Bench Marking & Xerox

8/8/2019 Bench Marking & Xerox

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Are you the best??

Who here thinks they

are the best (or at least

exceptional) at some

aspect

1Faculty of Management Studies , MBA (MS)


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Scope for improvement??

Who thinks they could

benefit from learning

how someone else is

doing a particularthing??



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Benchmarking

Benchmarking is the practice of beinghumble enough to admit that someone

else is better at something, and being

wise enough to learn how to match or

even surpass them at it.



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Benchmarking is...

A systematic and disciplined process of

examining your own processes

Finding who is better or best Learning how they do it

Adapting it to your organization

Implementing it

Doing it continuously



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Benchmarking is the process of continuallysearching for the best methods, practicesand processes, and either adopting oradapting their good features andimplementing them to become the best ofthe best.

Benchmarking : Formal definition



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Xerox : Benchmarking definition

The continuous process of measuring our products,services, and practices against our toughest

competitors or those companies known as leaders.



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Benchmarking is NOT

Only competitive analysis

Number crunching

Just copying or catching up Spying

Quick and easy



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Types of benchmarking

Competitive Benchmarking Functional Benchmarking Internal Benchmarking Product Benchmarking Process Benchmarking Best Practices Benchmarking

Strategic Benchmarking Parameter Benchmarking



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Benchmarking methodology

Competitive

Industry leaders Top performers with

similar operatingcharacteristics

Functional

Top performersregardless of industry Aggressive innovators

utilizing newtechnology

Internal

Top performerswithin company

Top facilitieswithin company

Best PracticeOverlap



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Benchmarking atXEROX



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About Xerox

Global document management company

Xerox was founded in 1906 in Rochester as "The Haloid

Company

The company subsequently changed its name to "HaloidXerox" in 1958 and then simply "Xerox" in 1961

Company's revenues increased from $ 698 million in 1966 to $

4.4 billion in 1976, profits increased five-fold from $ 83 million

in 1966 to $ 407 million in 1977.

In the early 1980s, Xerox found itself increasingly vulnerable

to intense competition from both the US and Japanese

competitors



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Problems

As Xerox grew rapidly, a variety of controls and procedures

were instituted and the number of management layers was

increased during the 1970s. This, however, slowed down

decision-making and resulted in major delays in product

development.

Xerox's management failed to give the company strategic

direction.

It ignored new entrants (Ricoh, Canon, and Sevin)

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



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Problems (Continued)

As a result of this, 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

Between 198

0 and 198

4,X

erox's profits decreased from $1.15 billion to $ 290 million



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Leadership Through Quality

In 1982, David T. Kearns (Kearns) took over as the CEO.

He discovered that the average manufacturing cost ofcopiers in Japanese companies was 40-50% of that ofXerox.

As a result, Japanese companies were able to undercutXerox's prices effortlessly.

Kearns quickly began emphasizing reduction ofmanufacturing costs and gave new thrust to quality

control by launching a program that was popularlyreferred to as 'Leadership Through Quality.'

As part of this quality program, Xerox implementedthe benchmarking program



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These initiatives played a major role in

pulling Xerox out of trouble in the years

to come. The company even went on to

become one of the best examples of the

successful implementation of

benchmarking.



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Benchmarking @ Xerox

The 'Leadership through Quality' programintroduced by Kearns revitalized the company.

The program encouraged Xerox to find ways to

reduce their manufacturing costs. Benchmarking against Japanese competitors,Xerox found out that it took twice as long as itsJapanese competitors to bring a product tomarket, five times the number of engineers, fourtimes the number of design changes, and threetimes the design costs.



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Benchmarking @ Xerox

The company also found that the Japanese couldproduce, ship, and sell units for about the sameamount that it cost Xerox just to manufacture them.

In addition, Xerox's products had over 30,000 defectiveparts per million - about 30 times more than itscompetitors.

Benchmarking also revealed that Xerox would need an18% annual productivity growth rate for fiveconsecutive years to catch up with the Japanese.

After an initial period of denial, Xerox managersaccepted the reality.



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Following this, Xerox defined benchmarking as

'the process of measuring its products, Services,

and practices against its toughest competitors,

identifying the gaps and establishing goals.

Gradually, Xerox developed its own

benchmarking model. This model involved ten

steps categorized under five stages - planning,analysis, integration, action and maturity



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The ten step Xerox Benchmarking

model



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Ten Step Process

Identify what is to be benchmarked: a product, a service,a process or a practice, or even a level of customersatisfaction. The goal is to determine whether the area ofinterest is managed in the best possible way.

Identify comparative companies.

Benchmarking partnerscan be other operating units within the company,competitors, or non-competitors who are judged to bethe leaders in the area being benchmarked.

Determine data collection methodand collect data.

Determine what measurements will be used in thebenchmarking process.



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Ten Step Process

Determine current performance levels. Once the necessarydata have been gathered and compared with currentperformance levels, analyze the results. Generally, theyreveal a negative or positive performance gap. Sometimes

they show no significant differences. Determine future performance levels. Forecast the

expected improvements for use in establishing new goals.

Communicate benchmark findings and gain acceptance.Present the methodology, findings, and proposed strategies

to senior management. This information must also becommunicated to the employees who will be asked to helpimplement the new strategies.



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Ten Step Process

Establish functional goals.Present final recommendations onways in which the organization must change, based on thebenchmark findings, to reach new goals.

Develop action plans. Develop specific action plans for each

objective that provide behavioral considerations inimplementing change with strategies for obtaining fullorganizational support.

Implement specific actions and monitor progress. Put theplans into place. Collect data on the new level ofperformance. Adjustment to the process are made if the goals

are not being met, and problem-solving teams may be formedto investigate.

Recalibrate benchmarks. Over time, re-evaluate and updatethe benchmarks to ensure they are based on the latestperformance data.



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How benchmarking began

Xerox collected data on key processes of best practice companies. These

critical processes were then analyzed to identify and define improvement

opportunities.

For instance, Xerox identified ten key factors that were related to

marketing. These were customer marketing, customer engagement, orderfulfillment, product maintenance, billing and collection, financial

management, asset management, business management, human resource

management and information technology.

These ten key factors were further divided into 67 sub-processes. Each of

these sub-processes then became a target for improvement.

For the purpose of acquiring data from the related benchmarking

companies, Xerox subscribed to the management and technical databases,

referred to magazines and trade journals, and also consulted professional

associations and consulting firms.



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The begining

Xerox initiated functional benchmarking with

the study of the warehousing and inventory

management system of L.L. Bean (Bean), a

mail-order supplier of sporting goods and

outdoor clothing.



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Bean had developed a computer program that made orderfilling very efficient.

The program arranged orders in a specific sequence thatallowed stock pickers to travel the shortest possible

distance in collecting goods at the warehouse. This considerably reduced the inconvenience of filling an

individual order that involved gathering relatively lessnumber of goods from the warehouse.

The increased speed and accuracy of order filling achieved

by Bean attracted Xerox. The company was convinced it could achieve similar

benefits by developing and implementing such a program.



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Similarly, Xerox zeroed in on various other best practicecompanies to benchmark its other processes.

These included American Express (for billing and

collection), CumminsE

ngines and Ford (for factoryfloor layout), Florida Power and Light (for qualityimprovement), Honda (for supplier development),Toyota (for quality management), Hewlett-Packard (forresearch and product development), Saturn (a division

of General Motors) and Fuji Xerox (for manufacturingoperations) and DuPont (for manufacturing safety).



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Benchmarking partners

Areas that have

been benchmarked

Bechmarking

partners

Manufacturing operations ----------

Manufacturing safety ----------------Factory floor layout

Research and product development

Distribution ---------------------------

Billing and Collection ---------------

Quality Management ----------------

Quality improvement ----------------

Supplier development ---------------

Saturn (a division of GM)

Fuji-Xerox

DuPontCummins Engine

Hewlett-Packard

L.L. Bean Inc.

American Express

Toyota

FloridaP

ower and LightHonda Manufacturing

of America



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SUPPLIER MANAGEMENTSYSTEM

BENCHMARKING

Xerox found that all the Japanese copier companies put together had only1,000 suppliers, while Xerox alone had 5,000. To keep the number ofsuppliers low, Japanese companies standardized many parts. Often, halfthe components of similar machines were identical. To ensure partstandardization, Japanese companies worked closely with their suppliers.They frequently trained vendor's employees in quality control,manufacturing automation and other key areas. Cooperation between thecompany and the vendor extended to just-in-time production scheduling,i.e. delivery in small quantities, as per the customer's productionschedule.

In line with the best practices, Xerox reduced the number of vendors forthe copier business from 5,000 to just 400. Xerox also created a vendorcertification process in which suppliers were either offered training orexplicitly told where they needed to improve in order to continue as aXerox vendor. Vendors were consulted for ideas on better designs andimproved customer service also.



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REAPING THE BENEFITS

The first major payoff ofXerox's focus on benchmarking andcustomer satisfaction was the increase in the number of satisfiedcustomers.

Highly satisfied customers for its copier/duplicator and printingsystems increased by 38% and 39% respectively.

Customer complaints to the president's office declined by morethan 60%.

Customer satisfaction with Xerox's sales processes improved by40%, service processes by 18% and administrative processes by21%.

The financial performance of the company also improvedconsiderably through the mid and late 1980s.

Overall customer satisfaction was rated at more than 90% in 1991.



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BENEFITS (Continued)

Number of defects 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 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 market

segment.

Country units improved sales from 152% to 328%.



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Recognition/Awards

Xerox went on to become the only company worldwide to win

all the three prestigious quality awards: the Deming Award

(Japan) in 1980, the Malcolm Baldridge National Quality

Award in 1989, and the European Quality Award in 1992.

Xerox Business Services, the company's documentoutsourcing division, also won the Baldridge Award in the

service category in 1997.

In addition, over the years, Xerox won quality awards in

Argentina, Australia, Belgium, Brazil, Canada, China, Colombia,

France, Germany, Hong Kong, India, Ireland, Mexico, the

Netherlands, Norway, Portugal, the UK, and Uruguay.

Analysts attributed this success to the 'Leadership Through

Quality' initiative, and, more significantly, to the adoption of

benchmarking practices. 31Faculty of Management Studies , MBA (MS)


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The aftermath

The success of benchmarking at Xerox motivated manycompanies to adopt benchmarking. By the mid-1990,hundreds of companies implemented benchmarkingpractices at their divisions across the world.

These included leading companies like Ford, AT&T, IBM,GE, Motorola and Citicorp.

During the 1990s, Xerox, along with companies such asFord, AT&T, Motorola and IBM, created the

International Benchmarking Clearinghouse (IBC) topromote benchmarking and guide companies acrossthe world in benchmarking efforts.



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Why do many companies fail to

successfully implement benchmarking? Lack of motivation and inability to identify and adopt outstanding

practices.

Own process is not understood well enough

DBU (doing business as usual) inertia Were fine and benchmarking is a lot of work.

Its expensive

Its often more expensive not to

Can you afford (financially and ethically) not to serve your

customers in the best manner possible?

Conceit / delusions of grandeur

Were so good (return rate, satisfaction, outcomes, etc.) that we cant

improve much.



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Summary



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Benchmarking - A Journey

Not a tool, but a process

Not an end, but a means

Not once, but continuous A way of life



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In the end.

Is it rocket science? No.

Could you do it yourself? Yes, if you have

expertise available to you Read about benchmarking and youre probably

okay

Must have a process expert

It all comes down to a little humility and a lot

of passion



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R.D. Laings Knots

T rang of at t ink an o

is limit by at fail to notic .

An b caus fail to notic

that we fail to notice

t r is littl can o

to c ang

until notic

o failing to notic

s ap s our t oug ts an s.

37Faculty of Manag

m

nt Stu

i

s , MBA (MS)


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Useful web sites

American Productivity and Quality Center

http://www.apqc.org/

Malcolm Baldrige National Quality Awardcriteria

http://www.baldrige.org/

American Society for Quality http://www.asq.org/



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References

http://www.visionrealization.com/Resources

/Organizational/Benchmarking.pdf

http://

www.icmrindia.org/free%20resources/casestudies/xerox-benchmarking-5.htm

http://www.slideshare.net/msq2004/bpr-04-

benchmarking

http://en.wikipedia.org/wiki/Xerox


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