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Thursday, April 26, 2012

Business process improvement

Business Process Improvement (BPI) is a systematic approach to help an organization optimize its underlying processes to achieve more efficient results. The methodology was first documented in H. James Harrington’s 1991 book Business Process Improvement. It is the methodology that both Process Redesign and Business Process Reengineering are based upon. BPI has been responsible for reducing cost and cycle time by as much as 90% while improving quality by over 60%.

The organization may be a for-profit business, a non-profit organization, a government agency, or any other ongoing concern. This was the first methodology developed that focused away from the production processes to address the service and support process. It was developed within IBM as a result of the IBM president John F. Akers putting out a Corporate Instruction in the early 1980s requiring the rest of IBM operations to upgrade their processes so that they were at least as good as the production processes. At that time the production processes were required to be at a Cpk of 1.4. To measure and meet these performance goals required major improvements in IBM’s business processes. To accomplish this, IBM’s Business Process Improvement methodology was developed. On March 13,1984 after the Business Process Improvement was under way at IBM, John Akers stated at the American Electronics Association seminar on Quality in Boston, Our studies show that more than 50 percent of the total cost of billing relates to preventing, catching, or fixing errors. This approach was first documented outside of IBM by H. James Harrington while at Ernst & Young and then in Harrington’s 1991 book entitled Business Process Improvement – the Breakthrough Strategy for Total Quality, Productivity, and Competitiveness published by McGraw-Hill. More detailed information about the methodology was documented in Harrington’s 1997 book Business Process Improvement Workbook-Documentation, Analysis, Design, and Management of Business Process Improvement  also published by McGraw-Hill.

It should be noted that BPI focuses on "doing things right" more than it does on "doing the right thing". In essence, BPI attempts to reduce variation and/or waste in processes, so that the desired outcome can be achieved with better utilisation of resources.
BPI works by:
Defining the organization's strategic goals and purposes (Who are we, what do we do, and why do we do it?)
Determining the organization's customers (or stakeholders) (Who do we serve?)
Aligning the business processes to realize the organization's goals (How do we do it better?)
The goal of BPI is a radical change in the performance of an organization, rather than a series of incremental changes (compare TQM). Michael Hammer and James Champy popularized this radical model in their book ‘’Reengineering the Corporation: A Manifesto for Business Revolution’’ (1993). Hammer and Champy stated that the process was not meant to impose trivial changes, such as 10 percent improvements or 20 percent cost reductions, but was meant to be revolutionary (see breakthrough solution).
Many businesses in the 1990s used the phrase "reengineering" as a euphemism for layoffs. Other organizations did not make radical changes in their business processes and did not make significant gains, and, therefore, wrote the process off as a failure. Yet, others have found that BPI is a valuable tool in a process of gradual change to a business.

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