XEROX-THE BENCHMARKING STORY ARCHANAA DIVYA KARPAGANATHAN MYTHILISHWARAN SARANYA SRIRAM
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)