Benchmarking: Xerox Corporation Paper
In the 70s and the early 80s, Xerox Corporation was one of the leading copier companies in the world. However, towards the 1990s, the company began to lose significant market share to Japanese and American copier firms. Numerous mistakes by the firm such as the managements’ failure to give direction and the firm’s failure to observe market trends cost it its position at the top. The biggest failure on the part of Xerox Corporation was to ignore new entrants that came in with more efficient models. These factors saw the company lose market share and profits to these new entrants. To bring back the company to its former glory, the management instituted sweeping changes through benchmarking.
Xerox Corporation Benchmarking
John T. Kearns became the CEO of Xerox Corporation in 1952. Kearns quickly discovered that his Japanese competitors effortlessly undercut Xerox’s prices because they produced copiers at 40-50% less than that of Xerox. Kearns decided to learn how he could bring back Xerox to profitability by using benchmarking. The CEO introduced a program called ‘Leadership through Quality’ as a strategy to revitalize the company.
Through benchmarking, the company’s CEO found that his company took twice as long to avail the company’s product to the market compared to his Japanese competitors. Other results that the CEO of Xerox found out through benchmarking are that the Japanese competitors could manufacture, ship, and sold units for the same amount that it cost Xerox on manufacturing only (Riva, & Pilotti, 2019). Secondly, Xerox products had more defects per part, about 30 times that of its competitors. Besides, the company had more engineers, about five times that of its competitors, yet the competitors’ were more efficient and profitable. With all these problems, it would take Xerox Corporation about five years to catch up with its competitors.
The course of Action and Current Status
Faced with the reality of the situation, Xerox Corporation began to collect critical data-based practices from the best-performing companies in its industry. The management analyzed and evaluated each practice to identify the improvement opportunities each presented. In particular, the company identified ten critical aspects on marketing alone that were further fine-tuned into 67 sub-categories that became targets for improvement (Intrisano et al., 2017). Besides marketing, Xerox also targeted other critical areas for improvement that included quality improvement, supplier relation and development, safety, efficiency, and lean operations.
Between the late 80s and the early 90s, Xerox Corporation began to reap from best practices it implemented from benchmarking. For example, by 1991, the company had reduced defects of its machines by an impressive score of 78 per 100 machines. Besides, sales units within the country improved from 152% to 328% indicating positive growth and profitability. By the late 1990s, Xerox Corporation became the only company in the world to win the three-most prestigious quality awards (Kozena, M., & Kocvarova, 2017). By the 2000s, Xerox Corporation became the leading copier firm that other firms worldwide looked up to for benchmarking. Leading companies like Toyota, Citicorp, IBM, Ford, and General Electric have joined hands with Xerox to the International Benchmarking Clearinghouse to promote benchmarking across the world.
Xerox Corporation turned around its losing streak in the 80s through benchmarking. The company identified several best practices from leading firms and incorporated them into its operations. Through benchmarking, Xerox Corporation rose to become one of the leading firms that successfully used benchmarking to turn failure into success.
- Intrisano, C., Micheli, A. P., Calce, A. M., & Di Nallo, L. (2017). Economic and Financial Benchmarking as a Strategic Planning Tool. International Journal of Economics and Financial Issues, 7(6), 175. http: www.econjournals.com
- Riva, A., & Pilotti, L. (2019). The strategy and the evolution of benchmarking methodology: the case of Rank Xerox-Fuji. Economia Aziendale Online-, 10(2), 273-291. https://doi.org/10.13132/2038-5498%2F10.2.1960
- Kozena, M., & Kocvarova, L. (2017). Evaluating Company Performance Through The Use Of Benchmarking. In 4th International Multidisciplinary Scientific Conference on Social Sciences and Arts Sgem 2017, 3(), 279-286. DOI: 10.5593/sgemsocial2017/13/S03.036