Xerox Corporation is an American company founded in 1906 as Haloid Company. The company began as a manufacturer of photographic paper and equipment. Joseph Wilson inherited the business from his father who was the founder of the company and propelled it to new heights. Wilson signed an agreement with Chester Carlson to develop Carlson’s idea of printing using the toner commercially. The technology was named Xerography. The company changed its name to Haloid Xerox in the year 1958 and subsequently in 1961 to Xerox Corporation. Xerox has a presence in over 180 countries worldwide, and it employs over 140,000 people. The company deals in document management, business process solutions and software services. Xerox Company provides a multitude of products and services to its clients worldwide. They include business services, office equipment, and production equipment. The company’s dynamic nature has enabled it to survive technological changes in the industry. Xerox has made several acquisitions in its lifetime as part of strategic survival. In the year 2010, Xerox acquired Affiliated Computer Services as part of its strategy to integrate technology into its operations.
Total Quality Management (TQM) and Benchmarking at Xerox
As said earlier, the firm started operations in 1906 in the USA. Five decades later, it had made its first plain paper copier. Its profit growth was 20 per cent annually by the start of the 21st century. Stock prices for the public company soared. However, its company’s growth nosedived soon afterwards. Its stock price fell from a high of USD 70 in 1999 to less than USD 5 in 2001. During the period, the company lost USD 30 billion as market value.
Worldwide, Xerox has a reputation to uphold, as the world’s best photocopier manufacturer. Its success is a demonstration of right management principles, tool usage, and positive sustainable outcomes. Implementation of TQM at Xerox began as a reaction to the negative market performance. The company lost about 65 percent of market share in the 1980s and was moving towards obsolescence. It needed to change its strategies and once again become dominant in the market.
At the time, key sources of competition were Japanese manufacturers that were embracing a low cost market strategy to upset incumbent rivals like Xerox in the general electronics and office equipment markets. Although Japanese copiers were very affordable for most businesses, they did not compromise on quality, which made them irresistible to customers. Xerox copiers at the time were of high quality, but costs of production were very high, such that cutting prices would translate to company losses.
The introduction of Total Quality Management (TQM) was a change of tactic that would seek to ensure that Xerox copiers curve out a new niche market segment and fulfill consumer preferences. Xerox opted to go for a quality edge, instead of being fixated on prices and finding ways to produce cheaper products than competitors do. Its new value proposition would be to attain leadership through quality. Xerox would leap ahead of the innovation curve and defend its brand image. It would grow its reputation by designing well-functioning and long lasting products.
Additionally, the company was also looking at maintaining long-term relationships with customers. It would only achieve this feat through adequate quality management. Research on TQM benefits in company shows that having TQM is not an end in itself. Firms also have to embrace the critical features and principles that promote TQM implementation for them to maximize its benefits. The goal of TQM at Xerox is to manage for results. This applies to all operations of the firm. The company wants to have production improvements and revenue increases consistently. It relies on the management of quality as its main strategy. To achieve its success, the company used TQM principles to make changes in the way it does business and relates to customers, suppliers, and employees. Today, Xerox is back to its glorious past, where it commands a substantial market share in printing and document production business globally. It has the support of employees and customers and its revenue and returns on investment are high.
The company realized that suppliers, including employees as labor suppliers, were sources of quality compromises. It also noticed the spread of resources when dealing with many independent suppliers for specific production components became less efficient than collective dealings. As a remedy, it consolidated manufacturing facilities so that it would only deal with groups of suppliers. It made economic sense, as group relations afforded Xerox economies of scale and gave it a bargaining power in negotiations, as it could easily take advantage of intra competition among suppliers. Most importantly, groups of suppliers lowered the cost of quality implementation. With suppliers organized into a group, the company could organize supplier relationship systems to undertake quality inspections and lower its overhead costs by eliminating marginal costs in procurement, inspection, shipping, and supply management. Moreover, consolidation meant that Xerox now had a manageable small supplier base. Its task of increasing employee empowerment also became achievable after the renewed focus. It was able to extend monitoring systems to the suppliers and assume a better position that allowed the firm know in advance when a problem arises. With few overheads in supply and a low number of suppliers, employee requirement for Xerox in the manufacturing and supply management remains low.
When Xerox was losing money in 2001, it was still implementing TQM; however, a change in the external environment meant that the company’s production strategy was no longer viable. Photocopiers were turning digital and Xerox was still stuck in the analogue world. After the decline, the company retaliated with its digital production press for the production market. It also enhanced its office product line to include digital copiers and printers. The company worked towards increasing its revenue and reducing costs so that it would offset the losses encountered prior to the year 2004.
Performance over the last decade has been promising, which shows that the tactics used by the firm paid off. Its financial performance for the last few years has been positive, with promises for future revenue growth. Other than the shortcomings of failing to catch up with technological trends, Xerox has made considerable efforts to be at par with customer demands and environmental threshold capabilities. In addition to photocopiers, the company offers LCD monitors, printers, large volume digital printers, workflow software, and other office productivity software.
The company relies on benchmarking, as it works towards sustaining its competitive advantages. This is a process of improving towards, and considering best practices. Benchmarking can be of different types, such as strategic, process, functional, internal, external, and international. Each type has a different aim and scope of comparison. Benchmarking is a multiple step process that begins with planning and the data collection, which precede analysis and reporting. After that, the firm makes changes based on the report. After initial market troubles, Xerox benchmarked its operations against Japanese companies. Xerox realized that it takes twice as long to produce compared to Japanese competitors. At the same time, the number of technical staff needed by Xerox for the same production process was almost five times higher than the number used by Japanese firms.
For example, there would be five more engineers at Xerox than at its competitor, and they would all develop similar products. The company also experienced design changes that were four times higher than the competitors. Consequently, it spent more on design costs, with figures being three times more than the competitors. As Xerox manufactured goods, Japanese firms had already sold them to the market. They were fast, low cost, and high quality at a retail price that was equal to the manufacturing cost at Xerox. Xerox had over 30,000 defective parts per million due to the inherent inefficiencies and the lack of quality management. This was 30 times more than what competitors reported. After finding out its bad position against the competitors, the company opted to follow the benchmarking process to achieve similar results and surpass the competitors in some aspects of its operations.
In planning stages, it came up with the features for benchmarking. In addition, it had to come up with an appropriate data collection method to facilitate effective capturing of information for subsequent decision-making. Xerox evaluated the rivals’ strength against its strength as part of the analysis.
Once it made tangible analysis, it moved on to the step of integration. In this step, necessary goals were put into the overall company planning process. Action steps came later and they included the implementation of established plans. Moreover, the company checked whether the goals that were set were being realized. It also assessed its maturity to determine its position in the market.
The suppliers who served Xerox were about five thousand, while those of most Japanese firms were about one thousand. It reduced the number to 500. It was also realized that Xerox’s rivals offered the vendors skills in quality control, among other areas. To match up, Xerox opted to introduce a vendor certification process. It consisted of training suppliers and then certifying them and establishing partnerships that would provide a means of telling them the areas for improvement. Xerox informed the vendors about the changes that were undertaken in the bid to enhance customer experience. This ensured that the firm became proficient in supplier management and was able to increase overall quality of the business unit consistently.
Xerox got rid of inventory bottlenecks caused by excess capacity, or non-matching customer orders and production stocking levels as part of inventory management. A key indicator of performance improvement was the capital cycle period. The company also minimized its inventory carrying cost. With smart document management solutions, the firm allowed customers to shift to an on-demand model for producing documents. The method retained quality and saved in inventory costs for customers and Xerox. The manufacturing system recognizes internal customers like assembly line workers and external customers like the end users. The people at Xerox connect to customers and their businesses. Relationships between employees and customers or the firm are personalised.
With product innovation, the company has come up with new ways of enhancing the functionality of its main products to reduce damage and waste so that they are more beneficial to client businesses. For example, the firm develops smart packaging products that can track temperature and relay consumption information with every opening. They act as additional information collection centers for the company and fulfill customer needs for better functional designs.
On customers, a philosophy of being oriented to customer demands drives Xerox’s strategy. Here, manufacturing goals have a quality aspect, in addition to being quantity based, because of firm performance targets. The current goal is to ensure that customer interaction with Xerox at any point is rewarding to both parties. Points of interaction include Xerox copiers, employees, and marketing campaigns. The company seeks to have all activities meet high quality standards, such that it does not have to worry about customers interacting with any of the company aspects and finding out there are poor quality elements. Thus, customer satisfaction encompasses everything that the company does internally and externally. The realization of customer satisfaction goals is a management task. In addition, the company continues to move elements of its production-based strategies to customer based ones.
Achieving the customer satisfaction feat comes with a full dedication of all members of the organization to be considerate of the market and be alert about opportunities for improvement. Entrepreneurship shows in the spirit of employees, while personal initiative ensures that there are incremental changes that enhance the overall quality of the company tradition, customer relationship, and product features at all levels of the organization. Customer satisfaction goals continue to be key pillars of quality of the company. The firm continues to invest in other businesses that are likely to increase its value creation for customers. Rather than offer standalone products, Xerox now takes part in integrating its office and production systems, together with clients and their end users for both public and private customers.
The company is now moving towards being a service-led company. It provides products, but it also enhances their utility and fulfills customer needs by making the customer part of an overall process of designing and solving needs. Thus, the company has to constantly add new features and eliminate the challenges that relate to service delivery.
A key indicator for its success is the rate of contract renewals for managing services that it provides. The year 2013 saw a 92 per cent increase in business processes and IT outsourcing business. The company also retained its global leadership in digital technology products. Service revenues for the firm were only 24 per cent of its total revenue in 2009. In 2013, they made up 55 per cent of total revenue.