Case Study of Corporate Reengineering

Haier's Corporate Reengineering

Challenges faced by Haier

Haier, in 1998, had already realized sales revenue of over 10 billion yuan. Haier began to consider the implementation of internationalization strategy, however, there is still a big gap between Haier and the big international companies. This gap is centered on Haier's customer satisfaction, speed and error rates are not excellent, and the company's employees do not have a high degree of perception of market pressure.

Haier's Reengineering Program

Before the reengineering of the enterprise, Haier was a traditional business headquarters system, with six product headquarters under the group, and a number of product divisions under each headquarters, which were independently responsible for the related purchasing, research and development, human resources, finance, sales, etc. In 1999, Haier redesigned and reengineered its original business process on a group-wide basis. In 1999, Haier carried out a group-wide redesign and reengineering of the original business processes, and integrated the reengineered business processes with the "market chain" as a link.

(1) Synchronized business process structure: "three big circles, six small circles, and two cornerstones".

Haier's reengineering program separates the finance, purchasing, and sales operations of the original divisions and implements unified purchasing, marketing, and billing across the group. The original functional management departments of the group were integrated into the innovative order support process 3R (R&D-R&D, HR-Human Resource Development, CR-Customer Relationship Management), and to ensure that the order implementation of the completion of the basic support process 3T (TCM-Comprehensive Budgeting, TPM-Comprehensive Equipment Management, and TPM-Complete Equipment Management). Budget, TPM-Total Plant Management, TQM-Total Quality Management).

(2) The main driving force of process operation: "market chain". The main force driving the overall business process is no longer the administrative instructions of the past, but the introduction of the market economy's interest-regulating mechanism into the enterprise, transforming the business relationship into an equal buying and selling relationship, service relationship and contractual relationship, and transforming the external market orders into a series of internal market orders.

(3) The platform of process operation: Haier culture and OEC (daily work, daily clean) management mode.

Effectiveness of Haier's reengineering

Delivery time reduced by 32%

Arrival timeliness increased from 95% to 98%

Export earnings increased by 103%. Profit and tax increased by 25.9%

Accounts payable turnover days decreased by 54.79%

Direct benefits amounted to RMB 345 million.

Implications for us

(1) The timing of reengineering: the level of enterprise operation and management on the stage.

(2) The core of reengineering: transforming the vertically integrated structure into a parallel network process structure.

(3) The goal of reengineering: to maximize customer satisfaction.

(4) Motivation for reengineering: to utilize the motivation and initiative of every employee.

(5) The guarantee of reengineering: leadership to promote the full force, corporate culture penetration.