 Hello and welcome to the session in which we will discuss business process re-engineering and compare this to a prior topic business process management. Business process re-engineering is when the company seeks to fundamentally rethink and redesign the processes, systems and structure of an organization in order to achieve dramatic improvement and efficiency effective and overall performance. The basic idea behind business process re-engineering is the current system is not working as expected. It's based on the idea that many business processes could be complex, inefficient at this time, outdated, and we can have significant gains by rethinking and redesigning these processes from scratch. So the whole goal is to eliminate non-value added activities, activities that don't add value to the customer, don't add value to the product, automate and simplify the process, introduce new ways of working that result in a more efficient and effective organization. So we typically use technology to automate the stream the streamline as well as changes to the structure of the organization, the culture to support new ways of working, and I will show you an example shortly. Now bear in mind this is a challenging process. It's often disruptive that requires strong leadership. People don't like change, no one likes change. So when you're changing fundamentally everything, well people are threatened and it's not good. You also need effective communication in order to communicate the new business plan, the new processes to the employees, to management, and you need a commitment of change in order to be successful if you are undergoing a business process re-engineering. I will look at an example shortly, but once it's well done it can lead to significant improvement in business processes, increase productivity, reduced cost, and improve customer satisfaction. Let's take a look at a real example that for a company that went through this business process re-engineering. Before we proceed any further, I have a public announcement about my company farhatlectures.com. Farhat Accounting Lectures is a supplemental educational tool that's going to help you with your CPA exam preparation as well as your accounting courses. My CPA material is aligned with your CPA review course such as Becker, Roger, Wiley, Gleam, Miles. My accounting courses are aligned with your accounting courses broken down by chapter and topics. My resources consist of lectures, multiple choice questions, true-false questions, as well as exercises. Go ahead start your free trial today, no obligation, no credit card required. The company is Ford Motor Company. Back in the 80s Ford was facing intense competition from Japanese automakers. They were producing higher quality vehicles. And what's happening real quick historically back in the 50s, 60s, and 70s, well the Japanese were not producing and exporting cars as much as they were in the starting in the 80s because they were coming out of the war and the same thing applies to the Germans. Well Ford and GM were the only two companies that are producing and selling cars especially in the US so they had no competition. But starting in the early 80s, well it started in the 70s with the gas crisis but in early 80s then Ford and GM they're starting to feel the heat from the competitors. Now in response, Farhat said we're gonna embark on a radical business process re-engineering initiative called Ford 2000, which is a 20-year plan for Ford. And that was the whole goal is to completely overhaul, which is do what? A business re-engineering, overhaul the Ford organizational structure, business processes, and the worst problem for Ford was their culture, the company culture, in order to become more efficient, customer focused. They were not customer focused. If you're interested you can read the book about this or do some research but you know this is not the purpose of this session but it's very interesting of how arrogant was Ford and GM when it comes to customer focus. So the initiative of this re-engineering involved the complete redesign of many of Ford business processes including product development, manufacturing, and supply chain. And specifically I'll give you one specific example about process re-engineering as part of the 2000 initiative was the company order-to-delivery process. Well, prior to this initiative the process was slow and cumbersome involving a large number of manual steps and handoffs between different departments, it's like the government bureaucracy. As a result, Ford was often unable to quickly respond to changing customer demand or market condition. The new system that was automated, it automated many of the manual steps in the process reduced the number of handoffs between department and provided real-time visibility into the status of each order. So simply put the use technology to reduce the number of steps so they can get the product, the vehicle sooner to the dealer and respond to customer demand much much faster. Now, since we talked about BPR, business process re-engineering, we're going to go back real quick and remember what BP, which is BPM, which is business process management is. The concepts are related but they have different goals and approaches. Remember, BPM is a systematic approach to managing an organization process in order to improve, not to radically change. Re-engineering is your radically changing. Management is you are trying to improve. You're focusing on continuous improvement and optimization of the existing processes rather than a complete redesign of the process. It involves analysis, monitoring, improvement of the process using range of tools, techniques and methodology. Remember, BPR focuses on one time but major transformation like what FOR did for the entire organization. Now, both method can be effective to improve organizational performance, but remember they have different goals, different approaches, different timelines. They may be appropriate for different type of organizations and situations. What should you do now? Go to FARHAP lectures and look at additional resources, multiple choice that's going to help you understand BPM and BPR a little better. Invest in yourself, study hard, good luck and stay safe.