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Reading Henry's Books

May 5, 2003
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Dear Editor;

Your editorial, "Stop Bullying" (Quality, June 2002, p. 6) and Chatterjee's, Satpathy's, Ganguli's, and Kumaresh's "Collaboration: Key to World Class Quality" (Quality, June 2002, p. 50) show that the U.S. auto industry has forgotten the techniques and practices it developed about 90 years ago. These include supply chain management and especially supplier development.

Ford's practice of demanding annual 3-5% price cuts from its suppliers is only half of the approach its founder used to generate unprecedented sales and profits. Henry Ford cut his prices and increased his workers' wages by using lean manufacturing to reduce production costs. He also practiced supplier development by teaching his suppliers how to use lean manufacturing.

Some readers may wonder how Henry Ford could have taught his suppliers lean manufacturing, which was supposedly developed at Toyota during the 1950s. Toyota did NOT develop lean manufacturing. Taiichi Ohno read Ford's "Today and Tomorrow" (1926) and introduced its content systematically and thoroughly at Toyota. This book and Ford's "My Life and Work" (1922) and "Moving Forward" include not only all the elements of lean manufacturing, but also just-in-time manufacturing and supply chain management. The latter means making all elements of the supply chain effective partners in a lean and JIT operation.

Design for manufacturing (DFM), error-proofing (poka-yoke), self-check systems, continuous improvement (kaizen), cellular manufacturing, standardization, and best practice deployment also are easily identifiable in Ford's books.

During the early days of the Ford Motor Company, Ford and his associates were dissatisfied with the price that an auto body manufacturer was demanding. They wanted him to get his price down, just as today's Big Three want their suppliers to reduce prices. The difference was that Ford and his coworkers didn't just tell the supplier to cut his price. They looked at the supplier's product and taught the supplier how to make it more efficiently. The supplier's production costs dropped so far that the supplier could not only give Ford the price he wanted, but also make more money for himself.

Per the article and the editorial, it looks like today's OEMs want price concessions from their suppliers, but they don't want to practice supplier development. (I believe that the modern Ford company does have a lean manufacturing resource center, but as far as I know it does not even use the company's own founder as a role model.) As Henry Ford said in many contexts, the desire to get something-- in this case, price concessions -- for nothing is destined for failure. If suppliers must cut corners on quality to deliver these price concessions, this is proof that the OEMs' approach is dysfunctional.

Furthermore, it is doubtful that Japanese competitors will make this mistake. The Japanese, Taiichi Ohno in particular, read Henry Ford's books and they are still using his methods very diligently.

William A. Levinson
Principal
Levinson Productivity Systems, P.C.

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