Estimates
according to Rand Corporation Paper titled The 21st Century at Work
Forces Shaping the Future Workforce and Workplace in the United States mentions
that in the coming 10-15 years, work in the United States would have been
shaped by demographic trends, technological advances, and economic
globalization (Karoly 2004) The article further explains that through synergies
across technologies and disciplines will generate advances in research and
development, production, processes, and the nature of products and services.
This will further support higher productivity growth, and change the
organization of business and the nature of employment relationships. (Karoly
2004)
BPR BPO and Technology
Business
Process Reengineering (BPR) was first introduced by Hammer, Davenport and
Short, as an approach to management process involved in raising
performance. Since its initiation, it
has become popular management tool for dealing with rapid technological and
business change in today’s competitive environment. BPR evolved from the
experiences of a few US-based companies in the late 1980’s (Pellicelli 2012)
Business
Process Outsourcing (BPO) is the model of delegation of one or more information
technology enabled business processes to an external source provider. Outsourcing of business processes that
involve the manipulation of either physical or informational objects
constitutes contract manufacturing.
Information Technology is integral to process execution and management
in BPO. This is true of transactional processes such as administration or
processing services, where IT performs simple automation or process updates, as
well as more strategic processes such as customer analytics or financial
planning, where IT facilitates linkages with other processes and delivers
business information to process workers in a timely fashion. (Mani 2010)
Business
Process Reengineering generally is more dramatic and higher risk than Business
Process Outsourcing. According to Bain
and Company there are five steps to the business process reengineering:
• Refocus company values on customer
needs
• Redesign core processes, often using
information technology to enable improvements
• Reorganize
a business into cross-functional teams with end-to-end responsibility for a
process
• Rethink basic organizational and
people issues
• Improve business processes across the
organization (Rigby 2013)
According
to the Rand Corporation they have predicted a vertical disintegration, whereby
firms change the production process and specialize in broad products and
services that define core competencies, while outsourcing non core activities.
(Karoly 2004)
Some
of the technologies that have helped enabled business re-engineering are:
• Shared databases, making information
available at many places
• Expert systems, allowing generalist
to perform specialist tasks
• Telecommunication
networks, allowing organizations to be centralized and decentralized at the
same time
• Decision support tools, allowing
decision-making to be part of everybody’s job
• Wireless
data communication and portable computers, allowing field personnel to work
office independent
• Interactive videodisk, to get
immediate contact with potential buyers
• Automatic
identification and tracking, allowing things to tell where they are, instead of
requiring to be found
• High performance computing, allowing
on the fly planning and envisioning.
(Johnson 2011)
According
to Gunasekaran, in Modeling and analysis of business process reengineering in
the 1980s, Total Quality Management (TQM) helped incremental process
improvements in manufacturing/service organizations, but in the 1990s it was
replaced by BPR using advanced IT (Gunasekaran 2002) according to the article the
most efficient method was process mapped through the restructuring of an
information system that should support functional integration to improve
productivity and quality. There are several modeling methods for IT to help the
BPR process. Since the strategy begins
with a top down approach here are some of the steps and software.
The
decision support systems help businesses decide on a strategic level. These enterprise systems help select suitable
strategies and methods for reengineering based on a set of performance measures
and metrics. Decision Support Systems (DSS) have evolved from two main areas of
research the theoretical studies of organization decision making conducted
during the 1950s and 1960’s at Carnegie Institute of Technology and Massachusetts
Institute of Technology respectively. (Shim, J.P. 2002)
Some
of the DSS systems in use today are in the healthcare field particularly a
component of the Electronic Health Records. This allows the ability to improve
care at the point of delivery with a variety of tools called Clinical Decision
Support System where the software provides general clinical knowledge and
guidance, intelligently processed patient data, or a mixture of both; and
information delivery formats can be drawn from data and order entry
facilitators, filtered data displays, reference information, alerts, and
others. (Teich, J 2012)
The
business process system design helps with system design considering the non
value added activities the tools used for this activity are usually the analytical
models such as queuing and simulation models. (Gunasekaran 2002)
Under
the umbrella of project management are the Program Evaluation Review Technique/
Critical Path Method (PERT/CPM) and flow charts are used for the implementation
of various reengineering processes. (Gunasekaran 2002)
Under
the area of reengineering business process there are activity based analysis
(ABA) and workflow model including flow charts used to analyze the business
process and identify the value and non value added activities. (Gunasekaran
2002)
To
understand the business process system there are Integration Definition models
(IDEF), European Forum for Quality
Management (EFQMO) Models and Petri-Net Models these produce visual forms.
(Gunasekaran 2002)
How the Technology works
How
does the business achieve its goals? How does this tie in to the achieving
customer needs? According to an article in Educause Quarterly the University of
Wisconsin had an issue with their computer systems. Some of the systems
implemented in the 1980’s could not keep up with the web environment in the
90’s so the school system purchased a system wide license for Peoplesoft. This
tied some of the older systems together an Admissions module, a Student Records
module, Student Financials module. With these new modules the school
administration was able to produce more accurate and meaningful reports for
various levels of the university.
Some
of the main things highlighted by this Process reengineering were the sharing
of multiple databases also known as modules between different parts of the
business. In this case they were student Finance, Admissions, and Student
Records.
Some
of the telecommunications networks allowed for multiple access of information
in a timely manner. E-Hive web application allowed successive enrollment by
student classification Seniors, Juniors, Sophomores, and Freshman. If a student
doesn’t meet the time and classification requirements they may not be allowed
to enroll during that window. Students with financial hold will not be allowed
to register this is another example of the database integration that the school
did not have before the integration. This is also an example of shared decision
making between users. One can easily see the parallel between this situation
and some of the technology drivers. (Yakovlev 2002)
Some
of the interesting finds were Mutual Benefit Life had an issue where it would
take several months to process an insurance policy with 225 people in 5
departments using 19 specialist undertaking 30 specific tasks and 7 different
computer systems. It is now processed the same day with 1 case manager, 55%
less staff doing 20% more business and a 40% cut in overhead using a single
computer system. (Norman 1993)
Process Integration
According
to the Chartered Institute of Purchasing and Supply in an article titled
Business Process Re-engineering & Business Processing Outsourcing – what
the procurement professional needs to know BPR is just one element of making a
step change.
When
an organization has chosen the appropriate process and considered the use of IT
to deliver that process, it will need to think about other aspects such as
structure, systems, people, culture, and of course whether it is obtaining
optimum value for money from its external suppliers. Are they going to do the process
re-engineering in house or will they outsource the process. (Bates 2013)
So
from a more generic view a firm may analyze Total Quality, then decide if a
more dramatic change is needed or re-engineering. Finally the question becomes
if the firm wants to use in house staff to complete the engineering or
outsource the process. (Bates 2013)
Domestic vs Offshore Outsourcing
According
to an article in Industrial Labor Relations Review estimates staffing services
reduced the amount of employment by manufacturers by 6 million or 3%. The rapid growth of blue collar workers in
the staffing sector began in the 1980’s. In 2010 the staffing services sector
comprised of three industries temporary help services, professional employer
services, and employment agencies comprised 77%, 15%, and 9% respectively. (Dey 2012)
American
manufacturing companies chose to outsource production overseas, for various
reasons. Some reasons were to establish presence in China, Brazil, and India
others were the low cost of labor. This low cost labor allowed the products to
flood the global marketplace. There are,
hidden costs of outsourcing estimated to be between 14 and 60 percent of
purchase price according to CCMP Supply Chain Quarterly article titled The 10
hidden costs of outsourcing. According
to the article there can be some faulty assumptions:
·
Oil Prices have tripled since 2000,
making shipping more expensive
·
Wages in China have increased five
fold
·
Some American Labor Unions are
becoming globally competitive
·
The natural gas boom in the United
States has lowered operating and facility costs. Natural Gas in Asia can be
four times as high as those in the US.
·
Higher material-value content in
products combined with productivity gains through continuous improvement has
made chasing labor savings outdated.
·
Much of the labor savings has been
trumped by waste and overhead costs required to make the supply chain function
well. (Burton 2013)
Because
of these assumptions and points of friction some authors are expecting
manufacturing to return to the US.
According to Mayer in his article Strategies: U.S. companies are
bringing back manufacturing jobs he argues that some 70% of large manufacturers
had some production in non U.S. locations. (Mayer 2013)
Conclusion
Information Technology has had a
powerful effect on the process of business operations. We have seen the
manufacturing sector undergo several changes as a result. From Total Quality Management, to Business
Process Re-engineering to Business Process Outsourcing business have transition
from a centralized hierarchy to a, “disintegrated” firm with production and
manufacturing overseas. This has all been
enabled with Information Technology systems that integrate data systems for
de-centralized information with real time implications due to newer World Wide
Web applications and networking. I think the next step is to move the business
based upon where the services or products are consumed AJ Sweatt has used the
term of Manufacturing in Markets of Consumption. (Sweatt 2011) Manufacturing and servicing both have
abilities to be decentralized at some point.
There has to be some gained benefit at approximation of consumption in
the future it might be some other method of evaluating where these processes
take place and this in itself will could lead to a further change in the way
that business is conducted.
References
Bates,
James (2013) Business Process Re-engineering and Business Process Outsourcing
Retrieved
Burton,
Terence (2013) The 10 hidden costs of outsourcing, CCMP’s Supply Chain
Quarterly Retrieved
from: http://www.supplychainquarterly.com/topics/Strategy/20130621-the-10-hidden-costs-of-outsourcing/
DEY,
M., HOUSEMAN, S. N., & POLIVKA, A. E. (2012). MANUFACTURERS' OUTSOURCING
TO
STAFFING SERVICES. Industrial & Labor Relations Review, 65(3),
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Gunasekaran,
A; Kobu, B. (2002) Modelling and analysis of business process reengineering
International
Journal of Production Research
Retrieved from: http://www.umassd.edu/media/umassdartmouth/businessinnovationresearchcenter/publications/modelling_bpr.pdf
Johnson,
Abhinav (2011) Role of IT in BPR Retrieved from:
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Whinston, A. (2010). AN EMPIRICAL ANALYSIS OF THE
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BUSINESS
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The Business
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Christer (2002) Past present, and future of decision support technology,
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