Magazine article Business Credit

A Tale of Two Companies

Magazine article Business Credit

A Tale of Two Companies

Article excerpt

An inside look at two businesses that won the Malcolm Baldrige National Quality Award

Xerox: From Riches to Rags to Riches

It has been a long, hard road, but Xerox Corporation is once again king of the hill. Like many American companies in the 1970s, Xerox watched its market share steadily fall as foreign-made copy machines materialized in the U.S. market. International companies were suddenly operating so efficiently that they could sell some small copiers for what it cost Xerox to build similar models. Its survival in peril, Xerox realized that it might not make the next decade unless action was taken. But what could the company do to change its fortune?

In 1979, Xerox set out on a continuous quality journey. The corporation examined and redefined its traditional concepts of quality, setting new goals in every one of its operations. It further pledged to increase the efficiency of its managers by improving worker relations and enhancing problem-solving abilities. By 1989, Xerox had come full circle. The continuous quality journey the company set out on culminated in the pinnacle of success. Xerox Corporation Business Products and Systems won the 1989 Malcolm Baldrige National Quality Award in the manufacturing category.

What Prompted Change?

Facing competition from products which surpassed them in both quality and lower cost for the first time ever, Xerox initiated its quality process and run for the Baldrige Award in 1979, implementing competitive benchmarking. The company used this strategy to measure its processes and operations against others that were noted as the best in their field such as Procter & Gamble in marketing and L.L. Bean in distribution. Fuji Xerox in Japan evaluated Japanese competitors.

"At first we denied the competition problem," says James Sierk, the Xerox vice president who led the Baldrige effort. "But in the end, we realized that our competition simply managed better than we did. We set out to match them and exceed them in every way we could."

After the comparisons, Sierk says Xerox found they had 10 times as many parts rejected and seven times as many manufacturing defects as their best competitor. "We also found," says Sierk, "that compared with Japanese manufacturers, we had nine times as many production suppliers, product lead times were twice as long, and it took five times as long to set up a production line for manufacturing."

After learning these startling facts, and convinced that only a change could save the company, Xerox required each of its functional areas to compare itself to its best counterpart to develop benchmarks, and then work to meet or exceed those standards. Furthermore, the company trimmed its number of production suppliers from 5,000 to 500. These suppliers were to be the "best in class" and Xerox committed a team of consultants to teach them statistical quality control and other quality improvement methods that would be required to do business with the company.

Customer Satisfaction Tops Priority List

By 1984, Xerox had realized significant progress. But to match its competition which had continued to improve, the company became convinced that a long range, comprehensive quality strategy was needed. The answer came when former chairman and CEO David Kearns launched a process called "Leadership Through Quality" to instill a total commitment to quality into every aspect of Xerox corporate life. With customer satisfaction its number one priority, Xerox used the process to achieve this goal. The implementation of Leadership Through Quality suddenly transformed the way Xerox conducted business. From planning for future products, to delivering current products, to reviewing progress, all activities started with a focus on customer requirements.

To support this massive quality effort, Xerox created an extensive quality training program. All Xerox employees received at least the basic 28 hour Leadership Through Quality training and many were trained in advanced quality techniques. …

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