BENCHMARKING & XEROX

ANUJ NANGIA
MS-09
Are you the best??

Who here thinks they

are the best (or at least
exceptional) at some
aspect

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Scope for improvement??

Who thinks they could

benefit from learning
how someone else is
doing a particular
thing??

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 Benchmarking

Benchmarking is the practice of being

humble 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 continually searching for the best
methods, practices and processes, and either adopting or adapting
their good features and implementing them to become the “best of the
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

• Best Practice
• Overlap •• Competitive
• Industry leaders
• • Top performers with
similar operating
characteristics

• • Functional
• Top performers
• Internal
• • Top performers
regardless of industry within company
• • Aggressive innovators • • Top facilities
utilizing new within company
technology

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Benchmarking at
XEROX

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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 "Haloid
Xerox" 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 1980 and 1984, Xerox'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 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.
• Kearns quickly began emphasizing reduction of
manufacturing costs and gave new thrust to quality control
by launching a program that was popularly referred to as
'Leadership Through Quality.'
• As part of this quality program, Xerox implemented the
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' 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.

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 Benchmarking @ Xerox
• 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.
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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 customer satisfaction.
The goal is to determine whether the area of interest is
managed in the best possible way.
• Identify comparative companies. Benchmarking partners can
be other operating units within the company, competitors, or
non-competitors who are judged to be the leaders in the area
being benchmarked.
• Determine data collection method and collect data.
Determine what measurements will be used in the
benchmarking process.

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 Ten Step Process

• Determine current performance levels. Once the necessary data

have been gathered and compared with current performance
levels, analyze the results. Generally, they reveal 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 be communicated to
the employees who will be asked to help implement the new
strategies.
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 Ten Step Process

• Establish functional goals. Present final recommendations on

ways in which the organization must change, based on the
benchmark findings, to reach new goals.
• Develop action plans. Develop specific action plans for each
objective that provide behavioral considerations in implementing
change with strategies for obtaining full organizational support.
• Implement specific actions and monitor progress. Put the plans
into place. Collect data on the new level of performance.
Adjustment to the process are made if the goals are not being
met, and problem-solving teams may be formed to investigate.
• Recalibrate benchmarks. Over time, re-evaluate and update the
benchmarks to ensure they are based on the latest performance
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, 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.

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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 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.

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• 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).

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 Benchmarking partners
Areas that have Bechmarking
been benchmarked partners

Manufacturing operations ---------- Saturn (a division of GM)

Fuji-Xerox
Manufacturing safety ---------------- DuPont
Factory floor layout Cummins Engine
Research and product development Hewlett-Packard
Distribution --------------------------- L.L. Bean Inc.
Billing and Collection --------------- American Express
Quality Management ---------------- Toyota
Quality improvement ---------------- Florida Power and Light
Supplier development --------------- Honda Manufacturing
of America

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SUPPLIER MANAGEMENT SYSTEM BENCHMARKING

• Xerox found that all the Japanese copier companies put together had only 1,000
suppliers, while Xerox alone had 5,000. To keep the number of suppliers low,
Japanese companies standardized many parts. Often, half the components of similar
machines were identical. To ensure part standardization, Japanese companies
worked closely with their suppliers. They frequently trained vendor's employees in
quality control, manufacturing automation and other key areas. Cooperation
between the company and the vendor extended to just-in-time production
scheduling, i.e. delivery in small quantities, as per the customer's production
schedule.

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

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 REAPING THE BENEFITS
• The first major payoff of Xerox's focus on benchmarking and
customer satisfaction was the increase in the number of satisfied
customers.
• Highly satisfied customers for its copier/duplicator and printing
systems increased by 38% and 39% respectively.
• Customer complaints to the president's office declined by more
than 60%.
• Customer satisfaction with Xerox's sales processes improved by
40%, service processes by 18% and administrative processes by 21%.
• The financial performance of the company also improved
considerably 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 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%.
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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 document
outsourcing 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,
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 The aftermath
• The success of benchmarking at Xerox motivated many
companies to adopt benchmarking. By the mid-1990,
hundreds of companies implemented benchmarking
practices 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 as
Ford, AT&T, Motorola and IBM, created the International
Benchmarking Clearinghouse (IBC) to promote
benchmarking and guide companies across the 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
– “We’re fine and benchmarking is a lot of work.”
• It’s expensive
– It’s 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
– “We’re so good (return rate, satisfaction, outcomes, etc.) that we can’t
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 you’re 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. Laing’s “Knots”

The range of what we think and do

is limited by what we fail to notice.

And because we fail to notice

that we fail to notice

there is little we can do
to change
until we notice
how failing to notice
shapes our thoughts and deeds.

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 Useful web sites
• American Productivity and Quality Center
– http://www.apqc.org/
• Malcolm Baldrige National Quality Award
criteria
– 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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