Total Quality Management: Xerox Case

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Table of Contents

Introduction
Xerox case
Discussion
Issues of TQM
Conclusion
Reference List

Introduction

Total quality management is a variation of lean manufacturing principles that originated in Japan. Toyota Production System first developed them. Over the years, the concepts have morphed into various business tools, including the TQM that is now a comprehensive tool used by almost all major firms in the Western world.

TQM incorporates customer satisfaction, continuous improvement, and workforce commitment (Lai, Lui & Hon 2014). The following are achievable with adequate total quality management implementation in a firm.

First, the firm will strengthen its competitive position, have high productivity, enhance its market image, increase its profitability, and ensure that employees have job security. These and other results depend on the nature of TQM implementation and the business sector.

A question concerning implementation is whether it contributes to better functioning of other tools and whether TQM leads to the desired results. Additional queries may relate to whether the business in question is also reaping sustainable benefits.

Xerox case

This section now examines the application of TQM in Xerox Corporation. Familiarity with Xerox and research on the company through secondary literature sources informs the analysis. Among multinational Western firms, Xerox is one of the most quality conscious one.

It began implementing TQM in 1980. The company develops its TQM practices to respond to changes in its business environment and to shape its operations to enjoy a competitive advantage.

Company background

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 21^st century (Xerox 2004). 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 (Xerox 2004).

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.

Main findings

The introduction of TQM was a change of tactic that would seek to ensure that Xerox copiers curve out a new niche market segment and fulfil 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 maximise its benefits (Fawcett et al. 2014).

Employee commitment

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 labour 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.

Continuous improvement results

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 (Xerox 2014).

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 (Xerox 2014). 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 (Rani, Duhan & Deshwal 2012).

After initial market troubles, Xerox benchmarked its operations against Japanese companies. Xerox realised 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 Xenon 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 Xenon’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. Xenon 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.

Xenon 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 (Xerox 2004).

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 (Xerox 2004).

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 centres for the company and fulfil customer needs for better functional designs (Xerox 2014).

Customer satisfaction

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 (Xerox 2014).

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 (Sikdar & Payyazhi, 2014).

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 fulfils 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 (Xerox 2014). 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 (Rani, Duhan & Deshwal 2012).

Discussion

According to Rani, Duhan and Deshwal (2012), the gains made by Xerox, such as the reported reduction in supplied parts defects by the early 1990s, are attributable to the robustness of TQM applications. Today, TQM can serve both private and public organizations, with equal gains expected.

The focus of quality refers to meeting the expectations of customers and financial stakeholders. It can extend to meet societal needs and personnel needs. As much as the basic definition of quality has remained the same over the last few decades, understanding has undergone an evolution. In its original foundation, TQM aims to discourage reactions and promotes planning and production.

It favours first-time prevention, instead of inspection and conformance to requirements. Looking at Xerox, success came because management was committed and offered a storing top-to-bottom support. The company held a strong customer focus in its internal and external processes.

The entire Xerox workforce was, and continues to be part of TQM implementation. Business improvement is happening in a continuous manner, while the firm is becoming more innovative in its production. Lastly, the company opted to treat its suppliers as partners.

It involves them in its long-term plans and accommodates their needs in its strategic plans to ensure that high quality production remains sustainable. Success at Xerox was achieved by focusing on information. The question was about what the firm could do with knowledge of its internal processes and the competition.

Although the company embraces technology, it only does so when the underlying information makes economic sense. Continuous improvement and employee empowerment are features of TQM. Achieving perfection may not be possible in a dynamic business setting.

Nevertheless, organizations need to improve their performance recurrently to enjoy compounded effects of growth, development, and efficiency. On the other hand, employee empowerment is recognition of the internal customer of the organization and the first public relations officer.

Under this feature, a firm lets employees suggest changes and spot problems in production. Forthcoming employees receive rewards, instead of punishment. Process management and product design are also features of TQM.

They relate to the quality of source materials being determined before processing or production commences and the ability of a product to meet customer needs based on its functions, usage, and practicality respectively. A firm has to make sure that suppliers offer same quality practices to it so that time for inspection and resources used for verification of quality standards remain minimal.

With product design, a firm seeks to put customer preferences into technical requirements of products, such that product performance in the market experiences grows.

Issues of TQM

Coming up with a comprehensive implementation of total quality management in a firm needs total commitment from the staff. With participation of every member of the firm and their commitment, some TQM features may remain unachievable. In addition, the level of commitment and participation differs among the hierarchical levels of the organization.

An important thing is to have the management staff doing more as both workers and mentors to influence expected behaviour and the attitude of the junior staff (Sikdar & Payyazhi, 2014). Once the staff exhibit commitment, an additional step is to have a company-wide improvement process.

Here, the basic feature is measurement of performance, and then implementing new or existing strategies to increase the performance and achieve new benchmarks. Monitoring ensures that a firm is in touch with its features of TQM, such that improvements and corrections to problems happen immediately upon the identification of a need.

The determination to push forward with the changes brought by TQM is important. Demanding continuous improvement may not be straightforward and comfortable, but this is what overall success requires. Consequently, a firm’s leadership may have to look into attaining high satisfaction levels for all the organizational members as part of the collective strive to gain firm-level triumph.

While implementing and fostering commitment is critical, there is also a heightened need for quality, which is the principle factor within TQM. Quality is a measure of excellence in processes, products, interactions, relationships, and strategies of a firm (Cronholm & Salomonson 2014).

Any features of poor quality undermine overall gains that a firm makes towards being a preferred organization to work in and a fierce competitor. Quality achievement comes at a cost. To gain good quality, a firm has to use resources and adopt a specific tactic to avoid consequences of poor quality.

At the same time, if a firm has poor quality, then the cost suffered in terms of missed opportunities and declining business prospects is the problem that it will have to deal with. Thus, a firm must evaluate whether prevention, appraisal, and implementation costs of TQM are appropriate investments and whether their returns is higher than the lack of initiative, which reverts a firm back to its initial losing position.

Among prevention costs incurred by most firms are procurement inspection, quality training, design, machine inspection, field testing, sampling, and monitoring along the supply chain (Azadi, Farzipoor & Hosseinzadeh 2014).

TQM is applicable to all activities undertaken by an organization. The improvements achieved help to increase opportunities and efficiencies of other non-related sections of the organization. For example, improvement in procurement inspection lessens the demand for process inspection and allows an organization to reallocate resources and maintain agility towards changing business environments.

On the customer side, satisfaction is the product of quality management. The same achievements are possible for suppliers. The essential thing is that performance enhances across the organization, affecting all its business processes and stakeholders (Eltantawy, Giunipero & Handfield 2014).

Quality costs narrow down to prevention, appraisal, and avoidance of failure. Taking precaution is expensive, but not taking it can be more expensive for a firm; therefore, it is a necessary cost. The same is true for appraisal costs, which relate to the expense paid to detect flaws in quality across the entire firm’s spectrum.

Appraisal costs will include the funds used to perform in-house checks, together with those paid to third-party inspectors. It will also include the time and other non-monetary resources used by the firm to achieve its total quality management.

Future of workforce commitment and continuous improvement at Xerox

As Xerox focuses on service delivery as its next area of growth, it increases demand for expertise, employee citizenship behaviour, and quality control of its employees and business partners’ staff. Determination of quality at a service level is the same as that of a physical product.

For example, the number of defects is not as countable in a service, as they are in a physical product. Sometimes, errors in service delivery and customer relations compound and take time to reveal. Setting standards and conforming to them when the product is intangible is problematic.

Xerox meets the service delivery challenge by emphasizing on information gathering and knowledge sharing (Xerox 2014). Xerox can control the manner of delivering services to clients by integrating suppliers, employees, and customers in its plans and their execution, such as review of designs and inventory management.

With this approach, it is possible to learn about mistakes and eliminate them in collaboration with clients to prevent the loss of business (Mosadeghrad, 2014). Some aspects of TQM at Xerox are not as visible as they were two decades ago when the process was initiated at the firm.

Today, quality management has become part of an ongoing tradition. Benchmarking may not reflect the competition in isolation, but it integrates with customer and employee features. The blurring line of business partners and customers also makes information differentiation from competitors and customer preferences difficult and may pose a challenge for data analysis for the company (Moskovkin, Bocharova & Balashova 2014).

Conclusion

The implementation of TQM at Xerox has been one of the reasons for sustained success over the last few decades. At the same time, incidences of company poor performance at the end of the 20^th century show that TQM is only advantageous when it also ensures that the firm remains agile to changing business environment conditions.

The findings from a review of Xerox show that the firm is moving towards being a service-oriented company. Many of its success strategies were based on manufacturing. As a global business, service delivery has a number of challenges. Nevertheless, the adoption of quality control benchmarks and insisting on employee empowerment ensure that the firm’s service oriented strategy is paying off.

Reference List

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Rani, S, Duhan, RK & Deshwal, S 2012, ‘Study of implentation of total quality management for defect reduction in manufacturing industry’, IOSR Journal of Mechanical and Civil Engineering , vol 1, no. 3, pp. 11-14.

Sikdar, A & Payyazhi, J 2014, ‘A process model of managing organizational change during business process redesign’, Business Process Mgmt Journal, vol. 20, no. 6, pp.971-998.

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Xerox 2014, Annual report 2013, Web.

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