W-306
ONLINE FILE W15.11
RESTRUCTURING PROCESSES
AND
ORGANIZATIONS
Redesign, restructuring, and reengineering efforts involve many activities, three of
which are described in this section: redesign of one or a few processes, cycle time
reduction, and restructuring the entire organization
REDESIGN OF ONE
OR A FEW
PROCESSES
Redesign efforts frequently involve only one or a few processes. One of the most
publicized examples of process redesign is the accounts payable process at Ford
Motor Company (Hammer and Champy, 1983). The Ford example, as shown in
Figure W15.11.1, demonstrates changes in a simple process. Khan (2000) describes
the restructure of an air cargo process that was much more complicated and
involved several IT tools.
Cycle time refers to the time it takes to complete a process from beginning to end.
As discussed earlier, competition today focuses not only on cost and quality, but also
on speed. Time is recognized as a major element that provides competitive advantage, and therefore cycle time reduction is a major business objective. The success
of Federal Express, for example, is clearly attributable to its ability to reduce the
delivery time of packages. It does this by using complex computer-supported systems that allow flexible planning, organization, and control (see Wetherbe, 1996).
Additionally, the Internet, extranets, and intranets provide a means of economically reducing cycle time by cutting communications time through the use of e-mail
and EDI (also Internet/EDI) and by allowing collaboration in design and operations of products and services.
CYCLE TIME
REDUCTION
RESTRUCTURING
THE WHOLE
ORGANIZATION
The fundamental problem with the hierarchical organizational structure is that any
time a decision needs to be made, it must climb up and down the hierarchy. If one
person says “no” to a pending decision, everything comes to a screeching halt. Also,
if information is required from several “functional sources,” getting all the right
information coordinated can be a time-consuming and frustrating process for
employees and customers alike.
So, how is organizational redesign done? It varies, depending on the organization and the circumstances. For example, providing each customer with a single
New Process
Old Process
Supplier
Purchasing
Purchase order
Copy of
purchase
order
Supplier
Purchasing
Purchase order
Goods
Goods
Ford receiving
Ford receiving
Receiving document
Invoice
Database
Accounts payable
Accounts payable
Payment
500 Employees
Figure W15.11.1 Reengineering processes at Ford Motor Company.
Payment
125 Employees
W-307
Customer
Call
center
Account
manager
supported
(via a portal)
by. . .
My
accounts
Customer
accounts
Databases
Checking
accounts
Expert system
Installment
loans
Backed up by. . .
Savings
accounts
Mortgage
loans
Investment
expert
Trusts
Etc.
Statement
Etc.
Figure W15.11.2
Reengineered bank with
integrated system.
Loan
expert
Consolidated
statement
point of contact can solve the stovepipe problem. In the traditional bank, for example, each department views the same customer as a separate customer. Figure
W15.11.2 depicts a redesigned bank in which the customer deals with a single point
of contact, the account manager.
The account manager is responsible for all bank services and provides all services to the customer, who receives a single statement for all of his or her accounts
and can access all accounts on the same Web page (“My Accounts”). Notice that the
role of IT is to back up the account manager by providing her with expert advice on
specialized topics, such as loans. Also, by having easy access to the different databases, the account manager can answer queries, plan, and organize the work with
customers.
An alternative to the single-point contact is a networked structure. In this structure, regardless of where and when a client contacts the company, the networked
agents would have access to all customer data, so that any employee can provide
excellent customer service. Companies such as USAA, Otis Elevator, and others
have all agents located in one city and give customers around the country the same
toll-free number and a centralized Web address. In this model, the company also can
install a computer-based call-center technology, which brings up complete customer
information (or information about a customer’s elevator in the case of Otis) on the
computer screen, whenever a customer calls. This means that anyone who answers
the call would know all the information necessary to make a quick, frontline decision (see Chapter 12). There is no need to ask questions of the customer, and any
agent can give personalized and customized service. This is especially important in
services such as reservation systems for hotels or airlines, as well as for utility companies, financial services, universities, and health care services.
W-308
References for Online File W15.11
Khan, M. R. R., “BPR of an Air Cargo Handling Process,” International
Journal of Production Economics, January 2000.
Hammer, M., and J. Champy, Re-engineering the Corporation. New
York: Harper Business, 1983.
Wetherbe, J. C., The World on Time. Santa Monica, CA: Knowledge
Exchange, 1996.