out tasks, the significance of training requirements, the existence of process problems and ‘roadblocks’, and all that.
Furthermore, analysts such as Harrington recognize, as do ethnographers of the organization, that not merely are process specifications and the organizational activity in question not the same thing, however that deviation from specifications is understandable by a whole range of factors, together with the possibility that there may be potentially constructive reasons why specifications are not being followed since, and for instance, individuals may have establish that goals are more efficiently achieved if they are bypassed.
Bypassing specifications may as well compensate for problems. Particularly, BPR stresses the role of ‘chronic’ problems in working life, specially so given that chronic problems are often difficult to see. One cause for this is that methods for completing processes often acclimatize to chronic problems. People often find ways round persistent obstructions and this can disguise what the problems may have been in the first place without necessarily removing them.
The systematicity that BPR presents may emerge twice as attractive for the reason that it addresses both the weaknesses of traditional IT design and the glosses on organizational context provided by, for example, the ‘job design’ movement. By way of instance, a sufficient picture of what is going on in the organization and how to change it requires, for Davenport, a holistic approach which includes not merely every dimension of an organization’s activities, however as well a method for designing the future. Thus:
“The term process innovation encompasses the envisioning of new work strategies, the actual process design activity, and the implementation of the change in all its complex technological, human, and organizational dimensions”. (Davenport 1993:2)
That is, BPR promises a comprehensive understanding of how the organization currently functions and what has to be done in both work and technological terms to offer radical success in redesign. However, asserting that one has provided an ‘all singing, all dancing’ solution to problems raised is a long way from signifying that the assertion is valid. Just since a system is offered which claims to manage problems of appropriate technology and appropriate organizational structure does not make it so.
BPR’s approach, then, comprises conceptualizing what goes on in organizations as a matter of understanding and defining ‘processes’. These processes, whether specified in rules or developed to solve problems by workers themselves, are clearly defined according to their measurable relationship to the customer. Therefore, Harrington explains a process as:
“Any activity or group of activities that takes an input, adds value to it, and provides an output to an internal or external customer. Processes use an organization’s resources to provide definitive results”. (Harrington 1991:9)
A business process in turn is defined as:
“All service processes and processes that support production processes. A business process consists of any logically related tasks that use the resources of the organization to provide defined results in support of the organization’s objectives”.
This is the way BPR makes use of an economistic viewpoint on organizational goals, however orients that viewpoint to a set of explicit change-management objectives, for instance improving effectiveness, efficiency, as well as adaptability. The analytic work involves identifying a set of definite tasks which are to do with meeting organizational objectives, and which are construed in terms for instance determining where the process boundaries will be, and what the inputs and outputs to the process are.
Key aspects of this work might comprise identifying suppliers to and customers of the process identified, together with who is performing the key operations. Therefore, determining process boundaries has to do with recognizing the ownership of the process and where it starts and ends, with a view to assessing the purposeful relevance of each process.
As one might expect from a largely top-down methodology, the point of examining how operations are performed is to establish the ‘health’ or otherwise of the processes in terms of the business objectives of the organization. A sample method advocated by Harrington for doing precisely that involves identifying ‘multiple buffers’, which creates the ‘queuing up’ of stages.
Certainly, a recurring theme in BPR is the distinction between the logical connection between activity, which tends to be horizontal, as well as the vertical connections of the organization. It is this distinction, conceivably more than any other, which has informed the developing interest in workflow. Workflow is defined in BPR as the method for transforming input into output, and is one of the main characteristics of a process, and in many respects is the key to understanding what is unique about BPR.
In summary, the analytic force of BPR lies in its interest to use direct observation of current practice to identify, from the top down, what is wrong with specified business goals as well as the means for pursuing them. Further, its conception of what is wrong is described in terms of measurable obstructions to efficiency with a view to producing alternative structures in which those obstructions have been eliminated. These obstructions may, certainly, be of more than one kind and may comprise, for instance, the generation of error, the existence of ‘poor quality’ costs (waste) also ‘multiple buffers’.
In any event, the assumption is that analyzing current work can unproblematically show the way us to conclusions regarding what it is that causes ‘problems’ to arise. The assumption is that measurable benefits will be obtained precisely from the identification, measurement, and respecification of process. These benefits—and we emphasize them merely to provide a flavor of the direction in which this kind of analysis takes us—conventionally comprise the elimination of duplication, error proofing, automation as well as standardization.
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Davenport, T.H. Process Innovation; Reengineering Work Through Information Technology, Boston: Harvard Business School Press, 1993
Hammer, M. and Champy, J. Re-engineering the Corporation: A Manifesto for Business Revolution, Boston: Nicholas Brealey Publishing, 1993
Harrington, H.J. Business Process Improvement: The Breakthrough Strategy for Total Quality, Productivity and Competitiveness, New York: McGraw-Hill, 1991
Jacobson, I., Ericcson, M. and Jacobson, A. The Object Advantage: Business Process Re-engineering with Object Technology, Wokingham, UK: Addison-Wesley., 1995
Miles, L.D. Techniques of Value Analysis and Engineering, 2nd edn, New York: McGraw-Hill, 1972
Stowell, D.M ‘Appendix’ to H.J. Harrington, Business Process Improvement: The Breakthrough Strategy for Total Quality, Productivity and Competitiveness, New York: McGraw-Hill, 1991