2000 Volume 9 Issue 1 Pages 43-60
The purpose of this paper is to review the background, structure and function of the Quality Cost Management at Xerox Corporation.
In the 1970s, IBM, Eastman Kodak, Canon, and other competitors entered the U.S. copier market and began making significant gains in the market share at the expense of Xerox. Xerox’s competitiveness was seriously damaged by the quality costs of correcting errors, re-doing things, apologizing to customers, etc. A survey of the published literature in this field showed that quality costs at the company, expressed as a percentage of sales turnover, was 20 percent. In 1983, CEO David Kearns and the senior management at Xerox launched the program, “Leadership Through Quality” to change the company’s culture and raise its commitment to quality. It took four years to train over 100,000 people to ensure a common understanding and approach to quality at all Xerox facilities. Quality cost concepts were introduced as a management tool of this “Leadership Through Quality” process.
The Xerox approach to quality cost differs somewhat from those programs described by the American Society of Quality Control and others. The company defines three categories of quality cost: conformance, nonconformance and lost opportunity. The third category is unique to Xerox. And although quality cost was developed to deal with manufacturing areas, attempts have been made to apply its principles directly to non-manufacturing areas. Struggle for survival in the market is the underlying structure of quality cost management at Xerox.
