Benchmarking at xerox
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Xerox Corporation used benchmarking extensively to improve its business operations and processes in the face of intense competition from Japanese companies in the 1980s. Through benchmarking, Xerox identified factors like higher manufacturing costs, lower quality, and inefficient supplier and inventory management processes compared to competitors. Xerox then implemented changes like reducing the number of suppliers, adopting just-in-time practices, optimizing inventory levels based on usage, and focusing on continuous improvement. As a result, Xerox saw significant benefits such as lower costs, higher customer satisfaction, and improved financial performance. Benchmarking became fully integrated into Xerox's management systems over time.
Benchmarking at xerox
- 2. INTRODUCTION • Chester Carlson, a patent attorney and part-time inventor, made the first xerographic image in the US. • The Battelle Memorial Institute in Columbus, Ohio, contracted with Carlson to refine his 'electrophotography.' • Haloid later obtained all rights to Carlson's invention and registered the 'Xerox' trademark in 1948. • Xerox was listed on the New York Stock Exchange in 1961 and on the Chicago 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.
- 3. THE SUCCESS STORY • Annual sales growth exceeded 25% from year 1946 to 1973 in plain paper copier business • Annual growth of earning exceeds 35% in the same period • Brought about an early revolution by introducing 914 plain paper copiers • The copying equipment business achieved the growth from 20 million in 1959 to 9.5 billion in 1965 just within 6 years • Created a global network through the partnership the partnership model like Rank Xerox and Fuji Xerox
- 4. GLOBAL PARTNERSHIPS Rank Xerox Limited: • 51/49 Joint venture established in 1969 • Europe, Africa and parts of Asia America Customer Operations: • Operated in Canada, South & Central America, China Fuji Xerox: • 50/50 Joint Venture • Operated in Japan and other Asia Pacific regions
- 5. HURDLES • Intense competition from both the US and Japanese competitors. • The average manufacturing cost of copiers in Japanese companies was 40-50% of that of Xerox. • Market share of Xerox fell from 96% to 45% in same period • The company's operating cost was high and its products were of relatively inferior quality in comparison to its competitors. • Xerox also suffered from its highly centralized decision- making processes.
- 6. LEADERSHIP THROUGH QUALITY • Fundamental principle is meeting customer requirement • Quality meeting is the main focus • Improvement in competitiveness and organizational effectiveness through quality • LTQ plan was fully integrated business process looks for improvement in processes as well as products
- 7. •Benchmarking can be defined as a process for improving performance by constantly identifying, understanding and adapting best practices and processes followed inside and outside the company and implementing the results. •The main emphasis of benchmarking is on improving a given business operation or a process by exploiting 'best practices,' not on 'best performance. External Benchmarking: Used by companies to seek the help of organizations that succeeded on account of their practices. This kind of benchmarking provides an opportunity to learn from high-end performers. International Benchmarking: Involves benchmarking against companies outside the country, as there are very few suitable benchmarking partners within the country. BENCHMARKING DEFINED
- 8. Competitive Benchmarking or Performance Benchmarking: Used by companies to compare their positions with respect to the performance characteristics of their key products and services. Competitive benchmarking involves companies from the same sector. Internal Benchmarking: This involves benchmarking against its own units or branches for instance, business units of the company situated at different locations. This allows easy access to information, even sensitive data, and also takes less time and resources than other types of benchmarking. Functional Benchmarking or Generic Benchmarking: Used by companies to improve their processes or activities by benchmarking with other companies from different business sectors or areas of activity but involved in similar functions or work processes. Process Benchmarking Used by companies to improve specific key processes and operations with the help of best practice organizations involved in performing similar work or offering similar services.
- 10. Manufacturing cost •In the early 1980s, Xerox found itself increasingly vulnerable to intense competition from both the US and Japanese competitors. •It ignored new entrants (Ricoh, Canon, and Sevin) who were consolidating their positions in the lower-end market and in niche segments. Threat of competition •The average manufacturing cost of copiers in Japanese companies was 40-50% of that of Xerox. As a result, Japanese companies were able to undercut Xerox's prices effortlessly. •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
- 11. Quality • Xerox's products had over 30,000 defective parts per million - about 30 times more than its competitors. • Xerox would need an 18% annual productivity growth rate for five consecutive years to catch up with the Japanese .
- 13. Determines the subject to be benchmarked. Identifies the relevant best practice organizations Select/develop the most appropriate data collection technique. PLANNING
- 14. ANALYSIS Assess the strengths best practice competitors Compares Xerox's performance with that of its competitors Determines the current competitive gap and the projected competitive gap
- 15. Establishes necessary goals, on the basis of the data collected Integrates these goals into the company's formal planning processes Communicates the targets and planning across the organization INTEGRATION
- 16. ACTION Implements action plans Assess the performance periodically to determine whether the company is achieving its objectives Deviations from the plan are tackled
- 17. MATURITY Determines whether the company has attained a superior performance level Determines whether the benchmarking process has become an integral part of the organization's formal management process
- 18. FLOW CHART
- 19. SUPPLIER MANAGEMENT SYSTEM BEFORE •The Japanese companies put together had only 1,000 suppliers while Xerox alone had 5,000. •To ensure part standardization, Japanese companies worked closely with their suppliers hence half the components of the machines were identical. They frequently trained vendor's employees in quality control, manufacturing automation and other key areas. •Japanese companies maintained good relations with the vendors. AFTER •Xerox reduced the number of vendors for the copier business from 5,000 to just 400 •Xerox created a Vendor Certification Process in which suppliers were either offered training or explicitly told the areas of improvement in order to continue as a Xerox vendor. They also adopted part standardization. •Cooperation between the company and the vendor extended to just-in- time. Vendors were consulted for ideas on better designs and improved customer service also.
- 20. INVENTORY MANAGEMENT PROBLEMS •Technical representatives used to decide the level of spare parts inventory by traditional methods 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, fully configured products near to the customer which led them to carry vast amounts of inventory, 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 determine inventory levels. •The company asked the branch managers to match the stocking policy to the customer's installation orders, thus reducing the inventory holding time. As a result, working capital cycle time was cut by 70% leading to savings of about $200 million. •Each 'family unit' (a manager and his direct subordinates) was encouraged to identify its internal & external customers and to meet their needs. •The two heads that it worked on 1. Marketing (Customer Satisfaction ) 2. Quality (Leadership Through Quality)
- 21. LATER STAGE OF BENCHMARKING • Benchmarking had become a day-to-day activity in every division of the company with the principle, 'anything anyone can do better, we should aim to do at least equally well." • In 1991, Xerox developed Business Excellence Certification (BEC) to integrate benchmarking with the company's 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 quality process and identify the key success factors or obstacles for achieving a specific quality goal. • Later on benchmarking was extended to over 240 key areas of product, service and business performance at Xerox units across the world.
- 22. 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 president's office declined by more than 60 • Service response time reduced by 27%. •The financial performance of the company also improved considerably through the mid and late 1980s • Inspection of incoming components reduced to below 5%. • Defects in incoming parts reduced to 150ppm.
- 23. • 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 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%. Continued..
- 24. PRESENTED BY GROUP NO: 7 Utkarsh Garg 121 Sangam Lalsivaraju 138 Sugandha Arora 140 Dhruv Mahajan 141 Nitish Dubey 177