Business process reengineering of a paint factory to reduce delivery lead time

Abstract

To reengineer business process of a paint factory to reduce delivery lead time of order-to-delivery process. Since the delivery lead time of current process is longer than the industry standard, the company has lost the competitive advantage in the paint industry. Therefore, business process reengineering (BPR) is used to improve the efficiency and reduce non-value added activities or Muda (wastes) in the current order-to-delivery process. The practical BPR framework and BPR theories are applied to use in this thesis. In this thesis, the BPR framework can be divided into seven steps, which are 1) Company and literature study, 2) Understanding the project, 3) Initiating the project, 4) Programming the project, 5) Transforming the project, 6) Implementing the project, and 7) Evaluating the project. The company business environment is analyzed by SWOT, PEST, and Porter's 5 forces. Then, all related people are made understand the project. Next, the project objectives and reengineering team is set. Then, the current or as-is process is analyzed to find the root causes of the problem in each sub-process. There are six sub-processes, which are orders capture, sales orders processing, customer credit exposure management, inventory availability checking, planning and delivering management, and transportation management. The problems are divided into 4 categories, which are process, policy, system, and people. Next, recommendations to solve those problems are proposed and assigned priority for implementing, while to-be process is designed by applying those recommendations. Then, the implementation plan is created for each responsible party. Finally, the comparisons on results between before and after implement are used to evaluate the project. As results, the project is quite successfully implemented. All of the comparison results of new process are better than the old process. Non value-added activities are reduced about 24%, delivery lead time is reduce about 48%, number of rejected orders are reduce about 51%, number of complaints on delay delivery are reduced from 33.38% to 11.64%, number of complaints on incorrect product/quantity and incorrect documents are reduced from 10.2% to 5%, and operations efficiency related costs are reduced 15%.