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. The Xerox vice president of copier manufacturing remarked, ” we were horrified to find that Japanese were selling their machines at what it cost us to make ours…we had been benchmarking against ourselves. We weren’t looking outside.”
The company was suffering from the “not invented here” syndrome, as Xerox managers did not want to admit that they were not the best. The company instituted the benchmarking process, but it met with resistance at first. People did not believe that someone else could do it better. When faced with the facts, reaction went from denial to dismay to frustration and finally to action. Once the process began, the company benchmarked virtually every function and task for productivity, cost, and quality. Comparisons were made for companies both in and outside the industry. For example, the distribution function was compered to L.L. Bean, tje Freeport, Main Catalog seller outdoor equipment and clothing and everyone’s model of distribution effectiveness.
By the company’s own admission, it would probably not be in the copier business today if it were not for benchmarking. Results were dramatic:
- Suppliers were reduced from 5000 to 300.
- “Concurrent engineering” were practiced. Each product development group has input from design, manufacturing, and services from the initial sages of the project.
- Commonality of parts increased from about 20 percent to 60 t0 70 percent.
- Hierarchical organization structure was reduced, and use of cross-functional “Teams Xerox” was established.
- Quality problems cut by two-thirds
- Manufacturing costs cut in half
- Development time cut by two-thirds
- Direct labor cut by 50 percent and corporate staff cut by 35 percent while increasing volume
It should be noted that all of these improvements were not the direct result of benchmarking. What happened at Xerox (and what happened at most companies) is that in adpopting the process, the climate for change and continuous improvement followed a natural result. In other words, benchmarking can be a very good intervention.