Springfield Armory Evolved into “American System of Manufactures” circa

1850s Developed to improve methods for manufacturing

firearms with an emphasis on interchangeability Political & economic motivations: military desired US government provided reliable demand Simeon North’s 1813 contract requires “uniformity”

Managed change from Craft Manufacturing (local knowledge and apprenticeships)

Creation of jigs, fixtures, turret lathe, milling machines, inspection by guage

Springfield Armory REQUIRED sharing of innovations / no patent

protection / future contracts 6 private armories (after War of 1812)

Exchanged innovations, materials, tools, labor Springfield as “clearinghouse”

Seek innovations, bring in-house, share with other firms/diffusion

People Management Pay systems, loyalty (church, schools), innovation encouraged Leadership: Roswell Lee, civilian (1815-1833): “fairness” Wage caps / no stealing of skilled labor Overcome craft resistance to technical change

Springfield Armory Quality

Absence of “fitters”Conformance to Specification

May have been precursor to overdesign

Mechanization rapid innovation/cheaper equipmentDedicated equipment/worker innovationmulti-skilled workers

Springfield Armory Integration

British government: control input quality Separate from assemblers Integrated at Springfield

Layout (Naval block mill) each set of machines for a single size range forms its own line No storage areas for WIP Material handling was wheeled carts

Notes from “Today & Tomorrow” Henry Ford, 1926

Company buying 2/3 of needs Focus on continuous improvement Waste elimination

MaterialsTime

Standardization

Time

“All men do not see the wisdom of fitting means to end, of conserving material (which is sacred as the result of others’ labor), of saving that most precious commodity—time; they must be taught.”

Vertical integration “The business—the manufacturer—must at once

decide whether he will have his service to his customers limited by forces beyond his control, or whether to the extent of his resources he will make his own supplies.”

“If he decides, as we decided, that the quantity and quality of our services should be within our control, then gradually he will be drawn, at least to a protective degree, into the manufacturing of raw materials…”

Procurement/pricing “If those who sell to us will not manufacture at the

prices which, upon investigation, we believe to be right, then we make the article ourselves. ... and in other cases, we manufacture just enough of a product to get thoroughly familiar with it, so that in an emergency we make it ourselves.

Sometimes, also, we do this merely to test the price we are paying. In distribution, the same rule holds. We have lake ships, ocean going ships, and a railroad, in order that we may measure transportation charges.”

Supplier relations

“We buy on cost and not market price. In our own production, we set ourselves tasks—sometimes we arbitrarily fix prices and invariably we will meet them; whereas if we merely accepted things as they are, we should never get anywhere. We follow exactly the same practice with those from whom we buy—and invariably they prosper.”

Employee Development

“Business can live only as it develops within its corps of employees the talent and force which will carry the business along. Business lives by the vigor and brains of the men it produces.”

Change

At the Allegheny glass plant: “If you compare these methods with the new methods described in the next chapter, you will gain some idea of the economies which may be had in almost any line of

manufacturing, if only the will to get away from tradition be strong enough.”

On buying a closed mining camp

“Then we began work into mining, learning as we went…”

“This camp looks like a suburban colony—everything is painted and kept painted a light color. We do not paint to cover up dirt—we paint white or a light gray color in order that cleanliness may be the order of things and not the exception.”

Continuous Improvement

“Our own attitude is that we are charged with discovering the best way of doing everything, and that we must regard every process employed in manufacturing as purely experimental.”

Continuous Improvement “That is why all our new operations are

always directed by men who have had no previous knowledge of the subject and therefore have not had a chance to get on really familiar terms with the impossible.”

“...but no operation is ever directed by a technician, for always he knows far too many things that can’t be done.”

Inspection

“We must have inspectors at every stage of the work; otherwise faulty parts might get into the assembly. Our inspectors in only a few cases are required to use judgment—mostly they apply a gauge, but, as was shown with the bushings, we are working toward mechanical inspection.”

Product Standardization

“The strongest objection to large numbers of styles and designs is that they are incompatible with economical production by any one concern. But when concerns specialize, each on its own design, economy, and variety are both attainable. And both are necessary.”

Global quality

“We do not make Ford cars in any one place. We turn out only a few completed cars in Detroit, and those are for the local market. We make parts, and the cars are assembled where they are to be used. And this involves an accuracy in manufacturing beyond anything thought of in the old days.

Standard Global Processes

“An operation at our Barcelona plant has to be carried out exactly like it is in Detroit.—the benefit of our experiences cannot be thrown away. A man on the assembly line at Detroit ought to be able to step into the assembly line at Oklahoma City or Sao Paulo, Brazil.”

Transportation

“The real limit to the size of a corporation is transportation. There is far too much useless carting of goods to central points from there to be distributed to points of consumption.”

Tolerance accuracy To get some needed accuracies to a ten thousandth

of an inch (most other tight ones were to .001):

“To gain this accuracy we sought the one man in the world who had made a business of absolute accuracy and brought him into the organization.” (Carl E. Johansson)

More

“While we have a monopoly on these gauges, our first move after acquiring the American rights was to improve the manufacturing processes to increase output and reduce prices, so that these gauges would be within the reach of every machine shop and toolmaker—which incidentally proves that there is nothing incompatible between mass production and quality.”

Dedicated Equipment

“We use single purpose machinery—that is, a machine is called on to do only one operation…”

Inventory

“…but having a stock of raw material or finished goods in excess of requirements is waste—which, like every other waste, turns up in high prices and low wages.”

Time

“The time element in manufacturing stretches from the moment raw material is separated from the earth to the moment when the finished product is delivered to the ultimate customer. It involves every form of transportation and has to be considered…a method of saving which ranks with the application of power and division of labor.”

Velocity

In 1921, Ford had $120M in raw material and $50M in “unnecessary transit in finished product.” In 1926, the total inventory is only $50M.

“Our inventory, raw and finished, is less than half it was when our production was only half as great.”

More Velocity...

“The extension of our business since 1921 has been very great, yet, in a way, all this expansion has been paid for out of money which, under our old methods, would have lain idle in piles of iron, steel, coal, or in finished automobiles stored in a warehouse. We do not own or use a single warehouse!”

Waste

“It is not possible to repeat too often that waste is not something which comes after the fact. Restoring an ill body to health is an achievement, but preventing illness is a much higher achievement. Picking up and reclaiming scrap left over after production is a public service, but planning so that there will be no scrap is a higher public service.”

Time waste

“Time waste differs from material waste in that there can be no salvage. In our industries, we think of time as human energy.”

Stock levels

“On the other hand, it is a waste to carry so small a stock of materials that an accident will tie up production. The balance has to be found, and that balance depends on the ease of transportation.”

Transportation

“The speed of transportation is itself a factor, and its importance depends on the commodity being carried.”

Cross-Functional Coordination

“Thus, the traffic and production departments must work closely together to see that all the proper parts reach the branches at the same time—the shortage of a single kind of bolt would hold up the whole assembly at a branch.”

Communication

“Whenever a shipment starts, the (rail) car number is wired to the branch. The traffic department traces all shipments and sees that they are kept moving…”

Lean

“Our production cycle is about 81 hours from the mine to the finished machine in the freight car, or 2 days and 9 hours instead of the 14 days we used to think was record breaking.”

Management principles

“After acquiring a business, the first step was to put in the Ford principles of management.

1. Do the job in the most direct fashion without bothering with red tape or any of the ordinary divisions of authority.

Management Principles

2. Pay every man well—not less than $6 per day—and see that he is employed all of the time through 48 hours per week and no longer.

3. Put all machinery in the best possible condition, keep it that way, and insist upon absolute cleanliness everywhere in order that a man may learn to respect his tools, his surroundings, and himself.”

Strategy “The whole subject of manufacturing and retailing

divides into two classes, not according to size, but according to purpose. If the purpose be to perform the greatest possible service, which in a business way means doing all that is in one’s power to manufacture or distribute the largest possible amount of goods at the least possible cost, then methods will for themselves quite naturally and according to circumstance.”

More Strategy...

“The second kind of business may be classified as as luxury or appealing to a smaller percent of society (10%). The point is that it is not size but intention that governs the methods to be adopted….And just as the methods of manufacture are determined by the kind of service he wants to render, so also are the methods of retailer determined.”