Question

Read the extract carefully and apply the problem-solution pattern of analysis to it.

Process Reengineering at IBM Credit

IBM Credit finances the computers, software and services sold by IBM Corporation. The company is considered one of the world's most profitable publicly- traded companies. Processing a finance application usually took between six days and two weeks. The application wound its way from the credit department to the pricing department, to an administrator who wrote out a formal quote letter. When IBM Credit realized that processing an application actually took only about 90-minutes, and the rest of the normal processing time was spent with the application sitting on a pile on a specialist’s desk waiting to be looked at, they decided to reengineer the entire process. Here’s what IBM Credit did: The four specialists who previously processed the application were replaced by a generalist called the deal structurer, who processed the application from start to end using templates on a new computer system which provided all the data and tools each specialist commonly used. The results of the reengineering program were: Turnaround time was reduced from a typical 7 days to 4 hours. Without any increase in staff numbers, IBM Credit has been able to achieve a hundred-fold improvement in productivity. It can now handle 100 times the number of credit applications that were handled before reengineering was undertaken. Source: ( Adapted from Grant 2008)

Questions:

a) What is the starting situation?

b) What is the problem?

c) What is the underlying cause of the problem?

d) What solution has been proposed?

e) How successful is the solution?

Answer 1

1. The starting situation: processing a finance application required more time, typically 6 days to 2 weeks resulting in lower throughput.

2. The Problem : processing the finance request invloved multiple entities i.e credit dept., pricing dept and an administrator which resulted in higher turnaround time.

3. Underlying cause: processing an application actually took only about 90-minutes and rest of the time was spent with the application sitting on a pile on a specialist’s desk waiting to be looked at.

4. Solution: the entire process was reengineered and the four specialists who previously processed the application were replaced by a generalist called the deal structurer, who processed the application from start to end using templates on a new computer system which provided all the data and tools each specialist commonly used. This resulted in avoiding the movement and waiting time associated with each department.

5. Success of solution: Turnaround time was reduced from a typical 7 days to 4 hours resulting in hundred-fold improvement in productivity without any increase in staff numbers.