Continuous Process Improvement: The Lessons of History SCM 494 Dr. Ron Tibben-Lembke

Growth of Service Economy

Continuous Process Improvement It used to be you had to be “good enough” It used to be you had to be “good enough” Now, you must be looking for ways to make your customer happy, and meet their future needs Now, you must be looking for ways to make your customer happy, and meet their future needs If you aren’t someone else is, and is going to take your business If you aren’t someone else is, and is going to take your business

Cotton Gin at Work

Eli Whitney introduced interchangeable parts in large musket contract for U.S. Army introduced interchangeable parts in large musket contract for U.S. Army Interchangeable parts the true secret of Ford’s success Interchangeable parts the true secret of Ford’s success Made possible by advances in measurement and tool steel Made possible by advances in measurement and tool steel

Beginning of Standards Before standardized parts, need Screws Before standardized parts, need Screws 1860s Machine Tool industry: Silicon Valley of its day 1860s Machine Tool industry: Silicon Valley of its day All screws custom made by tool & die shops according to what they thought best All screws custom made by tool & die shops according to what they thought best William Sellers: 1864 “On a Uniform System of Screw Threads” William Sellers: 1864 “On a Uniform System of Screw Threads”

Sellers vs. Whitworth 3 cutters & 2 lathes vs. 1 cutter & 1 lathe 3 cutters & 2 lathes vs. 1 cutter & 1 lathe Simple geometry vs. difficult Simple geometry vs. difficult Rounded top vs. straight: ease of manufacturing, ease of assembly Rounded top vs. straight: ease of manufacturing, ease of assembly

Not Just What you Know Machine tool makers didn’t want to be commoditized like gun makers Machine tool makers didn’t want to be commoditized like gun makers The standard people expect to win usually does. The standard people expect to win usually does. Navy Board found it superior, asked Singer Sewing Machine, Baldwin Locomotive which would win (already adopted). Navy Board found it superior, asked Singer Sewing Machine, Baldwin Locomotive which would win (already adopted). Pennsylvania RR adopted (Sellers on the Board) Pennsylvania RR adopted (Sellers on the Board) British tanks & trucks couldn’t be repaired in WWII because Britain adopted Whitworth British tanks & trucks couldn’t be repaired in WWII because Britain adopted Whitworth

Frederick W. Taylor Frederick W. Taylor: Frederick W. Taylor: Father of “Scientific Management” Father of “Scientific Management” Find ways to improve work environment and work processes Find ways to improve work environment and work processes Quantify, measure & track everything: Quantify, measure & track everything: Time required to haul wheelbarrow:

Factory Life “Schmidt” Taylor’s Factory

Frank and Lillian Gilbreth Systematically study a work environment and find the best way to achieve a particular task Systematically study a work environment and find the best way to achieve a particular task With Taylor, pioneered “industrial engineering” -- time and motion studies With Taylor, pioneered “industrial engineering” -- time and motion studies “Cheaper by the Dozen” “Cheaper by the Dozen”

Motion Capture Lights illuminate key motion joints Lights illuminate key motion joints For Computer Generation, convert to 3D For Computer Generation, convert to 3D

Barry Zito

Chronocyclegraph light-1914

Bricklayer

Typesetter

Drill Press

Pencil Holder Color coded slots Color coded slots Groove for grabbing pencil Groove for grabbing pencil

Ergonomic chairs

Andrew Carnegie Telegraph operator to RR division superintendent Telegraph operator to RR division superintendent Adopted latest technology, built first steel plant laid out to optimize flow Adopted latest technology, built first steel plant laid out to optimize flow Focused on knowing, lowering unit cost Focused on knowing, lowering unit cost Raise prices with everyone else in booms, slash prices in recession Raise prices with everyone else in booms, slash prices in recession

Andrew Carnegie Production: US England 18688,500111, ,138,0001,862,000 Steel Prices: (per ton) 1870$ $12 How? Continuous Process Improvement

The Richest Man in the World Found out strike organizers, fired before Found out strike organizers, fired before 1886 “Triumphant Democracy”, Forum magazine- workers’ right to unionize 1886 “Triumphant Democracy”, Forum magazine- workers’ right to unionize 1889 “Gospel of Wealth:” rich need to help the poor ($25m annual income) 1889 “Gospel of Wealth:” rich need to help the poor ($25m annual income) 1892 Homestead strike: 12 hour gunfight, Pinkerton defeated (12 died), state militia called in, strike breakers hired 1892 Homestead strike: 12 hour gunfight, Pinkerton defeated (12 died), state militia called in, strike breakers hired 1901 sells out to J.P. Morgan: $480m 1901 sells out to J.P. Morgan: $480m Built 2,500 libraries. “The man who dies rich dies disgraced.” Built 2,500 libraries. “The man who dies rich dies disgraced.” 1919 dies, having given away 90% 1919 dies, having given away 90%

Skibo Castle

Henry Ford Continuous Process Improvement Continuous Process Improvement Advances in metal cutting allowed him to cut pre- hardened steel, produce identical parts Advances in metal cutting allowed him to cut pre- hardened steel, produce identical parts Standardized parts facilitated standardization of jobs, moving assembly line Standardized parts facilitated standardization of jobs, moving assembly line Model T: 1908 $850 Model T: 1908 $ ’s: $250

Ford’s Rouge Plant

Vertical Integration Owned forests, iron mines, rubber plantation, coal mines, ships, railroad lines Dock facilities, blast furnaces, foundries, rolling mills, stamping plants, an engine plant, glass manufacturing, a tire plant, its own power plant, and 90 miles of RR track 1927 Model A Production begins 15,000,000 cars in 15 years 120,000 employees in WWII

Details to the Max In his autobiographies “My Life and Work” (1922), and “Today and Tomorrow” (1926), Ford gives great detail on innovations he and his company have made, including: Glass making, Artificial leather Glass making, Artificial leather Steering wheels out of Fordite Steering wheels out of Fordite heat treating -- saved $36m in 4 years (1922) heat treating -- saved $36m in 4 years (1922) Forging parts, wiremaking Forging parts, wiremaking Riveting, bronze bushings, springs Riveting, bronze bushings, springs

Managing Workers “It is a reciprocal relation -- the boss is the partner of his worker, the worker is partner of his boss. Both are indispensable.” -- MLAW p. 117

Paying for Good Employees “One frequently hears that wages have to be cut because of competition, but competition is never really met by lowering wages. The only way to get a low-cost product is to pay a high price for a high grade of human service and to see to it through management that you get that service.” T&T p. 43

Mindless Work “Repetitive Labour -- the doing of one thing over and over again and always in the same way -- is a terrifying prospect to a certain kind of mind. It is terrifying to me. I could not possibly do the same thing day in and day out, but to other minds, perhaps I might say to the majority of minds, repetitive operations hold no terrors. In fact, to some types of mind thought is absolutely appalling. To them the ideal job is one where their creative instinct need not be expressed.” MLAW p. 103

Mindless Work When you come right down to it, most jobs are repetitive. A business man has a routine that he follows with great exactness; the work of a bank president is nearly all routine; the work of under officers and clerks in a bank is purely routine. Indeed, for most purposes and most people, it is necessary to establish something in the way of a routine and to make most motions purely repetitive - - otherwise the individual will not get enough done to be able to live off his own exertions. -- MLAW pp

Guess the Expert(s) AndrewFrederick Henry ShigeoFrank & Lillian

1. Product Flow “If transportation were perfect and an even flow of materials could be assured, it would not be necessary to carry any stock whatsoever. The carloads of raw materials would arrive on schedule and in the planned order and amounts, and go from the railway cars into production.”

2. Inventory “…having a stock of raw material or finished goods in excess of requirements is a waste-- which, like every other waste, turns up in high prices and low wages. … We do not own or use a single warehouse! How we do this will be explained later in this chapter, but the point now is to direct thought to the time factor in service.”

3. Volume Buying “We have found in buying materials that it is not worth while to buy for other than immediate needs. We buy only enough to fit into the plan of production, taking into consideration the state of transportation at the time. But we learned long ago never to buy ahead for speculative purposes…we have found that thus buying ahead does not pay. It is entering into a guessing contest. It is not business. … the gains on one purchase will be offset by the losses on another … in the end speculation will kill any manufacturer.

4. Flexibility “We believe … that no factory is large enough to make two kinds of products. Our organization is not large enough to make two kinds of motor cars under the same roof.”

5. Standardization “Only six years ago, we used around six hundred different size boxes and crates for shipping. We studied the shipments and the boxes, and today, instead of six hundred sizes, we have fourteen sizes, for each of which a standard method of packing has been devised.”

The envelope please…

Answer: Henry Ford 1. 1.ML&W p T&T pp ML&W p T&T p T&T p. 122

The Lessons of History Continuously improving your products, your services is the only way you will survive Continuously improving your products, your services is the only way you will survive Ignore your customers, and they’ll go away Ignore your customers, and they’ll go away Those who do not learn from the past are doomed to repeat it. Those who do not learn from the past are doomed to repeat it.