Business Process Re-engineering


Porter’s Competitive Model


Porter’s 5 Threats

•      Entry of New Competitors

•      The Power of Suppliers

•      The Power of Customers

•      Substitute products or services

•      Rivalry between existing firms


8 Responses

•      Cost leadership

•      Differentiation of product or service

•      Niche focus

•      Growth

•      Alliances

•      Innovation

•      Internal Efficiency

•      Customer orientation


Case Study

You manage a paper mill in Wisconsin

•             What are examples of threats you might face according to Porter?

•             What 8 responses should you be considering?


What does this have to do with Business Process Re-engineering?

Internal efficiencies are assumed.  Unless you can take waste out of your business, you will always be at a competitive disadvantage.  BPR alone is NOT enough.  It assumed you are looking for innovation and better customer relations, etc.  But at some point your success depends upon your costs of doing business.  If your costs are higher than the other guy’s costs, you lose.


How else can you cut costs?

  • Drop wages
  • Drop benefits
  • Use cheaper materials
  • Push employees to work harder
  • Move manufacturing off-shore



  • Improve your business processes to
    • Improve internal efficiencies
    • Create alliances
    • Support growth
    • Link more fully to your customers
    • Differentiate your product or service




Internal Efficiencies

KC – “rec to check”  a process improvement to improve the paper flow from requisitioning an item to paying for it with fewer steps and less internal cost.


Supply-chain improvements to reduce inventory carried while improving quality


“Scaling” systems that allow the company to handle far more customers with only small additions to staff.

Customer connections

Customer Relationship Management (CRM) software that improves contacts with customers and reduces sales costs


Tracking features that let customers follow their product as it is being built and shipped.


Principles of Business Process Re-engineering

·        Shared information

  • Business value (every action must add value)
  • Reusable technology -- off-the-shelf software and processes
  • Just in Time
  • Industry benchmarks
  • Standardization around industry processes
  • Outsourcing non-core activities



Additional BPR activities

•      Mass customization

Plexus in Neenah produces circuit boards in quantities from 1 to 10,000.  Its ability to set up a production line for just a few items lets it compete with Chinese factories.

•      Flattened organizational structure



•      Cycle time reduction

Cars used to take 5-6 years from basic design to delivery of new models to the showroom.  Now it can be done in 20 months.



IT Support for BPR activities

• Corporate information sharing

•      Centralized Databases - ERPs

• Work simplification

•      Single data-entry point

• Redesign of processes

•      Electronic Data Interchange (EDI)

• Flattened organizational structure

• Intranets

• Cycle time reduction


• Empowerment


• Teams

• MS Outlook – emailing and groupware