Maytee Aspuro, Director of Procurement, Wisconsin Dept of Industry, Labor & Human Relations, Madison, WI 53702, 608/266-3130
A strategic plan provides a point of reference for both continuous improvement and process reengineering. The latter two enjoy a dynamic interplay of innovation. Each contributes to the desired cultural shift as both incremental and radical changes are experienced. Each has the potential to enable the realization of the other.
The management tools of Strategic Planning, Business Process Reengineering and Continuous Improvement are often addressed as separate initiatives. Organizations often fail to translate theory into a management methodology which integrates all three. Assenting to the vision provided by the Strategic Plan and maximizing the dynamic interaction between Business Process Reengineering and Continuous Improvement will assure an organization a steady progression toward efficiency and lessen the risk of change. This article traces the efforts of the Wisconsin Department of Industry, Labor & Human Relations (DILHR), Bureau of Procurement to transcend business practice theory and implement change while balancing immediate needs with a vision for the future.
DILHR, an agency of 2000 employes in 75 offices within the state of Wisconsin, began a strategic planning initiative in April 1991 and published its first plan in April 1992. The initiative was one component of a comprehensive management system which also includes:
DILHR's Administrative Services Division (ASD), which provides support to the department's program divisions, identified the Bureau of Procurement (bureau) as a candidate for business process reengineering. The procurement process was assessed as cumbersome, requiring too many approvals, with duplicate electronic and paper processes and an inability to respond to program needs in a timely manner.
Review of Bureau Operations/Continuous Improvement. DILHR appointed a new Director of Procurement (Director) in March 1993. The reengineering of the procurement process was immediately assigned. The bureau was a centralized organization responsible for general procurement operations, small dollar order processing, asset management, and risk management reporting. Exceptions to the centralized approach were the Just in Time (JIT) ordering of office supplies, the issuance of blanket order releases and the ordering of forms.
The bureau was staffed with four purchasing managers and one program assistant. The bureau's ability to meet customer needs while reengineering was a concern which required an immediate analysis of business practices.
The Director initiated a review of basic process methodologies. Within six months the bureau implemented the following changes:
These changes established a new level of expectation within the bureau. All policies and procedures were open to question. The focus was on incremental changes applied to existing processes. Implementation timelines were brief with a measured impact outside of the bureau. The role of procurement was fundamentally changed. Procurement was redefined as a proactive service provider rather than an additional check and control point of division spending.
The Procurement Reengineering team was established in August 1993. Volunteers were solicited from the divisions. Final team membership consisted of the project leader (Director), information technology project coordinator, three procurement managers knowledgeable in general procurement, printing, and asset management, and representatives from finance, information technology (IT), a large and a small division, and the field staff. Team members were chosen based on their expertise and staff interaction. The team named the reengineering project RAPIDS (Reengineering of Acquisition, Payment, Information and Disposition Systems).
RAPIDS' Executive Sponsor (ASD Administrator) established the project's objectives, scope, constraints and recommended methodology. Roles of the participants, project leader, process owner, management, executive sponsor and facilitators were defined. The reengineering methodology included: 1) process identification, 2) current process review, 3) problem analysis, and 4) new process design. During the course of the project, team members received training in business process reengineering, bench marking and IT innovations.
An attempt was made to benchmark other organizations' procurement processes. Inquiry's were made to three other states and two large corporations. It was difficult to find data regarding the time/cost of procurement processes. Levels of delegation and the proportion of automation differed. Review of published literature indicated a wide span of costs in both the private and public sector.
The January 1994 RAPIDS report identified eight critical strategies to guide the system design.
Cost/Benefit Analysis (CBA).
A CBA was completed by the Director in the spring of 1994. The data documented significant cost/labor variations between DILHR divisions. Approval levels and training were identified as the two primary causes for the variation. Other labor estimates were based on an analysis of the specific tasks. Because of the fragmentation and decentralization of the procurement processes decreases in labor measured as no less than one-half of a full time equivalent (FTE) employe were not identified except in two functional areas, central procurement and finance. RAPIDS could promise divisions labor savings of a lesser degree.
As the CBA was being completed bureau staff efforts were redirected towards continuous improvement opportunities. Two projects started in the spring of 1994. The first was the automation of the IT procurement process. A review of bureau tasks confirmed that bureau staff were accepting requisitions from the Bureau of Information Technology Services (BITS) without question. The two BITS staff assigned to assist in IT procurements demonstrated the necessary knowledge of DOA and DILHR contracts to properly complete the procurement transactions. The Director delegated procurement authority limited to IT equipment and services to BITS. The IT procurement process was redesigned to use the DILHR electronic mail system (email) to create IT procurement requests. This process was implemented on July 1, 1994. The BUYIT initiative proved that paperless ordering could be achieved. It decreased one step in the review process, improved commodity and service delivery and stood as an example of the cultural shift in DILHR.
The second initiative was to improve the DILHR forms and publications warehousing and distribution operations. The bureau developed a request for bid for the privatization of these services. Efforts resulted in an estimated 30% savings with remote order entry and enhanced management reporting.
The bureau developed two surveys directed to all front line staff with procurement related task assignments. The first survey explored issues relating to customer service, delegated authority, customer procurement, training, manuals, and communications. The second survey anonymously measured employe knowledge of all procurement policies and procedures. All seventy-two survey recipients were invited to participate in one of eleven focus groups.
The issues raised by the focus groups were segregated between those which could be addressed in a short period of time versus those which reflected system or organizational issues of a greater magnitude. The former were identified for continuous improvement efforts and the latter were concerns for RAPIDS. The focus group and survey results exposed many division failings including the lack of communication and training, inconsistent delegation, redundant approvals, inaccessibility to policy and procedural information, and a general frustration with management. Findings were reported to the DILHR Management Systems Coordinating Group (MSCG). The MSCG is comprised of high level division managers.
The bureau also shared the focus group results with DOA, its office supplies contractor, other ASD bureaus (finance, facilities, and information technology/telecommunications), program divisions and the detailed RAPIDS design teams.
Immediate Implementation of Non-automated System Designs. Many of the RAPIDS recommendations were based on the assumption that a new automated, integrated system would be designed. There were also a number of recommendations and insights from RAPIDS that did not require the implementation of a new automated system. These recommendations were reviewed and when ever possible immediately implemented.
The importance of timely implementation of the non-automated recommendations cannot be under estimated. The implementation continued the process of cultural change within DILHR. The changes also resulted in improved efficiencies which translated to a decrease in costs and an increase in labor availability. This latter point was of critical importance as appropriations were cut and significant employe layoffs were realized.
The integration of strategic planning, BPR and continuous improvement cannot eliminate all risks and unexpected barriers. The bureau experienced two significant disruptions during the RAPIDS design stage. In January 1995, Governor Thompson proposed legislation to merge DILHR with the Department of Health and Social Services' divisions of Economic Support and Vocational Rehabilitation to create a new department - the Department of Industry, Labor and Job Development and the merger of the DILHR Division of Safety and Buildings with the Department of Development to create a new Department of Commerce. The second change occurred in March 1995 when a lay off action decreased the bureau's professional staff by one purchasing manager.
DILHR staff became acutely aware of the precarious state of employment within the department. The layoff and the staffing uncertainty that the merger raised only accentuated their concern. DILHR management dealt with and continues to deal with the staffing issues by providing timely information and expanded employe services. An "At Risk" program identifies employes whose jobs are targeted for elimination and assists these employes in managing both personal and professional issues with the goal of placement in a new position.
In addition to the human resource concerns, DILHR had to ensure that its IT infrastructure would be able to support the proposed technology. This latter issue was and continues to be addressed by the Executive Sponsor, Project Coordinator and IT specialists with cooperation from division management.
RAPIDS Project - Design Phase.
On July 1, 1994 the first phase of detail system design was initiated. The goal was to design an integrated client/server application interfacing with a relational database to complete all procurement, accounts payable and asset management functions. In addition to the RAPIDS Project Manager, an IT Project Coordinator was assigned. RAPIDS designs were created through a multiple team effort. The Project Manager established five functional teams: 1) General Procurement; 2) Printing Procurement; 3) Asset Management; 4) Finance/Budget and 5) Management Policy. The team leaders met as an Integration Team to ensure issues were identified and assigned. All project documentation was placed in a shared LAN directory. IT representatives participated in all teams.
The inclusion of an IT programmer in the design teams resulted an early understanding of program requirements. Programmers were encouraged to create prototypes after the initial general design and system requirements were determined. The ability to visualize concepts and follow the process logic lessened the initial frustration experienced by team members.
As pilot implementation neared, key design staff were on-call to the programmers. Questions were answered and decisions were made with little or no delay. The design documentation and the empowerment of key staff to make design decisions was critical to RAPIDS' ability to stay near to its schedule. All problem resolution was directed to the Project Leader who was required to coordinate and integrate team design requests. The IT Project Coordinator had to ensure that the project programmers and IT personnel maintained a consistent vision of the final design.
A review of system requirements lead to the decision to phase in RAPIDS by processes. Printing was chosen as the first pilot because it affected fewer vendors and internal customers, it had a high volume of transactions and the preliminary design promised exceptional increases in productivity (75% for division users and 25%-35% for central procurement). The printing pilot, scheduled for July 1, 1995 was canceled due to delays in programming and extensive testing by procurement. RAPIDS-Printing, which is near completion, will be implemented during a three month period to minimize process disruptions. The ability to maintain a parallel system was critical to this decision. A second advantage to a phased-in strategy is the ability to pace the training schedule. Three procurement bureau staff members will be responsible for training over 220 employes. The second implementation phase will expand the printing process to include blanket orders and provide a means of testing the blanket order process independently from the larger third phase. The decision to maintain only one vendor file lead the bureau to incorporate the purchase order process for general procurement, the IT procurement process and the direct charge process into the third phase. The third phase is tentatively scheduled for July 1, 1996. Finally, the asset management phase will be designed and implemented during fiscal year 1997 (July 1, 1996 - June 30, 1997).
Minimizing Resistance to Change Through Participation and Communications. The implementation of any significant change will cause a degree of concern and anxiety among employes. There is no practice which guarantees complete employe buy-in to change but there are actions that can be taken to minimize the resistance. The DILHR strategic plan established an expectation of excellence which challenged the organizational culture. The initial continuous improvement changes in the bureau attempted to build on the expectation of change towards excellence. Many of the changes resided in the bureau and only informal staff comments communicated the new expectations to other DILHR employes. The JIT office supplies procurement process, the redesigned Direct Charge process, BUYIT, and the focus groups carried the expectation further throughout the department.
The RAPIDS strategy focuses on participation and communication. Team membership consists of central process owners and division customers. For all but the Management Policy team, management participation is minimized. Articles are published in the DILHR department wide newsletter to announce RAPIDS, its mission, vision, goals, team membership and progress. The Director and a purchasing manager toured the state in June 1995. On their training agenda was a one hour RAPIDS briefing demonstrating existing prototypes. Special demonstrations were also scheduled with management. The strategy is to build positive versus negative anticipation. This strategy carries the risk of employe disappointment if promised functionality and performance are sacrificed or if the implementation schedule is significantly delayed.
The management tools of Strategic Planning, Business Process Reengineering and Continuous Improvement must be integrated. The strategic plan communicates management's commitment to the future and documents its expectations. The strategic plan provides a point of reference and legitimacy for cultural change and process improvements. To succeed both continuous improvement and business process reengineering require that the management support documented by the strategic plan be realized in action and not only words. Seeking out and dedicating the organization's talent, knowledge and other resources is critical. Equally so, management must honor the work performed by the teams by keeping an open mind to the radical solutions they seek.
The link between continuous improvement and business process reengineering should be symbiotic. Continuous improvement provides efficiencies after short-term efforts. DILHR was able to invest the labor gains to its business process reengineering efforts - RAPIDS. Continuous improvement was a testing ground for RAPIDS concepts. Experience and knowledge garnered through the continuous improvement initiatives were fed back to RAPIDS to lessen the risk of design and implementation errors. Continuous improvement also tested and expanded the path for cultural change announced by the strategic plan. The incremental changes lessened the radical cultural shift RAPIDS mandated.
Finally, continuous improvement filled the gap between the announcement of RAPIDS and its implementation. Two years with only promised improvement risks speculation that nothing is going to happen, that the latest management initiative is a fad like all the others that preceded it. Instead, the bureau staff and its primary customers were in the position to affirm the efforts taken and the probability that the promise of improvement would be met. Business process reengineering also assisted the continuous improvement efforts. RAPIDS was always the near future. Proposed incremental changes found less resistance when the RAPIDS report was referenced as the mandate for change. Continuous improvement efforts also benefited from the concepts and ideas documented in the RAPIDS report. Any that could be implemented incrementally were.
As documented in this case study, theory must be implemented if it is to prove its validity. To successfully do so, to achieve the desire level of innovation management commitment, process customer participation, the allocation of resources a multifaceted approach and patience are required. Change, both process and cultural will not be realized without anything less. (1) The Department of Administration (DOA) is directed by state legislation to coordinate and provide services, promulgate rules and to review state agency programs and management. DILHR procurement authority is delegated by DOA to which it has limited reporting requirements.