Xerox is the world’s leading manufacturing company of copiers (black and white, colour), printers,

scanners and fax machines. It is also a leader in document management software and office
consumables. In 1997, it had sales of 8,261 million and growth of 8.4%, employing over 57,400 people
worldwide.

Some of the key reasons for Xerox’s success include:

Xerox was particularly successful because it developed a strong brand and enviable position with high
end customers. Manufacturing excellence, total customer satisfaction and leading customer services
underpinned the Xerox brand.

Xerox had successful partnerships. One of which was the Fuji-Xerox joint venture established in 1962,
brought the best of both companies together. Initially Xerox set out to license manufacturing to enter the
Japanese market, Xerox provided management know-how, resources and skills, whereas Fuji had local
market knowledge, distribution channels, and operational skills. The alliance enabled mutual learning to
take place - which led to some of the most successful advances in technology and manufacturing
excellence.

New technologies, new patents and new manufacturing processes resulted from the alliance. TQM - total
quality management was developed with lots of successes for the company, including the number of
defective parts from suppliers falling from 25 per million in 1983 to 300 per million, 1992. Xerox saved at
least a year in new product development, through specific project teams - that were tasked to design new
products and bring to the market new products quicker. Fuji Xerox developed a new focus towards
quality - which helped the company itself and reputation with the customer.

The business was regularly challenged. It need to restructure its business to keep in touch with the
changes in consumer requirements. By the late 1990’s Xerox had grown into a large corporation. To
keep itself innovative and entrepreneurial it needed a structure that would ensure that it was responsive
to the market.

Significant changes were made including a new matrix structure for management and the
organization. Nine independent business units were created for its different product groups and markets,
supported by organization wide R&D, and sales and service teams. By changing its structure it was
closer to the customer and offered a single point of contact.

The Xerox culture - encouraged employees to innovate all the time, helping the company to stay ahead.
Challenges and outlook for Xerox:
Some of the threats to the industry include the internet. The internet and e-mail have led to a reduction in
the demand for printing, copying, and paper based products.

Competitors, such as IBM, Canon and Kodak have been particularly effective at gaining low-end
customers; they have entered the high end market at lower prices which have affected profit margins.

Worldwide recession is affecting the capital expenditure on IT. Companies are withdrawing from non
priority investments. Xerox has diversified its business to include consulting, workflow and document
management services. Software development has become a greater cash cow for the business.

Xerox Case Study Analysis

The challenge facing Xerox and its management is complex, challenging and probably not
unique. The company had been dependent on its highly trained sales force to turn a profit on
their existing products and had not focused on new product opportunities until the development
of its "Book In Time" product. This revolutionary product presented some new opportunities for
the company. One of the significant advantages this product yielded was its costs. The Book-
in-Time equipment allows for a publishing company to produce a 300-page book for $7,
something which could have been previously reached only for lots larger than 1,000 copies. A
significant decrease in publishing costs, given the fact that these cover up to 20 % (including the
paper and binding the book), would create the possibility of an increased profit margin.
Another advantage that the Book-in-Time solution provided by Xerox is that is one of the most
efficient solutions for publishing companies running on-demand, short-books. Clearly
publishing and or printing companies that may have achieved economies of scale with large
print runs would be threatened by the Book-in-Time solution that able to provide a significant
cost-advantage on low print run books.
Furthermore, if we look at Table E, providing an analysis of the on demand conversion potential,
several long-runs can be targeted by the equipment Xerox provides. Subscription references,
for example, have a 100 % conversion potential (on the other hand, they only have 1 % of the
overall market). College textbooks, the university press and professional textbooks all have a
50 % demand conversion potential.
So, in order to be able to estimate the market size for the Book-in-Time, one needs to take into
consideration the conversion potential, in addition to the actual number of books. In this sense,
we may estimate the on demand market to around 600.000 books per year.
Xerox Case Study Analysis

The challenge facing Xerox and its management is complex, challenging and probably not unique. The
company had been dependent on its highly trained sales force to turn a profit on their existing products
and had not focused on new product opportunities until the development of its “Book In Time” product.
This revolutionary product presented some new opportunities for the company. One of the significant
advantages this product yielded was its costs. The Book-in-Time equipment allows for a publishing
company to produce a 300-page book for $7, something which could have been previously reached only
for lots larger than 1,000 copies. A significant decrease in publishing costs, given the fact that these
cover up to 20 % (including the paper and binding the book), would create the possibility of an increased
profit margin.
Another advantage that the Book-in-Time solution provided by Xerox is that is one of the most efficient
solutions for publishing companies running on-demand, short-books. Clearly publishing and or printing
companies that may have achieved economies of scale with large print runs would be threatened by the
Book-in-Time solution that able to provide a significant cost-advantage on
low print run books.
Furthermore, if we look at Table E, providing an analysis of the on demand conversion potential, several
long-runs can be targeted by the equipment Xerox provides. Subscription references, for example, have
a 100 % conversion potential (on the other hand, they only have 1 % of the overall market). College
textbooks, the university press and professional textbooks all have a 50 % demand conversion potential.
So, in order to be able to estimate the market size for the Book-in-Time, one needs to take into
consideration the conversion potential, in addition to the actual number of books. In this sense, we may
estimate the on demand market to around 600.000 books per year.
Basically, Xerox has two separate options at this point, given the performances of the Book-in-Time and
these were clearly expressed by the senior managers at Xerox.
The first option refers to sticking with what Xerox does best, printing and copying and delivering
exclusively the product itself. This would mean selling the Book-in-Time equipment to all those elements
of the value chain that may be interested, including publishers and book printers (see Appendix A for
Break Even Analysis).
The main advantage such an option provides
is the fact that it allows Xerox to operate on a market it fully knows and controls. As we have seen from
the case study, Xerox has already gained an edge over IBM, the main competitor, and the invention and
development of the Book-in-Time system will bring a new product on the market, an innovation that could
significantly reduce the publishing costs, consolidating Xerox’s position and market share.
The second advantage we may see in such an option is the fact that, as Steenburgh laid down the facts,
this option provides a real synergy for the company, integrating several pieces into a significant system
and allowing the company to gain more rather than operate them separately. It is important to note,
however, that the solution provided by Xerox actually fits on a very specific niche, operating most
efficiently only for run lengths of 1,000 and below. This would mean increased competition on the over
1,000 segment, with less competitiveness for Xerox.
The second option is much riskier and it involves entering the book production business. On the other
hand, its potential is practically unlimited. The market for on-demand, short-run books is a market that
exceeds the lifecycle of a normal book, providing numerous
opportunities. Additionally, the book market itself is enormous: 50,000 new titles and 1.5 million repeat
titles a year is a figure worth to be taken into consideration.
The main disadvantage in such an option is the fact that the competitors have already gained (1) a
significant operating experience and (2) a strong position on the market. The first 12 publishers account
for 85% of overall US book publishing market, so Xerox would find it difficult to find the best niche into
which to fit an entire publishing activity.
In my opinion, the best action plan for Xerox at the given time is a joint version of the two options it has at
hand. On one hand, it can sell the equipment to the interested buyers from the value chain, which will
probably consist into a profitable action that will have the capacity to later finance an entrance into the
publishing market. This seems a prudent approach that will be able to benefit from the competitive
advantage that the solution provides. If this option was selected Xerox would only need to sell three of
their complete Book-in-Time products to break even (based on assumptions around fixed and variable
costs in Appendix A).
In addition, a joint venture, forward integrating into
or the acquisition of a publishing company seems appropriate if Xerox decides to enter the publishing
market. This way, it will be able to create a positive synergy by bringing together the company’s
equipment and solutions and the know-how and experience of human resources from the publishing
company, people that will smooth the entrance in the market. As far as the four Ps are concerned.
Clearly, the Book-in-Time product should take advantage of it’s differentiation related to short run printing
costs and product placement within the short run/on demand production market. Finally, the on-demand
market has the potential to grow into the future as well, with more and more books being included into this
segment. This needs to be taken into consideration when taking a final strategic decision.

Appendix A
Break Even Analysis of Xerox Book In Time Product Selling into the Publishing/Printing Market
Component Costs $895,000
Per Unit Set Up Costs $1000
5% Sales Commission* $75,000
Total Variable Costs $971,000
Per Unit Contribution** $529,000
Fixed Costs $1,500,000
Break Even Amount*** 2.83
*Based on a per unit sales price of $1.5M.
**Per Unit Sales – Total Variable Costs.
***Total Fixed costs/Per Unit Contribution

Total Quality Management in the Xerox Corporation

By: Jennifer Zook

Total Quality Management (TQM) is a term used to define quality programs
corporations use to help increase the profit share and the customer relations of the
corporation. Total Quality Management can consist of different programs that
different companies use to obtain the results of customer satisfaction, better quality
products, and a decrease in the defects of the products. Total Quality Management in
the Xerox Corporation includes programs such as benchmarking, reduced supplier
base, and leadership teams (Evans-Correia, 1991). In the following paragraphs
Xerox�s strategies for TQM, the Baldrige Award, and the effects of TQM on the
Xerox Corporation will be discussed as well as a background of the Xerox
Corporation.

The Xerox Corporation started its thrive towards TQM in the 1970�s with the
invention of PARC, Palo Alto Research Center. This center was created to do research
in computer science, electronics, and material science (Brown, 1992). There are same
basic principles that PARC has identified as important to research, "1. Research on
new work practices is as important as research on new products, 2. Innovation is
everywhere; the problem is learning from it, 3. Research can�t just produce
innovation; it must �coproduce� it, and 4. The research department�s ultimate
innovation partner is the customer" (Brown, 1992). Research is a key component
when it comes to Total Quality Management. The only way to make yourself better is
to learn new things and learn when you are doing things wrong so that the errors can
be fixed. By opening up PARC Xerox has given itself a place to help with the
innovation process of the corporation and thus allowing the corporation the means to
do its job better. Alos, PARC is used as a way of finding out what the customer wants,
if the customer can be satisfied then the corporation is one step closer to being a
strong thriving company with Total Quality Management.

Opening the research facility was one of Xerox�s ways of implementing TQM
before TQM was even invented. Now that TQM has become known in the
marketplace Xerox has established its own program to obtain it. The Xerox
corporation focuses on benchmarking, a reduced supplier base, and leadership teams
as a way of producing Total Quality Management. Benchmarking is a "standard or
point of reference in measuring or judging quality, value, etc." (Webster, 1979).
Xerox looks at what the competition is doing and sets a level of quality and value that
all of its products are compared against. These levels of quality are also used by other
companies because of Xerox�s excellent standards. Once the standard that has been
set is met then a new and higher standard is set so that the company is continually
striving to do better and have a higher quality product.

The second method Xerox is using in its strive for TQM is to reduce its supplier base.
A supplier base is the amount of companies that the ordering company, in this case
Xerox, gets its materials from. Xerox has gone from individual suppliers for each of
the different manufacturing facilities to a consolidated group of suppliers for all of the
manufacturing facilities (Evens-Correia, 1991). This has drastically cut the amount of
suppliers needed which increases accountability of the suppliers to get the materials to
Xerox on time and it decreases some overhead costs because of shipping reductions
and economies of scale discounts. The smaller supplier base also gives Xerox more
control in the corporations decision processes. If the company wants to make a change
that affects the way it uses its suppliers there are less problems arising from having to
many different suppliers. Furthermore, there are a reduced amount of people needed
in overseeing the ordering process from the suppliers which allows for a decrease in
positions and less of a chance for error.

The third method Xerox uses to help in Total Quality Management is leadership
teams. Leadership teams are a new concept that many companies are adapting. These
teams consist of a group of people with different areas of specialty. The main
functions of the teams are to produce a product for the lowest possible cost with the
highest quality. These teams can have jobs that range from finding ways to cut costs
all the way to how to handle difficult employees and anything in between. The teams
generally decide on what special project they are going to work on. The teams also
decide what the hours are they are going to work and the salaries they are going to get
for doing the jobs. Leadership teams also are put together to train other people how to
work in teams and how to take and active role in the workplace with your job. Xerox
has established a program called Leadership Through Quality (LTQ) and a Quality
Training Task Force for its company�s leadership teams. "Today, more than 100,000
Xerox employees worldwide have been trained in this process, which stresses
continuous improvement and defines quality precisely as meeting customer
requirements" (Evans-Correia, 1997, 135).

Through Xerox�s effort with TQM the corporation has won the Baldrige Award as
well as a few other awards. The Baldrige Award "has come to signify a standard of
excellence in total quality management, and the practices and achievements of each
year�s award winners have been examined with considerable interest" (Internal
Auditor, 1992, 38). The award was created to identify companies that are going above
and beyond the process of making products for cash. These companies are
establishing guidelines for excellence. Part of the benefits or downfalls of winning the
award, depending on the way you look at it, is that the company who wins the award
must share their company�s policies with competitors. The winning company gives
plant tours and gives lectures on its TQM to other companies and students who are
interested in learning about TQM. It is a share the knowledge attitude of the founders
of the award. If a company is not willing to give others the knowledge they have
found then they will not win the award. The idea of share the knowledge is to help
American companies do better in the global market and to help these companies
survive in the long run with increasing competition. The more businesses in the
market place the more competition there is and the more jobs there are for the
American people.

The Baldrige Award is only one of the effects of Total Quality Management for the
Xerox Corporation. Another example of the effects of TQM on the Xerox Corporation
is the employee and customer support given to the company. Xerox hosts a teamwork
day in which teams are able to come in and show off the projects that they are
working on to other employees and to visitors. The first year the amount of teams that
attended was thirty. The next year the amount of teams doubled and there were five
hundred visitors attending as well. There are no incentives for the teams to take part.
The only recognition the people get from the day are thank-you notes (Pell, 1994).
This is an excellent example of how TQM is working within the company. The
workers want to take part in this activity because of a sense of competition to come up
with the best ideas and pride in the work the team has done. These are the kind of
employees that help make a corporation become a success and stay a success.

The third effect of Total Quality Management is the amount of knowledge the
company has learned by implementing the new procedures. The new procedures
include research as part of the TQM process. Xerox does surveys to customers,
stockholders and employees as part of this research. These surveys are mailed out to
the respective people and ask questions about the satisfaction of the products and ask
about improvements that can be made to the products. The surveys also take into
consideration suggestions made by the employees as to how to improve the products
and to improve the production process. "Xerox and other leading TQM companies
have similar processes of surveying employees, mass media, government, and
investors on an ongoing basis and sharing the information in the company " (Grostedt,
1996). These surveys let the employees know the quality of the job they are doing and
how they can improve their performance on that job. This allows empowerment of the
employees and increases the improvement time and it increases the rate in which
improvements are made. These surveys help to strengthen the corporation because of
the fact that the company responds to then and the corporations image is improved
because good customer relations are developed. The surveys work well in the Xerox
corporation because they are taken seriously and are responded to. The company
wants to be the best it can be and it is shown partly through these surveys.

In conclusion, Total Quality Management plays a major role in the Xerox

Corporation. It is the major philosophy of the company and has played an important
role in the success of the Corporation. The strategies Xerox uses include issuing
surveys and developing events for the employees to take part in to further benefit the
corporation. The effects of the TQM process include the winning of the Baldrige
Award as well as various other Total Quality Management Awards and the amount of
knowledge the company has gained from using this philosophy. Finally, the
companies processes that are used in the Total Quality Management program include
benchmarking, reduced supplier base, and forming leadership teams.