‘Manufacture’ – The word stands for ‘Manu’ + ‘Facture’.
Manu means ‘hand’ and
facture means ‘to make’
Manufacturing was an art to start with. How did it become a science?
Industrial Revolution: Technological & Methodological Advances
- Tull’s ‘Seed Drill’ improved the method of sowing seeds and increased crop yield dramatically
- Introduction of ‘Crop rotation’ resulted in high yields and increased variety
- Suddenly demand for cotton went up and farmers grew cotton in large volumes
- Abundance of cotton kick-started the industrial revolution
- Industrial revolution took a firm grip first in the Textile industry
A Series of Inventions Followed…
Improvements In Transportation
Industrial Revolution: Technological & Methodological Advances
- Machines and other inventions resulted in unimaginable productivity increase
- Improvements in transportation resulted in widening the markets, to which products were supplied
- Growth in the textile industry and the invention of machines demanded improvements in iron industry. Iron and steel making process began to grow
- Europe became a superpower as it led the industrial revolution and America joined later
- More and more of these machines were sold in Europe and Americas
- HOW WERE THESE MACHINES BUILT? What was the manufacturing system?
- To study that we shall use the example of automobile industry
Case of ‘Panhard et Levassor’
- The firm of Panhard and Levassor was one of the original pioneers of the automobile industry
- They started making cars as early as 1890
- They sold several hundred cars a year and by 1894, they were the largest car company in the world
- In 1894, Honorable Ellis a member of English parliament ordered a car from Panhard &Levassor
- He was the first to drive a car in England (In June 1895 @10mph)
- The company then used the classic ‘Craft Production System’
Features of Craft Production System: Manufacturing as an art- The P&L case
- No two cars were alike. They were built as per specifications of each customer
- The system depended highly on the skills of the craftsmen
- Same parts were not alike and had differences. The part makers used different gauges. Their specifications were approximate and had to be filed and worked upon before fitting
- Parts were produced with general purpose machines and usually in small workshops.
- Raw material available for parts production were not perfectively conducive for manufacturing
- Each car was a prototype and hence reliability and consistency were an issue
- Speed and customization were the buyer priority and not cost, reliability and driving ease. Owners were rich and mostly employed drivers and mechanics
- The time taken to deliver a car and the cost was prohibitively high. Hon.Elis bought his car for 50 pounds and had to wait one year
Present Examples of Craft Production
- A suit stitched by a tailor
- A golden bangle made by a jewel designer
- An artificial limb designed for a handicapped person
- Eye glasses supplied by an optics vendor
- A wood furniture made as per your order
- A dress designed by a fashion designer for a wedding
- A house built as per your taste and specification
F.W.Taylor’s Scientific Management (1911)
- Poor productivity was due to ‘Rule of Thumb’ methods and workmen’s tendency to soldier
- Proposed scientific study of work methods to find the ‘One best way’. Paved the way for ‘efficiency drive’ and industrial engineering
- Advocated scientific selection and training of workmen based on skills
- Planning and production were separated.
- His key innovations were..
- Standardized work
- Reducing cycle time
- Time and motion studies
- Measurement and analysis for continual improvement.
Interchangeability of Parts
- Machines were less adaptable than humans and required a standardized grade of starting materials to work properly
- Eli Whitney pioneered the concept of interchangeable parts that were exactly identical in specifications
- Interchangeable parts were made possible by improvement in iron and steel processing and hence consistent raw material
- Interchangeability allowed easy fitting and assembly of parts and hence very high productivity
- Gun industry was the first to take advantage and produced guns at a far cheaper rate than craft production
Henry Ford’s Mass Production System
- Initially whole car was built on one assembly stand often by one fitter
- Improved the efficiency by delivering parts to each work station
- Achieved perfect interchangeability of parts and produced parts himself at very low cost/unit – ‘Mass Production’
- Improved product design – reduced major components from 750 to 93
- Interchangeability and ease of operation eliminated need for skill
- Moving assembly line introduced – 1913
- Fine division of labor – ‘One man – One job’ and achieved high labor productivity
- Made only ‘Model-T’ and at a large scale
- Vertically integrated all his operations
The success of the Ford System
- Between 1908 and 1920 Ford hit peak production of 2million units per annum.
- At the same time real cost to the customer had been cut by two thirds.
- Ford was able to famously DOUBLE the wage of assembly workers to $5 per day.
- Ford became the industry leader.
- Alfred Sloan recognized the need for professional management.
- Divided General Motors into 5 auto. divisions each to operate under a GM as a profit centre.
- GAPP accounting standards developed supported this transformation and came to encourage wasteful manufacturing.
- Gap between management and shop floor widened.
- After almost a decade of labor unrest auto workers signed agreements-main issues being job seniority and job rights.
The growing Dysfunction
- Worker alienation: Unions continually fought to reduce working hours.
- Quality: Took a back seat to production.
- Machinery: Became larger and larger in pursuit of economies of scale.
- Engineering: branched into myriad specialties, having to say leas and less to other specialty engineers.
Things could have gone on like this but for:
- The Oil Crisis of the 1970s
- The developments in Toyoda city.
Eiji Toyoda visits Ford
In 1950 Eiji Toyoda visited Ford’s Detroit plant and on return made two famous conclusions:
- Mass production would not work for Japan
- There are some possibilities to improve the production function.
In 1950, after 13yrs of effort Toyota had managed to produce 2685 automobiles. In contrast Ford’s Detroit plant produced 7000 per day.
Daunting Challenges for Toyota
- Small domestic market, demanding a wide range of Vehicles
- The warn torn Japanese economy was capital starved therefore huge investment in latest western technology was impossible
- Established car makers outside Japan eager to take a foothold in Japan.
- Toyota faced bankruptcy and labor unrest
- Due to labor laws passed in 1946 the company’s union was in a strong bargaining position.
The historic bargain
- 25% of the workforce was terminated as originally proposed
- Kiichiro Toyoda resigned as President
- The remaining employees received two guarantees.
- Life time employment
- Pay steeply graded to seniority and tied to company’s profitability through bonuses.
The deep implications:
- The workers were now a fixed cost…hence it made sense for the company to continually enhance worker skills.
- It made sense for the workers to stay with the company.
- Thus a foundation was created for an entirely different employee contract based on cooperation, flexibility and mutual benefits.
The Rise of Toyota Production System (Lean)
- Taiichi Ohno assisted by Shiego Shingo, over a period of 30 years, pioneered the Toyota production system as a solutions to Toyota problems.
- They developed activities to fully involve team members in improvement-an utterly novel idea at the time.
- Ohno faced daunting obstacles but he was a genius and had the full support of Eiji Toyoda.