Creating Competitive Advantage Through Reengineering Paper Based Information

Author(s):

Dr. Phillip L. Carter
Dr. Phillip L. Carter, Professor of Management, Michigan State University, East Lansing, MI 48824, 517/432-3521.
Dan D. Siadak
Dan D. Siadak, CFC, President, RBF, Inc., Lansing, MI 48906, 517/323-3181.
Brian P. Behnken
Brian P. Behnken, Purchasing Manager, Blue Care Network - Southwest, Southfield, MI. 48086, 313/799-6610.

80th Annual International Conference Proceedings - 1995 - Anaheim, California

Systems

ABSTRACT.
This paper presents an approach to creating a competitive advantage through a supplier-customer partnership to reengineer the paper based information system in an organization. The competitive advantage is created by reducing costs, enhancing process quality and increasing productivity. The nature of the partnership and the organizational changes needed to implement it are described. The paper briefly reviews the concepts of business process reengineering (BPR) and demonstrates how the redesign of the paper based information system can be integrated with BPR activities. The paper describes a methodology for redesigning paper based information systems based on a detailed analysis of the business processes. Lastly, the experiences of an organization which redesigned its paper based information system in partnership with a supplier are presented. Some results of this effort, including cost and time savings and quality improvements, are presented.

SUPPLIER-CUSTOMER PARTNERSHIP.
Business forms are the foundation and most visible part of the paper based information system in an organization. Traditionally, organizations acquired business forms using a bidding process. Little thought was given to how the business forms were actually used, what impact they had on the organization or its customers, or how the business forms might be improved. Typically this approach resulted in poorly designed forms which caused frequent errors and omissions in the information flow, which, in turn, led to high rates of rework and scrap. Additionally, this approach led to frequent form stockouts, which disrupted business, excessive form inventories, and high form obsolescence and scrap. Some organizations even designed and produced the forms in-house, using ad-hoc groups to design new forms as the need arose and producing the forms on a copy machine. The in-house approach often yielded even more dismal results.

In contrast to using the bidding process, some progressive purchasing departments completely outsourced their business forms, relying on suppliers to manage this aspect of the business. Long term relationships were established which required the supplier to be responsible for designing effective and user friendly forms and for managing the forms inventory to minimize stockouts, inventory, and obsolescence. Several suppliers of business forms now offer these services under the general name of business forms management . Generally this approach to business forms management has yielded good results, including a reduction in the acquisition cost of business forms.

Recently, a few business forms suppliers and customers have moved to elevate their relationship to a partnership which includes a broader and deeper level of activity between the partners. This new relationship integrates the business forms supplier into the Business Process Reengineering (BPR) activities of the customer. The customer motivation to create this new relationship is the realization that all business processes are accompanied by an information system. Therefore, to accomplish the best possible redesign of a business process, redesign of the accompanying information system is also necessary. Because business process information systems (BPIS) typically include both paper based and electronic based elements, progressive business forms suppliers have developed the capability to analyze and redesign both. Thus, the BPR activities of the organization are formally expanded to include a reengineering of the BPIS. We call this Business Process Information System Reengineering (BPISR). (Figure 1 displays the concept of BPR and BPISR).

Establishing this partnership requires a new approach by both the supplier and the customer. Both need to take an organization-wide point of view and involve functions in addition to purchasing in creating the partnership. Often presidents and vice presidents have to be sold on the idea of a sole supplier for business forms and on the involvement of the supplier in the business process reengineering activities of the organization. The supplier vision must be one of supplying BPIS expertise, not just business forms. Both parties have to make a long term commitment to the partnership to achieve the maximum benefits.

BUSINESS PROCESS REENGINEERING.
As computers and software were introduced into organizations, the result, in most cases, was to automate processes then in place. Cumbersome or ineffective processes were speeded up, but the effect on overall organizational efficiency and effectiveness was small. Thus, management found itself in the position of investing large sums in computers, software, networks, and other computer technology, with precious little return on the investment. [1] In an effort to energize this investment companies have engaged in reengineering the basic processes in the organization. The reengineered processes made better use of the investment in computers and related technology, eliminated many middle management positions, and often resulted in more efficient and effective organizations.

Many authors and practitioners have presented approaches to business process reengineering. In Table I the first column lists the BPR activities suggested in [2]. In the second column the authors identify the concomitant activities required to reengineer the business process information system.

TABLE I INTEGRATING BPR AND BPIS ACTIVITIES

PHASE I ORGANIZING FOR IMPROVEMENT
BPR ACTIVITIES BPISR ACTIVITIES 1. Establish Executive Improvement Establish partnership with BPIS Team (EIT ) supplier 2. Appoint a BPI (Business Process Include redesign of BPIS in charge to Improvement) Champion BPI Champion 3. Provide executive training BPIS partner provides training on BPIS 4. Develop an improvement model Include BPIS in improvement model 5. Communicate goals to employees Include BPIS in goals 6. Review business strategy and Review impact of BPIS on strategy and customer requirements customers 7. Select the critical processes Include BPIS in process definition 8. Appoint process owners Make process owners aware of BPIS partner 9. Select the Process Improvement Team Include BPIS partner on Process Improvement Team

PHASE II UNDERSTANDING THE PROCESS BPR ACTIVITIES BPISR ACTIVITIES 1. Define the process scope and Identify associated information mission system 2. Define process boundaries Identify information inputs, information produced and used within the process, and information output from the process 3. Provide team training BPIS partner provides training on BPIS 4. Develop a process overview Include role of BPIS in overview 5. Define customer and business Evaluate client technology measurements and expectations capability, infrastructure, and for the process development capability 6. Flow diagram the process Include BPIS in the process flow diagram or prepare parallel diagrams to illustrate complex systems 7. Collect cost, time, and value data Collect usage information for each document (paper based or electronic) 8. Perform process walkthroughs Include BPIS flow 9. Resolve differences Resolve differences 10. Update process documentation Include BPIS in update

PHASE III STREAMLINING
BPR ACTIVITIES BPIS ACTIVITIES 1. Provide team training BPIS partner provides training on BPIS 2. Identify improvement opportunities: Identify improvement opportunities: * eliminate bureaucracy * fitness for use analysis * eliminate no-value-activities * combine and eliminate documents * simplify the process * meet corporate design standards * reduce process time * improve public image * error proof the process * eliminate errors and omission * upgrade equipment * standardize * automate 3. Document the process Include instructions, flow charts and job aids in redesigned paper based information system. Provide on-line help in electronic information systems 4. Select the employees Select the employees 5. Train the employees Include BPIS in training

PHASE IV MEASUREMENTS AND CONTROL
BPR ACTIVITIES BPIS ACTIVITIES 1. Develop in-process measurements and Incorporate quality and performance targets measurement into documents and electronic information system 2. Establish a feedback system Develop reporting schedule, inventory control procedures, process improvement reports and service evaluation 3. Audit the process periodically Audit the information system periodically 4. Establish a poor-quality cost Establish a poor-quality cost for system documents and screens which includes the cost of reduced productivity, product cost, and rework

PHASE V CONTINUOUS IMPROVEMENT BPR ACTIVITIES BPIS ACTIVITIES 1.Qualify the process Qualify the BPIS 2.Perform periodic qualification Challenge each document which is part process of the BPIS as it is restocked 3. Define and eliminate process Define and eliminate BPIS problems problems 4. Evaluate the change impact on the Evaluate the change impact of the business and on customers BPIS on the business and on customers 5. Benchmark the process Document improved quality, increased productivity, and reduced cycle time 6. Provide advanced team training BPIS partner provides training

BUSINESS PROCESS INFORMATION SYSTEM REENGINEERING.
Business process information system reengineering takes place under the umbrella of BPR. In Phase II of BPR, Understanding the Process, information gathering takes a separate but parallel path. Samples of each document, data entry/retrieval screen, and report associated with the business process are collected and evaluated. The initial evaluation is performed without client input, examining the documents and screens for:

• Consistent appearance and adherence to design standards
• Clear purpose and use without written/verbal direction
• Duplication of information
• Fulfillment of functions of standard business practice

The current information flow is flowcharted to illustrate gaps, hold points, and duplicate information routing.

Detailed interviews with document and screen owners or principal users follow the initial analysis where objective information is collected (i.e., usage rates, handling, routing and storage information) as well as subjective review of the communication tools' suitability (i.e., adequate fill-in space, correct information, fitness for use, recurring errors).

Close coordination of the BPR activities and BPISR activities are required in Phase III, Streamlining. Otherwise, the information system could be streamlined to support a process that no longer exists. To avoid working at cross purposes, the BPIS streamlining should lag behind the BP streamlining. Thus reengineered processes can be taken into account when streamlining BPIS. In fact, the BPIS streamlining can be key to implementing the re-engineered processes.

Using the reengineered business process as a map, information elements required to support the business process are identified. This perfect future world is compared to the existing BPIS and process flow. Documents and data entry screens are combined, eliminated and redesigned to meet the requirements of the new process. Another important area of evaluation is the interaction between electronic and paper-based information systems. Use of bar coding, scanning, or simply rezoning printed information for more efficient data entry can improve productivity and increase accuracy significantly.

Following the BPISR, proposed revisions are presented to the users and management for critique, testing and approval. Once approval is given, implementation schedules must be developed and the new BPIS implemented.

CASE STUDY.
In August 1993, Blue Care Network of Southeast Michigan and RBF Inc. began their partnership. The agreement is based on RBF, Inc. supplying all of the business printing at Blue Care Network in return for performing BPISR as well as evaluating and redesigning individual documents as they are ordered. The RBF, Inc. account manager chairs the BCN Forms Committee and directs their activities which include review and approval of each document implemented and coordination with the Information Systems Department.

RESULTS.
In the first year business processes in four departments were analyzed. (The structure of the company lends itself to organizing the process analyses around departments.)

The BPISR resulted in the following changes and improvements:

• 47 documents were re-engineered
• 49 forms are in design review or being tested
• 53 forms were eliminated (32% reduction in forms)
• $33,432 cost savings in printed forms (14.5% reduction in cost)
• $11,415 cost savings in storage (41% reduction in storage cost)

Additionally, the following productivity improvements were documented:
Hours Saved per Year Department Change 52 Stockroom Direct deliveries and reduced stock 572 Purchasing Eliminate bidding and purchasing printing 520 Corporate Communications Designing and specifying forms 750 Information Services Revised microfilm input sheet 650 Members Services Revised forms 5000 Membership and Billing Revised enrollment/change form 7544 Total Savings

SUMMARY.
BPR can only be effectively accomplished if the BPIS is also reengineered. This can be accomplished by partnering with a knowledgeable supplier and making the supplier part of the BPR team. Experience from case studies has show that partnering can lead to significant cost reduction, quality improvement, and productivity increases. These improvements, in turn, can lead to a significant competitive advantage for the organization.

REFERENCES

1. Davenport, Thomas, Process Innovation: Reengineering Work Through Informa- tion Technology, Boston, Mass. Harvard University Press, 1993
2. Harrington, H. James, Business Process Improvement, New York, New York: McGraw-Hill, 1991.

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