When the order is completed, the business representative will transfer the information stored in the mobile database to the central database. To avoid unnecessary delay, this process shall be done on the date of ordering or a working day after that. The business representative will have commission as soon as the order is accepted by the central database.
As of today, both the capital cost and running cost are relatively high for connecting 2 databases by real-time and on-line. Connecting the databases by means of off-line is recommended at this juncture. The top management of CI shall re-consider the suitableness of adopting the real-time and on-line databases when the costs drop and the mobile technologies become more mature in future.
Elimination of Production Forecasting
Forecast by product shall be removed.
The production backlog can be removed when the production does notIn light of forcasting of 60% of order
When the central database receives a confirmed order, a production order will be automatically placed to the Production.
BACKGROUND
Computec, Inc (CI) is a computer software company in two Asian countries. The company was a pioneer in the computer industry responsible for designing, producing, marketing, selling and training of software for business applications. Due to the ineffective customer order process and keen competitions from competitors, the company is under tremendous pressure of shortening its product delivery time to their customers.
OBJECTIVES
The objectives of this Business Process Re-engineering (BPR) are:
- to reduce the time required to convert a customer accepted proposal into a completed order; and
- to increase CI’s competitiveness and improve its customer satisfaction.
CHARACTERISITCS OF RE-ENGINEERED PROCESS
To shorten the time to convert a customer proposal to a completed order, the existing customer order process has been analysed and re-engineered. The new process map is in figure 1.
Implementation of IT and Staff Empowerment
Under the new process, the company will develop a database for mobile devices (mobile database), an integrated database for sharing of common data and provide each business coordinator with an appropriate mobile device, like a notebook or PDA. Before meeting a customer, the business coordinator connects his notebook to the integrated database and preloads updated customer information into the notebook. Such preloaded information contains credit limits and credit conditions of the customer and an electronic ordering form with validation rules for checking the completeness of an order.
When a customer accepts a proposal, the business coordinator will enter the order into the electronic ordering form. If the information provided is invalid or insufficient, validation rules built with the ordering form shall detect and prompt the business coordinator for corrections. Regarding the credit issue, the mobile database will verify the amount of the order against the customers’ credit limit from the integrated database. For an existing customer, the order can be made if and only if the amount does not exceed its credit limit and the inputted data is valid and complete. For a new customer, the business coordinator is empowered to accept the order if the amount does not exceed a permissible credit. In case of doubt or excess the permissible credit, the business coordinator shall collect all necessary information from the customer on the spot and refer the case to the Finance department for verification.
Establishment and Implementation of New Policies
When the order is completed, the business coordinator will transfer the information stored in the mobile database to the integrated database. To avoid unnecessary delay, this process shall be done on the date of ordering or a working day after that. The business coordinator will have commission as soon as the order is accepted by the integrated database.
With the implementation of IT technology and the empowerment of business coordinators, the number of credit checks will be reduced sufficiently. As such, credit clerks do not expect to accumulate their order any more. Credit clerks are required to clear all credit orders in a day after receiving it. In addition, their workloads are reorganised so that the clerks can daily handle financial transactions in a.m. and credit checks in p.m..
Elimination of Production Forecasting
The forecast by product has been removed. As the forecast could not accurately estimate the products to be ordered, the Production has had to deal with surprise order and the forecasted order at the same time. That leads to a series of backlog in the Production. However, after the re-engineering, the Production shall only schedule production order if the integrated system receives an order from their customer. As the forecast of the produced unit is reasonably accurate, the Production should rely on this figure to estimate the manpower required per month. This measure can ensure that the Production has sufficient manpower to meet customers’ orders.
Reduction of Order Size
Concerning the order size, the company shall fulfill customers’ expectation by reducing their standard order size. When the standard order size reduces to 10, Production will not require to handle the special order size and, as a result, the required assembly time will be sufficiently reduced to 1 day from 3 days.
Introduction of Hybrid Products & Special Air Delivery
To cope with the increasing demand of combination of products, CI shall put a special system in place. The system shall document the details of every special order and make such a hybrid product to become a standard product. When it is the first time that the company has received such an order, the company will have to pick and assemble the parts specially. In spite of budget constraint in Production, those completed products will be delivered by air so as to compensate the additional 3 days for special picking and assembly.
However, when the company receives the hybrid product again, the Production will base on his previous experience and manufacture the product as usual, without going through the process of special picking and assembly. All such products will be delivered to customers by ship.
BENEFITS
The benefits from the re-engineered process are as follows:
Time Saving
With the new customer order process, different steps such as completing an order and checking the credit are processed concurrently, instead of sequentially. The company is therefore expected to complete a customer order within 10 days, which represents 67% of reduction in process time as compared with more than 30 days under the old process.
Reallocation of Resources
By eliminating the inventory check and combing the jobs of Sales Representative, Administrator and Credit Clerk together, the operation costs and the manpower required for handling customer order process will be reduced. The top management of CI should discuss and review the possibilities of deploying the excess manpower to expand their business and services.
Elimination of Product Inventory
There is no redundancy inventory. Instead of forecasting, products will be manufactured upon receiving the order. All products will be available in the right place and at the right time. The company will also reduce storage space.
Improvement of Customer Satisfaction and CI’s Competitiveness
Delivery products on time result in good reputation and customer satisfaction. These benefits will improve customer loyalty and they in turn will bring more new customers to CI.
LIMITATIONS AND THE WAYS AHEAD
The limitations of the re-engineered process are:
- restricting the quantity of order in the size of 10;
- increasing the packaging and delivery cost about 3%, as a result;
- imposing additional costs for upgrading software and hardware; and
- adding extra costs for air delivery when a new hybrid product has been firstly ordered.
Looking ahead, as of today, both the capital cost and running cost are relatively high for connecting 2 databases by real-time and on-line. Connecting the databases by means of off-line is recommended at this juncture. The top management of CI shall re-consider the suitableness of adopting the real-time and on-line databases when the costs drop and the mobile technologies become more mature in the future.
