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Benchmarking and Lean Sigma for Xerox

GB560 DESIGNING, IMPROVING & IMPLEMENTING PROCESSES
STUDENT ID 124810
MR. WEERACHAI
PECHARAWECH
PECHVCHAI@HOTMAIL.COM
Names Student Number
1. Weerachai Pecharawech 124810
2.
3.
4.
5.

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ID : 124810 Weerachai Pecharawech

Table of Content Page

Introduction 2
The engage of Benchmarking Process 2
Benchmarking first phase “ Planning ” 3
Benchmarking second phase “ Analysis ” 3
Benchmarking third phase “ Integration ” 4
Benchmarking fourth phase “ Action ” 5
Benchmarking fifth phase “ Maturity ” 5
Lean Sigma approach 6
Conclusion 6
Reference List 7

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Introduction
Benchmarking is “the search for industry best practices that lead to superior performance
(Camp,1989) ”. It is a tool for learning which companies are the best at performing particular
activity and then using their technique or using their best practicing to improve the cost and
effectiveness of the company on internal activity. Benchmarking is not the reengineering
program. It’s the way to identify and implement the best practice for product, service and
processes from other companies or industries to improve company’s ability and performance.
“Why re-invent the wheel if I can learn from someone who has already done it?” Jackson
Grayson Jr, chairman of the Houston-based American Productivity and Quality Center once said
(Ross, 1995, p. 235).
The intention of this essay to examine how Xerox Company re-achieve competitive advantage
over IBM and Kodak and other Japanese Photocopier companies. After it was losing its market
share and focus on product development. How it searched quality standard and used to
compare itself with others. How it created and implemented benchmarking process through
“Leadership though Quality” program by follow LL Bean company ( the clothing store catalogue
retailor) benchmarking model for distribution and logistics and customer satisfaction (Finch and
Luebbe,1995) and how it possibly implement component of the lean Sigma to business
improvement. And became a pioneer in benchmarking process (McNair and Leibfried, 1992).
(Dragolea & Cotîrlea, 2009) highlight that the 5 phases benchmarking business process consist
of planning, analysis, integration, action and maturity phases. Which will explain later in this
assignment.
Also will explain how Xerox apply Lean sigma approach which is a philosophy of eliminating
waste.

Firstly this essay will analyze the engage of benchmarking using Xerox model to analyses how
Xerox Company on minimize lost, reduce manufacturer cost and improve quality control, Xerox
recovered the lost market share and survived the competitive crisis. It became the leading
example of successful implementation of benchmarking. (Dragolea & Cotîrlea, 2009)
In 1960s Xerox was succeeded from invented photocopier machine and revenue increased
enormously from $698 million in 1966 to $4.4 billion in 1976. Xerox grew significantly and
expanded its company aggressively in 1970s. This started to cause problem in decision making
line and slow down product development. In 1980s there were many competitors from both USA
and Japan. And Xerox had lost its strategic direction. It overlooked at new entrances such as
Ricoh, Cannon and Sevin as it competitors as these companies put their products in lower
market. Besides from higher price and many layer management which lead to the downturn of
income, profit and market share.
After realized the problem Xerox investigated the manufacturing cost was 40-50% higher than
Japanese manufacturing cost. (Jeffries, 1999). Moreover, when it compared with its
competitors. There were 4 main problems need to be done which are
1) Supplier management system.
2) Quality control system.
3) Manufacturing system.

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4) Inventory management system.

Xerox CEO commenced to cut the manufacturing cost and launching new program “Leadership
Through Quality”. Benchmarking is a part of this program. This effective program helped and
pulled Xerox out of the problem and it was a good example of how to implement and apply
benchmarking successfully. (Dragolea and Cotîrlea, 2009).

Secondly, this essay will analyze the first phase (planning) of the process management best
practice model, in this phase the company needed to identify which units need to be
benchmarked. Identified and compare best practice to competitors. To perform benchmarking it
need to choose data source to collect and the method to collect data. The best practice process
maybe within industry to cross industry.
Xerox used best practice companies’ key success to gather data. This process is very important
as it will use to analyze to classify and see the best opportunity to improve.
Company can perform benchmarking both internal and external. Internal benchmarking is to find
the best operation and compare with other department within a company, while external
benchmarking include competitive benchmarking (a comparison with competitors) and
functional benchmarking (a comparison of methods with organizations who have similar
processes in a different industry) (Hinton, Francis and Holloway, 2000). At first Xerox used
competitive benchmarking and then found it was not suit the company best practice. Then it
adopted functional benchmarking by studied many companies best practice within industry and
cross industry.
It took L.L. Bean (Bean), and studied warehouse and inventory management system. Bean
specialized in mail-order supplier of sporting goods and outdoor clothing to be its benchmarking.
Xerox studied how Bean established efficient made order filling system by computer program
and how Bean achieved in increased speed and correctness of order filling. The company was
convinced that if it could develop and implement special program like Bean it could achieve
similar benefits (Dragolea & Cotîrlea, 2009). After benchmarked with Bean Xerox could develop
and modernized its warehouse and logistic. It included arranging materials system by velocity,
fast movers, sorting and releasing incoming order per day were located near the picking route
(short-interval schedule), which help to speed the flow and minimize picker travel distance, and
maximize the usage of warehouse space. Improved total computer managed warehouse data
through barcoding. Besides from followed L.L. Bean, it also cooperated with American Express
to learn about billing and collection process and studied the Quality procedure from Florida
Power and Light and Procter&Gamble for marketing.

Thirdly, will analyze second phase “Analysis phase”. Xerox need to determine cost and current
performing gap between company and benchmarking and future plan target. It needed to
evaluate and compare the chosen best practice programs with its competitors were using. It
required monitoring and comparing the gap within its organization and among competitors as
well. Which are identifying the supplier and identify the process.
The cost of benchmarking is very expensive. Although, it is one of the best practice program but
the cost vary from direct expense to indirect expense related with employee time foreseen in

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team meeting and travel (Feltus,1997). In this case Xerox need to concern about the price and
had to be planning careful, accomplish benchmarking one step at the time. The actual costs can
be manageable if the company benchmarks in degrees and defines very narrow areas to
explore (Feltus, 1997).
It found out that the cost of bringing product to market is double than its Japanese competitors.
Xerox engineering cost was 5 times more expensive and 4 times costly for design change and 3
times more for design costs. Which made photocopiers from Japanese competitors 40-50%
cheaper than Xerox.

Xerox needed to increase its production at least 18% per year to fight with rivals (The IBS
Center for Management Research reported.1982), Xerox GM started to cut manufacturing cost
and increased quality control while initiated 'Leadership through Quality program.' During that
time Xerox developed its benchmarking process as a part of this program with successful result
and made Xerox famous for its benchmarking program.

After analyzed the cause of problems and agreed to implement the new program “Leadership
through Quality” and benchmarking process could strengthen and created a company goal. To
evaluate and measure products, services and best practices by comparing with its competitors
by using LL Bean’s benchmarking model. Then Xerox continued to integration phase.

Fourthly will analyze the third phase “Integration phase” which are mistake proof, develop
measure, control, and actions to improve goal. In this phase, Xerox set new goals, based on
collected data to improve and resolve company’s problems and finding best practices. It needed
the participation of everyone in company to achieve the goal. Xerox put these accounts into
company’s integrated plan. In this stage concluded the communication process within
organization to achieve the new goals, targets.
Benchmarking asked for devoted manager and employee feedback and participation. It is very
important that every level of the company working together. To make benchmarking effectively,
Xerox managers needed to understand the process and train their employee. They need to be
strong strategic focus in company goals. The cores of effective implemented benchmarking are
planning, training and good communication between departments in the company.
“Benchmarking is an applied discipline” (McNair and Leibfried, 1992). It must learned from
experience not from class or reading book. Although it has inevitable mistake. Company need to
set goal and follow the rule to achieve it. After Xerox was realized specific areas of weakness
and found the way to find solutions and then turn them into strengths.
Only the production cost was the same price as its Japanese competitors produced, delivered
and distribution. Moreover Xerox produced more than 30,000 defected part/million which is 30
times more than its rivals. The benchmarking program recommended Xerox to 18%
manufacture more per year for 5 years to compete in the market.
In addition Xerox need to improve its supply chain as it had 5,000 suppliers, while all Japanese
photocopier companies altogether had 1,000 suppliers. It studied how Japanese competitors
recreated and standardized many parts so those parts can use in similar machine. Competitors
focus supplier on quality control and just in time production. To reduce Xerox suppliers from
5,000 to 400. Xerox requested every suppliers to pass Xerox’s certification and training
standard of Xerox quality. It worked closely with its suppliers to achieve the goal of

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benchmarking process. Xerox developed its own benchmarking model, which involve five
stages and have 10 steps. Xerox benchmarking process is one of the best practice (Dragolea &
Cotîrlea, 2009).

Fifthly will explain about the action phase of best practice model. In this stage Xerox developed
and implemented all action steps and plans. To monitor and evaluate the best practice it was
created is effective or not.

Xerox assigned cross function team as a part of its company culture. This team consisted of 24
senior managers and consultants from outsourcing company McKinsey&Co to create its Total
Quality Management (TQM). This team re-evaluate Xerox benchmarking over 240 areas,
compared its position with its competitors. They started benchmarking effort on various
process.

This benchmarking process helped Xerox refurbish the production and manufacture’s line
strategies. Every unit in the company worked closely to offer what customer needs. It improved
the functional operation efficiency within organization. It created a Customer Satisfaction
Measurement System. Every month more than 55,000 surveys were sent out to evaluate the
satisfaction of the clients and monitor the performance of its competitors. Later it would focus
to achieve client satisfaction on the competitors high mark topics. Xerox used its benchmarking
system to collect numerous data to improve business plan and increase quality, service and
meet the customer needs.

Xerox "Leadership Through Quality" program, it reinvented the quality control policy which
enhanced its benchmarking. Its aimed to be as “Xerox is a quality company”. It put every effort
on its company policy especially on quality control started from every employee. Which means
giving the best customer service process with innovated products with premium services. The
company was restructured to pay more focus on 3 topics which are research and development,
employee involvement and customer orientation.

Sixthly phase which is maturity phase: At this stage the company will assess the best practices
had achieved its goals or objectives or not. To point out that this benchmarking process could
be integrate in the company plan.
During 1980s, Xerox performed benchmarking more than 200 topics. Xerox received vast
benefit from its benchmarking. Customer satisfaction increased by 38%. While, customer
complaints and service response time was decreased more than 60% and 27% respectively.
Sale process satisfaction rose to 40%. Overall customer satisfaction rated more than 90%.
Other benefits were: number of defected product dropped by 78%, Inventory cost reduced by 2-
3, Production activity and product account reliability improved 8-10% and 40% respectively,
error billing declined from 8.3% to 3.5% and considerably minimize labor cost. It revamped to be
a leader in the market. Sale rocket high from 152% to 328%. Moreover it was the only company
in the world to win 3 impressive quality awards: the Deming Award , the Malcolm Baldridge
National Quality Award, and the European Quality Award. (Bogan and English, 1980)

The achievement of Xerox benchmarking process is a solid proof to be the best practice. It
motivated many companies to follow and adopt benchmarking into their strategy.

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Seventhly this essay will analyze how Xerox implement Lean Sigma approach model to achieve
a reduction in wastes. Although at that time, there is no evident to show that Xerox using Lean
Sigma approach to eliminate its wasted but there was a possible proof to show that this
company knew how to eliminate its wastes. In 2003 Xerox adopted Lean Six Sigma as company
measurable improvement. It uses as internal process to reduce waste and exaggerate speed
process. And as consultant with its clients to improve process and business projects. Xerox use
black belt and green belt to maximize on limited resources. Lean sigma process helps Xerox
minimize 2 billion pound of electronic wastes from landfills and utilize as eco box or pallet. Most
return items processed into environment preferable materials and can save cost nearly $2M
from this project.

Conclusion
This essay show how Xerox Company revived and gained momentum from losing its market
share to USA and Japanese competitors. It developed “Leadership through Quality program” as
it benchmarking to investigated how its competitor managed cost and supplier chain value.
Then, it studied many industry benchmarking and cross industry benchmarking best practices to
apply in the company. It used mainly LL Bean’s benchmarking model and developed to use it
efficiency. Xerox benchmarking program consist of 5 phases which are Planning, Analysis,
Integration, Action and Maturity as explained above. It was enormously succeeded and inspired
many companies to follow its benchmarking or best practice model. Although that time Xerox
did not apply lean Sigma in its process but later adopted in 2003 and has been managed to use
it as a latest step successfully.

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