Workshop Report- June 10-11, 1987:
JIT Purchasing At Xerox
Larry Connorton
Pierre Landry
X erox JIT purchasing no longer
resembles procurement in the
conventional sense at all, but
is an American version of supply
management called the Materials
Management Strategy within the
company. The story is of the Busi-
ness Products and Systems Group,
producers of the products for which
Xerox is famous: copiers, duplica-
tors, printers, typewriters, comput-
ers, and their accessories. These
pr.oducts account for $9.2 billion of
the $12.9 billion total Xerox revenue.
Product design teams and core
manufacturing operations are at
three locations: Webster, NY;
Welwyn Garden City, United King-
dom (Rank-Xerox); and Ebina,
Japan (FUji-Xerox). Manufacturing
activity also takes place in Canada,
Netherlands, France, Mexico, and
Brazil. It is a far-flung enterprise.
Each new product is developed
by a product delivery team at any of
the three core locations. Within each
product delivery team a manufactur-
ing resource team works with prod-
uct designers, contributing to prod-
uct design and developing the total
process to deliver it - using manu-
facturing personnel of both Xerox
and its suppliers. Commodity teams
are separate, but charged with de-
veloping and managing a base of
world-class suppliers who will partic-
ipate in this process.
A commodity team contains a
mix of business and technical skills:
purchasing, engineering, finance,
manufacturing, quality, and other
backgrounds. It is not a purchasing
team, but a multifunctional team,
which is necessary to operationally
work with suppliers and bring out
guidelines for cost-effective design.
Key elements of the Materials
Management Strategy are:
4 Target
1. Competitive benchmarking: To
appreciate the magnitude of cost,
quality, and delivery improve-
ments necessary to be world
class, Xerox compares key func-
tions and processes against the
best functional leaders in the
world, either inside or outside the
industry. The benchmarks from
the best become clear goals for
Xerox internally, and for its exter-
nal suppliers. (The Xerox Materi-
als Management Strategy cannot
be understood without grasping
the basics of benchmarking to
fuel the process - striving to be-
come the best. See the accom-
panying box.)
2. Quality at the source: "Doing it
right the first time" is becoming a
way of life. After-the-fact inspec-
tion has given way to process
control. Xerox is now promoting
Total Quality Control within itself
and with suppliers.
3. Early and Continuous Supplier
Involvement (ESIICSI): Involve-
ment of suppliers early in product
development has resulted in sig-
nificant improvements in quality,
cost, and delivery. Specifications
critical to each supplier's tooling
and equipment are much better
understood, and afterward, CSI
cements sound supplier partner-
ships.
4. Long-term contracts: No more
annual "Request for Quotes" ex·
ercises. Most contracts are two
to five years. If a supplier's ex-
pertise is instrumental in design-
ing and launching a product, a
contract may last the life of the
part.
5. Supplier base consolidation:
Total effort managing long-term
relationships is directly propor-
tional to the number of suppliers.
Xerox is reducing its supplier
base to those few world class
suppliers existing for each com-
modity. The 1960 base of 5000
suppliers is now down to 300,
and that number will decline fur-
ther.
6. Supplier development program:
A prime criterion to become a
member of the Xerox supplier
team is attitude, "the habit of
continuous improvement." "Po-
tentially world class" suppliers
are being developed into model
suppliers by support programs in
SPC, JIT, TQC, and technology
implementation.
7. Multifunctional commodity teams:
The new supplier partnerships
cover every aspect of operations
from participation in new designs
onward. Interaction with suppliers
is a team effort of much broader
scope than traditional purchaser·
buyer roles.
In 1960 Xerox began to recog-
nize that drastic change was need-
ed. Benchmarks of Japanese com-
petitors told the story. Changes
began in 1961, and many of them
concentrated on suppliers because
purchased components are 60 per-
cent of Xerox unit manufacturing
A commodity team contains a
mix of business and technical
skills: purchasing, engineering,
finance, manufacturing,
quality, and other
backgrounds. It is not a
purchasing team, but a
multifunctional team, which is
necessary to operationally
work with suppliers and bring
out guidelines for
cost-effective design.
Xerox Performance Indicator
Quality
Supplier paris: Line fallout in PPM.
Inlernal: Quality defects per 100 machines
Cost
Direct material cost (Index=100)
Labor overhead rates in percent
Material overhead rates in percent
Delivery
Total manufacturing leadtime (includes
longest leadtime af any supplier), in months
Inventory in calendar days on hand
Fig. 1. Some benchmarks moved forward while Xerox progressed toward them.
costs. Progress since 1980 is a
cause for pride, but the current con-
dition 1s no inducement to compla-
cency. The benchmark goals pre-
vent that. They show that Xerox
competitors are not becoming com-
placent and giving anything to them.
Some of the benchmarks have
moved forward while Xerox pro-
gressed toward them. The situation
is summarized in Fig. 1.
Material Quality Assurance
Order of magnitude quality im-
provements have been central to
Xerox progress since the emer-
gence from the lot acceptance test·
ing morass in 1981. Quality im-
provement was considered a
precursor to JIT. Steps were:
1. Internal communication - iI's a
life-or-death necessity.
2. Reduce the supplier base-can't
work in detail with the whole
world.
3. Training quality assurance
engineers-need a cadre.
4. Develop a supplier training pro-
gram.
5. Train supplier personnel.
By mid-1982, process controls
were in place on 2400 different
parts. Most suppliers were not able
to install the controls without hand
holding. It was a struggle because
many suppliers were reluctant to
use the new methods, and so were
many quality assurance engineers.
Winter 1987
Latest
1980 1986 Benchmark
10,000 450 125
91 12 4
100 50 25
380.0% 180.0% 150.0%
9.0% 3.1% 2.5%
9 5 2 The print is vital. There must be
99 33 9 agreement between a designer's
The critical success factors in over-
coming this reluctance were training,
training, and training. Then the com-
milled overcame. Today 95 percent
of all production parts are certified,
and need no incoming inspection.
The commodity teams were the
force behind supplier quality im-
provement. The quality department
of Xerox does not "own" the quality
function. It permeates every com-
modity team. The teams reduced
the supplier base to a size manage-
able for quality training. They drove
the message home to the suppliers'
upper management. The suppliers
who remained were commilled,
which makes an impossible job into
something reasonable.
Now that the dimensional de-
fects have been resolved through
SPC, remaining defects can only be
eliminated by acceptance of Total
Quality Control by all suppliers.
Rollout of the TQC program to sup-
pliers is in four steps:
• One-day orientation for the CEO
to gain commitment
• Three days to supplier senior
management
• A "gestation period" for the sup-
plier to develop a quality policy
and strategy
• Rollout to the rest of the compa-
ny.
These four steps take about a year.
This rollout is followed by consistent
reinforcement and retraining at the
supplier's site. The adoption of SPC
and TQC management methods is a
condition of doing business with
Xerox.
The quality engineer's certifica-
tion of supplier processes started
with a review of prints to assure the
part was manufacturable to the de-
sign intent. Then:
• First piece verification-tool can
produce part to print
• Histogram - process can produce
part to print
• Process study-process control,
capability
• Process audit.
"customer requirement" and a sup-
plier's "supplier specifications."
Xerox insists on this exchange be'
fore a print is finalized. It is the best
opportunity for the supplier to im-
prove quality, cost, and delivery of
the part.
The results of SPC on quality
were dramatic. Soon dimensional
characteristics were no longer an
issue. Remaining defects were in
eight categories, including missed
operations, wrong parts, burrs, and
so forth. Xerox began coaching on
failsafe techniques. Results were
equally dramatic. By the end of
1986, Xerox had met its originai
benchmark quality goals and had
improved supplier quality perfor-
mance by 90 percent. Unfortunately,
the goal also moved, and a 75 per-
cent further reduction in defects is
needed. Xerox understands that
zero defects is the ultimate goal.
The commodity teams were
the force behind supplier
quality improvement. The
quality department of Xerox
does not "own" the quality
function. It permeates every
commodity team.
Commodity Teams
Commodity teams are the heart
of Xerox JIT purchasing. Each team
has responsibility to drive Quality,
Cost, and Delivery (QCD) perfor-
mance to benchmark. The teams
5
are multifunctional, including full- Example of a Xerox Commodity Team Challenge:
time participation of process engi- 43% Benchmarking Gap in Cost of Large Plastic Parts
neers, manufacturing engineers, de-
sign engineers, and quality and cost
specialists. The scope of the assign- , Totalcompetitive
ment is total, including: process ~ostgap,43%
-----r- _.
!
technology (such as plastic mold- ~

ing), applications engineering (such

Allocation of causes by comparison with best practices
as correct motor type), makelbuy
decisions, design guidelines, suppli- c=-==:::;---;::= -- I

j--- - - - '-----'
er base management (selection,
I~c.ost I! p.rocess tool cost ! Design-related cost I I
training and "the works"), and
benchmarking. ~o J L __ 1 1 % _ • L ~·;'_o _

1/4 the problem 1/4 the problem 1/2 the problem

By the end of 1986, Xerox had
met its original benchmark
quality goals and had
improved supplier quality
performance by 90 percent.
Unfortunately, the goal also
moved, and a 75 percent
further reduction in defects is
needed. Xerox understands
that zero defects is the
ultimate goal.
Half the problem is design, which is an opportunity for Interactive design work
with suppliers, a responsibility of Xerox as well as suppliers.
To eliminate the 43 percent gap, all three areas should be attacked, but
they cannot be attacked independently:
• Best design depends on resin and color selection.
• Best resin cost depends on color and strength requirements of the design,
and on selection of the process.
• Best process depends on design, volume of production, and so forth.
Fig. 2. Multidisciplinary efforts of commodity team are illustrated.

Eleven commodity teams now
exist. Their process begins with
benchmarking to understand the na-
ture of competitive gaps and formu-
late strategies for closing them.
Some examples of the plastics com-
modity team working on their 43
percent gap (see Fig. 2) demon-
strate the multidisciplinary workings-
of all the commodity teams.
Item: Supplier selection and devel-
opment.
Between 1980 and the formation of
the plastics commodity team, the
number of active plastics suppliers
had already diminished from several
hundred to less than fifty world-
wide. The team studied the survi-
vors and categorized them into three
groups:
Green: Best suppliers. Best chance
of long-run survival
Yellow: Marginal performers slow in
managing change
Red: Suppliers who do not think
change is necessary.
The plastics commodity team
soon realized they were spending
most of their time problem solving
with Red suppliers, and no time with
Green suppliers. That situation
changed rapidly. No new work was
placed with Red suppliers. New
product programs received a list of
only GreenIYeliow suppliers to
choose from. Red supplier problem
solving was taken under direct con-
trol by the team to stem the waste.
Load and capacity studies began to
develop what the Xerox plastics
supply base should look like: types
of processes, numbers of suppliers,
and locations needed.
The notion of a "model suppli-
er" emerged from experience with
the Green suppliers. Their common
characteristic is attitude. The ownerl
operator, CEO, or general manager
recognizes threats from the Far East
or elsewhere and understands that
continuously better performance is
necessary.
Several Red suppliers had good
"QCD" by the then current expecta-
tions, but could not read the bench-
marks on the wall as a need to con-
tinuously improve in world
competition. Red supplier attitudes
fell into several categories:
• Disbelief that a plastic molder
could have an overseas threat
• Basic lack of foresight and strate-
gy
• Willingness to sell out and retire (I
got mine)
• Carried by "traditional American
auto practices," and unwilling to
work with a customer having an
immediate danger.
The best characteristics of a
Green supplier are predictors that it
will outperform others in the future.
These characteristics fall into three
categories: behavioral, physical, and
financial. Examples: Use of SPC by
operators, assisting customers with
cost effective product and tool de-
sign, high degree of employee in-
volvement, closed loop processing
controls, CAD/CAM, shipping prac-
tices, knowledge of operating costs
and ratios, and having a clear plan-
ning strategy. Benchmark cost com-
parisons and the usual financial indi-
cators should also show strength.
The team met with the top man-
agement of each prospective model

6 Target
supplier, starting with the Green
ones. Xerox previously had met the
owners or CEOs. No meetings were
arranged through the sales depart-
ment. In fact, the meetings were
sales pitches by Xerox to the plas-
tics suppliers. The team began by
explaining the "43 percent problem"
in Fig. 2 and giving the competitive
doomsday message. The usual reo
maining format:
• Formal supplier presentation to an
agreed agenda
• Plant tour
• Formal Xerox team presentation
of a "report card" comparing the
supplier to model supplier charac-
teristics.
The meetings confirmed suppli-
er attitudes toward competitive reali-
ties. Owners and CEOs usually
came through with flying colors, eas-
ily seeing the business threat. How-
ever, "many company staff members,
constrained by more narrow views.
failed to recognize the problem.
At onset, polite skepticism per-
vaded the meetings, but everyone
was curious how they matched up to
benchmarks. In nearly every case,
the company committed to the next
step, reformatting their financial/
accounting data to the format used
by the Xerox team. Then they
matched their cost profile to those of
benchmark companies and other
local companies.
At this point the suppliers had
to do close self-examination. Xerox
was inviting them to become a
model supplier, not on the basis of
quotes or recent performance, but
on willingness to go for world-class
performance. Xerox's condition for
the relationship was to prepare a
plant to meet benchmark perfor-
mance.
Not all accepted, but many did
They welcomed help in becoming
model suppliers. Then the commodi-
ty teams were obligated to work with
them; providing business, sharing
technology, assisting with bench-
marking, and training on JIT, EI,
SPC, TOC, and all the rest. Rela-
tionships soon developed so that
Winter 1987
model plastics suppliers could pro-
vide cost effective design ideas to
Xerox product design teams.
It was a long way around, but
by this process the plastics com-
modity team began to make inroads
on the supplier side of the "43 per-
cent gap" that was related to de-
sign. Xerox also had to receive de-
sign guidelines internally.
Item: Color and appearance.
Industrial Design is a group within
Xerox which is responsible, among
other things, for product color and
appearance. However, in the eyes
of design engineers, suppliers and
quality assurance, industrial design's
standards and decisions were out of
touch.
Armed with benchmark informa-
tion and horror stories, the plastics
commodity team met with Industrial
Design. The mission to meet bench-
mark performance quickly became a
shared one. Industrial Design
agreed to take "ownership" of costs
for applied finishes - over ten per-
cent of all purchased plastic costs.
Two subsequent actions dramatically
reduced costs on troublesome parts
and created a pleasing, cost-
effective textured paint usable on
both plastic and sheet metal parts
- created with the assistance of
suppliers, naturally.
Much of the closing of
benchmark gaps was achieved
by interactive design of new
products between suppliers
and new product design
teams - cost-effective design
guidelines. The basic vision
today is unchanged since
1980, but the actual process is
slow and evolutionary-and
painful at times.
Item: Quality failsafe coaching.
The SPC rollout to plastic injection
molders was so effective that Xerox
assembly lines were rarely troubled
by molding process problems. They
were affected, however, by the eight
"random" errors such as wrong in-
serts, upside down labels, dirty
parts, and incomplete assembly.
The old logic was that these once-
in-a-lifetime errors were uncontrolla-
ble. Benchmarking said differently.
Besides devising failsafe meth-
ods for Xerox line assembly, a spe-
cial multidisciplinary team traveled
to suppliers to identify the causes of
such problems originating there. The
most noteworthy cause was that no
supplier had ever tried to correct
these "trivial" problems. A series of
simple failsafe guidelines did the
job. Prior to the failsafe effort, no
plastics supplier had ever reached
the quality benchmark. After failsafe,
nine did.
Item: Resin contracting
The price of resins purchased by
plastics suppliers had been regard-
ed as uncontrollable. Xerox did not
buy resin; molders did. A seasoned
buyer and a college summer student
in finance were assigned to bench-
mark the situation. They dug out
world-wide facts and figures on resin
pricing and contracting practices.
Then Xerox issued competitive bids
which not only addressed pricing,
but JIT lot sizing, and a series of
demanding negotiations took place.
Resin suppliers agreed to sell to the
Xerox molders according to the con-
tracts. A pricing gap no longer exists
for resins subjected to this process.
In summary, the plastics com-
modity team (and the other ten
teams) have steadily progressed in
developing and managing a supplier
base. Much of the closing of bench-
mark gaps was achieved by interac-
tive design of new products between
suppliers and new product design
teams - cost-effective design gUide-
lines. The basic vision today is un-
changed since 1980, but the actual
process is slow and evolutionary
- and painful at times.
Organizational Change at Xerox
Prior to 1981, the purchasing
function at Xerox was primarily de-
centralized. Each major manufactur-
ing plant operated its own materials
management f~nction supported by
its own suppli~r base. "Three quotes
- arms Illngth" relationships pre-
vailed, the..Jow quote being awarded
the business for that purchasing
cycle.
I>
7
 Competitive benchmarking stud-
ies in 1980, however, identified sig-
nificant performance gaps in cost,
quality, and delivery in every com-
modity. It became very clear that if
suppliers were to become competi-
tive, the development effort had to
be managed centrally. It also be-
came very clear that such an effort
could not be accomplished with
"thousands" of suppliers. The first
order of business was to reduce the
supplier base to a handful of high
potential suppliers willing to enter
into long-term relationships with
Xerox. Such a strategy would re-
quire a new organizational approach
to materials management.
Today's organizational align-
ment of the Xerox materials man-
agement function provides for cen-
tral commodity operations and for
decentralized plant materials opera-
tians and new product development
operations.
A. Central Commodity Operations.
This group consists of eleven
commodity teams, supplier mate-
rial quality assurance, general
procurement (non-production),
and a small staff support func-
tion. Primary responsibilities are
selection, development, and
management of a supplier base
that is capable of meeting cost,
quality, and delivery bench-
marks. Additionally, each com-
modity team will develop and
provide to the new product de-
velopment teams cost effective
design guidelines for their re-
spective commodities.
B. Plant Materials Operations. Each
manufacturing site has a local
function responsible for day-to-
day production planning and con-
trol activities including releasing
and supplier delivery scheduling
This function reports directly to
the plant managers. Some local
purchasing may be performed at
plant level, but all major com-
modity purchases are sourced
and negotiated through the cen-
tral commodity operations.
C. New Product Development Op-
erations. Within each new prod-
uct development team, the orga-
nization provides for full-time,
B Target
dedicated buyers and planners.
These buyers are co-located with
the product development team
(PDT) and report to the chief en-
gineer responsible for that prod-
uct. The mission of the PDT is
defined as managing the devel-
opment process (concept, de-
sign, prototype, pilot plant, and
launch) of new products. The
team has full responsibility for
meeting all product targets and
benchmarks.
The new product development
buyers work very closely with the
central commodity teams, and within
the approved supplier base. They
playa key role in final supplier se-
lection and negotiation. One key ac-
tivity is to coordinate and facilitate
the supplier's involvement in the de-
sign of the products. Most suppliers
will be engaged as early as the
"concept phase" of the product de-
livery process.
Once the product has been fully
developed and successfully
launched in the marketplace, the
product will be transferred to plant
operations. Product development
team members such as material
planners, manufacturing engineers,
and process engineers will be trans·
ferred with the product. The buyers
will be reassigned to central com-
modity operations or to a new prod-
uct development team.
Execution of the new organiza-
tional alignment was traumatic, even
though it was evolutionary. At the
commodity team level, buyers were
asked to move away from compo-
nent level concerns and deal with
suppliers' managers. Some found
this uncomfortable and were re-
assigned to new product teams
where they could continue to deal at
the component level. Some of the
buyers reporting to a new product
development team felt that their ca-
reers were over. How could they
have proper recognition reporting to
engineers? Meanwhile, the plant
materials operations planners felt
abandoned. Supply problems were
not yet solved. SPC was just start-
ing to show results, yet how could
they resolve these problems without
the direct clout over the suppliers?
All of these problems and concerns
were eventually resolved through
teamwork on the part of each func-
tion. "Leadership Through Quality"
was a key enabler to resolve organi-
zational issues.
Each Xerox employee is asked
to think of his output, whether
product or service, as being
sold to some other Xerox
employee. Are the customer's
needs being met? Each
employee must first identify
his customer, then pin down
the requirements. It is not as
simple a process as it sounds.
Leadership Through Quality (LTQ)
A broad sweeping "cultural"
process to enable change at Xerox
is called "Leadership through Quali-
ty." This cultural style has three as-
pects:
1. Starting at the top of Xerox and
cascading down
2. Generating mutual goal selting
and peer level cooperation, with
goals cutting across all disci-
plines
3. Fostering employee involvement
and good interpersonal skills.
Leadership Through Quality has
many facets, but the most obVious is
an emphasis on "meeting customer
requirements." Each Xerox employ-
ee is asked to think of his output,
whether product or service, as being
sold to some other Xerox employee.
Are the customer's requirements
being met? Each employee must
first identify his customer, then pin
down the requirements. It is not as
simple a process as it sounds.
Employees must also define
their own "supplier specifications."
That is, determine in detail how to
meet the customer's requirements.
This is nearly impossible without
person-to-person, supplier-{;ustomer
communications. As a result, roles,
responsibilities and expectations be-
come more clearly defined.
"Team Xerox" is a more than
casual phrase. The binding element
of changes within Xerox is the em-
ployee code, "Think first of your
customer."
 When the new materials man-
agement strategy began, managers
from the plants, new product devel-
opment, and central purchasing as-
sembled to work out the new struc-
ture of "customer requirements" and
corresponding "supplier specifica-
tions." Broad missions were thus
outlined by peer managers working
as a team. The Leadership Through
Quality program has been success-
ful bringing a "total quality" focus
internally. Xerox is so enthusiastic
about the results, it is now extend-
ing the program to suppliers.
Employee Involvement (EI)
Employee involvement is central
to the multidisciplinary work which is
a key feature of the new materials
management strategy. Team prob·
lem solving has become a way of
life for Xerox professionals. Hun-
dreds of mUltidisciplinary EI teams
are active at a time. Everyone has
been trained in a basic seven-step
methodology, and some are deep
into experimental design or "ad-
vanced" methods. Team involve-
ment from shop workers is on the
increase.
Employee involvement includes
definition of one's own duties and
obligations. The working out of "sup-
plier specifications" requires it.
After the peer group of manag-
ers had developed the broad mis-
sions for the new materials manage-
ment, a group of operating people,
some assigned but mostly volun-
teers, developed a detailed matrix of
roles and responsibilities for materi-
als tasks: supplier selection, lot siz-
ing, pricing, referral responsibility,
and the like. Both primary and sup-
port responsibilities were defmed.
Training
Training is constant, part of
everything, as with the SPC pro-
gram. In the case of the reorganiza-
tion, the semi-volunteer group which
redefined the responsibility matrices
also packaged the resu Its with the
help of the training professionals
and broadcast it to everyone affect-
ed.
In June when Xerox hosted
AME to a JIT purchasing workshop,
it rapidly became apparent that
much more was involved than host-
ing a "vendor day." Many American
companies are following the Xerox
lead in devising a Western approach
to JIT purchasing. As a result, com-
panies are taking a new interest in
the stale subject of benchmarking,
but made fresh by Xerox using
benchmarking as an organizational
driver toward world-class achieve-
ment. (See accompanying box.)

COMPETITIVE BENCHMARKING: WHAT IT

IS AND WHAT IT CAN DO FOR YOU
Xerox defines Competitive Benchmarking as "the con-
tinuous process of measuring our products, services,
and practices against our toughest competitors or
those companies renowned as the leaders." Observe
what companies are doing now and project their per-
formance into the future. The current benchmark is
the very best performance of any given activity by
any company anywhere in the world. All current
benchmarks which exceed the performance of Xerox
or of its suppliers become goals for future achieve-
ment.
Just as important as measuring the performance
of other companies is determining how they achieve
it. Whenever it makes sense, Xerox adapts the best
practices of others to its own use. Benchmarks are
periodically updated to provide new goals and new
insights. Competitive benchmarking is not just taking
measurements. It is embedded in the ongoing Xerox
management process.
Xerox considers the Competitive Benchmarking
process to have five phases:
1. Planning
What to benchmark? In the case of direct competi-
tors, almost anything. The same for suppliers and
their prime competitors. In the case of renowned
companies, benchmark operations of interest such as
order-entry-to-customer-delivery activities if the out-
standing feature is distribution, for instance.
Items to benchmark include throughput times,
leadtimes, key defect rates - descriptors of quality,
flexibility, cost, and delivery plus customer satisfac-
tion. Xerox has a database on many kinds of compa-
nies covering the classic cost elements: wt;:t;ltJ\;,
efits, efficiency, energy cost, cost of """it,,1
depreciation, taxes, and all the categories of over-
head, including profit. Overhead allocations are
sometimes known down to the work station.
The question is, what data are obtainable, reli-
able, and useful? Are comparisons being made of
truly comparable operations? If so, are data gathered
the same way and organiZed in a comparable format?
While these issues are important, so is the fact that
much time can be wasted on measurement problems.
Whom to benchmark, and who is best? Xerox regular-
ly benchmarks all direct competitors, all their suppli-
ers, and all major competitors to those suppliers. In
addition, certain functions of renowned companies
are benchmarked as potential performance stan-
dards. (L.L. Bean is a benchmark reference in mail
order distribution.)
Through FUji-Xerox a benchmarking window is
open into the Far East. The same is true in Europe
through Rank-Xerox.
Data collection. This process generally starts with
public sources of information; trade publications, an-
nual reports, and open meetings. Occasionally con-
sultants design and conduct surveys, but most of the
time, data are directly exchanged with the bench-
marked company. When comparing the details of in-
ternal operations, it's almost the only way. Bench-
marking a circuit of companies can sometimes be
done in return for sending data to each of them-if
everyone understands that in advance. Quid pro quo
L>

Winter 1987 9
 benchmarking exchanges are starting to add to air-
line traffic. To be meaningful, data collection should
be repeatable on a regular basis.
2. Analysis
Xerox asks four basic questions: (1) Is the competi-
tion better, and if so, by how much? (2) Why are they
better (or worse)? (3) What can be learned? and (4)
How can Xerox apply what was learned?
Updates are very important. Projecting how fast
competitors are improving is as important as knowing
their current capabilities.
Then determine the size of performance gaps,
positive or negative, between Xerox and the bench-
marked company. The nature of the gaps, their mag-
nitude, and a breakdown of reasons for them or com-
ponents of them are very important. Try to develop an
objective basis upon which to attack the gaps ~ to
close negative ones or extend positive ones.
3. Integration
Xerox describes this phase in fifteen steps which boil
down to first accepting the results. A big negative
.gap is easier to accept if executives understand why
it exists. Overcoming the denial syndrome follows.
The benchmarking gap and general goals are widely
communicated.
Strategies and action plans follow. For this proc-
ess, Xerox relies on the problem-solving of its Em-
ployee Involvement program.
4. Action
Any obvious corrective action is started irnrtr6·df11'fiiiiY
but many solutions are not obVious. Most attacl«:
multidisciplinary. Standing teams such as ~~~,:if":Ji,,,:
teams or new product teams swing into action.
cial Employee Involvement teams are formed as nec-
essary, and the Employee Involvement problem solv-
ing processes move into high gear.
Tracking progress is essential. Benchmarks
should be periodically remeasured to check goals,
and progress against planned milestones marks the
rate of internal response.
5. Maturity
The best form of maturity is to see that many bench-
marking gaps are either zero or positive. While good
progress has been achieved and Xerox is becoming
the benchmark in certain areas, more often than not,
Xerox finds that the elusive target continues to move.
Another sign of maturity is to have benchmarking
become a natural, integrated part of the ongoing
process of continuous improvement, so that wherever
Xerox does not happen to be the current leader, it is
at least making a hard run at it.
Source: Competitive Benchmarking: What it is and What it can do
for You, by the Xerox Corporate Quality Office, Stamford, CT, 1984
(Called the "red book" within Xerox.)

Authors:
Larry Connorton is a materials manage-
ment professional who recently elected
to take early retirement after 27 years
with Xerox. He was instrumental in the
development of many materials man-
agement strategies articulated during
the AME workshop. His most recent po-
sition at Xerox was as commodity man-
ager for the plastics commodity team.
L---
Pierre "Pete" Landry is manager of
supplier programs for the company's
Business Products and Systems Group.
During his 18 years with Xerox,
Landry'S assignments have ranged
from corporate staff to materials man-
ager for one of the Xerox manufacturing
subsidiaries.
---'°