Xerow was having great difficulty making clients accept the products technical progress and therefore its selling price. The customer was having difficulty perceiving the progress being made, bringing the performance to that of a quality photocopier and having their eye constantly on the price.
The machines at the end of a leasing contract were in good shape or only needed minor repairs or updates. Thrown away they were a big cost center, notably the electrical and electronic equipment in the machines which represented a large stock of value assets.
To remain the proprietor of the machines in order to freely manage their lifecycle. Reviewing the product range in order to to have the most amount of adaptable components to all machines (rate achieved: 90%), conceive new machines so that each component can be easily replaced when necessary.
Reducing storage and treatment costs
+ reducing the need of raw materials and components
= Recovery program for tied-up capital in end of life products (1991)
The cleaning, dismantling and assembling, driver tests … have lead to doubling the cost of the workforce in comparison to the number of new machines, but this increase has been more than compensated by the transformation of 24.000 tons of waste into usable components.
Xerox has estimated that they have gained a profit of 200 million dollars for the year 1999.
Xerow encountered and overcame a resistance to price by replacing the sale of the good by the sale of its usage (photocopies charge by per unit and not the sale of the machine). Xerox did this was by remodeling upstream of their value chain of the sold product: a photocopier
Component compatibility and modularity was a key factor of success.
Return of a quality workforce, able to save energy and raw materials.
With the same problem as Michelin, Xerox came up with the opposite solution to Michelin.
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