BUSINESS PROCESS REENGINEERING AND ITS IMPLEMENTATION. A COMPARATIVE STUDY OF THE BANKING AND MANUFACTURING SECTOR

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

BPR could be described as a process that contributes to each company’s transformation in a bid to achieve a radical and dramatic improvement .BPR would continue to remain constant in our business activities as a means to restructure our aging processes to achieve the strategic objectives of increased efficiency, reduced costs, improved quality, and greater customer satisfaction (Hammer and Stanton, l995:32)

As a result of improved technology and customer awareness, companies worldwide have become conscious of the need to constantly change their processes in other to serve their customers better and at the same time remain efficient and cost effective.

According to Davenport and Short (1995:11-27) BPR is ‘a set of logically related tasks performed to achieve a defined business outcome’. A business process in this case is a structured and measured set of activities designed to produce a specified output for a customer or a particular market. In the views of these authors, a business process has two very important characteristics; internal or external customers and ability to cross organizational boundaries.

Hammer & Champy (1993:35) on the other hand defined BPR as ‘the fundamental rethinking and radical redesign of business process to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, services and speed’. A number of other literature have been published on process reengineering which covered the processes, myths and its relations with other restructuring tools e.g. Grover & Kettinger in Reengineering concepts, methods and Technologies, Michael Hammer in Beyong Reengineering.

In recent times, the focus on customers, competition and change have become the new watchword for businesses around the world and the old rigid structure has proved inadequate to cope with the flexibility and quick turnaround being demanded by customers around the world presently (Hammer & Champy.l995:73).

In our opinion, between 1970 and a decade after, the structure of businesses in Nigeria hardly changed with importation of raw materials and cheap finished goods being the other of the day. The revenue generated from the oil export did not help matters as the successive governments embarked on ill-conceived projects and few ‘white elephants’ that led to drain on the foreign exchange reserves.

Although, this period created a level of economic growth with many factories springing up in most urban centers of the country, it also served as a neglect of our agricultural sector and an exodus from the rural areas to urban centers. By the mid 1980’s our dwindling foreign imports and the issuance of import licenses could not be utilized as our international trade partners could no longer guarantee our imports (Michael Stevens and Associates, 1994:19).

In 1986, it was evident that efforts had to be made to be address the economic recession and discontinue the false perception of life shared by all and sundry. This led to the introduction of the SAP which major steps include:

Stringent economic measures,

Trade liberalization

Guided deregulation

And currency devaluation (Agusto & Co, 1994:15)

A number of financial reforms were implemented which resulted in increased activities in the financial sector. These activities included liberalization of imports of goods and services, interest rate and foreign exchange reforms.

With hindsight, the consequent effects of this was a strange hold on the manufacturing sector, breakdown of shaky infrastructure and the collapse of the banking sector which had witnessed a growth in the number of participants as a result of these reforms earlier mentioned.

Majority of the corporations operated well below optimal level due to lack of foreign exchange and credit squeeze. The financial sector’s problem was caused by illiquidity and insolvency as many banks began to fail to meet with their customers’ demand for funds.

The manufacturing sector took the brunt of these economic measures as their sales took a downward turn. Although, the sector was classified as a preferred sector, together with agricultural and housing but with no credit facilities to secure foreign exchange for raw materials nor enough sales to generate adequate revenue to repay outstanding loans, the predicament of this sector soon became evident.(CBN Briefs,1998).

A number of these companies employed numerous tactics to redress the situation; some employed a three day working week, few rationalized while some closed down all together. Some of these companies that survived the downturn in the economy at this period were those that changed their old structures and their old processes with the customers as their focus.

The process steps are considered activities that transform a set of inputs into a set of output (goods and services) for another individual. Improving business processes is paramount for businesses to stay competitive in today’s market place. Over the past few years, businesses have been forced to improve their processes because the consumers are demanding better and better products and services. Coupled with this is the competitive issue facing businesses, the opportunities available to each customers to seek service/goods from other outlets if not satisfied with that provided by a particular company.

Inevitably, with the opening of world markets and increased free trade, many businesses started business process improvement as competition became more intense and coupled with the reality that change was the only hope of survival.

The process of reengineering centers on understanding the current process and build in performance improvements into the process accordingly. Having said this, it is important to note that there are a few different schools of thought in BPR. Extreme school assumes that the current process is irrelevant and should be dismantled and rebuilt while another is of the opinion that you only need to bridge the gap between the current process, technologies and structures (Hammer, 1995: lO4).

1.2 Statement of the Problem

The issue of process redesign has become a matter of survival for most companies and as a result they wanted breakthrough performance changes immediately, faster than what TQM could achieve. Total quality managers focused on incremental change and gradual improvement of business processes while proponents of BPR often seek for radical redesign and drastic improvement of process.