Is Automation Always the Answer?

By: ernest madara

The hype of the millennia is over and as usual, organizations are struggling with their usual challenges and issues in the 21st century. In the late 80s and earlier 90s saw an emergence of concepts, postulates and approaches to modern management with gurus such as Michael Hammer, James Champy, Thomas Davenport et al. providing radical approaches in ushering in the millennium.

There are those that have advocated for heavy investment in information technologies as a business enabler in leapfrogging organizations into their vision. History is likely to repeat itself, especially organizations that go for products as opposed to solutions. There has to be a thorough understanding of business needs and how information technology can be aligned to the business strategy. This is likely going to bring a change to the organization, in terms of its structure, culture and its core business processes etc. Whereas it is easy to initiate change, the most challenging aspect is the management of the change itself.

Business Process Reengineering is a management approach aiming at improvements by means of elevating efficiency and effectiveness of the processes that exist within and across organizations. Business process reengineering is also known as BPR, Business Process Redesign, Business Transformation, or Business Process Change Management.

Total Quality Management (TQM) is a set of management practices throughout the organization, geared to ensure the organization consistently meets or exceeds customer requirements. TQM places strong focus on process measurement and controls as means of continuous improvement.

Just-in-time (JIT) is a "a philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity". It also has been described as an approach with the objective of producing the right part in the right place at the right time (in other words, "just in time"). Waste results from any activity that adds cost without adding value, such as the unnecessary moving of materials, the accumulation of excess inventory, or the use of faulty production methods that create products requiring subsequent rework. JIT (also known as lean production or stockless production) should improve profits and return on investment by reducing inventory levels (increasing the inventory turnover rate), reducing variability, improving product quality, reducing production and delivery lead times, and reducing other costs (such as those associated with machine setup and equipment breakdown).

Kaizen , is a Japanese term for "change for the better" or "improvement"; the English translation is "continuous improvement" or "continual improvement").Kaizen aims to eliminate waste (defined as "activities that add cost but do not add value"). It is often the case that this means "to take it apart and put back together in a better way." This is then followed by standardization of this 'better way' with others, through standardized work.

Muda is a Japanese term which means any wasteful activity or any obstruction to smooth flow of an activity. Any expenditure on the Muda is a waste!

Six Sigma is a methodology that provides businesses with the tools to improve the capability of their business processes. This increase in performance and decrease in process variation leads to defect reduction and vast improvement in profits, employee morale and quality of product"

Enterprise Resource Planning - software that integrates departments and functions across a company into one computer system. ERP runs off a single database, enabling various departments to share information and communicate with each other. ERP systems comprise function-specific modules designed to interact with the other modules, eg Accounts Receivable, Accounts Payable, Purchasing, etc.

Supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption.
Customer Relationship Management (CRM), is a company-wide business strategy designed to reduce costs and increase profitability by solidifying customer loyalty

Organizations that will reap the benefits of the promises of IT, are those that will re-engineer themselves and not simply automate, because they will simply automate their inefficiencies as well viz if you have a problem of rats in your house in Kayole Estate, you cannot solve the problem by shifting to a new house in Runda Estate - you'll' end moving with the rats to Runda as well. You need to examine your belongings -if possible get rid of stuff you don't need.

It is agility that will ensure that we can be what we admire to be. We have to constantly revise our business process with an aim of adding value to the customer. We can only talk of quality, if only we can exceed the expectations of or clients by be prepared to transgress through the organisation change spectrum i.e automate, rationalize, re-engineer or have a paradigm shift. To what level do we utilize our information technology - Is the IT driving the business or is the business driving the IT? Where are we on the strategic grid? Are we in the support, factory , turnaround or strategic quadrant?

The Strategic Grid measures the organization's level of dependence on IT systems

McFarlans Strategic grid

F. Warren McFarlan's strategic impact grid helps companies understand how much they depend on their IT systems for strategic impact and speed/reliability.

Steps to A successful BPR
Start BPR by setting up one task force to select and structure all processes, to conduct the first high level process review and to eliminate structural inefficiencies

Each process has to cover the entire sequence of activities from source to customer and produce measurable results, which are relevant to the customer

Set the objectives from the customer's viewpoints and measure results as relevant to them; always measure costs, response time, quality and variance
Measure the result of existing processes first before setting targets and compare them with competition and customer's feedback. Set the baseline for improvement

Appoint one person to be responsible for the re-engineering process and implementation management and success tracking of one complete process

Develop the "should be" process from the customer backwards and never forwards from resource level. "Engineer from scratch" rather than "re-engineer"

Choose a "top down" approach to process mapping and avoid overly detailing... but take great care in measuring and defining the output. Use maps of existing processes primarily for "as is" vs. "should be" comparison and implementation action planning. Do not use detailed process mapping for upwards elimination of steps

Involve every function, which takes part in the whole process. Train, motivate and support the teams in every possible way. Recognize and reward success. Cascade experience down the organization

Set performance measures for each participating function. This enables tracing performance deviations back to the originator and prevents failures being blamed on other links in the process chain. Avoid double counting of successes

Set up one decision-making team for each whole process and another for the whole programme. Manage conflicts though teams

Steps to A successful TQM
?Pursue new strategic thinking
?Know your customers
?Set true customer requirements
?Concentrate on prevention, not correction
?Reduce chronic waste
?Pursue a continuous improvement strategy
?Use structured methodology for process improvement
?Reduce variation
?Use a balanced approach
?Apply to all functions

Most organizations across the world have realized that in a rapidly changing environment, it is impossible to create and maintain a custom designed software package, which will cater to all their requirements, and also be completely up-to-date. Realizing the requirement of user organizations some of the leading software companies have designed Enterprise Resource Planning software which will offer an integrated software solution to all the functions of an organization. There are many numbers of ERP suppliers who are very active in the market. Some of the companies offering renowned international ERP products include: Baan, IBM ,JD Edwards, Sun systems, Scala, Oracle, Peoplesoft, and SAP. There are also significant shift towards customer relationship management (CRM) and supply chain management (SCM).

Business Process Reengineering is a pre-requisite for going ahead with a powerful planning tool, ERP. An in depth BPR study has to be done before taking up ERP. Business Process Reengineering brings out deficiencies of the existing system and attempts to maximize productivity through restructuring and re-organizing the human resources as well as divisions and departments in the organization. Implementing an ERP package has to be done on a phased manner. Step by step method of implementing will yield a better result than big-bang introduction. The total time required for successfully implementing an ERP package would be anything between 18 and 24 months. The benefits accruing to any business enterprise on account of implementing are unlimited.

?Gives Accounts Payable personnel increased control of invoicing and payment processing and thereby boosting their productivity and eliminating their reliance on computer personnel for these operations.
?Reduce paper documents by providing on-line formats for quickly entering and retrieving information.
?Improves timeliness of information by permitting, posting daily instead of monthly.
?Greater accuracy of information with detailed content, better presentation, fully satisfactory for the Auditors.
?Improved Cost Control
?Faster response and follow up on customers
?More efficient cash collection, say, material reduction in delay in payments by customers.
?Better monitoring and quicker resolution of queries.
?Enables quick response to change in business operations and market conditions.
?Helps to achieve competitive advantage by improving its business process.
?Improves supply-demand linkage with remote locations and branches in different countries.
?Provides a unified customer database usable by all applications.
?Improves International operations by supporting a variety of tax structures, invoicing schemes, multiple currencies, multiple period accounting and languages.
?Improves information access and management throughout the enterprise.

Automation is not the answers to solving inefficiencies in our organizations, but through thorough devotion of resources, the processes ought to be re-engineered first, then the ERP can come later. Nevertheless, information technology enables the change that organizations need to transform or re-invent themselves. Unfortunately, BPR has become synonymous with cost cutting and massive redundancies in 21st century

&bullDavenport, T.H., Process Innovation: Reengineering work through Information Technology, Boston: Harvard Business School Press, 1993
&bullHammer, M., Champy, J.1993 Reengineering the Corporation Manifesto for Business Revolution, Harper Collins, London
&bullLevitt, T. (1983) The Marketing Imagination, MacMillan, New York
&bullMoreton and Chester (1996) Transforming the Business : the IT contribution, McGraw Hill
&bullZuboff, S. (1988) In the Age of the Smart Machine, Heinemann, Oxford,4814,105400,00.html


» More on Technology