BUSINESS PROCESS RE-ENGINEERING at Magnet Joinery Richard Hill

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, Builder’s 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 can’t 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 • Let’s 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