Benchmarking A key to success

by V S RAMA RAO on DECEMBER 2, 2008 (modified) In the late 1970s, Xerox turned to benchmarking when it found that foreign competition could sell its equivalent copier at a price equal to Xeroxs manufacturing cost. To find a benchmark, Xerox used its Japanese affiliate, Fuji Xerox as a window into the competition. By observing the efficient processes of selected competitors, Xerox was able to streamline its own operations without compromising service or quality. For instance, Xerox found that it could cut the number of steps in storing and handling materials from four to two, saving time and money. Although Xerox managers looked to the competitors in the early days of their benchmarking efforts, they have focused their more recent benchmarking efforts on firms outside the industry. Managers believe they find their most innovative ideas studying seemingly unrelated firms. In addition, if attention is focused only on the competition, playing catch is the best you can do according to Robert C Camp manager of benchmarking competency, quality and customer satisfaction. For ideas on how to improve their processes for filling customer orders. Like Xerox, the Freeport, Maine company ships products that do not come in standard size packages. Additionally, LL Bean selects its orders manually like Xerox, only three times faster. Xerox found that LL Bean had superior systems for processing and filling orders. Xerox has also looked internally for benchmarks, identifying the locations within its own organization that have the best processes then bringing the other locations or units up to the same performance level. Process has improved understanding of operations at Xerox, providing the necessary perspective to make external comparisons valuable. Since the early 1980s, benchmarking has enabled Xerox to cut manufacturing costs in half and reduce in-process inventories by two-thirds. In addition, it has reduced service labor costs and substantially raised the productivity rate of its distribution organization. In its second decade of benchmarking, Xerox is focusing on improving processes rather than solving problems. The company is firmly committed to continuing use of this tool as an important part of its drive toward continuous improvement.

A Focus on Customers
Many early attempts to improve quality systematically failed precisely because managers became enamored of the tools of quality. They spent a great deal of time creating diagrams, doing statistical process control and benchmarking. If customer needs are not the starting point, though using the tools of quality may result in products and services that no one wants to buy. Joseph Juran defined quality as fitness for use the ability of product or service top satisfy a customers real needs. By focusing on real needs, Juran believes managers and workers can concentrate their efforts where it really matters.

Quality Award
In 1989 Xerox won the coveted Malcolm Baldrige National Quality Award.

Inspection
Before Xeroxs quality initiative, they produced 50,000 copiers per year with 100,000 employees. After the initiative was fully implemented, they produced 100,000 copiers with only 50,000 employees, bringing them record profits at a time of record layoffs. The role of quality inspector was completely eliminated.

Questions
1. 2. 3. 4. 5. 6. 7. How did Xeroxs quality initiative save Xerox money? How did Xeroxs quality initiative increase Xeroxs sales? What would have happened to Xerox without the quality initiative? How could Xerox improve quality while eliminating quality inspectors? What did Xerox focus on, quality tools, process improvement, customer needs, or something else? How could Xerox justify eliminating so many positions when their profits were increasing so quickly? Was Xerox fully committed to their quality initiative or was it a passing trend?