Xerox Borrows From L.L. Bean, Other Unlikely Companies
ROCHESTER, N.Y. (AP) _ Xerox Corp., maker of high-tech copiers, is taking a page from L.L. Bean Inc., purveyor of turtlenecks, maple syrup and duck shoes.
It’s also mimicking something from American Express, Florida Power & Light, and Toyota.
At first glance, the companies have little in common. But each performs at least one job also done by Xerox - and, in Xerox’s judgment, does it better than anyone else.
For the past decade, Xerox has used a process called benchmarking to measure itself against such disparate industry leaders as L.L. Bean, Hershey Foods and Mary Kay Cosmetics.
The copier company uses benchmarking to determine what makes each company so good at what it does, and then to implement those practices at Xerox.
L.L. Bean, for instance, has a reputation for getting the sweater you order there fast. Xerox doesn’t ship sweaters, but goes through similar processes to deliver a diverse array of goods.
″We take phone orders and ship products,″ said Richard C. Palermo, Xerox senior vice president for customer marketing, ″and we’re not that good.″
Xerox is not the only company that practices benchmarking but is considered one of the leaders in making the practice a success.
It began benchmarking in 1979, at a bleak point in the company’s history. After two decades of undisputed reign over the copier market, the company was facing an assault from Japanese competitors selling copiers at the price it cost Xerox to make them.
By the late 1970s, Japanese firms had captured the low end of the market. Xerox officials didn’t expect them to stop there.
″We could see the same thing that happened to motorcycle, automobile, and television industries happening,″ said James E. Sierk, Xerox vice president for quality in development and manufacturing. ″We had to find out how they were doing that.″
With the help of its Japanese affiliate, Fuji-Xerox, Xerox began looking at how the Japanese run their companies. Much of the information was there for the asking, Sierk said.
″Japanese companies share an enormous amount of data with other companies,″ he said. ″They tend to be very open.″
Benchmarking doesn’t have to involve competitors, Sierk said. For example, when Xerox officials wanted to evaluate their sheet-metal manufacturing processes, they looked at Japanese automakers.
″Their practices were directly applicable to us in manufacturing at Xerox,″ he said. ″We didn’t have to go into Canon and Ricoh.″
Xerox engineers learned how to position tools and prepare equipment to reduce drastically the time needed to change over an assembly line from manufacturing one product to another. They also discovered ways to cut the company’s inventory by more than half, Sierk said.
In development and manufacturing, most companies benchmarked by Xerox are Japanese. But when trying to improve efficiency in areas such as administration, sales, service, and billing, Xerox turns to American role models.
″Really what you’re trying to do is say, ’Who does pieces of what I do very well?″ said Palermo.
Xerox managers went to L.L. Bean’s warehouse and distribution center in Freeport, Maine, to observe operations and talk to supervisors. The managers then analyzed how L.L. Bean’s practices differed from Xerox’s, and why.
As a result of the visit, Xerox redesigned the layout of its distribution center and changed its system to make greater use of computers.
The benchmarking process has been boiled down to 10 steps taught to all Xerox managers, from identifying the area to be benchmarked to updating benchmarks once targets have been reached. Benchmarking has become ingrained in the way Xerox officials think, Sierk said.
″It’s just something that every manager is expected to do and every manager does,″ he said. ″You do it all the time.″
Sierk said other companies are generally willing to share information with Xerox. One guiding rule of benchmarking is not to ask for any information that Xerox wouldn’t give in return.
″You’d be amazed how open companies are,″ Sierk said. ″There’s more exchange of information between American companies now than I have ever seen.″
Xerox looks for companies with similar processes, but almost any kind of company can be benchmarked, no matter how different it seems, Sierk said.
″American Express, L.L. Bean and Xerox have got a massive amount in common in a whole batch of areas,″ he said. ″Ford Motor Co., Chrysler and Xerox have got a massive amount of processes in common. Milliken Carpet and Xerox can learn an awful lot from each other. Texas Instruments and Xerox are learning an awful lot from each other.″
Looking at how other companies do business goes against the grain for some American executives who think ″they may do that but it doesn’t work for me, we’re different,″ Sierk said.
″The thing you learn in benchmarking is nobody’s different. That is an excuse not to do things. You have to be open to change.″
Targets set after benchmarking other companies tend to be higher than goals based on past performance, Sierk said. Benchmarking also makes goals believable, because employees can see how another company has achieved them, he said.
″If you say, ‘you’ve got to get four times better, or reduce costs by half,’ the reaction would be ‘you’re nuts.’ But if you say, ‘here’s how Toyota’s getting their results, here’s what they’re doing’ - all of a sudden people believe it.″
Benchmarking has paid off for Xerox, which has managed to reduce costs and regain market share, Sierk said. In 1989, the company won the Malcolm Baldrige National Quality Award given by the Commerce Department.
″The more you benchmark, the more you accept that people are very good at things, even better than you. No one company is good at everything,″ Sierk said. ″If you look at the best practices from all over the world ... you’re going to be an extremely good company.″