In today’s ever-changing and unpredictable world, business increasingly needs innovative and responsive approaches to the renewal and improvement of production.
Concerning reengineering, many definitions can be mentioned, but one is the most accurate and most used, namely – reengineering is a fundamental rethinking and radical change of business processes to achieve a dramatic improvement in critical performance indicators, such as level of cost, quality, service, and speed.
The discoverer of the redesign of the enterprise is Michael Hammer, a professor at the Institute of Technology in Massachusetts.
He believes that much of the work done by companies has no added value and should be eliminated, not automated.
Businesses need to review their processes
According to him, businesses need to review their processes and thus maximize value for consumers while reducing the consumption of resources to produce a good or service.
This idea quickly became popular among companies that lost the opportunity to meet the needs of consumers and their competitiveness due to the entry of foreign companies into the market.
Although critics have accused Taylorism of reengineering, in 1993, 65% of Fortune 500 companies said they had either redesigned the processor intended to do so shortly.
Reengineering is a completely new way and approach to treating various issues and problems in the system.
Occurs in response to changes in the organization and management of the economic activity. Reference: “The place of the manager in the management process”, https://projectmanagement.cloudaccess.host/the-place-of-the-manager-in-the-management-process/
This approach requires decentralization in the performance of individual functions and in decision-making, which leads to greater responsibility on the part of employees.
Satisfying the customer’s needs
Satisfying the customer’s needs is a major goal in reengineering.
Therefore, quality and cost control are essential. They must be carried out starting from the search and finding of materials and raw materials, going through their transportation and storage, and reaching the production, marketing, distribution, and service.
To design an enterprise, it is necessary to analyze and study the individual processes that take place in it.
The whole enterprise is divided into separate sectors of different importance, where certain processes take place.
The connections between the processes, their sequence, and duration are studied. They are defined, formulated and design is undertaken.
Unnecessary processes are removed, some are improved, and completely new ones also appear.
For the application of reengineering the company needs specially built teams for this activity.
Employees must take full responsibility for the quality of production from the beginning to the end of the production itself. Companies need to focus on products that are promising and innovative.
Individual parts not only of the production process but also of the indirect sectors are considered as modules of the whole process, including the input and output of the system.
In this case, the input-output principle is applied and all related processes included in the circuit are integrated.
The places where the processes intersect and the capacities are distributed are covered, which leads to better results.
The design of the processes aims to reduce the unplanned part at the expense of the determinant.
The value of a product
The value of a product is not only formed until the end of production, but the process continues after that, including aspects of sales, warehousing, service, as well as the image of the company to customers, suppliers, and competitors.
The company should try to reduce the number of its suppliers, thus making them more responsible for their actions and creating an opportunity for a parallel combination of operations.
Together with the suppliers, a calendar planning of the deliveries is developed, which leads to better quality products and more flexible production.
Conditions are created for building the optimal number and volume of the individual units and the people who are employed in them.
For easier and more efficient process design, they are divided into the following categories.
At the entrance to the system supply, which consists of supplies of raw materials, recruitment, finding the appropriate equipment, and obtaining financial resources, as well as transportation and storage.
The main process for each company follows – the production, which in turn is divided into ancillary production, production preparation, including design, technological and organizational-economic preparation, basic, additional, and side production.
The output of the system is marketing analysis and research, warehousing of finished products, and marketing, which consists of finding a market for the company’s products, concluding contracts, and transportation.
Processes, units, and departments
Through these processes, units and departments are formed, taking into account the volume of work on the implementation of functions and tasks that are essential for determining the composition and degree of mechanization and automation of processes.
The basics of reengineering are that the emphasis is on development, the working area is reduced, the investment per unit of product is reduced, costs for raw materials are minimized, productivity is increased.
The competencies of individual associates are expanded, trust is created between employees, suppliers, and management, products are diversified, markets are segmented, and a flexible organization is created.
All teams working and participating in the activity of the enterprise are included, the information flows are optimized, the mass is combined with the single production, the processes for their optimal course are synchronized, the expenses on the place of origin, on economic content are effectively planned and reported. transaction costs are also reported.
According to some authors, reengineering also has social moments and functions that are contained in a system of values, as well as in the entire political system.
One of the main culprits for the Japanese miracle is considered to be reengineering and its impact on the Japanese economy.
In reengineering, the goal is to create the most favorable conditions for employees, taking into account their personal qualities and thus improve the technical and economic indicators.
The design of the processes
The design of the processes can be considered as a prerequisite for the development and growth of the individual enterprise, which is conditioned by the increase of the contribution of each worker in the final product.
Of course, a critical analysis of the approach should be made. The design of new processes leads to greater labor intensity, which is not always compensated.
Too strict conditions and over-discipline, which is required to be observed by individual employees and teams, harm productivity and lead to physical and mental overload. This leads to more frequent absences from associates.
The control that managers exert over staff can lead to conflict situations. It is believed that in reengineering the human factor is neglected due to the reductions that result from its staging.
In addition, due to the transformation of employees into universal ones, the specialization of labor is lost, which in turn leads to a decrease in productivity and an increase in control over work.
On the other hand, process design stimulates the rationalization of management and production structures, as well as technological chains.
Key decisions and supervisors
Although teamwork and greater responsibility by staff are extremely important in a reengineering setting, key decisions are made by a single supervisor.
The existence of a will for reorganization is of great importance for the individual enterprise, as well as the development of rules and norms for the individuals, for the teams, and for the connection between them, which should be obligatory for all, participating in the activity of the company.
The difficulties that arise when applying to reengineer vary from company to company, but management must be familiar with them so that they can be avoided.
These can be both the negative impact of traditional thinking on the desire for reorganization and the inadequate governance structure.
Insufficient research and analysis of the processes and their application only in part of the company, and not in its entirety lead to incorrect statements of the problems in the company.
In addition, the lack of support from management leads to demotivation of staff and unwillingness to change.
Individualists and lack of team spirit hinder the design of processes because teamwork is of great importance for such a reorganization of the company.
Of course, staff reductions and new functions to be performed by individual employees harm reengineering. This can be avoided by management agreeing with the unions.
Lack of trust between individuals and teams, insufficient training can be an obstacle to change in the company.
Mistakes on the part of management
Mistakes on the part of management and, above all, incorrect goal-setting, unclear regulations, incorrect communications, and lack of transparency are prerequisites for the failure of this endeavor. Reference: “Communication process in management”, https://www.mmrls.org/communication-process-in-management/
The requirements for the application of reengineering are that it must be based on goal setting, it must not be approached partially and in isolation during its implementation.
It must be known to what extent the enterprise is independent and whether certain processes have already been developed and implemented to be integrated into the overall system.
It is believed that TQM should be part of the further development of the organization to achieve flexibility. Professionalism is required in designing the processes and linking reengineering with the company’s strategy. Reference: “Adaptive and Survival model of strategic modeling in organizations”, https://www.libraryofmu.org/adaptive-and-survival-model-of-strategic-modeling-in-organizations/
Criteria for the implementation of reengineering
There are different criteria for the implementation of reengineering. In the first place, the individual processes are considered, such as strategy development, product development, user design and maintenance, production development, customer relations, order fulfillment, etc. Secondly, a map of the processes is created, which shows the individual processes, the sequence, and how they proceed. Reference: “The decision-making process in management”, https://www.kievpress.info/decision-making-process-management/
They are grouped by content – those that arise and occur in the additional or main sectors, at the entrance or exit of the system, or by place of their course and duration can be in the system itself, related to the production process, with the entire production system or covering only part of it.
“Competitive model in strategic modeling”, https://eduwiki.me/competitive-model-in-strategic-modeling/