Sometimes, improving processes isn’t the most efficient thing you can do. Instead, you want to re-engineer it (not just a business buzzword, we promise!). Meaning, instead of improving a process, you re-create it from scratch.In most cases, this is done with the help of technology. After all, you can’t really change something fundamentally just like that.To give you a better idea of how this works, we’ll look into an example of how Ford completely re-engineered their accounts payable department.The major problem was that the department was significantly overstaffed. They employed 500 people, as opposed to 5 in the same department at Mazda (a partner company).Ford launched a BPR initiative to figure out why they were underperforming. The old process worked as follows…
- The purchasing department receives a purchase order. The copy is forwarded to the accounts payable
- Material control receives the goods & send a copy of the delivery document to accounts payable
- The vendor sends a receipt to accounts payable
- The accounts payable matches the three separate documents, and only then is the payment issued
Or, as it would look like in a graph…
As you’ve probably already guessed, this makes the whole thing extremely time-consuming. Hence, you’d need a lot of employees to keep doing this on the go.Realizing this, Ford completely re-engineered the process. Instead of doing everything manually, they created an online database which was used to match the different documents.
Accordingly, an operations manager can use business process reengineering to make significant improvements to company processes.