Reengineering defined by Michael Hammer and James Champy in Reengineering the corporation is: “Reengineering” properly, is “the fundamental rethinking and radical redesign of business process to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed”.
Business process re-engineering 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. BPR aimed to help organizations fundamentally rethink how they do their work in order to dramatically improve customer service, cut operational costs, and become world-class competitors. In the mid-1990s, as many as 60% of the Fortune 500 companies claimed to either have initiated reengineering efforts, or to have plans to do so.
BPR seeks to help companies radically restructure their organizations by focusing on the ground-up design of their business processes. According to Davenport (1990) a business process is a set of logically related tasks performed to achieve a defined business outcome. Re-engineering emphasized a holistic focus on business objectives and how processes related to them, encouraging full-scale recreation of processes rather than iterative optimization of sub processes.
Business process re-engineering is also known as business process redesign, business transformation, or business process change management.
"In our never ending quest for quality and increasing productivity at all levels, the various projects initiated by the company - including BPR - are helping us achieve higher productivity, reduction in costs and improved quality."
- Keshub Mahindra, Chairman, Mahindra & Mahindra (M&M), in 1996.
M&M's Problem Plants
In the mid-1990s, India's largest multi utility vehicle (MUV) and tractor manufacturer M&M was facing serious problems at its Igatpuri and Kandivili plants in Maharashtra. The plants were suffering from manufacturing inefficiencies, poor productivity, long production cycle, and sub-optimal output.
Alarmed at the plant's dismal condition, Chairman Keshub Mahindra tried to address the problem by sacking people who allegedly indulged in corrupt practices. M&M also tried to implement various voluntary retirement schemes (VRS), but the unions refused to cooperate and the company was unable to reduce the labor force.
During this period, M&M was in the process of considering the implementation of a Business Process Reengineering (BPR) program throughout the organization including the manufacturing units. Because of the problems at the Igatpuri and Kandivili plants, M&M decided to implement the program speedily at its manufacturing units.
M&M's management was not surprised to learn that the unions expressed extreme displeasure at the decision to implement BPR and soon went on a strike. However, this time around, the management made it clear that it would not succumb to union demands. Soon, the workers were surprised to see the company's senior staff come down to the plant and work in their place. With both the parties refusing to work out an agreement, observers began casting doubts on the future of the company's grand plans of reaping the benefits of BPR.
Mahindra & Mahindra: Implementing BPR- Next Page>>