Mr. Qayyum, the manager of the Motor registration and licensing department, is considering business process re-engineering in order to meet the department’s recent substantial budget cuts. He has been asked to develop a cost budget for the coming year that is 10 per cent lower than the costs for the current year.
The licensing department, which employed 50 people, issues driver’s license to qualified applicants. On average, the department currently processes 250 licenses per hour. To achieve the required cost savings, the branch manager has decided to re-engineer the process. The proposed process will consist of 5 consecutive activities and require a staff of 45 people: •
Area A would have a staff of 5 people and be responsible for receiving each application and checking that it is complete. They could process 250 applicants per hour.
Area B would have a staff of 8 people, who confirm that the applicant is qualified to drive. They could process 350 applicants per hour.
Area C would have a staff of 10 people, who take the applicant’s photo. They could process 150 applicants per hour.
Area D would have a staff of 17 people, who complete the license card by adding the photo and a driver’s license number to card. They could process 140 applicants per hour.
Area E would have a staff of 5 people, who issue the license to the applicant and process his or her payment. They could process 280 applicants per hour.
a) Explain the theory of constraints and business process reengineering. What implications do these two approaches have for managing costs?
b) How many drivers’ license applicants would be processed per hour using the reengineered process? c) Identify the bottlenecks that would have to be removed to reach the current level of output.
d) Will the company achieve the required cost savings under the proposed business process re-engineering? Provide your explanations and support it with the computation on...
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