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Reengineering or Process Improvement  
Introduction: Inside most companies, the conversations revolving around business change gravitate toward a discussion of the merits of reengineering. Yet, in our experience, there seems to be considerable confusion between reengineering and process improvement. Additionally, there seems to be even greater confusion about which one of these business changes is appropriate. Let’s begin by looking at the fundamental differences between reengineering and process improvement. Then we can discuss the relative merits of each, with an eye toward the decision making process.

Process Improvement : Your orders have too many errors. You determine that you need to "fix" the problem. After analyzing the root causes of the problem, you determine to add bar codes and introduce an electronic audit into your shipping operation. This is process improvement.

Reengineering: Your costs of sales continue to climb, you have layers of people entering orders, answering status questions, and answering product specification questions. You can't add customers without increasing this type of sales support and you’re losing profits to spiraling costs. You start to brainstorm radical new ways to deliver sales support that will dramatically improve customer satisfaction and streamline your operations. Your answer comes in the form of an Internet based on-line sales support system. Your customers have the ability to generate their own quotes and orders, review product specifications and track the status of their orders seven days a week 24 hours a day from anywhere in the world via the web. Your customers are delighted at their new found empowerment, and you can grow sales and profits again. This is reengineering.

In the first example, an existing process was analyzed and a technology enabling enhancement was added to improve the process. In the second example, a radical new approach to conducting business was implemented. The customer was empowered to serve themselves directly. This type of business change required cross-functional changes throughout the organization. Accounting and credit processes were revamped. Information systems were redesigned. Sales and marketing had to make a major shift in their approach to your customers. In short you just went through an organizational, procedural, systematic paradigm shift, not to be taken lightly.

Conclusions:   So, when do you improve and when do you reengineer ? There is not a simple answer. Process improvements are easier to manage, smaller in scope, less organizationally threatening and faster to implement. Reengineering is an "E-ticket" roller-coaster ride not for the faint at heart. Process improvements yield incremental results. Reengineering is reinventing your business. It is a form of metamorphosis. The results can be incredible. It can mean the difference between continued success or slow death. As a general rule, process improvements are an ongoing part of normal business operations. Reengineering is called for when dramatic change is required to remain or become competitive. In any case, the place to start is by applying the 5 steps of Constraint Management and the Thinking Tools to identify your core problems. This will focus your efforts where they will do the most good for your business and save you from wasting time and resources on areas that aren't really constraining your achieving your enterprise goal.

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