It has been nearly 15 years since the landmark book and case study on Xerox Corporation appeared and helped start a quality revolution in the United States. It was called Xerox: American Samurai(Gary Jacobson & John Hillkirk, New York, Macmillan, 1986). I assigned this book as required reading for my students for nearly five years until there was something shorter and better on the topic of how to reinvent (hence reproduce for future generations) a company using quality as the central focus for the change process. For me, this was the book that made benchmarking a real concept. It put the key total quality concepts within reach of nearly anyone who cared to spend just a few hours reflecting on the Xerox comeback story. All this occurred because Mr. David Kearns, then the CEO of Xerox, had both a quality vision of the future, stimulated by Fuji Xerox in Japan, and the courage to teach a risky message to a proud organization. Mr. Kearns went on to a senior post in the U.S. Department of Education after leading Xerox to its turn around in the 1980’s, and represents the best in what we have come to know as a global business leader.
So whither Xerox today? I had the great pleasure and opportunity to hear Ms. Ursula M. Burns, corporate vice president of Manufacturing for Xerox, speak at a breakfast recently, sponsored by the College of Business at Rochester Institute of Technology. Ms. Burns began her talk by saying that she would attempt to answer any question other than why Xerox stock was currently selling at $24! It did not take but a few minutes into her presentation to realize that Xerox, like so many other household manufacturing names in the U.S., continues to reinvent itself. Xerox, like every other company, is beset with a host of new challenges. In particular, prices are falling rapidly—not just on high technology products, but on literally everything. Cost pressures dominate the scene today, and it is hard not to be preoccupied with this one subject, let alone quality and delivery. I recall one of the comments that a Ford Motor Co. middle manager made in a quality seminar, nearly five years ago, summarizing the challenge for his company: “Cheaper, faster, better...what’s second?” Ms. Burns has pronounced the Xerox manufacturing infrastructure O.K. for today, but the company much change to support the future.
Xerox is in the process of systematically restructuring its worldwide manufacturing. Ms. Burns said that only Xerox’s newest plant in Ireland is basically exempt from this process. The other 23 plants in 12 countries are all reorganizing. If prices go down by 10 or 15%, productivity has to double. More importantly, time was that the strategy for manufacturing was that if you sold product someplace in the country or the world, you had to do manufacturing there—you could not afford to do business any other way. But when the manufacturing costs in China are one-tenth that of the U.S., a company has little option but to rethink global manufacturing strategy. Eventually, most companies are going to be concentrated in from two to five regions in the world, and they will ship to everywhere else from those regions.
During the past five years, Xerox has improved reliability substantially by increasing uptime from 95% to 99%. Operations have become more flexible— the company can now respond to customers within hours, not months. Time to market for new products has been shortened from years to months.
But there are significant challenges ahead. Human resources is the first big issue. There is a gap between the number of skilled labor and technical positions available and people to fill them. Xerox is systematically promoting math and science teaching and student development in the secondary schools. Technology changes continue to hit the beach, one wave after another. For example, Xerox is “growing” gears now for its machines using nanodevices. Of course, like every other company, Xerox is chasing Internet solutions and e-business solutions to tomorrow’s problems. A recent Booz Allen survey quoted by Ms. Burns indicates that by the year 2001, 61% of managers responding said the Internet will help advance the strategic goals of their companies. Finally, the relentless quest to focus all efforts on customer requirements (quality) continues to challenge Xerox. With over 15,000 people working in manufacturing, Ms. Burns has her work cut out for her after one year on the job.
The role of leadership in an organization is to help focus efforts on what is important. Ahead of everything else is the persistent goal to connect with the customer. With 24 operations in 12 countries, there are bound to be some variances. But Xerox’s costs are higher in its headquarters state of New York than anyplace else in the world. Needless to say, the passion for continuous improvement at home and the exporting of work abroad is part of the manufacturing strategy of this company. But the largest market for Xerox products and services is at home in the U.S., so the company is not leaving town. Capacity utilization is a critical part of the solution to future challenges. But that is not enough.
In order to reinvent itself, Xerox is in transition to mass customization—getting the product or service to the customer, when they need it and at a competitive price that will support profits for the company. This manufacturing “go-to-market-method” strategy varies by segment. It will be different for large products and the Industry Solutions group at Xerox when compared to general markets, like home products, and for developing markets, like China. But all have one thing in common. With the high degree of turbulence in markets and technology, the biggest challenge will be flexibility to build to order and integrated manufacturing.