What is Business Process Reengineering with example?

As companies grow and their operations become more complex, certain inefficiencies are inevitable. These tend to start as imperfect, improvised solutions that made sense in an earlier situation, but become obsolete & inefficient at scale. What makes these inefficiencies so dangerous is that they can be extremely difficult to detect. This is because they arise out of earlier processes that may have helped make the company successful, or operations that may have once been necessary even if they no longer are. Business process reengineering is specifically designed to help businesses identify and root out unreasonable inefficiencies, and to replace them with more functional operations. Unreasonable, in this context, means systematic and deeply rooted.

The term business process reengineering may seem like management-speak. But implemented correctly, this tool can work miracles for struggling companies. Business process reengineering can offer companies a radically fresh perspective on the ways in which operations can be improved. See below for business process reengineering examples and steps.

What Is Business Process Reengineering?

So, by now you’re probably wondering, what is business process reengineering exactly? Like a lot of management jargon, the term reads as both powerful and vague. But there is a specific lineage to this idea. Business process reengineering was first introduced as a business management strategy by Michael Hammer in a Harvard Business Review article titled, “Reengineering Work: Don’t Automate, Obliterate.” The basic insight driving this idea was that companies often struggle because they keep seeking to optimize fundamentally ineffective processes instead of building something categorically superior with new technologies. A commonly cited example is a shipping company that goes to great lengths to improve the quality of its horses’ horseshoes, instead of simply switching to automobiles.

Business process reengineering is offered as an alternative to business process management, which would generally be characterized by the horseshoe-style thinking above. Business process management can be effective for making consistent improvements to sound operations, but if there is a fundamental flaw in the nature of those operations, an alternative is needed to identify the flaw and enforce adaptation.

The major aims of business process reengineering are reducing costs and improving quality. Reducing costs by eliminating inefficiency can include restructuring departments, redesigning processes, laying off redundant employees, and eliminating unnecessary organizational layers. Oftentimes the “reimagining” characteristic of business process reengineering also entails a transformation in company values.

Conclusion

Oftentimes, prudent and diligent management will do everything possible to optimize every facet of an operation, and yet they still won’t be able to root out inefficiency. This is the case when something fundamental to the operations is dysfunctional. No amount of improvement will resolve this dysfunction until the relevant systems are repaired or redesigned. Business process reengineering is an alternative to business process management, and their relationship is analogous to the one between political revolution and mere reform. Reform is great when it’s possible, but some systems reach such a state of dysfunction that they need to be reengineered from the ground up.

Additional Reading: