Caoili, Sahara Katrina D. 07-00008
Total Quality Management in the Xerox Corporation By: Jennifer Zook
Summary of facts Total Quality Management (TQM) to help increase the profit share and the customer relations of the corporation. Research is a key component when it comes to Total Quality Management.
Steps aimed to implement a quality strategy.
The very first step that the Xerox had to take was to enhance and change the corporate culture, which usually is very difficult and time consuming, since the process involves changing the perceptions of the people in the organization. David Kearns decided that this "corporate culture turnaround strategy" was to be achieved by extens ive training. A company motto was established, "the better the quality, the lower the overall costs." In 1983, Xerox implemented a "Quality through Leadership" program, which had three main objectives. First to improve profits as reflected in higher returns on assets. Second, to improve customer satisfaction, and third, to improve market share. David Kearns first believed that these three objectives were of equal importance. However, soon it was recognized that the objectives were in conflicting nature, and they could only be achieved on the expense of one other. Therefore, one particular objective was ranked as most important to improve customer satisfaction.
The cost of the implemented program was enormous, $125 million, and over 4 million hours of man hours of work. However, the results of the program were positive. Customer satisfaction increased by 40% and customer complaints decreased by 60%. Promotions were based on criteria not related to quality. By 1989, 75% of Xerox workers participate in the drive for perfect quality, and over 7,000 quality improvement
teams were formed. Company expenditure designated for training was increased to 2.5%-3.0% of the annual revenues. In the total quality control (TQC) concept, employees are empowered to take responsibility for quality.
In addition, Xerox closely examined companies such as American Express, American Hospital Supply and L.L. Beam in the purpose to learn how to increase efficiency. This process is known as competitive bench marking which is the "continuous process of measuring products, services, and practices against the company's toughest competitors or those companies renowned as industry leaders." This kind of strategy forces the corporation to examine and effectively respond to changes in the competitive environment.
Furthermore, since it is difficult to control the quality standards of several suppliers (Xerox had 5000), Mr. Kearns decided to cut down the number of suppliers to 300. This action made it possible for the corporation to gain more control over the quality of inputs and to reduce costs.
Problems/issues In the midst of the organization's great ascent to the top of their business circle, Xerox supposed unstoppable run and expansion became relatively lethargic post 1970. Many economic and world-related events had caused for this sluggish outbreak. One of the crucial factors which contribute to the mediocre performance of Xerox during this period was the expiration of Xerox's original patent for the plain paper copier. Xerox, after this event, was saturated and engulfed amongst other rising competitors within their s imilar industry. Competition gradually escalated and Xerox, during this futile time, had no
proper business plan and strategy to face and resolve the matter in hand. The business environment slowly became dynamic and saw Xerox behind in sales and growth compared to other players in the similar industry, specifically those of the Japanese. Additionally, due to the undervalued Japanese Yen, Japanese products became an instant hit as it not only provided value for money products but presented customers with similar alternatives at a breakthrough price. During this period, although competition was stiff, Xerox managed to strategize and penetrate other geographical regions. Xerox entered Europe, Africa and the Middle East via a 50/50 joint venture with Rank Organization PLC, an established British film industry which later instituted the ever-famous Paramount Cinema chain. The success of the joint venture bestowed Xerox with supreme confidence to form a partnership with Fuji Photo Film Company in Japan. The highly anticipated partnership, named Fuji Xerox, granted the company access to countries in South East Asia. During the same period and through similar agreement, Xerox managed to market its products in the South and Central American countries.
Did Xerox satisfy the ten elements from implementing a TQM program?
Total Quality Management (TQM) is viewed as a new organizational culture and way of thinking. There are ten essential elements of implementing total quality management. First, the organization has to define "quality". Company personnel should have a clear definition of what quality means in the job, department, and throughout the company. I believe that Xerox did satisfy this element. Xerox was able to "empowering employees to take responsibility for quality." Effective reward systems, and extensive training made this possible.
The second element in TQM is to develop a customer orientation, which emphasizes that quality is what the customer says it is. Xerox did fulfill this element. Employees were directly involved in the sales process, and became directly responsible for keeping customers satisfied. In the Xerox organization, "Employees are closest to the customer".
Third, TQM requires focus on the company's business processes. Processes in all functional areas of an organization should be closely examined, and the organization should look for ways to improve them. Again, Xerox did closely examine its functional areas, such as manufacturing processes. By better utilizing assets, including the employees, Xerox was able to increase its return on assets. Defect free products rose to 99.95 percent. The fourth element which is to develop customer and supplier partnerships. This view suggests suppliers are partners in meeting customer needs, and customers are partners by providing input so the company and suppliers can meet customer product expectations.
Fifth, an organization must take a preventive approach. The management should be rewarded for being prevention oriented and seeking to eliminate non value-added work. The organization must be proactive. Sixth, the organization has to adopt an error-free attitude. Instill an attitude that "good enough" is not good enough anymore. Xerox clearly fulfilled this requirement, since it reached a nearly perfect quality index, and that David Kearns still emphasized a 100 percent fault free products.
Seventh, a company that is in the process of implementing a TQM program should "get the facts first." TQM companies should make decisions based on facts, not on opinions. Xerox fulfilled this requirement, since the company was turned into an information company, as opposed to a copier company. Xerox was one of the first companies to
conclude that the "Industrial age" is over and the "Information Age" has begun. Furthermore, research and development staff was reorganized and trained.
Eight, a TQM company should encourage every manager and employee to participate. Xerox was able to fulfill this element. Employees were included in more management decisions. Line workers and other personnel was involved and were given the opportunity to provide input in finding ways of improving production and service through quality improvement teams. The ninth element is to create an atmosphere of total involvement. TQM cannot be achieved unless all areas of the organization apply quality concepts simultaneously. Xerox fulfilled this requirement as well. All functional departments in the organization were involved, and Finally, TQM companies should strive for continuous improvement. Quality is not only a one-time program of competitive response, for it creates a new standard to measure up to. Improving quality is not only good for the profitability of the business, but it is a necessity for l ong term survival of the corporation. Xerox is clearly planning on preserving its TQM approach, and it is a vital part of the company's long term strategy.
Problems
in the 1970's
Xerox dominated the document processing industry before the middle of the 1970's. The company anticipated that no one single competitor would be able to penetrate the industry. Xerox believed that the barriers to entry were high, and that most Xerox customers would continue to be loyal towards the company. The company did simply not take the competition seriously. They underestimated the power of the competition, especially high potential Japanese manufacturers.
In addition, Xerox was not worried that the Japanese started to penetrate the international copier market in the early 1970's with their low-cost copiers, since Xerox believed that "low cost mean low quality." They believed that their pr oducts were untouchable since they were superior in quality and technology. They believed that "the Japanese products posed no threat, because their products were seen as cheap, unreliable, and of laughable quality."
What Xerox did not anticipate was the Japanese were able to catch up in the international market place, and that they were able to keep costs low, but the products were of good quality. In addition, Xerox did not respond to the plain paper copiers which the Japanese introduced in 1974. Furthermore, the Japanese were able to produce their products more effectively than Xerox, and the parts used in production were less complex, mass produced, more reliable, and easier to fix than Xerox products. In addition, the Japanese were able to sell their products instead of leasing them, which released tied-up capital. Xerox suddenly had to realize that the company was being out produced and under priced.
Suggested solution Xerox's key success factors
The key success factors to Xerox successful strategy turnaround are very much employee related. First, increased involvement of employees has directly increased customer satisfaction. Employees are now directly responsible for keeping customers happy and satisfied. Also, since "employees are the closest to the customer", so they
know the best how to please the customer. Furthermore, employees are involved in more management decisions. A large emphasis is placed on employee participation. In addition, plenty of money was spent on employee training. I believe that the funds spent on training paid off good returns. A large emphasis was based on changing the corporate attitude regarding the concept of quality, This massive cultural change was accomplished by the training programs. A new slogan was developed, "the better the quality the lower the overall costs."
In addition, the new customer supplier relationship which was created aided in the process of improving the quality standards of component products. It is logical that it is impossible to produce a superior quality product, when components do not meet required quality standards of the company. Also, by better utilizing assets, including the employees, Xerox was able to increase returns on assets (fixed assets) by almost 300 percent.
Furthermore, by reorganizing the organization (particularly in the research and development staff and the marketing force), with the objective of viewing new product lines as systems in the organization. Also, Xerox was one of the first major corporations that recognized the need to move fr om a purely product-line oriented company (copier company) to an information company. Computer information networks such as Ethernet and other office communications networks made it easier for divisions and people in the organization to communicate with each other. One of the major problems that corporations face today are problems and interference in communication channels.
Examples
of strategic and operational controls
There are numerous examples of Strategic controls in the Xerox case.
First, employees are Operational control systems guide, monitor, and evaluate progress in meeting annual objectives. Usually, in order to be effective, operational control systems involves setting four essential objectives; Set standard of perf ormance, measure the actual performance, identify deviations from standards set, and finally initiate corrective action. There are several examples of operational controls in the Xerox case. Xerox has focused on "key success factors", such as improved productivity, high employee morale, improved product-service quality, and growth in market share
ntegration Although quality and quality management does not have a formal definition, most agree that it is an integration of all functions of a business to achieve high quality of products through continuous improvement efforts of all employees. Quality revolves around the concept of meeting or exceeding customer expectation applied to the product and service. Achieving high quality is an ever changing, or continuous, process therefore quality management emphasizes the ideas of working constantly toward improved quality. It involves every aspect of the company: processes, environment and people. The whole workforce from the CEO to the line worker must be involved in a shared commitment to improving quality.
Therefore, in brief, quality and total quality management (TQM) in particular can be defined as directing (managing) the whole (total) production process to produce an excellent (quality) product or service.
It differs from other management techniques in the attitude of management toward the product and toward the worker. Older management methods focused on the volume of production and the cost of the product. Quality was controlled by using a detection method (post production inspection), problems were solved by management and management's role was defined as planning, assigning work, controlling the production. Quality management, in contrast, is focused on the customer and meeting the customer's needs. Quality is controlled by prevention, i.e., quality is built in at every stage. Teams solve problems and everyone is responsible for the quality of the product. Management's role is to delegate, coach, facilitate and mentor. The major quality management principles are: quality, teamwork, and proactive management philosophies for process improvement.
Conclusion TQM attempts to have maximum customer satisfaction through providing quality products and services but uncongenial business environment, high cost of production, increasing prices of products unfair competition in market are the major constraints in using TQM. Once the business is profitable, they can develop quality products and services. Absence of breakeven point decline in demand for products, lack of trained manpower are other limiting factors for such use. We should try to have market research to satisfy our customers as well as managerial efficiency and effectiveness sidely side. We should also develop strategic management techniques to stand in open market economy. Once the strategies are appropriate business can see well and further enhance the wide are of TQM devices towards the customers goals achievement. Academic research on the holistic approach to TQM is in its primitive stage. So, there is
a clear need for more precise measures of quality. Endeavour has been paid throughout this paper to find out a comprehensive approach to TQM. The technical tools of quality improvement may be well developed, but its theory and practice lag far behind. The concept of quality is only dimly understood by the practicing managers. Links to market share, cost, and profitability are unclear. Measurement is also complex. Empirical researches on these issues like costs, market share, prices, profitability, employee turnover, and the like, as dependent variable may be conducted in the f uture. Because of the recent trade globalization, developing countries are in crying needs to increase productivity and elevate the quality of products. More empirical research can be conducted in future to make quality a vital issues in every sector of the economy. Over the past few decades, Information Technology (IT) helps TQM organization achieve its goals. Study may be conducted to reveal the effectiveness of IT application toward quality assurance.
