|
|
|
The 'Leadership through Quality' program introduced 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 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.
The company also found that the Japanese could produce, ship, and sell units
for about the same amount that it cost Xerox just to manufacture them. In
addition, Xerox's products had over 30,000 defective parts per million - about
30 times more than its competitors. Benchmarking also revealed that Xerox
would need an 18% annual productivity growth rate for five consecutive years
to catch up with the Japanese. After an initial period of denial, Xerox
managers accepted the reality.
|
|
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. Our goal is always to achieve superiority in
quality, product reliability and cost.' Gradually, Xerox developed its own
benchmarking model. This model involved tens steps categorized under five stages
- planning, analysis, integration, action and maturity (Refer Figure I for the
Xerox benchmarking model).
The five-stage process involved the following activities:
-
Planning: Determine the subject to be benchmarked, identify the
relevant best practice organizations and select/develop the most appropriate
data collection technique.
-
Analysis: Assess the strengths of competitors (best practice companies)
and compare Xerox's performance with that of its competitors. This stage
determines the current competitive gap and the projected competitive gap.
-
Integration: Establish necessary goals, on the basis of the data
collected, to attain best performance; integrate these goals into the company's
formal planning processes. This stage determines the new goals or targets of the
company and the way in which these will be communicated across the organization.
-
Action: Implement action plans established and assess them periodically
to determine whether the company is achieving its objectives. Deviations from
the plan are also tackled at this stage.
-
Maturity: Determine whether the company has attained a superior
performance level. This stage also helps the company determine whether
benchmarking process has become an integral part of the organization's formal
management process.
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, order
fulfillment, 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.
Having worked out the model it wanted to use, Xerox began by implementing
competitive benchmarking. However, the company found this type of benchmarking
to be inadequate as the very best practices, in some processes or operations
were not being practiced by copier companies. The company then adopted
functional benchmarking, which involved a study of the best practices followed
by a variety of companies regardless of the industry they belonged to. 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.
Bean had developed a computer program that made order filling very efficient.
The program arranged orders in a specific sequence that allowed 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 less number 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.
Similarly, Xerox zeroed in on various other best practice companies to benchmark
its other processes. These included American Express (for billing and
collection), Cummins Engines and Ford (for factory floor layout), Florida Power
and Light (for quality improvement), Honda (for supplier development), Toyota
(for quality management), Hewlett-Packard (for research and product
development), Saturn (a division of General Motors) and Fuji Xerox (for
manufacturing operations) and DuPont (for manufacturing safety).
IMPLEMENTATION
REAPING THE BENEFITS
2002, Case Studies and Management Resources. All rights reserved. No part of this publication may be
reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted
in any form or by any means - electronic or mechanical, without permission.
To order copies, call 0091-40-2343-0462/63/64 or write to Case Studies and Management Resources, Plot # 49, Nagarjuna Hills, Hyderabad 500 082, India or
email info@icmrindia.org. Website: www.icmrindia.org
This case study is intended to be used as a basis for class discussion rather
than to illustrate either effective or ineffective handling of a management
situation. This case was compiled from published sources. |
More Classifications...