Xerox is the worlds leading manufacturing company of copiers (black and white, colour), printers, scanners and fax

machines. It is also a leader in document management software and office consumables. In 1997, it had sales of 8,261 million and growth of 8.4%, employing over 57,400 people worldwide.

Some of the key reasons for Xeroxs success include:

Xerox was particularly successful because it developed a strong brand and enviable position with high end customers. Manufacturing excellence, total customer satisfaction and leading customer services underpinned the Xerox brand. Xerox had successful partnerships. One of which was the Fuji-Xerox joint venture established in 1962, brought the best of both companies together. Initially Xerox set out to license manufacturing to enter the Japanese market, Xerox provided management know-how, resources and skills, whereas Fuji had local market knowledge, distribution channels, and operational skills. The alliance enabled mutual learning to take place - which led to some of the most successful advances in technology and manufacturing excellence. New technologies, new patents and new manufacturing processes resulted from the alliance. TQM - total quality management was developed with lots of successes for the company, including the number of defective parts from suppliers falling from 25 per million in 1983 to 300 per million, 1992. Xerox saved at least a year in new product development, through specific project teams - that were tasked to design new products and bring to the market new products quicker. Fuji Xerox developed a new focus towards quality - which helped the company itself and reputation with the customer. The business was regularly challenged. It need to restructure its business to keep in touch with the changes in consumer requirements. By the late 1990s Xerox had grown into a large corporation. To keep itself innovative and entrepreneurial it needed a structure that would ensure that it was responsive to the market. Significant changes were made including a new matrix structure for management and the organization. Nine independent business units were created for its different product groups and markets, supported by organization wide R&D, and sales and service teams. By changing its structure it was closer to the customer and offered a single point of contact. The Xerox culture - encouraged employees to innovate all the time, helping the company to stay ahead.

Challenges and outlook for Xerox:

Some of the threats to the industry include the internet. The internet and e-mail have led to a reduction in the demand for printing, copying, and paper based products. Competitors, such as IBM, Canon and Kodak have been particularly effective at gaining low-end customers; they have entered the high end market at lower prices which have affected profit margins. Worldwide recession is affecting the capital expenditure on IT. Companies are withdrawing from non priority investments. Xerox has diversified its business to include consulting, workflow and document management services. Software development has become a greater cash cow for the business.

Xerox Case Study Analysis The challenge facing Xerox and its management is complex, challenging and probably not unique. The company had been dependent on its highly trained sales force to turn a profit on their existing products and had not focused on new product opportunities until the development of its "Book In Time" product. This revolutionary product presented some new opportunities for the company. One of the significant advantages this product yielded was its costs. The Bookin-Time equipment allows for a publishing company to produce a 300-page book for $7, something which could have been previously reached only for lots larger than 1,000 copies. A significant decrease in publishing costs, given the fact that these cover up to 20 % (including the paper and binding the book), would create the possibility of an increased profit margin. Another advantage that the Book-in-Time solution provided by Xerox is that is one of the most efficient solutions for publishing companies running on-demand, short-books. Clearly publishing and or printing companies that may have achieved economies of scale with large print runs would be threatened by the Book-in-Time solution that able to provide a significant cost-advantage on low print run books. Furthermore, if we look at Table E, providing an analysis of the on demand conversion potential, several long-runs can be targeted by the equipment Xerox provides. Subscription references, for example, have a 100 % conversion potential (on the other hand, they only have 1 % of the overall market). College textbooks, the university press and professional textbooks all have a 50 % demand conversion potential. So, in order to be able to estimate the market size for the Book-in-Time, one needs to take into consideration the conversion potential, in addition to the actual number of books. In this sense, we may estimate the on demand market to around 600.000 books per year.

Xerox Case Study Analysis The challenge facing Xerox and its management is complex, challenging and probably not unique. The company had been dependent on its highly trained sales force to turn a profit on their existing products and had not focused on new product opportunities until the development of its Book In Time product. This revolutionary product presented some new opportunities for the company. One of the significant advantages this product yielded was its costs. The Book-in-Time equipment allows for a publishing company to produce a 300-page book for $7, something which could have been previously reached only for lots larger than 1,000 copies. A significant decrease in publishing costs, given the fact that these cover up to 20 % (including the paper and binding the book), would create the possibility of an increased profit margin. Another advantage that the Book-in-Time solution provided by Xerox is that is one of the most efficient solutions for publishing companies running on-demand, short-books. Clearly publishing and or printing companies that may have achieved economies of scale with large print runs would be threatened by the Book-in-Time solution that able to provide a significant cost-advantage on low print run books. Furthermore, if we look at Table E, providing an analysis of the on demand conversion potential, several long-runs can be targeted by the equipment Xerox provides. Subscription references, for example, have a 100 % conversion potential (on the other hand, they only have 1 % of the overall market). College textbooks, the university press and professional textbooks all have a 50 % demand conversion potential. So, in order to be able to estimate the market size for the Book-in-Time, one needs to take into consideration the conversion potential, in addition to the actual number of books. In this sense, we may estimate the on demand market to around 600.000 books per year. Basically, Xerox has two separate options at this point, given the performances of the Book-in-Time and these were clearly expressed by the senior managers at Xerox. The first option refers to sticking with what Xerox does best, printing and copying and delivering exclusively the product itself. This would mean selling the Book-in-Time equipment to all those elements of the value chain that may be interested, including publishers and book printers (see Appendix A for Break Even Analysis). The main advantage such an option provides is the fact that it allows Xerox to operate on a market it fully knows and controls. As we have seen from the case study, Xerox has already gained an edge over IBM, the main competitor, and the invention and development of the Book-in-Time system will bring a new product on the market, an innovation that could significantly reduce the publishing costs, consolidating Xeroxs position and market share. The second advantage we may see in such an option is the fact that, as Steenburgh laid down the facts, this option provides a real synergy for the company, integrating several pieces into a significant system and allowing the company to gain more rather than operate them separately. It is important to note, however, that the solution provided by Xerox actually fits on a very specific niche, operating most efficiently only for run lengths of 1,000 and below. This would mean increased competition on the over 1,000 segment, with less competitiveness for Xerox. The second option is much riskier and it involves entering the book production business. On the other hand, its potential is practically unlimited. The market for on-demand, short-run books is a market that exceeds the lifecycle of a normal book, providing numerous opportunities. Additionally, the book market itself is enormous: 50,000 new titles and 1.5 million repeat titles a year is a figure worth to be taken into consideration. The main disadvantage in such an option is the fact that the competitors have already gained (1) a significant operating experience and (2) a strong position on the market. The first 12 publishers account for 85% of overall US book publishing market, so Xerox would find it difficult to find the best niche into which to fit an entire publishing activity.

In my opinion, the best action plan for Xerox at the given time is a joint version of the two options it has at hand. On one hand, it can sell the equipment to the interested buyers from the value chain, which will probably consist into a profitable action that will have the capacity to later finance an entrance into the publishing market. This seems a prudent approach that will be able to benefit from the competitive advantage that the solution provides. If this option was selected Xerox would only need to sell three of their complete Book-in-Time products to break even (based on assumptions around fixed and variable costs in Appendix A). In addition, a joint venture, forward integrating into or the acquisition of a publishing company seems appropriate if Xerox decides to enter the publishing market. This way, it will be able to create a positive synergy by bringing together the companys equipment and solutions and the know-how and experience of human resources from the publishing company, people that will smooth the entrance in the market. As far as the four Ps are concerned. Clearly, the Book-in-Time product should take advantage of its differentiation related to short run printing costs and product placement within the short run/on demand production market. Finally, the on-demand market has the potential to grow into the future as well, with more and more books being included into this segment. This needs to be taken into consideration when taking a final strategic decision. Appendix A Break Even Analysis of Xerox Book In Time Product Selling into the Publishing/Printing Market Component Costs $895,000 Per Unit Set Up Costs $1000 5% Sales Commission* $75,000 Total Variable Costs $971,000 Per Unit Contribution** $529,000 Fixed Costs $1,500,000 Break Even Amount*** 2.83 *Based on a per unit sales price of $1.5M. **Per Unit Sales Total Variable Costs. ***Total Fixed costs/Per Unit Contribution

Total Quality Management in the Xerox Corporation

By: Jennifer Zook

Total Quality Management (TQM) is a term used to define quality programs corporations use to help increase the profit share and the customer relations of the corporation. Total Quality Management can consist of different programs that different companies use to obtain the results of customer satisfaction, better quality products, and a decrease in the defects of the products. Total Quality Management in the Xerox Corporation includes programs such as benchmarking, reduced supplier base, and leadership teams (Evans-Correia, 1991). In the following paragraphs Xeroxs strategies for TQM, the Baldrige Award, and the effects of TQM on the

Xerox Corporation will be discussed as well as a background of the Xerox Corporation. The Xerox Corporation started its thrive towards TQM in the 1970s with the invention of PARC, Palo Alto Research Center. This center was created to do research in computer science, electronics, and material science (Brown, 1992). There are same basic principles that PARC has identified as important to research, "1. Research on new work practices is as important as research on new products, 2. Innovation is everywhere; the problem is learning from it, 3. Research cant just produce innovation; it must coproduce it, and 4. The research departments ultimate innovation partner is the customer" (Brown, 1992). Research is a key component when it comes to Total Quality Management. The only way to make yourself better is to learn new things and learn when you are doing things wrong so that the errors can be fixed. By opening up PARC Xerox has given itself a place to help with the innovation process of the corporation and thus allowing the corporation the means to do its job better. Alos, PARC is used as a way of finding out what the customer wants, if the customer can be satisfied then the corporation is one step closer to being a strong thriving company with Total Quality Management. Opening the research facility was one of Xeroxs ways of implementing TQM before TQM was even invented. Now that TQM has become known in the marketplace Xerox has established its own program to obtain it. The Xerox corporation focuses on benchmarking, a reduced supplier base, and leadership teams as a way of producing Total Quality Management. Benchmarking is a "standard or point of reference in measuring or judging quality, value, etc." (Webster, 1979). Xerox looks at what the competition is doing and sets a level of quality and value that all of its products are compared against. These levels of quality are also used by other companies because of Xeroxs excellent standards. Once the standard that has been set is met then a new and higher standard is set so that the company is continually striving to do better and have a higher quality product. The second method Xerox is using in its strive for TQM is to reduce its supplier base. A supplier base is the amount of companies that the ordering company, in this case Xerox, gets its materials from. Xerox has gone from individual suppliers for each of the different manufacturing facilities to a consolidated group of suppliers for all of the manufacturing facilities (Evens-Correia, 1991). This has drastically cut the amount of suppliers needed which increases accountability of the suppliers to get the materials to Xerox on time and it decreases some overhead costs because of shipping reductions and economies of scale discounts. The smaller supplier base also gives Xerox more control in the corporations decision processes. If the company wants to make a change that affects the way it uses its suppliers there are less problems arising from having to

many different suppliers. Furthermore, there are a reduced amount of people needed in overseeing the ordering process from the suppliers which allows for a decrease in positions and less of a chance for error. The third method Xerox uses to help in Total Quality Management is leadership teams. Leadership teams are a new concept that many companies are adapting. These teams consist of a group of people with different areas of specialty. The main functions of the teams are to produce a product for the lowest possible cost with the highest quality. These teams can have jobs that range from finding ways to cut costs all the way to how to handle difficult employees and anything in between. The teams generally decide on what special project they are going to work on. The teams also decide what the hours are they are going to work and the salaries they are going to get for doing the jobs. Leadership teams also are put together to train other people how to work in teams and how to take and active role in the workplace with your job. Xerox has established a program called Leadership Through Quality (LTQ) and a Quality Training Task Force for its companys leadership teams. "Today, more than 100,000 Xerox employees worldwide have been trained in this process, which stresses continuous improvement and defines quality precisely as meeting customer requirements" (Evans-Correia, 1997, 135). Through Xeroxs effort with TQM the corporation has won the Baldrige Award as well as a few other awards. The Baldrige Award "has come to signify a standard of excellence in total quality management, and the practices and achievements of each years award winners have been examined with considerable interest" (Internal Auditor, 1992, 38). The award was created to identify companies that are going above and beyond the process of making products for cash. These companies are establishing guidelines for excellence. Part of the benefits or downfalls of winning the award, depending on the way you look at it, is that the company who wins the award must share their companys policies with competitors. The winning company gives plant tours and gives lectures on its TQM to other companies and students who are interested in learning about TQM. It is a share the knowledge attitude of the founders of the award. If a company is not willing to give others the knowledge they have found then they will not win the award. The idea of share the knowledge is to help American companies do better in the global market and to help these companies survive in the long run with increasing competition. The more businesses in the market place the more competition there is and the more jobs there are for the American people. The Baldrige Award is only one of the effects of Total Quality Management for the Xerox Corporation. Another example of the effects of TQM on the Xerox Corporation is the employee and customer support given to the company. Xerox hosts a teamwork

day in which teams are able to come in and show off the projects that they are working on to other employees and to visitors. The first year the amount of teams that attended was thirty. The next year the amount of teams doubled and there were five hundred visitors attending as well. There are no incentives for the teams to take part. The only recognition the people get from the day are thank-you notes (Pell, 1994). This is an excellent example of how TQM is working within the company. The workers want to take part in this activity because of a sense of competition to come up with the best ideas and pride in the work the team has done. These are the kind of employees that help make a corporation become a success and stay a success. The third effect of Total Quality Management is the amount of knowledge the company has learned by implementing the new procedures. The new procedures include research as part of the TQM process. Xerox does surveys to customers, stockholders and employees as part of this research. These surveys are mailed out to the respective people and ask questions about the satisfaction of the products and ask about improvements that can be made to the products. The surveys also take into consideration suggestions made by the employees as to how to improve the products and to improve the production process. "Xerox and other leading TQM companies have similar processes of surveying employees, mass media, government, and investors on an ongoing basis and sharing the information in the company " (Grostedt, 1996). These surveys let the employees know the quality of the job they are doing and how they can improve their performance on that job. This allows empowerment of the employees and increases the improvement time and it increases the rate in which improvements are made. These surveys help to strengthen the corporation because of the fact that the company responds to then and the corporations image is improved because good customer relations are developed. The surveys work well in the Xerox corporation because they are taken seriously and are responded to. The company wants to be the best it can be and it is shown partly through these surveys. In conclusion, Total Quality Management plays a major role in the Xerox Corporation. It is the major philosophy of the company and has played an important role in the success of the Corporation. The strategies Xerox uses include issuing surveys and developing events for the employees to take part in to further benefit the corporation. The effects of the TQM process include the winning of the Baldrige Award as well as various other Total Quality Management Awards and the amount of knowledge the company has gained from using this philosophy. Finally, the companies processes that are used in the Total Quality Management program include benchmarking, reduced supplier base, and forming leadership teams.