Short presentation about benchmarking and Xerox case study.

1. Benchmarking
Made by
Yuriy Stakh

2. What is Benchmarking?
 Benchmarking is the process of comparing
the cost, cycle time, productivity, or quality
of a specific process or method to another
that is widely considered to be an industry
standard or best practice.

3. Why best practice?
 Best practice refers to techniques, methods
or processes that are more effective at
delivering a desired outcome.
 Incorporating best practice into your
organization can lead to greater efficiency
and effectiveness and a happier customer.

4. Benefits of Benchmarking
 Benchmarking helps identify the gaps
between the organization that is
undertaking the benchmarking assessment
and best practice.
 Undertaking benchmarking can lead to
improvements being incorporated into
processes and systems delivering gains in
efficiency and effectiveness.
 Benchmarking can help align improvement
activity with strategic goals and objectives.

5. The Benchmarking process
 Benchmarking has a defined process
1. Identify the process that will be
benchmarked – consider what metrics
will be measured.
2. Measure results in own organization.
3. Identify a benchmarking partner (look
for one with favourable results or to the
metric being measured or known best
practice).
4. Measure the process.

6. The Benchmarking process
5. Analyze the conditions that determine
the favourable results.
6. Determine an action plan to take your
organization to the favourable results.
7. Review Benchmarking results and
conduct regular reviews with your
peer (s).

7. Problems with Benchmarking
 Problems with benchmarking occur where
 Data is not obtained for the process being
measured – and analysis becomes subjective
 No peer group/best practice identified
(including data available)
 The gap between current state and best
practice is captured but nothing is done about
it
 Assumed best practice isn't best practice
 Benchmarking happens as a one off event and
not reviewed periodically

8. The importance of data
 In order to measure the gap between the
measuring organization and best practice
quantifiable measures need to be taken,
this requires data.
 Unless this method is followed results can
be subjective and inaccurate.

9. Benchmarking doesn’t stop
 Benchmarking should be viewed as a
continuous improvement method.
 Regular reviews of performance should be
taken especially if improvement activity is
underway to transition to “best practice”.
 Regular reviews of the peer group should
be taken to cater for any
changes/improvement made.

10. Case study
Background:
 'Xerox' trademark in 1948.
 Xerox was listed on the New York Stock Exchange
in 1961 and on the Chicago Stock Exchange in
1990.
 Revenues soared from $37 million in 1960 to $268
million in 1965.
 Xerox acquired a majority stake in various
company’s
 Profits increased five-fold from $ 83 million in 1966
to $ 407 million in 1977

11. Competition
 In the early 1980s, Xerox found itself
increasingly vulnerable to intense
competition from both the US and Japanese
competitors.
 According to analysts, Xerox's management
failed to give the company strategic
direction. It ignored new entrants (Ricoh,
Canon, and Sevin)
 Between 1980 and 1984, Xerox's profits
decreased from $ 1.15 billion to $ 290
million

12. Competition
 The company's operating
cost (and therefore, the
prices of its products) was
high and its products were
of relatively inferior quality
in comparison to its
competitors.
 Return on assets fell to less
than 8% and market share
in copiers came down
sharply from 86% in 1974
to just 17% in 1984.

13. Competition
 Average manufacturing cost of copiers in
Japanese companies was 40-50% of that of
Xerox.
 Benchmarking against Japanese
competitors, Xerox found out that it took
twice as long as its Japanese competitors to
bring a product to market, five times the
number of engineers, four times the
number of design changes, and three times
the design costs.

14. Competition
 Japanese could produce, ship, and sell units
for about the same amount that it cost
Xerox just to manufacture them.
 Xerox's products had over 30,000 defective
parts per million - about 30 times more
than its competitors.
 Benchmarking also revealed that Xerox
would need an 18% annual productivity
growth rate for five consecutive years to
catch up with the Japanese.

15. Benchmarking
 Benchmarking was
implemented at
Xerox –
‘Leadership
Through Quality’

16. Results
 Highly satisfied customers for its
copier/duplicator and printing systems
increased by 38% and 39% respectively.
 Customer complaints to the president's
office declined by more than 60%.
 Customer satisfaction with Xerox's sales
processes improved by 40%, service
processes by 18% and administrative
processes by 21%.
 Overall customer satisfaction was rated at
more than 90% in 1991.

17. Results
 Number of defects reduced by 78 per 100
machines.
 Service response time reduced by 27%.
 Inspection of incoming components reduced
to below 5%.
 Inventory costs reduced by two-thirds.
 Marketing productivity increased by one-
third.
 Distribution productivity increased by 8-10
%.

18. Results
 Increased product reliability on account of
40% reduction in unscheduled
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 market segment.
 Country units improved sales from 152% to
328%.