Studying the new approaches to operations and business processes and tools, in order to reflect the way in which organisations are evolving at the start of the 21st century.

University Degree Business and Administrative studies

Introduction

In response to business pressures such as globalisation, deregulation and new technology, many companies to undergo reorganization and restructuring in an effort not only to compete but in many cases just to survive. The development and adoption new business models and the capability to keep pace with the changing manufacturing environment are particularly important to the success of manufacturing business. A manufacturer needs to be able to produce multiple and diverse products, upgrade and redesign its products in short life cycles, and execute efficient production changeovers simultaneously. Facing the pressures from globalisation, particularly in shorter product life cycles and over-supplied manufacturing environments, manufacturers need to provide more value-added services to their customers.

The assignment consist in studying the new approaches to operations and business processes and tools, in order to reflect the way in which organisations are evolving at the start of the 21st century.

To proceed I will first introduce the debate concerning organization evolution and the need for new methodologies to provide competitive solutions. Then I will focuses on two management innovation and change programs: Business Process Reengineering (BPR) and Total Quality Management (TQM) . These change management approaches are discussed in chronological order beginning with TQM and then the BPR.

I will finish with a comparison, and a discussion how these methods could improving the performance of operations.

Artist and poet create theirs works in response to the time in which they lives, wars emerge out of economic and political pressure, and companies change their structures in response to the need to follow their customers overseas, for instance. Therefore, to better understand the Operation Management in organisation today, it’s useful to understand how companies themselves are changing and the trend that are causing these change to occur. Perhaps most important, organisation today are under intense pressure to be better, faster, and more competitive. The combined effects of globalisation, the dematerialisation of economic activity, the acceleration of technological and social change, and the emergence of new trends toward a service society and the information age.

These trends have dramatically increased the degree of competition is virtually all industries, while forcing firms to cope with unprecedented product innovation and technological change. Companies in such environment either become competitive high-performers or the die. Indeed these trends have changing the nature of work. Of the many changes, the increase in customer sophistication has been most important. The customer is more demanding and seeks more variety, lower cost, and superb quality. The market economic structure switched from economy of scale (mass production) to economy of scope (variety). This economy of choice has emphasized variety over mass standardized products. The idea of purchasing a car designed to suit individual taste in such things as power, colours, and features has replaced the black Model T Ford syndrome. Industry has the difficult task of combining the efficiency of mass production with the variety and craftsmanship of pre-industrial revolution times. The customer dictates what is offered, and industry follows demands. The production-driven system of the mass production era has been replaced by a market-driven system.

We shall see how the organization cannot fix several objectives for time. Continually changing environments impose new demands and problems, Whether they concern shortage of raw materials, rising energy prices, new customer requirements or tougher competitive policies of rivals. A key part of the management function is to maintain an awareness of such changes and prepare responses to them. All these considerations are forcing companies to rethink their approach of the operations and business processes within organizations, in order to develop an operations change tools and techniques.

Total Quality Management, or TQM, is perhaps one of the most popular of the innovation and change programs which have emerged over the last few decades. First developed by US writers such as Deming (1982) and Juran (1986) in the post-war period, TQM has widespread appeal in both the academic and practitioner communities. This is largely because it offers a company-wide perspective on managing change that includes all members of an organization, from top management to operational and clerical personnel. In essence, TQM is concerned with quality improvement on a company-wide basis. It is a comprehensive approach to improving competitiveness, effectiveness and flexibility through planning, organizing, and understanding all the activities and tasks undertaken by people within an organisation.

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Despite the wide use of Total Quality Management ( TQM ), there is no generally agreed upon definition. In fact, it is not clear whether TQM is a system, a philosophy, or a business strategy. Ciampa (1992) characterises total quality in three different ways: the unifying principle, the outcomes, and the tools and techniques. The unifying principle is total dedication to customers so that their needs are met and their expectations are exceeded. The total quality outcomes include intensely loyal customers, minimized time so that costs decrease, a climate that supports teamwork and more meaningful work, and a general ethic of continuous improvement. The tools and techniques include quality control, quality assurance, reliability engineering, just-in-time production, organizational development, and leadership. Tenner and DeToro (1992) identified three fundamental principles of total quality: customer focus, process improvement, and total involvement. The customer focus should include both internal and external customers in order to ensure that the needs and expectations of the external customer are ultimately met. Together, these three principles have the effect of ensuring continuous improvement in the product or service offered. Process improvement requires first that variability be minimized and that the process is stable. When achieved, if the results are unacceptable, the process must be redesigned. Finally, total involvement begins with active leadership by senior management and includes efforts that use all of the employees in the organization. Involved employees will work together to solve problems, improve processes, and satisfy customers. Tenner and DeToro (1992) also identified six supporting elements: leadership, education and training, supportive structure, communications, reward and recognition, and

measurement.

Much of the research and focus on TQM has involved process issues, the how of TQM, and little on the content of TQM. Tenner and DeToro (1992) considered the firm’s orientation (customer or operations) and evaluated the effectiveness of TQM implementations. Those with a customer orientation used TQM successfully and were better performers. Dean and Bowen (1994) compared TQM with various management theories and identified areas where they are virtually identical, areas where TQM practice should be informed by management theory, and areas where new directions in management theory are suggested by TQM. In their analysis, Dean and Bowen (1994) characterize Total Quality as a philosophy or approach to management that can be characterized by its principles, practices, and techniques.

The three mutually reinforcing principles are a customer focus, continuous improvement, and teamwork, all of which are based on meeting a customer’s needs and expectations. Leadership is a key element in most prescriptions for TQM. Recently, Choi and Behling (1997) found that top managers’ underlying (often unspoken) orientations toward time, goals, and customers lead to different approaches to TQM, which in turn influence TQM’s chance of success.

There is no single recipe for a successful implementation of a total quality or re-engineering program. Krishnan, Shani, Grant, and Baer (1993), studied quality management programs and identified three sets of problems in their formulation and implementation:

Confusion arising from the pursuit of multiple quality initiatives and lack of clarity and consistency of program goals;
Inability to translate broad quality goals into quantitative targets, organisational structure for implementing quality programs, communication difficulties, and managing the transition from individual to organisational learning; and
Problem of consistency between quality programs and other strategic initiatives, particularly when simultaneously pursuing quality management and restructuring.

Business Process Re-engineering (BPR), or Re-engineering, emerged in the late 1980s and early 1990s as a new approach to managing innovation and change. Essentially it was designed to be highly prescriptive since it advocated that managers should constantly seek new and improved methods and techniques for managing and controlling core and service Business Processes (Belmonte and Murray ,1993).

Hammer (1990) introduced the concept of Re-engineering that has been accepted and has been tried in many companies. Hammer and Champy (1993) further popularised the concept Business Process Re-engineering (BPR) with their best selling book.

In it, they define Re-engineering as the :

“fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed” ( Hammer and Champy, 1993: 32).

They emphasize four key words: fundamental, radical, dramatic, and processes. They emphasize what Re-engineering is not. In particular, it is not the same as reorganizing or flattening an organization; it is not restructuring or downsizing; and it is not the same as quality improvement; TQM, or any other quality management program.

Hammer and Champy (1993) note that BPR and TQM have a number of common themes: both involve processes and both start with the needs of the customer. However, quality programs typically work with existing processes and seek to enhance them, whereas re-engineering seeks breakthroughs, not by enhancing existing processes, but rather by discarding them. With respect to bureaucracies, Hammer and Champy (1993) indicate that they cannot be eliminated as an objective. Rather, by BPR processes so that they are no longer fragmented, bureaucracy will no longer be needed. One distinguishing characteristic of BPR is the role of information technology (IT). Hammer and Champy (1993) characterize IT as an “essential enabler” for Re-engineering efforts.

In an article entitled: “Re-engineering work: don’t automate, obliterate” Hammer (1990) claims the essence of Re-engineering is about “discontinuous thinking” and the relinquishing of “outdated rules and fundamental assumptions that underlie operations”. Managers are criticised for “thinking deductively”. That is, defining a problem and then seeking its resolution by evaluating a number of possible remedies. Instead, Hammer and Champy (1993) make the case for inductive thinking. This is to “recognize a powerful solution and then seek the problems it might solve, problems the company probably doesn’t even know that it has”. Other writers suggest that Re-engineering is about serving the external environment through improved customer service and not simply about meeting a narrow range of internal performance targets. Thus, “Re-engineering is a radically new process of organizational change that many companies are using to renew their commitment to customer service” (Janson, 1993). But some writers question Re-engineering’s claims to radicalism and novelty, and also the notion that organizations can engage in a process of “collective forgetting”, of wiping the slate clean, and starting with a “blank sheet of paper” (Grint & Willcocks, 1995).

Recent surveys of executives have indicated frustration with BPR outcomes. Hammer indicated that 50 to 70 percent of all Re-engineering initiatives fail in achieving their objectives. Khalil (1995) indicated that causes of BPR failure included mismanagement of change, lack of know-how, and misunderstanding of re-engineering.

Hammer and Champy (1993), while providing a good description of the concepts associated with Re-engineering, did not focus on explicit guidance on how Re-engineering should be conducted.. Hales and Savoie (1994) described four phases for a BPR project: orientation; overall planning; detailed design; and implementation. They focus on the critical orientation phase because it provides the foundation for successful Re-engineering efforts. Based on their experience, Hales and Savoie (1994) identified ten “lessons learned” with respect to the orientation phase that are related to BPR success. The lessons learned include: commit to implementation; establish the business context, project scope, and expectations; agree on duration and resources; assemble a team of the best people; limit the team size; clearly define roles and responsibilities; communicate; encourage creativity; provide effective education and team building opportunities; and provide the best facilities, methods, tools, and support.

Khalil (1995) developed a life cycle perspective for BPR: The first phase is to conduct a “readiness for change assessment.” The findings of this assessment will help in identifying the scope of BPR projects and sensitise the culture and political environment to possible change. This is an important time to identify cultural issues that may affect employee insecurity and possible distancing from BPR efforts. With possible discarding of processes, the question of what are the positives for people naturally arises. Khalil (1995) recommends that the next phase is to identify which processes are targets for redesign. Typically, these should be processes that are central to the execution of the business strategy and currently fall short of customer expectations, management aspirations, and competitor performance. The third phase involves identification of potential BPR enablers, including information technology and human organizational enablers (e.g., autonomous teams, flattened organizations). The next phase is business analysis: to link the process vision and business strategy. This understanding provides a foundation for the next two phases: process analysis and process redesign. Process analysis requires that the existing process be understood and its performance measured before designing a new one. Traditional industrial engineering tools and information systems methodologies are useful here. Process design results in a prototype of the new process. Khalil emphasized that these solutions must be evaluated with respect to their relative benefits, costs, risks, and time frames. The final phase is process implementation, including a migration strategy to move from the current process to the new process. Finally, an essential element inherent in successful implementation of BPR projects is top management leadership and support (Hammer and Champy., 1993).

Both TQM and BPR are customer-oriented. They both aim on improving the customer satisfaction. Also, they both suggest thinking outside in. On the other words, they both suggest to think from the customer's viewpoint. Also, both TQM and BPR are process-oriented. They both target to alter the processes, but not just on the product. Moreover, they both take team approach.

Nearly all BPR projects are initiated by top-down approach. Since BPR would results great changes, staff resistance is obvious. Therefore, top management's support and commitment are very important. For TQM, both top-down approach and bottom-up approach are possible.

The basic assumptions of TQM and BPR are different. TQM assumes that the existing practices or systems are principally right and useful. The target of TQM is to improve on the basis of the existing system. However, BPR takes an opposite assumption. BPR assumes the existing system is useless and suggests starting it over. Unlike TQM that aims on smoothly and incremental improvements, BPR aims on dramatic results.

TQM emphasis on total involvement, including all the stakeholders. The involvement even extends to suppliers and customers. Also, TQM also suggests involving all the processes in the company, including human resources management, order fulfilling, manufacturing, marketing and customer management and others. However, for BPR, the project can be controlled to a specified area only.

Standardization is one of the key points of TQM. TQM aims on standardize the practices, thus achieving a consistent performance. It also makes that there is a certain degree of documentation for TQM. However, BPR emphasis on flexibility and believes that standardization would increase the complexity of the process. Therefore, standardization is rare in BPR and the level of documentation is much lower.

TQM emphasis on the use of statistical process control. However, there is no similar concern for BPR. On the other hand, BPR emphasis more on the enabling role of information technology.

TQM is a cultural issue. Once the culture is built, TQM is absorbed in the daily operation. However, BPR is a project. It is with a clear target that should be achieved as soon as possible.

In fact, BPR is a risky project that is suitable for organizations in deep trouble or facing great challenges. However, an organization cannot always be under BPR. TQM, on the other hand, can be treated as a consolidation approach for the organizations to maintain continuously improvements.

Conclusion

In contemporary business environments, organizations need to continuously adapt to new conditions and respond to competitive pressures. As a result of this, various change management approaches have been developed.

The ideas developed in this assignment have emerged since the early 1990s, Total Quality Management (TQM), is often compared to Re-engineering. Some people have said that the two are, in fact, the same, whilst others have even argued that they are incompatible. Michael Hammer argues that the two concepts are compatible and actually compliment one another. Both concepts are centered on a customer focus. The concepts of teamwork, worker participation and empowerment, cross-functionality, process analysis and measurement, and supplier involvement are significant contributions from quality management. In addition, the need for a “total” view of the organization has been re-emphasised by quality management in an era of extensive functionalisation of business. Quality management has also influenced company culture and values by exposing organisations to the need for change. Quality management has emphasized continuous and incremental improvement processes that are in control. Re-engineering, on the other hand is about radical discontinuous change through process innovation.

There are some similarities and differences between TQM/Continuous Improvement and Re-engineering. The dissimilarities that have been identified may create an impression that Re-engineering is outside the realm of quality management. The Re-engineering guru Hammer, together with quality gurus such as Deming and Juran, all agree that innovation and breakthroughs in processes are an essential part of quality management. TQM assumes that the design of the process is sound and that all it needs is some enhancement. But if the world has changed dramatically since the process was first (or most recently) designed, the current design may be fundamentally flawed and incapable of delivering the required performance: Re-engineering is then necessary.

Bibliography

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References

Belmonte, R. and R. Murray. (1993). ‘Getting ready for strategic change: surviving business process redesign’, Information Systems Management: Summer: pp 23-29.

Choi, T.Y. and Behling, O.C. (1997). ‘Top managers and TQM success’, The Academy of Management Executive, 11:1, pp. 37-47.

Ciampa, D., (1992). Total Quality: A User’s Guide for Implementation, Reading: Addison-Wesley.

Dean, J.W., Jr. and Bowen, D.E.(1994). ‘Management theory and total quality: Improving research and practice through theory development’, Academy of Management Executive, 8:3, pp. 20-26.

Grint K., & Willcocks, L. (1995). 'Business Process Reengineering in Theory and Practice: Business Paradise Regained?', New Technology, Work and Organization, Vol.10:2, pp.99-109.

Hammer, M. (1990). ‘Reengineering work: Don’t automate, obliterate’, Harvard Business Review, 68:4, pp. 104-112.

Hammer, M. and Champy, J. (1993). Reengineering the Corporation: A Manifesto for Business Revolution, New York: Harper.

Hales, H.L. and Savoie, B.J (1994). Building a foundation for successful business process re-engineering, The Academy of Management Executive, 8:4, pp. 17-19.

Janson, R. (1993). ‘How re-engineering transforms organizations to satisfy customers.’, National Productivity Review (Winter): pp. 45-53

Khalil, O.E.M. (1995). ‘Business process reengineering: A life cycle perspective’, Proceedings of the Northeast Decision Sciences Institute, pp. 455-458.

Krishnan, R., Shani, A.B., Grant, R.M., and Baer, R., (1993). ‘In search of quality improvement: Problems of design and implementation’, Academy of Management Executive, 8:4, pp. 7-16.

Tenner, A. R., DeToro, I. J. (1992). Total Quality Management, Englewood Cliffs: Addison-Wesley.