Value Creation: Dynamic Supply Chain Design

Abstract

Xerox spent most of the 1980s painfully regaining, inch by inch, the market share it had lost so dramatically to new entrants from its dominant position in the market in the 1970s. In Europe, for instance, Xerox’s market share tumbled from 18% in the early 1980s to 4% in 1986, stabilizing around 15% in 1989. Central to this comeback was an obsessive dedication to quality, and the introduction of just-in-time (JIT) manufacturing and distribution. In fact, Xerox spent the second half of the 1980s implementing the JIT philosophy in its European manufacturing operations. In this process, Xerox rationalized its supply base, reducing it from 5,000 suppliers to 300, enabled direct delivery into the production lines, and closed down all of its national warehouses, centralizing the distribution activities through a European logistics center in Holland.¹ As emphasized in Figure 3.1, this supply chain rationalization effort was accompanied by a reclassification of the product offerings, ranging from built-to-order high-end products to make-to-stock low-end products with different decoupling points.