BENCHMARKING AT XEROX Report submitted in partial fulfillment of the requirement for the Operations Management II Course

PGDM
Under the Supervision of
Ms. Sanjita Jaipuria
By

Group R

To Rajiv Gandhi Indian Institute of Management
Mayurbhanj Complex,
Nongthymmai, Shillong – 793 014
Nov. 2014

TABLE OF CONTENT
Topics Page No.

List of Figures……………………………………….................................. 5
List of Tables………………………………………................................... 6
Glossary…………………………………………………………..………. 7
Case……………………………………………………………………….. 8
Annexure 1 …………………………………………………….…………. 11
Annexure 2 ……………………………………………………………….. 12
Annexure 3………………………………………………..……………… 14
Annexure 4………………………………………………..……………… 15

Abstract

We have used the Xerox methodology for benchmarking, with some slight modifications that place more emphasis on the planning and analysis phases which are thought to be more relevant to the stage of Total Quality Management. Benchmarking is defined as either internal or external, i.e. competitive, generic, or functional, and we can apply the Xerox methodology to both. We found internal benchmarking very useful initially as it enabled familiarization with the benchmarking process throughout the company and encouraged cross functional communication. It also enable people to make their benchmarking errors within the company.
The external benchmarking has been mainly competitive and generic. Much of the benchmarking in manufacturing has been competitive as this is where similar processes are being carried out, and there is a collective realization that there is more benefit in working together in certain areas. The approach to competitive benchmarking has been based around this understanding of mutual benefit by co-operation.

INTRODUCTION

Benchmarking is the process of comparing one's business processes and performance metrics to industry bests or best practices from other industries. Dimensions typically measured are quality, time and cost. The procedure not constrained to simply the business norms it might likewise be watched that the estimation of the parameters of the business sector pioneer are additionally made note of in different circumstances. Different organization's contrast the estimation of their metrics with that of the business sector pioneer and attempt to match it, accepting that it is the mystery of their prosperity.

Technically speaking there are twelve significant stages in the process of benchmarking, which are: 1. Select subject 2. Define the process 3. Identify potential partners 4. Identify data sources 5. Collect data and select partners 6. Determine the gap 7. Establish process differences 8. Target future performance 9. Communicate 10. Adjust goal 11. Implement 12. Review and recalibrate
These 12 stages are the essence of benchmarking on completion of which the company aspires to match up with the industry leader. It is used very often and can be seen in most (60%) of the competing companies.
The benchmarking theory is built upon performance comparison, gap identification and changes in the management process. The following points explains the role of benchmarking:
• Helps associations to comprehend where they have qualities and shortcomings relying on changes in supply, demand and economic situations

* Permits associations to acknowledge what level(s) of execution is truly conceivable by looking at others, and the amount of change can be accomplished. * Helps organizations to improve their competitive advantage by stimulating continuous improvement in order to maintain world class performance and increase competitive standards * Helps to better satisfy the customers' needs for quality, cost, product and service by establishing new standards and goals * Promotes changes and delivers improvements in quality, productivity and efficiency; which in turn bring innovation and competitive advantage * Is a cost effective and time efficient way of establishing a pool of innovative ideas from which the most applicable practical examples can be utilised * To be keen on new developments within the related area, and improves the motivation of employees.
Regardless of these profits, time constraints, competitive obstructions, expense, absence of both administration responsibility and expert human assets, imperviousness to change, lack of foresight and fleeting desires are viewed as the primary issues influencing fruitful benchmarking examination. A clumsy benchmarking activity will bring about a waste of money related and human assets, and in addition time. Benchmarking requires complete responsibility from the top administration and the representatives additionally need to be prepared in the routines that need to be executed to actualize Benchmarking.

Problem definition
Xerox is the company that invented photocopier in 1959 and maintained a virtual monopoly for many years thereafter, like “Coke” or “Kleenex,” “Xerox” became a generic name for all photocopiers. By 1981, however, the company’s market shrank to 35% as IBM, Kodak developed high-end machines and Canon, Richo, and Savin dominated the low-end segment of the market.
Major problem faced by Xerox was that Xerox managers did not want to admit that they were not the best and there was resistant to applying Xerox in the company.

METHODOLOGY
Benchmarking promotes the PDSA method i.e. Plan Do Study Act. The process is composed of four stages which are as follows. In the plan stage we chose the parameters related to certain functions that need to be benchmarked. It also deals with the type of benchmarking to be used. The do stage deals with collection of data of other companies which need to be benchmarked as the standard. The study part deals with identifying gaps between one's own company and the other company which is being benchmarked. There are either positive or negative gaps that are identified in this stage. The next stage is the act stage in which the company acts in order to reduce a negative gap and maintain the positive gap. This is a cyclical process that is never ending and continuously takes place.

TYPES OF BENCHMARKING
According to literature and the various studies made there are two broad classifications of benchmarking, they are: internal benchmarking and external benchmarking. Competitive, functional and generic benchmarking are classified under external benchmarking. The basis of this classification is what is to be benchmarked and against whom.

Internal Benchmarking
The term internal hints to what this type of benchmarking refers to. Internal benchmarking is done among different departments of the same company or different business units of the same organization. Once a particular department achieves an appreciable level of performance the other departments can benchmark it and follow the same approach to reach their target. All benchmarking processes should start by dealing with internal benchmarking because this requires an organisation to examine itself, and this provides a baseline for comparison with others. Among advantages of internal benchmarking are the ability to deal with partners who share a common language, culture and systems, having easy access to data, and giving a baseline for future comparisons. Therefore, the outcomes of an internal benchmarking can be presented quickly.

External Benchmarking
External benchmarking refers to setting a benchmark outside the organization i.e. marking a different company or a competitor as a benchmark and comparing one's own performance against the benchmark. This process ensures that learn from the leaders or those who are best in the industry and understand why they hold that position. The various types of external benchmarking are: i. Competitive benchmarking: This type of benchmarking refers to benchmarking direct competitors and identifying what allows them to perform so well. This requires access to primary information of the competitor which is a highly challenging task. This type of benchmarking is more suitable for larger companies which have the capability and resources to support continuous development. Sometimes this type of benchmarking might be misleading as companies focus on those factor that differentiate the competitor rather than what causes them to perform well. ii. Functional benchmarking: refers to comparative research and attempts to seek world class excellence by comparing business performance not only against competitors but also against the best businesses operating in similar fields and performing similar activities or having similar problems, but in a different. For instance, British Rail Network South East employed a benchmarking process to improve the standard of cleanliness on trains. British Airways was selected as a partner because a team of 11 people cleans a 250 seat jumbo aircraft in only 9 min. After the benchmarking exercise, a team of ten people was able to clean a 660 seat train in 8 min. iii. Generic Benchmarking: refers to the comparisons of business function that are same regardless of business. This means that a hotel organisation's accounting department would look at the accounting department of a manufacturing organisation that has been identified as having the fastest operations. It is believed to be easier to obtain data in such arrangements, as best in class organisations are more likely to share their experiences. However, generic benchmarking can take a long time to complete, and research outcomes may need a lot of modification in order for organisations to set their own standards.

ANALYSIS
ABOUT THE COMPANY
The historical backdrop of Xerox backtracks to 1938, when Chester Carlson, a patent lawyer and part ¬time designer, made the first xerographic picture in the US. Carlson battled for more than five years to offer the creation, the same number of organizations did not accept there was a business opportunity for it. At long last, in 1944, the Battelle Memorial Institute in Columbus, Ohio, contracted with Carlson to refine his new process, which Carlson called "electrophotography." after three years, The Haloid Company, creator of photographic paper, approached Battelle and acquired a permit to create and business a replicating machine taking into account Carlson's innovation. Haloid later got all rights to Carlson's innovation and enlisted the "Xerox" trademark in 1948. Floated by the accomplishment of Xerox copiers, Haloid transformed its name to Haloid Xerox Inc in 1958, and to The Xerox Corporation in 1961. Xerox was recorded on the New York Stock Exchange in 1961 and on the Chicago Stock Exchange in 1990. It is likewise exchanged on the Boston, Cincinnati, Pacific Coast, Philadelphia, London and Switzerland trades. The solid interest for Xerox's items drove the organization from quality to quality and incomes took off from $37 million in 1960 to $268 million in 1965.

All through the 1960s, Xerox developed by procuring numerous organizations, including University Microfilms, Micro-Systems, Electro-Optical Systems, Basic Systems and Ginn and Company. In 1962, Fuji Xerox Co. Ltd. was propelled as a joint endeavor of Xerox and Fuji Photo Film.

Xerox obtained a lion's share stake (51.2%) in Rank Xerox in 1969. Amid the late 1960s and the mid 1970s, Xerox expanded into the data innovation business by gaining Scientific Data Systems (creators of time-imparting and exploratory PCs), Daconics (which made imparted rationale and word handling frameworks utilizing minicomputers), and Vesetec (makers of electrostatic printers and plotters).

In 1969, it set up a corporate R&D office, the Palo Alto Research Center (PARC), to create innovation in-house. In the 1970s, Xerox concentrated on presenting new and more proficient models to hold its impart of the reprographic market and adapt to rivalry from the US and Japanese organizations. While the organization's incomes expanded from $ 698 million in 1966 to $ 4.4 billion in 1976, benefits expanded five-fold from $ 83 million in 1966 to $ 407 million in 1977. As Xerox developed quickly, a mixed bag of controls and techniques were established and the quantity of administration layers was expanded amid the 1970s. This, notwithstanding, backed off choice making and brought about major defers in item improvement.

In the mid 1980s, Xerox ended up progressively defenseless against extraordinary rivalry from both the US and Japanese contenders. As per experts, Xerox's administration neglected to give the organization vital bearing. It overlooked new participants (Ricoh, Canon, and Sevin) who were solidifying their positions in the lower-end market and in specialty sections. The organization's working expense (and in this manner, the costs of its items) was high and its items were of moderately mediocre quality in examination to its rivals. Xerox additionally experienced its very unified choice making courses of action. As a consequence of this, profit for resources tumbled to under 8% and piece of the pie in copiers descended pointedly from 86% in 1974 to only 17% in 1984. Somewhere around 1980 and 1984, Xerox's benefits diminished from $ 1.15 billion to $ 290 million (Refer Exhibit I)
In 1982, David T. (Kearns) assumed control as the CEO. He found that the normal assembling expense of copiers in Japanese organizations was 40-half of that of Xerox. Therefore, Japanese organizations had the capacity undercut Xerox's costs easily. Kearns rapidly started underscoring lessening of assembling expenses and gave new push to quality control by propelling a program that was famously alluded to as 'Initiative through Quality.' As a component of this quality system, Xerox actualized the benchmarking project. These activities assumed a noteworthy part in a bad position in the years to come. The organization even went ahead to turn into one of the best samples of the fruitful usage of benchmarking

The 'Administration through Quality' system presented by Kearns revitalized the organization. The system urged Xerox to discover approaches to decrease their assembling expenses. Benchmarking against Japanese contenders, Xerox figured out that it took twice the length of its Japanese rivals to put up an item for sale to the public, five times the quantity of designers, four times the quantity of outline changes, and three times the configuration costs. The organization additionally found that the Japanese could create, ship, and offer units for about the same sum that it cost Xerox just to fabricate them. Also, Xerox's items had more than 30,000 deficient parts every million - around 30 times more than its rivals. Benchmarking additionally uncovered that Xerox would require a 18% yearly benefit development rate for five continuous years to get up to speed with the Japanese. After a beginning time of foreswearing, Xerox supervisors acknowledged the truth. Taking after this, Xerox characterized benchmarking as 'the procedure of measuring its items, Services, and practices against its hardest rivals, recognizing the holes and making objectives. Our objective is dependably to accomplish prevalence in quality, item dependability and expense.' Gradually, Xerox added to its own particular benchmarking model. This model included tens steps arranged under five stages - planning, analysis, integration, action and maturity.
The five-stage process involved the following activities: 1. Planning:
Determine the subject to be benchmarked, identify the relevant best practice Organizations and select/develop the most appropriate data collection technique. 2. 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 3. 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 4. 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 5. 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 process

Xerox collected data on key processes of best practice companies. These critical processes were then analyzed to identify and define improvement opportunities. For instance, Xerox identified ten key factors that were related to marketing. These were customer marketing, customer engagement, order fulfilment, product maintenance, billing and collection, financial management, asset management, business management, human resource management and information technology.
These ten key factors were further divided into 67 sub-processes. Each of these sub-processes then became a target for improvement. For the purpose of acquiring data from the related benchmarking companies, Xerox subscribed to the management and technical databases, referred to magazines and trade journals, and also consulted professional associations and consulting firms.
Having worked out the model it wanted to use, Xerox began by implementing competitive benchmarking. However, the company found this type of benchmarking to be inadequate as the very best practices, in some processes or operations were not being practiced by copier companies.
The company then adopted functional benchmarking, which involved a study of the best practices followed by a variety of companies regardless of the industry they belonged to. Xerox initiated functional benchmarking with the study of the warehousing and inventory management system of L.L. Bean (Bean), a mail-order supplier of sporting goods and outdoor clothing.
Bean had developed a computer program that made order filling very efficient. The program arranged orders in a specific sequence that allowed stock pickers to travel the shortest possible distance in collecting goods at the warehouse. This considerably reduced the inconvenience of filling an individual order that involved gathering relatively less number of goods from the warehouse. The increased speed and accuracy of order filling achieved by Bean attracted Xerox. The company was convinced it could achieve similar benefits by developing and implementing such a program.
Similarly, Xerox zeroed in on various other best practice companies to benchmark its other processes. These included American Express (for billing and collection), Cummins Engines and Ford (for factory floor layout), Florida Power and Light (for quality improvement), Honda (for supplier development), Toyota (for quality management), Hewlett-Packard (for research and product development), Saturn (a division of General Motors) and Fuji Xerox (for manufacturing operations) and DuPont (for manufacturing safety).
CONCLUSION
The main significant result of Xerox's emphasis on benchmarking and consumer loyalty was the increment in the quantity of fulfilled clients. Exceedingly fulfilled clients for its copier/duplicator and printing frameworks expanded by 38% and 39% individually. Client objections to the president's office declined by more than 60%. Consumer loyalty with Xerox's business techniques enhanced by 40%, administration forms by 18% and managerial methods by 21%. The monetary execution of the organization additionally enhanced significantly through the mid and late 1980s. General consumer loyalty was evaluated at more than 90% in 1991. Some of the other advantages Xerox determined 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 labour 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 ahead to turn into the main organization worldwide to win all the three prestigious quality honors: the Deming Award (Japan) in 1980, the Malcolm Baldridge National Quality Award in 1989, and the European Quality Award in 1992. Xerox Business Services, the organization's archive outsourcing division, likewise won the Baldridge Award in the administration class in 1997.

Likewise, through the years, Xerox won quality recompenses in Argentina, Australia, Belgium, Brazil, Canada, China, Colombia, France, Germany, Hong Kong, India, Ireland, Mexico, the Netherlands, Norway, Portugal, the UK, and Uruguay. Examiners ascribed this accomplishment to the 'Authority through Quality' activity, and, all the more essentially, to the reception of benchmarking practices.

The achievement of benchmarking at Xerox spurred numerous organizations to embrace benchmarking. By the mid-1990, several organizations actualized benchmarking practices at their divisions over the world. These included driving organizations like Ford, AT&T, IBM, GE, Motorola and Citicorp. Amid the 1990s, Xerox, alongside organizations, for example, Ford, AT&T, Motorola and IBM, made the International Benchmarking Clearinghouse (IBC) to advance benchmarking and aide organizations over the world in benchmarking endeavors.

The foundation offers data on different organizations and best practices through its electronic release board. Not long after its foundation, more than 100 organizations joined IBC to get entrance to far reaching database. By 2001, benchmarking had turned into a typical marvel in numerous organizations over the world. Experts commented that persistent benchmarking helped organizations convey best quality items and benefits and survive rivalry in all organizations.

REFERENCES 1. Various sections of OLX website http://www.olx.in/ 2. www.google.com 3. Google trend :- http://www.google.com/trends/explore#q=%2Fm%2F02qkn6p&cmpt=q 4. Compete.com :- https://siteanalytics.compete.com/olx.in/#.VHd78PmSyum 5. http://righttoinformation.gov.in/ 6. http://www.investopedia.com/terms/e/ecommerce.asp 7. Google Play Store :- https://play.google.com/store/apps/details?id=com.olx.olx 8. http://www.campaignindia.in/Video/381593,olx-mobile-app-urges-women-to-use-their-8216sell-phones8217.aspx 9. MIS Class case discussions by Dr. Harsh Vardhan Samali