Though re-engineering concept emerged at the beginning of the last decade of the last century, it has not lost its relevance even in this millennium; in spite of the presence of the so called “new economy” that co-exits with the ‘old economy’. Re-engineering is being increasingly used to transform major operational chunks. The notion of a single person operation while handling customer service is in fact re-engineering. Similarly cross functional teams, product made to fulfill customer orders rather than as a response to demand forecasts, decentralized low cost purchasing and such other manifestations of re-engineering are seen everyday.
Re-engineering is not a panacea for slothful management. It came to be used as a generic term for change. Re-engineering has benefited those companies which implemented it faithfully. However, its full potential is yet to be realized. It was applied to back office in its early days. It also was applied to the factory and the warehouse. It has now come to be applied to the front office. It touches the bottom line by being applied to product development, sales and marketing. It is close partner of IT. ERP is a re-engineering related technology. Internet must be integrated to re-engineering to realize its full potential. E-Commerce must be supported by solid re-engineered processes. Such re-engineered processes are easy to ‘web enable’.
In its first phase, re-engineering removed inter-functional boundaries. In its second phase, which is Internet enabled, the inter-corporate boundaries are being removed, where processes do not stop at corporate doorsteps.
The basic motivations for re-engineering are the three C’s of customers, competition and change.
Evolution of Corporation:
Organizations of today are patterned after the concept of division of labor propounded by Adam Smith in his book The Wealth of Nations (1776). Here each worker performs a part of task, and becomes specialized in it, thereby improving productivity dramatically. The larger the organization, the more the work gets divided and the more specialized the worker becomes. Division of labor principle is not only relevant in manufacturing but in service industries too. Transportation gave a big fillip to the growth of organizations. Business bureaucracy was practiced by the rail road companies. Here people conformed to the procedures set. The command-and-control system was introduced. Assembly line introduced by Ford brought work to the worker. Though each job of car making was made simpler, the co-ordination of people and combining from corporate HQ. Sloan extended the division of labor to management. The planning and control function became prominent after the World War II. The organization which evolved in the US later got duplicated in Europe and Japan. In those days, whatever was product was consumed irrespective of quality and service. Capacity build up was the main concern. In this high growth environment, pyramidal organization structure evolved. It can allow for expansion by adding the rank and file at the bottom or managers in the middle or top. As the work load was divided into parts, each part was supervised properly. A scalar chain was created to introduce accountability.
The organizations however, became far with several layers, and many people. The distance between the top and the bottom was too much. This is the genesis of the modern day corporation.
However, the organizations so evolved must adapt to the changing environment of today. We live in a different world. Business cycles are not predictable. Every other component of environment is changing. Adam Smith’s idea is a matter of bygone era.
Competition, customer and change have affected the organization structure tremendously.