COMBINING QUALITY AND REENGINEERING TO ACHIEVE OPERATIONAL EXCELLENCE.

Autor: Fernando Yanine.

PRODUCCIÓN, PROCESOS Y OPERACIONES

11-2004

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The question that I am most frequently asked about Reengineering is how does it relate to quality improvement. Throughout my work, as a university professor and as a consultant to industry, I have had the opportunity to realize that there exists a widespread lack of knowledge about the different tools and technologies available for process performance improvement and process management. This usually leads to misunderstandings and poor decision making when it comes to choosing an alternative from the vast arsenal of tools and techniques available. Knowing which is the right option is important, there is no doubt about it, but it is also important to know when and how to use each one of them. This is specially true about Reengineering and Total Quality Management (T.Q.M.).

ABSTRACT
The question that I am most frequently asked about Reengineering is how does it relate to quality improvement.
Throughout my work, as a university professor and as a consultant to industry, I have had the opportunity to realize that there exists a widespread lack of knowledge about the different tools and technologies available for process performance improvement and process management. This usually leads to misunderstandings and poor decision making when it comes to choosing an alternative from the vast arsenal of tools and techniques available. Knowing which is the right option is important, there is no doubt about it, but it is also important to know when and how to use each one of them. This is specially true about Reengineering and Total Quality Management (T.Q.M.).
The purpose of this paper is first to contribute with some background and fundamental concepts that will allow me to shed more light into the subject, specially for those who are not familiarized with the concepts in depth; primarilly to allow the reader to develop a better knowledge and understanding of the nature and purpose of each one of these business performance improvement technologies. Secondly, to formulate a proposal with regard to the application of Reengineering and Quality/Continuous Improvement programs in companies from different sides of the industrial spectrum, in order to achieve operational excellence, which will enable companies to develop and maintain their competitive edge, in a scenario marked by the frenzy of technological change, the ferocious competition and an ever more sofisticated customer, and at the same time, juggling with the uncertainty of the results in the numerous business performance improvement efforts carried out by such companies.
 
INTRODUCTION

Seventy years ago, the Bell Laboratories physicist Dr. Walter A. Shewhart pioneered the use of statistics to reduce process variability in manufacturing at AT&T. Shewhart´s ideas helped the telephonic giant set up a vast and complex communication network throughout the United States. But its ultimate significance was even greater. His ideas were the basis for the modern days quality improvement wave.
 
His ideas, although extremely powerful and vissionary, were not embraced immediately. On the contrary, it took a world war and the japanese competition after the war, shy and low profile at first but with far reaching consequences for the west, as it was later seen, before the rest of the world would begin to adopt Shewhart´s techniques as well as those of other quality emisaries like W. Edwards Deming , J. M. Juran and Kaoru Ishikawa. At first relegated to the factory floor, the quality improvement techniques have been sweeping inefficiencies, burocracy and waste in warehouses, storage facilities,departments and executive offices in a great number of organizations around the world.
 
In the United States, the search for continuous performance improvement has been very intense. Indeed it has reached far beyond the boundaries of quality control, in its relentless effort to reduce process variability and product design errors ; removing defects in each of the product and service development process's phases.
 
It has turned itself into a state of mind for thousands of top executives and managers of many organizations around the world. It is a powerful concept that strengthens and empowers organizations, enabling them to deliver what the customer really wants .
 
Yet in the last three years, another approach to process management and business performance improvement,--Business Process Reengineering--- with far different implications and scope of action has been capturing the imagination of an ever growing number of executives, since Michael Hammer's article " Reengineering Work; Don't Automate, Obliterate" first appeared in the july-august, 1990 issue of the Harvard Business Review. Even those with strong quality programs and background in their organizations. In my view, the interest in business reengineering reflects a growing realization that the continual and continuous improvement of Total Quality programs are necessary --- but not enough, specially in troubled economic times, characterized by the frenzy of technological change, the ferocity of world wide competition, and the uncertainty of the results in numerous business improvements efforts carried out by so many companies under different banners (JIT, MRP II, KAISEN,TQM, etc.)
 
With the scenario we are facing nowdays, companies call for periodic, continuous and also massive improvements in a select number of key business processes.
 
JUST WHAT IS REENGINEERING ALL ABOUT ?

Reengineering involves the radical redesign of the business processes, organizational structures, management systems and values/beliefs of an organization in order to achieve breakthroughs in business performance. Its underlying premise is that most of our present business processes and process management, in general, are the product of accretion--- work methods designed, added on to, tweaked and reconfigured over dozens, sometimes hundreds of years.
 
Despite the advent of the computer some forty five years ago, our basic approach in operations, specially in manufacturing, with sequential steps-type processes and assembly-line procedures, as well as service industry protocols, have remained essentially intact. In fact, most computerization efforts have only further cemented the status quo, and at significant costs, as it proved to be the case during the 1980's decade.
 
In contrast, Reengineering challenges the fundamental assumption governing the design of work processes. Many of these assumptions are no longer valid because information technology has altered the equation. The new organization is finally emerging, after much downsizing and restructuring-delayering was done during the last decade. The companies of today are realizing more and more that their main strategic ingredient in the race for competitive performance is information, (its multiplicity of applications, its influence in the management styles, the effect on the organizational structures and the influence it has had in defining the professional profile of the information-age employee; one whose expertise is based on broad-range knowledge, capable of approaching a problem from a variety of angles, among other things.) and management has to come in tune with this.
 
This is where Reengineering comes into play. I believe that in definition, technique and results, business Reengineering is distinct from Total Quality Management/ Continuous Improvement principles.
 
But I also believe that companies need both, business Reengineering and Continuous (and sustained) Improvement to become and remain highly competitive.
 
This means that organizations should realize :
 
--- Continual and continuous improvement in a wide range of tasks, departments, functions, and individual processes and subprocesses, through initiatives generated by Quality progarms.
 
--- Massive, spectacular improvements, of such magnitude that they will set a new standard of performance, in a few critical business processes, which by definition, operate across functional or departamental lines, by reengineering these processes. Reengineering demands identifying first of all those aspects of the business process in which a sizeable improvement will generate in the customer's eyes a value added perception which will outgrow by far the investment of resources made.
 
HOW DO REENGINEERING AND QUALITY PROGRAMS COMBINE ?
 
The question that I am most frequently asked about Reengineering is--- how does it relate to quality improvement? The people who ask this question are usually operating under one of two common assumptions:
 
--- They either think that Reengineering is the same as Total Quality Management--- and say : yeah, we are doing that already, as part of our quality improvement program (usually T.Q.M.).
 
--- Or, on the other hand, they see that they oppose one another.
 
Both assumptions are wrong. The truth is that Reegineering is complementary to Total Quality. Both are important tools that can be used to improve process performance in companies of all sides of the industry spectrum. Both are necessary in todays's enterprize, whether it is a manufacturing or a service company, in order to achieve order of magnitude improvement. A "breakpoint", being reached by taking a great jump, going over and away from the competion, outcompeting it by far in overall competitiveness and leadership; helping sustain the improvements already made and paving the way just forged through continual and continuous process improvement :
 
* It is continual in the sense that companies should always be doing it.
 
* It is continuous in the sense that quality improvement, unlike Reengineering, doesn't come in great jumps over the process performance (or productivity) curve.
 
On the other hand, we have that business process Reengineering is episodic, not continual. It is used occasionaly and only when the circumstances so require it. Neither is it continuous : Reengineering seeks to achieve massive improvements, which resemble a great jump in process performance, as it is most often refered to, over the productivity of a select group of business processes, and this is carried out one time over a certain extense time span.
 
The Quality approach works tipically within the framework of an existing process. It seeks to reach constant and continuous incremental improvements in a wide range of tasks which are relatively narrowly defined. Reengineering on the other hand, seeks to break through the framework of existing process management and operation, and to obtain sizeable, spectacular improvements. Sometimes quality improvement programs may reach similar results as those obtained with Reengineering, but the tools and techniques employed, by themselves, almost never do.
 
When people turn themselves enthusiastic and empowered around a continuous improvement program, with initiatives in and about quality issues and the elimination of waste, sometimes they produce breakthrough ideas due to the relevance of their contribution ( fuled by a powerful, company-wide collective effort) . But, unless we provide the staff taking part in these programs with the necessary fact-based management tools and the appropriate training required to perform in such endevour, these breakthroughs are only accidental.
 
Reengineering and Continuous Improvement share the same orientation, toward business processes; both can coexist under the same umbrella, namely "Precess Management". The organizations need to count on their ability to identify their key processes, and to assign a "process owner" to them who will be held accountable for their operation and improvement. Both methodologies, Quality and Reengineering, are tools to be used by the process owner, and both, along with several others at his disposal, are part of his tool kit.
 
One of the biggest challenges that today's companies face is simply to identitfy just what is the situation they are in. What is the nature of the problems they are facing ?. What do they involve ?, in terms of the organizational structure, the management styles and systems, the execution of the business processes, etc. Indeed in many cases, just to identify these key business processes themselves is a formidable task.
 
Business processes, as they are usually refered to in the literature, are those processes that span several functional and departmental lines, as it was pointed out earlier, and their scope of action involves numerous functions, from several different areas of the organization. Nobody has a name for each and every one of them, and there doesn't exist an "owner" for each. For example, the extense activity of begining with a product concept and ending up with a product in the market, has no specific name to it. There is more to it than people care to suggest when they say "Product Development", when refering to this activity. The same occurs with the sales process. Taking a sales request goes from the moment in which an order for certain goods and/or services is received, to the moment in which these goods are dispatched or services are rendered; but in reality, the process begins when a sales order is received and ends when the customer is really happy with his or her purchase. It is necessary to identify and to approach these wide spectrum processes, in order to obtain massive improvements that only Reengineering can generate .
 
Reengineering and Continuous Improvement Process(CIP) are applied under different circumstances :
 
--- Reengineering is usually, but not exclusively, indicated when the company's situation is drastic, when incremental improvement measures, projected over a rather extense period, are inadequate and when, as it is normally the case, you have decided to "throw the towel" over the process current conditions.
 
--- After you have reengineered (radically redesigned) the process, you need to apply continuous improvement (through Total Quality-like programs) in order to upgrade and sustain the new model and to further elaborate on it, otherwise it will decay. Or at best it will have not reached its fullest performance potential by continuously refining the model.
 
CONCLUSION

Reengineering simply establishes a new starting point. A new standard of performance for a given process, which is later improved continuously and continually. When the marginal contributions that continous and continual improvement render are not enough--- then maybe in three to five years from now, it might be time to reengineer again.
 
ACKNOWLEDGEMENTS

I would like to express my appreciation for the valuable contribution of my many students, with their active participation in class. Important comments and ideas have come out of that, as well as working with them over senior projects and graduation seminars at the universities where I work. I would also like to mention the important ideas and concepts that have materialized through the consulting work I have done and the always enriching client-consultant interaction that develops from it.
 

Fernando Yanine. - fyaninearrobaterra.cl  

Professor & Consultant Department of Business Administration  Faculty of Administration & Economics   Universidad de Santiago de Chile Casilla 307, Correo 2, Santiago, Chile