INTRODUCTION• Chester Carlson, a patent attorney and part-time inventor, made the firstxerographic image in the US.• The Battelle Memorial Institute in Columbus, Ohio, contracted with Carlsonto refine his electrophotography.• Haloid later obtained all rights to Carlsons invention and registered theXerox trademark in 1948.• Xerox was listed on the New York Stock Exchange in 1961 and on theChicago Stock Exchange in 1990. It is also traded on the Boston,Cincinnati, Pacific Coast, Philadelphia, London and Switzerland exchanges.• Throughout the 1960s, Xerox grew by acquiring many companies,including University Microfilms, Micro-Systems, Electro-Optical Systems,Basic Systems and Ginn and Company.
THE SUCCESS STORY• Annual sales growth exceeded 25% from year 1946 to 1973 inplain paper copier business• Annual growth of earning exceeds 35% in the same period• Brought about an early revolution by introducing 914 plainpaper copiers• The copying equipment business achieved the growth from 20million in 1959 to 9.5 billion in 1965 just within 6 years• Created a global network through the partnership thepartnership model like Rank Xerox and Fuji Xerox
GLOBAL PARTNERSHIPSRank Xerox Limited:• 51/49 Joint venture established in 1969• Europe, Africa and parts of AsiaAmerica Customer Operations:• Operated in Canada, South & Central America, ChinaFuji Xerox:• 50/50 Joint Venture• Operated in Japan and other Asia Pacific regions
HURDLES• Intense competition from both the US and Japanesecompetitors.• The average manufacturing cost of copiers in Japanesecompanies was 40-50% of that of Xerox.• Market share of Xerox fell from 96% to 45% in same period• The companys operating cost was high and its products wereof relatively inferior quality in comparison to its competitors.• Xerox also suffered from its highly centralized decision-making processes.
LEADERSHIP THROUGH QUALITY• Fundamental principle is meeting customer requirement• Quality meeting is the main focus• Improvement in competitiveness and organizationaleffectiveness through quality• LTQ plan was fully integrated business process looks forimprovement in processes as well as products
•Benchmarking can be defined as a process for improving performance byconstantly identifying, understanding and adapting best practices andprocesses followed inside and outside the company and implementing theresults.•The main emphasis of benchmarking is on improving a given businessoperation or a process by exploiting best practices, not on bestperformance.External Benchmarking:Used by companies to seek thehelp of organizations thatsucceeded on account of theirpractices. This kind ofbenchmarking provides anopportunity to learn from high-endperformers.InternationalBenchmarking:Involves benchmarking againstcompanies outside the country,as there are very few suitablebenchmarking partners withinthe country.BENCHMARKING DEFINED
Competitive Benchmarking orPerformance Benchmarking:Used by companies to compare theirpositions with respect to theperformance characteristics of their keyproducts and services. Competitivebenchmarking involves companies fromthe same sector.Internal Benchmarking:This involves benchmarking against itsown units or branches for instance,business units of the company situatedat different locations. This allows easyaccess to information, even sensitivedata, and also takes less time andresources than other types ofbenchmarking.Functional Benchmarking orGeneric Benchmarking:Used by companies to improve theirprocesses or activities by benchmarkingwith other companies from differentbusiness sectors or areas of activity butinvolved in similar functions or workprocesses.Process BenchmarkingUsed by companies to improvespecific key processes and operationswith the help of best practiceorganizations involved in performingsimilar work or offering similarservices.
Manufacturing cost•In the early 1980s, Xerox found itself increasingly vulnerableto intense competition from both the US and Japanesecompetitors.•It ignored new entrants (Ricoh, Canon, and Sevin) who wereconsolidating their positions in the lower-end market and inniche segments.Threat of competition•The average manufacturing cost of copiers in Japanese companies was40-50% of that of Xerox. As a result, Japanese companies were able toundercut Xeroxs prices effortlessly.•Xerox found out that it took twice as long as its Japanese competitors tobring a product to market, five times the number of engineers, four timesthe number of design changes, and three times the design costs
Quality• Xeroxs products had over 30,000 defective parts per million- about 30 times more than its competitors.• Xerox would need an 18% annual productivity growth ratefor five consecutive years to catch up with the Japanese .
PlanningAnalysisIntegrationActionMaturityBENCHMARKING PROCESS AT XEROX
Determines thesubject to bebenchmarked.Identifies therelevant bestpracticeorganizationsSelect/develop themost appropriatedata collectiontechnique.PLANNING
ANALYSISAssess the strengthsbest practicecompetitorsCompares Xeroxsperformance with thatof its competitorsDetermines the currentcompetitive gap andthe projectedcompetitive gap
Establishes necessarygoals, on the basis ofthe data collectedIntegrates these goalsinto the companysformal planningprocessesCommunicates thetargets and planningacross theorganizationINTEGRATION
ACTIONImplements actionplansAssess theperformanceperiodically todetermine whetherthe company isachieving itsobjectivesDeviations from theplan are tackled
MATURITYDetermines whether thecompany has attained asuperior performance levelDetermines whether thebenchmarking processhas become an integralpart of the organizationsformal managementprocess
SUPPLIER MANAGEMENT SYSTEMBEFORE•The Japanese companies puttogether had only 1,000 supplierswhile Xerox alone had 5,000.•To ensure part standardization,Japanese companies worked closelywith their suppliers hence half thecomponents of the machines wereidentical. They frequently trainedvendors employees in qualitycontrol, manufacturing automationand other key areas.•Japanese companies maintainedgood relations with the vendors.AFTER•Xerox reduced the number of vendorsfor the copier business from 5,000 tojust 400•Xerox created a Vendor CertificationProcess in which suppliers were eitheroffered training or explicitly told theareas of improvement in order tocontinue as a Xerox vendor. They alsoadopted part standardization.•Cooperation between the companyand the vendor extended to just-in-time. Vendors were consulted forideas on better designs and improvedcustomer service also.
INVENTORY MANAGEMENTPROBLEMS•Technical representatives used to decide the level of spare parts inventory by traditionalmethods with very little focus on the actual usage pattern of the spare parts.•The stocking policy followed by Xerox branch managers was to hold fully finished, fullyconfigured products near to the customer which led them to carry vast amounts ofinventory, some of which was not even sold during a given period.The process of benchmarking helped Xerox revamp its manufacturing techniques:-•Actual usage, rather than withdrawal from the stocking point, was used to determineinventory levels.•The company asked the branch managers to match the stocking policy to the customersinstallation orders, thus reducing the inventory holding time. As a result, working capital cycletime was cut by 70% leading to savings of about $200 million.•Each family unit (a manager and his direct subordinates) was encouraged to identify itsinternal & external customers and to meet their needs.•The two heads that it worked on 1. Marketing (Customer Satisfaction )2. Quality (Leadership Through Quality)
LATER STAGE OF BENCHMARKING• Benchmarking had become a day-to-day activity in every division of the company with theprinciple, anything anyone can do better, we should aim to do at least equally well."• In 1991, Xerox developed Business Excellence Certification (BEC) to integratebenchmarking with the companys overall strategies and to ensure continuous self-appraisal of the overall quality performance of the company.• BEC helped Xerox determine the causes for the success or failure of a specific qualityprocess and identify the key success factors or obstacles for achieving a specific qualitygoal.• Later on benchmarking was extended to over 240 key areas of product, service andbusiness performance at Xerox units across the world.
REAPING THE BENEFITS•There was an increase in the number of satisfied customers•Number of defects reduced by 78 per 100 machines.•Customer complaints to the presidents office declined by morethan 60• Service response time reduced by 27%.•The financial performance of the company also improvedconsiderably through the mid and late 1980s• Inspection of incoming components reduced to below 5%.• Defects in incoming parts reduced to 150ppm.
• Inventory costs reduced by two-thirds.• Marketing productivity increased by one-third.•Distribution productivity increased by 8-10 %.• Increased product reliability on account of 40% reduction inunscheduled maintenance.• Notable decrease in labour costs.• Errors in billing reduced from 8.3 % to 3.5% percent.• Became the leader in the high-volume copier-duplicator marketsegment.• Country units improved sales from 152% to 328%.Continued..