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We are truthfully to Institute of Productivity and Management, Meerut for

providing us with the opportunity to prepare a project on

Xerox- The Benchmarking Story

We are also thankful to Prof. Sham Sharma for guiding us in every stage of this
project report, without his support it would have been very difficult for us to
prepare the paper so meaningful and interesting.

Learning is a never-ending process. The more we learn the more we feel like
learning newer things. Abraham Lincon once remarked at his achievement that
“He had counted only a small number of pebbles on the bank while the whole
ocean on the lay ocean by unexplored”. We indeed this never ending craves of
learning are the result of evaluation of present day of human beings, who had
overcome all obstacles to make this earth a happy place to live in.

We are also thankful to the librarian and the computer lab in-charge of Institute
of Productivity and management, Meerut who have helped us during the course
of this paper in difference ways.

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1. INTRODUCTION………………………………………………………. 3

2. SWOT ANALYSIS……………………………………………………… 6

3. QUESTION 1…………………………………………………………….7

4. QUESTION 2…………………………………………………………….10

5. QUESTION 3…………………………………………………………….27

6. QUESTION 4…………………………………………………………… 31

7. CONCLUSIONS…………………………………………………………35

8. BIBLIOGRAPHY………………………………………………………..36

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Benchmarking can be defined as a process for improving performance by

constantly identifying, understanding and adapting best practices and processes
followed inside and outside the company and implementing the results. The main
emphasis of benchmarking is on improving a given business operation or a
process by exploiting “best practices”, not on “best performance”.

Haloid obtained all rights to Carlson's invention and registered the 'Xerox'
trademark in 1948. Buoyed by the success of Xerox copiers, Haloid changed its
name to Haloid Xerox Inc in 1958 and to The Xerox Corporation in 1961.
The strong demand for Xerox's products led the company from strength to
strength and revenues soared from $37 million in 1960 to $268 million in 1965.
Throughout the 1960s, Xerox grew by acquiring many companies and a majority
stake (51.2%) in Rank Xerox in 1969. During the late 1960s and the early 1970s,
Xerox diversified into the information technology business by acquiring Scientific
Data Systems.

In the early 1980s, Xerox found itself increasingly vulnerable to intense

competition from both the US and Japanese competitors. According to analysts,
Xerox's management failed to give the company strategic direction. 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.
Xerox also suffered from its highly centralized decision-making processes. As a
result of this, return on assets fell to less than 8% and market share in copiers
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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.

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. 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.

By the early 1990s, many Fortune 500 companies and other major companies
were implementing benchmarking to reap the benefits it promised. Benchmarking
also became a key criterion for winning the Malcolm Balridge National Quality
Award. Truly successful practices take an additional step and use that information
to develop strategic plans and make better business decisions, propelling them to
greater success. Most quality improvement experts will tell you that in any
successful effort to make improvements, there is a continuous circle: plan, do,
check, and act. The pioneering efforts of Xerox in the field of benchmarking have
undoubtedly been the most talked about and successful of such initiatives.

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The relationship between business performance strategy
development and benchmarking

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 Positive Brand Image

 Leadership quality
 Dominance on the Copier market
 Distribution channel
 Extensive Research wide range of product


 Weak operating performance

 Weak financial position
 Expensive machineries
 Dependence on third party manufacturing
 heavy revenues from the office segment


 Potential foreign market

 Diversified product line
 Launch of carbonless paper
 Investment in developing products, technologies and solution


 Intense competition
 Economic slowdown
 Paperless offices

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Q. 1) Explain the circumstances that led.................................................
implement benchmarking practices at the company.

Ans. There were many reasons that led to the adaptation of this program. The
whole Xerox Empire had compelling reason for seeking self-improvement. By the
mid 1970s Xerox found itself out of step with their customers and their needs.
The market had changed and so had the standards for quality. This became
evident when Japanese manufacturers established a position in the U.S. market
with inexpensive desk-top copiers and began changing the industry. In the early
1980s, Xerox found itself increasingly vulnerable to intense competition from
both the US and Japanese competitors. According to analysts, Xerox's
management failed to give the company strategic direction. It ignored new
entrants (Ricoh, Canon, and Sevin) who were consolidating their positions in the
lower-end market and in niche segments. 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. Xerox also suffered from its
highly centralized decision-making processes. 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.

In 1982, David T. 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. 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

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So, we can see the circumstances that led Kearns to adopt the ‘Leadership
through Quality’ program. Improvement processes, tools and techniques were
deployed across the corporation and centered on improving business processes to
create higher levels of customer satisfaction, quality and productivity.

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.

Benchmarking simply means comparing one’s organization or a part of it with

other companies. There are different types of benchmarking, but the one which
Xerox adopted was a Comparative benchmarking or a Performance
Benchmarking. This type of benchmarking is used by the company to compare its
position with respect to the performance characteristics of their key product and
services. It involves companies from the same sector. After that the company also
adopted Functional benchmarking in which companies improve their processes or
activities by comparing with other companies from different business sectors or
area of activity but involved in similar functions or work processes. Xerox
benchmarked with many companies like Florida Power and Light, American
Express, Honda, Hewlett-Packard etc. The company measures its performance in
about 240 key areas of product, service, and business performance. Derived from
international studies, the ultimate target for each attribute is the level of
performance achieved by the world leader, regardless of industry. During this
period company was facing a tough time and it was the benchmarking program
which helped the company to regain its position in the market.

In line with the best practices, Xerox reduced the number of vendors for the
copier business from 5,000 to just 400.

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

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for its copier/duplicator and printing systems increased by 38% and 39%
respectively. 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.
Some of the other benefits Xerox derived were:

 Number of defects reduced by 78 per 100 machines.

 Defects in incoming parts reduced to 150ppm.
 Inventory costs reduced by two-thirds.
 Increased product reliability on account of 40% reduction in unscheduled
 Errors in billing reduced from 8.3 % to 3.5% percent.
 Became the leader in the high-volume copier-duplicator market segment.

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Q: 2: Define benchmarking and discuss the various types of benchmarking
……………………………………………. Explain the various steps involved in the
implementation of a typical benchmarking process.

What is benchmarking?
The term benchmark comes from surveying where it was used to denote a notch
or mark representing a given altitude and against which other heights could be
calibrated or 'benchmarked', since when it has come to mean any standard
against which something is compared; and some of the leading exponents in
business include Xerox and GE. In business terms there are numerous definitions
of benchmarking, but essentially it involves learning, sharing information and
adopting best practices to bring about step changes in performance. So, at its
simplest, benchmarking means:

'Improving by learning from others - i.e. - benchmarking is simply about making

comparisons with other organizations and then learning the lessons that those
comparisons throw up'

Another definition is:

'Benchmarking is the continuous process of measuring products, services and
practices against the toughest competitors or those companies recognized as
industry leaders (best in class)'

Robert Camp's definition :

'A positive, proactive process by which a company examines how another
company performs a specific function in order to improve how it performs the
same, or similar function. Operational processes must be comparative or
analogous if the highest degree of knowledge transfer between benchmarking
partners is to be achieved'

Benchmarking allows you to discover the gaps in your performance when

compared with someone else. Nothing will happen, however, unless you actually
do something to close the gap - or surpass it. The real payback comes from
changing what you do to improve your operations - and as we all know change is
difficult - actual benchmarking is the easy part!

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Once a gap has been identified the key question is: 'How much of the gap do you
wish to close?' Do you wish to improve a little, a lot or become best-in-class? I.e.
what is the benefit from each stage of change and what will it cost? Some areas
will need greater effort to change than others but all must be compared to
probable benefit/return for that effort (e.g. revenue, cost efficiency or customer
satisfaction). It may not be cost effective to go the whole way and in some cases
best-in-class may be a step too far! But it may act as a stretch target to which you
aspire - or re-visit later.
In practice, benchmarking usually encompasses:
 regularly comparing aspects of performance (functions or processes) with
 identifying gaps in performance;
 developing performance improvements to close the gaps thus identified;
 implementing the improvements;
 monitoring progress and;

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 reviewing the benefits

The key questions on which successful benchmarking turns are:

 How do we do it? and
 How do they do it?

In other words, a comparison of all processes with more successful organization(s)

to establish exactly where the differences lie - and then taking steps to use the
knowledge to close the gaps.

What it is not
Although benchmarking involves making comparisons of performance, it is not:
 just competitor analysis - benchmarking is best when it involves
 comparison of league tables - the aim is to learn about the circumstances
and processes that underpin superior performance
 a quick fix, done once for all time - benchmarking projects may extend over
a number of months or even years, and it is vital to repeat them
periodically so as not to fall behind as the background environment
 catching up - in rapidly changing circumstances, good practices become
dated very quickly and anyway you want to gain competitive, or possibly
prime mover, advantage
 copying - the fact that others are doing things differently does not
necessarily mean they are better
 spying or espionage - openness and honesty are vital for successful
The underlying reason for benchmarking is to learn how to improve your business
processes and thereby increase your competitiveness. Organizations choose to
benchmark outstanding companies whose business processes are analogous to
their own - even if they are in different industries! Benchmarking allows you to
identify those practices that have facilitated those successful companies' superior
performance and that can be adapted to your own business. Accordingly,
benchmarking is an operational process involving continuous learning and
adaptation which enables you to improve your organization’s competitive

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Why benchmark?
Although many organizations initiate benchmarking projects because of some
dubious reasons; for practical purposes the only reason to benchmark is because
you recognize that somewhere, somehow you are not as efficient or as capable of
satisfying your customers as your competition - whether currently or because you
have spotted a trend in the market that you need to exploit, follow or respond to.
There are two key drivers for an organization - profitability and revenue growth
(the former being a function of the latter after costs) and there are many
variables that impact on these. The key to maximizing both is to understand
where competitors are better than you - where customers value it. It is of little
value having the best process for selling insurance if what customers really want
is an easy to use claims process and yours isn't! Similarly it is no good having an
extremely slick sales process for commodities if the delivery is poor, patchy and

As the diagram shows, processes, although an ephemeral component of an

organization (as opposed to more durable items such as hardware and fixed

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assets) because they change easily, are critical for profitability as delivery of
products/services is crucial to customer satisfaction, payments and ultimately
profit. Similarly reputation (ephemeral) is critical to growth but can be lost all too
easily - especially if processes/people do not deliver [c/f Arthur Andersen].

Although benchmarking is a measurement process and does generate

comparative performance measures, it also about attaining exceptional
performance. The practices that lead to exceptional performance are called

Thus the process of benchmarking results in two types of outputs: benchmarks, or

measures of superior performance, and enablers. Process enablers are developed
to meet a specific business need within the context of a specific business
environment and company culture.

This is why it is of little value to 'steal' from others because you will not have
explored whether and where their business practices are relevant or transferable
to yours.

Benchmarking should not be considered a one-off exercise. To be effective, it

must become an ongoing, integral part of an ongoing improvement process with
the goal of keeping abreast of ever-improving best practice.

Types of Benchmarking
There are a number of different types of benchmarking, as summarized below:
Type Description Most Appropriate for
the Following Purposes
Strategic Where businesses need to improve -Re-aligning business
Benchmarking overall performance by examining the strategies that have
long-term strategies and general become inappropriate
approaches that have enabled high-
performers to succeed. It involves
considering high level aspects such as
core competencies, developing new
products and services and improving
capabilities for dealing with changes in
the external environment. Changes

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resulting from this type of benchmarking
may be difficult to implement and take a
long time to materialize.

Performance Businesses consider their position in -Assessing relative level

or Competitive relation to performance characteristics of performance in key
Benchmarking of key products and services. areas or activities in
Benchmarking partners are drawn from comparison with others
the same sector. This type of analysis is in the same sector and
often undertaken through trade finding ways of closing
associations or third parties to protect gaps in performance

Process Focuses on improving specific critical - Achieving

Benchmarking processes and operations. improvements in key
Benchmarking partners are sought from processes to obtain
best practice organizations that perform quick benefits
similar work or deliver similar services.
Process benchmarking invariably
involves producing process maps to
facilitate comparison and analysis. This
type of benchmarking often results in
short term benefits.

Functional Businesses look to benchmark with - Improving activities or

Benchmarking partners drawn from different business services for which
sectors or areas of activity to find ways counterparts do not
of improving similar functions or work exist.
processes. This sort of benchmarking can
lead to innovation and dramatic

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Internal Involves benchmarking businesses or - Several business units
Benchmarking operations from within the same within the same
organization (e.g. business units in organization exemplify
different countries). The main good practice and
advantages of internal benchmarking are management want to
that access to sensitive data and spread this expertise
information is easier; standardized data quickly, throughout the
is often readily available; and, usually organization
less time and resources are needed.
There may be fewer barriers to
implementation as practices may be
relatively easy to transfer across the
same organization. However, real
innovation may be lacking and best in
class performance is more likely to be
found through external benchmarking.

External Involves analyzing outside organizations - Where examples of

Benchmarking that are known to be best in class. good practices can be
External benchmarking provides found in other
opportunities of learning from those organizations and there
who are at the "leading edge". This type is a lack of good
of benchmarking can take up significant practices within internal
time and resource to ensure the business units
comparability of data and information,
the credibility of the findings and the
development of sound
International Globalization and advances in - Where the aim is to
Benchmarking information technology are increasing achieve world class
opportunities for international projects. status or simply
However, these can take more time and because there are
resources to set up and implement and insufficient “national"
the results may need careful analysis businesses against
due to national differences which to benchmark.

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More than just learning what benchmarking is and what it can do, the
organization's leaders must develop a specific, organized approach to
implementing benchmarking. It is fine to extol the virtues of benchmarking and
encourage its use throughout the organization, but just like any other program, it
must be established into the organization as a working process. The following 10
steps will keep any organization on track in its benchmarking endeavors.

Step 1-Determine processes to be benchmarked

This step involves defining as accurately as possible the process to be

benchmarked. It is the cornerstone of the entire benchmarking process. An
incorrect identification at this stage could result in a waste of precious resources
at later stages. Consider the following questions:

 Have departmental priorities been established? Determine whether the

department has strongly defined its overall purpose. This includes setting
long-term goals and short-term objectives.

 What is the level of change? Does an entire system require rethinking?

Perhaps a particular process within that system needs to be improved. Can
improvement be achieved by upgrading some particular task within the

 Has the work process to be selected been flowcharted? A good first step in
gaining an overview of the entire process is to flowchart it. This will help
identify problem areas and locate potential trouble areas. Then establish
the critical measurements by which to compare future progress.

 How much change is possible? Given your organization's resources and

circumstances, find out whether reforming the process is affordable at the
determined level of change.

 Have critical performance measures been determined? Investigate whether

measures have been determined in accordance with customer

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After you've accomplished step 1, you will have a sharply focused, clearly defined
procedure that tells management what needs to be changed, how much change
can be achieved within given limitations and how to measure accurately your
processes against those of others and against your own future projections.

Step 2-Determine organizations to be benchmarked

This step determines which organizations should be studied by identifying "the

best of the best"-organizations whose practices can be adapted to your
requirements. An incorrect choice could lead to electing partners that are not
true benchmarks for the selected process, that are uncooperative or whose
practices are incompatible or irrelevant to your needs. Consider the following

 From which sources could an effective partner list most likely be created?
Research which published sources (industry periodicals, annual reports,
etc.) would yield the most useful, accurate and up-to-date information.
Find out which reliable individuals or groups (industry experts, watchdog
groups, etc.) could be consulted to expand the list. A good source to consult
is a library, either corporate or public. Librarians usually are eager to help in
such efforts.

 Which of the preliminary organizations selected are really "the best of the
best"? Determine which prospective partners truly are the benchmarks for
your organization.

 Are the systems of the selected organizations really comparable? Select the
organizations with practices that are the most compatible with yours.

Is sufficient and accurate data obtainable? Decide which prospective partners

would be expected to produce the most reliable information. Then see which
organizations (e.g., foreign entities) would present the fewest logistical problems
when gathering data. Also, figure out which organizations would be the least
likely to present legal problems when gathering data. From which organizations
would cooperation most likely be obtained?

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When you've gone through step 2, you will have compiled a large list from which
to choose organizations to contact as potential partners, based on the superior
quality of their processes.
Step 3-Gather data

This step involves creating a plan for collecting data from selected targets,
conducting site visits and creating a site visit report. The correct implementation
of this step will result in data that can be used directly to enhance your
organization's performance. Incorrect implementation of this step could result in
data that is useless or inadequate to your purposes. Consider the following

 Has an adequate data-collection plan been created? Determine what are

the simplest data sources and the most difficult. Then figure out which data
would have the most value. Other important factors are the time and cost
limitations of collecting data.

 Which are the best sources of practice data? Decide which combination of
the four types of sources-internal, published, external or original research-
would yield optimal results.

 Have the best internal sources been consulted? Good sources to consult
are your organization's library and other internal groups or teams.

 Have the best published sources been consulted? Internal publications

(e.g., annual reports, quarterly reports) of the target organizations should
be studied as well as any periodicals and directories containing information
about the target organizations. Appropriate data bases can also lead to
pertinent information.

 Have the best external sources been consulted? You can acquire significant
information from professional organizations dealing with the business of
your target organizations. You can also gain valuable information by
contacting industry experts and independent consultants.

Has original research been carried out? Identify the appropriate contact person of
each benchmarked organization. Make sure to notify all contacts by telephone,

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explaining that their organization has been selected as a potential benchmarking
partner. Explain the purpose of the process in clear language.

Have the appropriate ethical issues been considered? In obtaining information

from a competitor, avoid any possibility of misrepresentation. Be careful to
identify whether any of the information prepared could be considered proprietary
(e.g., insider trading).

Upon finishing step 3, your organization will have complete, accurate and relevant
data with which to compare its own processes with "the best of the best."

Step 4-Analyze for gaps

This step involves analyzing the data collected, discovering to what degree
present performance lags behind the best in each area and combining the best
features from the best practices into an ideal process. The correct
implementation of this step will result in a clear picture of your processes in
comparison with others in your business or industry. The incorrect
implementation of this step could result in vague information that would not
ultimately be useful in improving your operations. Consider the following

 How can the data compiled in step 3 be most effectively analyzed? Make
sure to properly analyze the results of the benchmarked organization(s) in
terms of output and customer satisfaction. Also analyze thoroughly the
results in terms of the work practices leading to them. Express both results

 How does each best practice compare with your organization's practice for
each procedure involved? Create a chart that compares the benchmarked
organization's practice with your own. Have the correct measures been
employed for comparison (e.g., cost, speed, ease of use)? Has the
difference between the benchmarked organization's practice and your own
been expressed in quantitative terms?

 How can the best practices from these sources be combined? The best
practice for each of the procedures involved should be combined into a

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single ideal process. How could the overall output of the process be
projected? You may find that some procedures need to be eliminated
because of cost or other considerations.

After you've accomplished step 4, relevant features from each of the best
practices will combine into an ideal practice that can be implemented within
budgetary and other constraints of your organization.

Step 5-Determine future trends

During this step, your team will examine your organization's past performance in
relation to its competitors, forecast potential change in your industry and project
future performance, both with and without the proposed benchmarking changes.
The correct implementation of this step will give management a clear idea of its
options and allot it a realistic conception of the potential benefits of adopting the
benchmarking practices. An incorrect implementation of this step will give
management an incomplete or inaccurate picture of its options. Consider the
following questions:

 What have been the industry trends of the recent past? Determine the
measure (e.g., revenues, productivity), related to the practice being
benchmarked, by which your organization can most appropriately be
compared to others.

 What is the current performance gap? Compare your organization's current

performance with the benchmarked organization. Is the gap widening or
narrowing, according to recent trends? Discover the reason, based on the
data analyzed in step 4, for the gap and its increase (or decrease).

 What will be the future performance gap if no benchmarking changes are

implemented? By projecting past trends into the future and allowing for
anticipated changes, learn what the benchmarked competitors' position
will be within the next specified time period. Decide what your
organization's position will be if no benchmarking changes are made. Will
the gap widen or narrow?

 What will be the future performance gap if all proposed benchmarking

changes are implemented? If the proposed benchmarking changes are

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implemented, determine your organization's position, in comparison with
its competitors, within a specified time period. Has the change been
expressed quantitatively (e.g., dollar amounts, percentages)? Has the
potential benefit of the change been compared with the estimated cost
(e.g., equipment, production delays, etc.) of its implementation?

Upon completing step 5, you will have identified the quantitative benefits of
implementing the proposed benchmarking changes.

Step 6-Reveal results and sell the process

This step involves communicating the benchmarking results and their implications
to significant audiences in the organization and motivating them to carry out
changes. The correct implementation of this step will result in a complete
understanding by the target audiences of the necessity for changes in the
processes involved and a desire to carry them out. Incorrect implementation of
this step will leave both management and employees confused or inadequately
informed, reducing the potential for effective change. Consider the following

 Which audiences should be addressed? Decide whether the organization's

entire management needs to be "sold" on the changes or only some
managers. Educate those departments that need to be educated about the
changes, and inform the entities outside the organization (e.g., customers,
suppliers) that need to be informed.

 How is the report to be written? Determine what kind of publications (e.g.,

full-length report, newsletter, video presentation) would be most
appropriate to communicate the benchmarking results, based upon the
nature of the organization and its goals. Express the purpose of the
benchmarking process in the appropriate manner. Has emphasis been
placed on the results of the study, rather than methodology? Has emphasis
been placed on fact rather than opinion?

 Has understanding and commitment been obtained from the target

audience? Check the feedback from the report to see whether it indicates
that the target audiences understand the necessity for change. Gain

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management approval for the concept of an implementation program. Also
ensure that nonmanagement employees are completely "on board" for the
changes. Do the outside entities involved understand how the changes will
benefit them?

Step 6 will ensure that the advantages of change have been explained to the
parties involved in order to motivate them to carry it out.

Step 7-Achieve consensus on revised goals

This step involves revising goals to close the performance gap determined in step
5 and achieving consensus on those goals. The correct implementation of this
step will create realistic and unambiguous new standards for the processes
involved. Incorrect implementation of this step could create poorly understood or
unrealistic standards that would only increase the frustration level of both
management and employees. Consider the following questions:

 Have operational goals been effectively and realistically revised? Determine

what type of change (e.g., basic goal priorities, measurement units,
quantity or frequency of units processed) must be implemented. All goals
should be expressed in quantifiable, easy-to-measure terms. The degree of
change should also be realistic based upon benchmarking findings.

 What impact will the revised goals have within the organization? Some
departments may need to be reorganized, and some employees' positions
will need to be redefined, created or eliminated. Also, some lines of
authority may need to be altered. Analyze how the revised goals will impact
departments not targeted for change. How will these changes be justified
to the parties affected?

 What impact will the revised goals have outside the organization? Try to
ascertain what effect the changes will have on customers and suppliers.
Then decide in what detail they should be informed of changes and how to
present the changes to generate support rather than anxiety.

 Has management committed to the specific revised goals? Management

must understand the proposed goals and fully support them. And

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management must communicate the goals to all affected employees in
such a way as to obtain their full commitment.

Step 7 establishes clear-cut goals that management has approved and that all
employees understand.

Step 8-Establish action plans

This step establishes the step-by-step plan designed to bring about the goals
created and approved in step 7. Incorrect implementation of this step could result
in vague procedures which would either be rejected by management or would
prove unworkable if approved. Consider the following questions:

 In what order should work practices be implemented? Choose the factors

(time, cost, software, etc.) that are most crucial in determining priorities.
Discuss the pros and cons of each factor. Then analyze all factors so that a
schedule of action can be determined. Project future performance based
on the schedule of action.

 Has the procedure been prepared? Break down all tasks into
comprehensible steps, with specified results. Then put the tasks in
sequence. Determine which resources are needed to accomplish the tasks.

 Has management approved the procedure? Clearly articulate the plan's

elements (task breakdown, costs, etc.) to management.

 Have individuals been empowered to manage the process? Identify the

appropriate level of management for the procedure (e.g., line manager,
management team, process owner). Select the employees and give them
the training and authority to manage the process.

 Has the implementation plan been printed and displayed? Create the
complete plan in printed form. Display the plan so that tasks,
responsibilities and deadlines can be clearly seen and understood.

Upon completing step 8, management has approved the specifics of the plan,
appropriate individuals have been empowered to carry it out, and every individual

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knows what changes in his or her work procedure are expected.

Step 9-Implement plans and monitor results

This step involves executing the approved best-practice procedures and the day-
to-day monitoring of changes. The correct implementation of this step will result
in a closely watched process in which deviations from the plan will be corrected
and the ultimate goals achieved. Incorrect implementation of this step could
result in inaccurate or spotty measurement, leading to poor control of the process
and disappointing overall results. Consider the following questions:

 Have timeline charts been created? Make sure that the charts accurately
reflect the factor to be measured over the selected period of time.

 Have control charts been created? Charts must accurately measure the
factor to be controlled (e.g., unit cost, quantity per hour) over the selected
period of time.

 Has any variance from the plan been dealt with effectively? Appropriate
action needs to be taken as soon as deviations are detected. Keep lines of
communication open to all affected parties, providing feedback on the

 Has final evaluation been made of the benchmarking process? Accurately

record the results, and determine whether acceptable goals have been
achieved. Prepare a final report, including which elements of the
incorporated changes should be rejected and which should be accepted as
permanent practices within the organization.

Step 9 develops procedures to enable close monitoring of the changes and

tracking of results so that, over time, successful elements of the new practices can
be retained and the less successful ones eliminated.

Step 10-Recalibrate benchmarks

This step ensures the organization remains on the cutting edge by continuously
evaluating the benchmarked practices and reinstituting the benchmarking process

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when necessary. The correct implementation of this step prevents complacency
by creating the habit of evaluating procedures for their potential for
improvement. The incorrect implementation (or nonimplementation) of this step
fosters the illusion that any successful benchmarked practice creates a permanent
improvement, resulting in a false sense of security and possible future loss of
competitive edge. Consider the following questions:

 How often do the processes need to be recalibrated? The period between

benchmarking studies should be realistic in terms of the nature and goals of
the organization. The organization may be planning systemic changes that
would make new benchmarking necessary. The level of customer
satisfaction must constantly be monitored for the potential need to
recalibrate. Also, management must commit fully to repeating the 10-step
process when necessary.

 Has a plan been developed for recalibrating? The need for periodic
recalibration should be communicated to all levels of the organization.
Decide whether the new benchmarking process will be complementary to
the previous one or will represent a new area of improvement.

 What additional factors are relevant? Investigate what industry changes

(systemic, technological) have occurred since the prior benchmarking
process that would impact a new one.

After completing step 10, the organization will understand when and how it needs
to recalibrate benchmarks and will never put itself at risk by becoming

The success of a benchmarking process depends on the organization's permanent

commitment to the process. A particular benchmarking change will often be
temporary. To sustain market leadership, however, the habit of benchmarking
must be a permanent part of the organization's culture.

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Q: 3: Describe Xerox’s benchmarking model. How did Xerox …….In the

Xerox defined benchmarking is finding and implementing best practices that lead
to superior performances of an organization. Xerox developed its own
benchmarking model. This model involved tens steps categorized under five
stages - planning, analysis, integration, action and maturity
The main goal of benchmarking is to identify the weaknesses within an
organization and improve upon them, with the idea of becoming the "best of the
best". The benchmarking process helps managers to find gaps in performance and
turn them into opportunities for improvement.
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

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

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Xerox benchmarking model

Xerox implementation of benchmark practices in the company-

Supplier Management System- 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.

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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.

Inventory Management: The stocking policy followed by Xerox branch managers

was to hold fully finished, fully configured products near to the customer.
Because of this policy, they carried vast amounts of inventory, some of which was
not even sold during a given period.

Another innovative strategy, followed by Xerox to minimize inventory-carrying

costs, was to delay the assembly of the product into the final configuration as
much as possible. According to a Xerox executive, Graham Scout, "Some finished
goods are language sensitive, software sensitive, voltage sensitive and cycle
sensitive for different worldwide markets. We will build it to a level where it's
generic and then configure it and finish it when we have an order for it. We may
have to hold a little more work-in-progress inventory back in the plant but we can
certainly avoid holding lots of finished products out in the field."

Manufacturing system: The process of benchmarking helped Xerox revamp its

manufacturing techniques. Each 'family unit' (a manager and his direct
subordinates) was encouraged to identify its internal as well as external
customers and to meet their needs. This process significantly improved the
operational efficiency of the work groups.

Xerox introduced a Customer Satisfaction Measurement System that integrated

customer research and benchmarking activities. The company sent out over
55,000 questionnaires monthly to its customers to measure customer satisfaction
and record competitors' performance. It then benchmarked against those
competitors that had scored high marks on specific measures of customer
satisfaction. Xerox also used the vast amount of information gathered by the
system to develop business plans for improving quality and meeting customer

As a part of its Leadership through Quality program, Xerox reformulated its

quality policy. The new policy supplemented the company's benchmarking efforts.

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Xerox's new quality policy stated, "Xerox is a quality company. Quality is the basic
principle for Xerox. Quality means providing our external and internal customers
with the innovative products and services that duly satisfy their requirements.
Quality improvement is the job of every Xerox employee". Following this, the
company embarked on a complete organizational restructuring exercise that
focused on research and development, employee involvement and customer

By the late 1980s, benchmarking had become a day-to-day activity in every

division of the company. According to company sources, Xerox's guiding principle
was, 'anything anyone can do better, we should aim to do at least equally well."
By the mid-1990s, benchmarking was extended to over 240 key areas of product,
service and business performance at Xerox. The initiatives were also adopted, at
varying levels, at Xerox units across the world. The benchmarking process
encouraged Xerox's employees to learn from every situation.

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Q: 4: What benefits did Xerox derive from the implement of benchmarking
practices?……….initiatives undertaken by the company.
The benefits Xerox derived from the implementation of benchmarking practices -
 Highly satisfied customers for its copier/duplicator and printing systems
increased by 38% and 39% respectively.
 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. Some of
the other benefits Xerox derived were: 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 labor 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%.
 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.
 The success of benchmarking at Xerox motivated many companies to
adopt benchmarking.

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To get the best results from this powerful performance improvement tool, you
need a clear understanding of what it can do for you and a well-structured
process for your initiatives.

Largely unheard of in the business world until the mid-1990s, when Xerox Corp.
used it to enhance its competitiveness, benchmarking has evolved to become an
essential element of the business performance management (BPM) toolkit and a
key input to financial and business improvement efforts. Despite this, it remains
one of the most widely misunderstood improvement tools. The word means
different things to different people, and, as a result, benchmarking projects all too
frequently fail to deliver on their promise of real results.

However, when executed correctly, benchmarking can be a powerful focus for

change, driving home sometimes uncomfortable facts and convincing leaders of
the need to embark upon improvement efforts. Benchmarking is a tool that
enables the investigation and ultimately the achievement of excellence, based on
the realities of the business environment rather than on internal standards and
historical trends.
There are two good reasons for organizations to benchmark. First, doing so can
help them to stay in business by enabling them to outperform similar
organizations, including competitors. Second, it ensures that the organization is
continually striving to improve its performance through learning. Benchmarking
opens minds to ideas from new sources, both within the same industry and in
unrelated sectors.
The causes of failed benchmarking projects are the same as those for other failed
1. Lack of sponsorship—A team should submit to management a one- to four-
page benchmarking project proposal that describes the project, its
objectives, and potential costs. If the team can’t gain approval for the
project or get a sponsor, it makes little sense to proceed with a project
that’s not understood or appreciated or that is unlikely to lead to corrective
action when completed.
2. Wrong people on team—Who are the right people for a benchmarking
team? Individuals involved in benchmarking should be the same ones who
own or work in the process. It’s useless for a team to address problems in
business areas that are unfamiliar or where the team has no control or

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3. Teams don’t understand their work completely—If the benchmarking
team didn’t map, flowchart, or document its work process, and if it didn’t
benchmark with organizations that also documented their processes, there
can’t be an effective transfer of techniques. The intent in every
benchmarking project is for a team to understand how its process works
and compare it to another company’s process at a detailed level. The
exchange of process steps is essential for improved performance.
4. Lack of long-term management commitment—Since managers aren’t as
familiar with specific work issues as their employees, they tend to
underestimate the time, cost, and effort required to successfully complete
a benchmarking project. Managers should be informed that while it’s
impossible to know the exact time it will take for a typical benchmarking
project, a rule of thumb is that a team of four or five individuals requires a
third of their time for five months to complete a project.
5. Focus on metrics rather than processes—Some firms focus their
benchmarking efforts on performance targets (metrics) rather than
processes. Knowing that a competitor has a higher return on assets doesn’t
mean that its performance alone should become the new target (unless an
understanding exists about how the competitor differs in the use of its
assets and an evaluation of its process reveals that it can be emulated or
6. Not positioning benchmarking within a larger strategy— Benchmarking is
one of many total quality management tools—such as problem solving,
process improvement, and process reengineering—used to shorten cycle
time, reduce costs, and minimize variation. Benchmarking is compatible
with and complementary to these tools, and they should be used together
for maximum value.
7. Misunderstanding the organization’s mission, goals, and objectives—All
benchmarking activity should be launched by management as part of an
overall strategy to fulfill the organization’s mission and vision by first
attaining the short-term objectives and then the long-term goals.
8. Failure to monitor progress—Once benchmarking has been completed for
a specific area or process benchmarks have been established and process
changes implemented, managers should review progress in implementation
and results.

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Benchmarking enables decision-makers to understand exactly how much
improvement they will need to accomplish in order to achieve superior
performance. Frequent and regular benchmarking helps us to create specific and
measurable short-term plans that are based on current reality rather than
historical performance, and which can support step-by-step improvements in
performance over time. The objective is to overtake the top performers, turning a
performance deficit into performance leadership.

Successful benchmarking results in improvements to quality and productivity as

well as positive financial outcomes; benchmarking promotes a “learning culture”,
which is the key to continuous long-term quality improvement and
competitiveness. Successful benchmarking organizations are continually looking
for new ideas. They adopt the most useful new ideas and meet and beat the best
performance they can find. Organizations with little experience in benchmarking
often discover the best performance benchmark but stop short of discovering
how the best performance was achieved. Additionally, they may start their
benchmarking efforts by looking at external benchmarks while overlooking
successful internal benchmarks that already exist. Further, inexperienced
benchmarking organizations often fail to measure the project’s effects in terms of
its costs and benefits.

"If we don't change our direction, we might end up where we're headed", says a
Chinese proverb. Benchmarking is a direction-setting exercise, and it is nothing
more than a quality tool, just one of many ways to improve and become more

All these have been said, is our strongly belief that –because quality is becoming
the hallmark for both products and services now-a-day, benchmarking has a very
powerful potential and it can be used as a valid strategy for the long term, taking
into account the fact that improvement must not be a one-time project

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