XEROX-THE BENCHMARKING

STORY

ARCHANAA

DIVYA

KARPAGANATHA

N

MYTHILISHWAR

AN

SARANYA

SRIRAM

BACKGROUND NOTE 1938-Chester Carlson made the first

xerographic image in US He struggled for over 5 years to sell the

invention 1944-Battelle Memorial Institute contracted

with Carlson and refined his new process called ‘Electro photography’

The Haloid company obtained license from Battelle to make photocopying machines based on Carlson’s technology

1948-Haloid obtained all rights from Carlson and registered ‘XEROX’ trademark

1958-Haloid changed to Haloid Xerox Inc

Xerox was listed on NY stock exchange in 1961,Chicago stock exchange in 1990

Xerox’s products led their revenues to soar from $37 million in 1960 to $268 million in 1965

1960-acquired University Microfilms, Micro-Systems, Electro-Optical Systems, Basic Systems &Ginn

1970-Diversified into IT business by acquiring Scientific Data Systems, Daconics and Vesetec

1969-Set up corporate R&D

1970-Focussed on introducing new and more efficient models

1980-Intense competition from US & Japan

Failure of Strategic direction lead to high

operating cost and inferior quality products

Between 1980 & 1984-Profit decreased from

$1.15 billion to $290 million

1982-David T. Kearns took over as the CEO

He found that the average manufacturing cost of

Japanese companies was 40-50% of that of Xerox

Leadership Through Quality

Implemented Benchmarking Program

Became one of the best examples of successful

implementation of benchmarking

ABOUT BENCHMARKING

Improving performance by constantly identifying, understanding and adopting best practices and processes followed inside and outside the company and implementing the results

Main emphasis of benchmarking is on improving a given business operation or a process by exploiting ‘best practices', not on ‘best performance’

Simply Benchmarking means comparing one’s organization or a part of it with that of the other companies

TYPES OF BENCHMARKING STRATEGIC BENCHMARKING

Aimed at improving company’s overall performance

COMPETITIVE BENCHMARKING Used by companies to compare their

positions with respect to the performance

PROCESS BENCHMARKING Used by companies to improve specific

key processes

FUNCTIONAL BENCHMARKINGUsed by companies to improve their

processes or activities INTERNAL BENCHMARKING

This involves benchmarking against its own units

EXTERNAL BENCHMARKINGUsed by companies to seek the help of

organizations INTERNATIONAL BENCHMARKING

Involves benchmarking against companies outside the country

PROCEDURE FOR BENCHMARKING IDENTIFY PROBLEM AREAS

Benchmarking can be applied to any business process or function, a range of research techniques may be required

Includes: informal conversations with customers, employees, or suppliers

IDENTIFY OTHER INDUSTRIES THAT HAVE SIMILAR PROCESSESFor instance if one were interested in

improving hand offs in addiction treatment he/she would try to identify other fields that also have hand off challenges

IDENTIFY ORGANIZATIONS THAT ARE LEADERS IN THESE AREAS Look for the very best in any industry and in

any country Consult customers, suppliers, financial

analysts, trade associations, and magazines to determine which companies are worthy of study

SURVEY COMPANIES FOR MEASURES AND PRACTICES Companies target specific business processes

using detailed surveys of measures and practices used to identify business process alternatives and leading companies

Surveys are typically masked to protect confidential data by neutral associations and consultants

VISIT THE "BEST PRACTICE" COMPANIES TO IDENTIFY LEADING EDGE PRACTICES Companies typically agree to mutually

exchange information beneficial to all parties in a benchmarking group and share the results within the group

IMPLEMENT NEW AND IMPROVED BUSINESS PRACTICES Take the leading edge practices and develop

implementation plans which include identification of specific opportunities, funding the project and selling the ideas to the organization for the purpose of gaining demonstrated value from the process

FOUR STAGE PROCESS OF BENCHMARKING

Planning Data collection Data analysis Reporting and adaptation

BENCHMARKING AT XEROX

Leadership Through Quality Benchmarking against Japanese

competitors 30,000 defective parts per

million Xerox developed its own

benchmarking model

FIVE STAGE PROCESS OF XEROX'S BENCHMARKING PLANNING

Determine the subject to be benchmarked ANALYSIS

Assess the strengths of competitors INTEGRATION

Establish necessary goals ACTION

Implement action plans MATURITY

Determine whether the company has attained a superior performance level

DATA COLLECTION Key processes of best practice companies Identified 10 key factors related to

marketing It includes customer marketing, customer

engagement, order fulfillment, product maintenance, billing and collection, financial management, asset management, business management, human resource management and information technology

10 key factors were further divided into 67 sub-processes

FINDING OUT THE BENCHMARKING STRATEGY Xerox began by implementing

competitive benchmarking which was inadequate

The company then adopted functional benchmarking

It was initiated with the study of the warehousing and inventory management system of L.L. Bean

Bean developed a computer program that made order filling very efficient

The company was convinced with Bean’s management system

IMPLEMENTATION OF BENCHMARKING AT XEROX SUPPLIER MANAGEMENT SYSTEM

Xerox had 5000 suppliers whereas Japanese companies had only 1000

StandardizationTrained vendor employeesJust-in-time production schedulingReduction of vendors from 5000 to 400Vendor certification processVendor participation

INVENTORY MANAGEMENT

spare parts management

Sophisticated information system

Replicated the system in the US

Stocking policy

Working capital cycle time was cut by

70% leading to savings of about $200

million

Revamped manufacturing techniques

This lead to improved operational

efficiency

MARKETINGIntroduced customer satisfaction

measurement systemSent out 55,000 questionnaires to its

customersBenchmarked against competitorsUsed vast amount of information gathered

by the system

QUALITYLeadership Through QualityOrganizational restructuring exerciseFormed transition team

REAPING THE BENEFIT Increase in the number of satisfied customers Number of defects were reduced by 78 per 100

machines Service response time reduced by 27% 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 in unscheduled maintenance

Notable decrease in labor costs

Errors in billing reduced from 8.3% to 3.5%

Became the leader in the high-volume

copier-duplicator market segment

Country units improved sales from 152% to

328%

It became the only company worldwide to

win the three prestigious quality awards

CONSEQUENCES The success of benchmarking at Xerox

motivated many companies to adopt benchmarking

1990-Hundreds of companies implemented benchmarking

It includes Ford, AT&T, IBM, GE, Motorola and Citicorp

Xerox along with Ford, AT&T, Motorola and IBM created the International Benchmarking Clearinghouse(IBC)