Aims

1
BUSINESS PROCESS RE-ENGINEERING at Magnet
Joinery Richard Hill
2
Lecture Plan

• Background
• The Need for Improvement
• Total Quality Management
• What Went Wrong?
• BPR
• Results

3
Background

• Leading manufacturer/retailer in UK
• Supply Retail, Trade and New Build
• Compete with DIY chains, Builders Merchants
• 215 Outlets in UK
• 4 Manufacturing sites

4
The Need for Improvement

• Significant change in marketplace
• Emphasis on non-standard products
• Customers increasingly impatient
• Design/advice services demanded for free
• Business cant react quick enough
• Losing market position

5
Total Quality Management

• Achieve success through constantly meeting
  agreed customer requirements at the lowest cost,
  by continually releasing the potential of all
  employees

6
TQM

• Define customer needs
• Benchmark processes
• Change working culture
• Make employees accountable
• Constant, incremental improvement

7
TQM at Magnet

• Employees and Trade Unions briefed
• Problem-solving training
• Quality Improvement Teams
• Process measuring
• Problems identified
• Solutions delegated

8
Results

• Material cost of SA Door reduced by 0.82
• Sales order lead-time reduced from 28 days to 23
  days
• Direct Sales LT increased by 2 days to 18 days
• WIP increased by 12

9
What Went Wrong?

• Focus on low-level detail
• No macro picture
• Lack of coordinated effort
• Busy fools
• Benchmarks meant nothing
• Not quick enough
• Lack of commitment from workforce suspicious of
  thorny issues

10
BPR

• Focus on whole business improvement
• Radical, one-hit approach
• Brutally honest
• Addresses processes across multiple functions
• Ignores traditional departmental boundaries

11
BPR at Magnet

• Lets face the facts
• Maintain output
• Reduce costs
• Convert losses to profits
• More efficient business processes
• Less staff required

12
BPR at Magnet 2

• Customer needs/business goals identified
• BPR Project members gathered
• Existing processes measured
• Logical processes modelled
• Processes prototyped and systems selected
• Retrain and retool - implementation

13
BPR at Magnet 3

• Direct sales placement of order to deliver, 18
  days
• Complete sales request 2 days
• Assign matls to order 2 days
• Assign to Distribution Schedule 1 day
• Pass to Prodn. Planning 2 day
• Schedule (Capacity plan) 2 days
• Release to factory 2 days
• Manufacture 3 days
• Distribution 4 days

14
BPR at Magnet 4

• Process order 2 days
• Complete sales request
• Assign matls to order
• Assign to Distribution Schedule
• Pass to Prodn. Planning
• Schedule (Capacity plan)
• Release to factory 2 days
• Manufacture 3 days
• Distribution 4 days

15
Results

• Direct Sales turnaround 11 days (18)
• Catalogue products in-store within 2 days (23)
• Sales Order transactions reduced by 64
• Headcount reduced from 850 to 610
• Distribution stock reduced by 28
• Project Cost 2.3M over two years
• Annual Savings 4.3M (Keighley)

16
Key Features of Success

• Unlike TQM, definite end to project
• Easier to sell/justify/measure
• Focus on business operations
• Ignore existing barriers
• Removal of waste process queue time reduced
• Use of IT to streamline by automating
• Investigate thoroughly, model, trial, implement
• Up-front brutality, radical approach
• Culture better prepared for TQM

17
Summary

• Background
• The Need for Improvement
• TQM at Magnet
• What Went Wrong?
• BPR at Magnet
• Results
• Key Features of Success