The history of lean manufacturing has roots in the American industrial revolution and, subsequently, Henry Ford’s famous assembly line. But the process improvements made much later by Toyota created the model. The Japanese automaker expanded on Ford’s ideas by producing more with existing resources, focusing on teamwork and eliminating non-value added activities. Lean manufacturing came full circle in the 1980s, as struggling U.S. automakers took notice of Toyota’s rapid efficiency increases and imported its ideas back to the U.S., although with inconsistent dedication.
The Industrial Revolution
The industrial revolution and the beginning of mass production would be an appropriate time to start a history of lean manufacturing. According to Stearns, society was drastically changed by the industrial revolution. The industrial revolution in early 1800s England was fueled by cheap labor that was worked very hard. Machine-made goods lowered the income of rural laborers and mechanization in the textile industry lowered the income of workers who spun cloth by hand. Some skilled workers did well during this time, but many employers used orphans and low-paid women as sources of cheap labor. Industrialization had some benefits at this time, such as lowering the selling price of many goods; however, it was still a difficult time because work was unpredictable and many people could find themselves out of a job because of constantly changing economic conditions. Some workers rioted because of job loss caused by mechanization. They claimed to be following a mythical figure named Ned Ludd. The Luddites attempted to have machinery banned, but they failed.
Life in the early factories was both hard and dangerous. Many factories worked the workers up to sixteen hours a day, six days a week and there was little protection from moving machinery that could injure workers. This was also at a time when an injured employee could not expect financial assistance from his or her employer or the government; therefore, an injury could lead directly to unemployment and poverty. Factory life during the industrial revolutions was so unpleasant that Marx’ manifesto described work in a British match factory as being so bad that Dante would have found his levels of Hell surpassed because of the long hours, short breaks and the constant smell of sulfur in the air.
Wren tells us many factory managers during the early industrial revolution complained that workers were not accustomed to the regular hours and monotony of factory work. However, many were enticed into giving up agricultural work because of the pay available in industry. Industrial work provided a chance to accumulate a small savings and was less variable than agricultural work that left people dependent upon the weather. Skilled labor in the early factories could get a premium wage and some employers kept their workers working in slack times just to ensure that they would still be there when production demands went up.
Training was also a problem in early factories. Employees could seldom read and were therefore incapable of understanding written directions. Training was typically oral if there was any. Generally, employees learned on the job by observing people who had been working in the job for a longer time. Workers were also often opposed to changes and this was a problem when attempts were made to implement the standardization of parts that is common to mass production.
Motivating workers was an issue in early factories. Many employers believed that high pay reduced output because they thought that workers would stop working as soon as they had enough money. Adam Smith opposed this belief and argued that people would work more if they could get more for their work. Many industries such as textiles used a piece-rate system that tied pay to output. This method worked well in early textile mills where there was a clear connection between work and output. It did not work as well in industries such as mining where team efforts were required.
American System of Manufacturing
Hounshell traces mass production's origins a French General named Jean-Baptiste de Gribeauva, who in 1765 attempted to standardize the manufacturing of French weapons. This led to the U.S. War department experimenting with interchangeable parts at the federal armories in America. The use of mechanization was also encouraged at the federal armories and this system of manufacturing came to be known as American system of manufactures.
Hounshell reports the arms maker Samuel Colt invented a pistol and opened a company to produce and sell it, but was hindered by quality problems. Colt blamed lack of uniformity of parts for the quality problems and he addressed this problem when he opened his new Colt armory in 1855. Colt invested in machinery and attempted the complete mechanization of the revolver manufacturing process in order to achieve product quality and uniformity. Even the use of machine tools was not sufficient to ensure interchangeable parts in the mid-nineteenth century, so jigs and fixtures were often used to test the parts. Interchangeable parts were expensive and their use may not have been profitable for most companies; however, interchangeable parts were considered necessary by the U.S. War Department, therefore they were often funded by tax money. Like the arms industry, the American clock industry of this era attempted to ensure quality and uniformity of parts by the extensive use of a jig and fixture system.
Ford's New Assembly Line
According to Aitken the next major changes in factory work were the coming of Henry Ford and Fredrick Winslow Taylor around the turn of the last century. Henry Ford created the Ford Motor Company in 1903 and his company produced medium-priced automobiles. Fredrick Winslow Taylor attempted to separate the planning function from the actual work performed.
In 1907 Ford gained full control of Ford Motor Company and he instructed his engineers to design a light-weight and low-cost car for the American public. The first ford Model T was sold in 1908 and the annual production rate grew every year until the First World War. Ford had a core of young and talented engineers and mechanics that were given room to experiment with production methods, work layouts, quality control and material handling. Hounshell believes that there would never have been a mass-produced automobile if the early Ford Motor Company engineers had simply copied older manufacturing methods.
Henry Ford began his involvement with the concept of interchangeability while planning the production of his Model N automobile. He considered interchangeability to be essential to increasing the production output. To accomplish this, the hand fitting of parts had to be eliminated. Ford went as far as to boast that every one of the parts that went into his car was all produced exactly alike.
One of Ford's mechanics made machines that the mechanic claimed were simple enough for farmers to use to produce high quality mechanical work. And all parts were checked for conformance with requirements by using jigs and fixtures. At this time in the history of manufacturing, manufacturing was still dependent on inspection and the heavy use of tools such as jigs and check fixtures for the checking of parts.
Ford Motor Company also started setting up machine tools according to the order of operations for a smoother work flow. Gravity slides were installed to move parts from one machine to another by letting them slide down a slide that resembled a rain gutter. Engineers placed brass tags on machine tools identifying the machine tool's location. The information contained on the tags was later used for planning the locations of the machine tools at the new Highland Park factory where production reached 200,000 automobiles per year in 1913. This was also the time of Ford's first experimental assembly line. Typical output for machines was determined and this information was used for scheduling purposes. Additional progress was made by simplifying operations for unskilled machine operators.
Ford engineers simplified tasks by designing parts that could be assembled without the use of skilled fitters. To eliminate the labor-intensive threading of radiator fins into radiators, the engineers built a device that could automatically complete the assembly with one movement. Teams of employees would move from one work station to another, but this resulted in problems when the individuals worked at different speeds. This problem was eliminated by leaving the employees stationary and moving the work pieces to and from them. With the assembly line, the line controlled the speed and not the employees.
On April Fool’s Day in 1913, Ford employees started assembling flywheel magnetos on an assembly line. Some operators performed tasks as simple as tightening a few nuts. The production rate increased from between 35 and 40 magnetos per day to 1,188 per day. There were problems with some operators working too fast and others intentionally working slowly. The engineers wanted to use a piece-rate system so that the slower operators would quit; but the engineers did not think Henry Ford would approve of the piece-rate so they solved the problem by setting the assembly line speed and letting it control the operator's speed. The assembly line cut production time in many departments and the overall assembly time for a Model T engine dropped by more than fifty percent.
Henry Ford started paying production workers five dollars per day to reduce employee turnover that had reached 380 %. Hounshell considers Henry Ford's five-dollar day to be the final step in the move towards mass production. The new assembly line was so distasteful to production workers that Ford Motor Company needed to hire more than nine hundred just to get one hundred because so many would quit in a short time. Henry Ford was also concerned with the growing differences between management pay and worker pay and this as well as labor unrest may have influenced his five dollar day.
Around the time that Henry Ford and the Ford Motor Company were implementing the production line, Fredrick Winslow Taylor was bringing scientific management to industry. According to Peter Drucker, Taylor is very misunderstood and few people appreciate the impact he has had on the world. Taylor felt that workers should receive a larger share of profits and using scientific management to make them more productive was a way to earn better pay; however, Taylor was often opposed by labor unions who objected to his simplification of work because that meant people with fewer skills than their members could perform the work.
Taylor begins his book The Principles of Scientific Management with the claim: “the principle object of management should be to secure the maximum prosperity for the employer, coupled with the maximum prosperity for each employee.” Aitken reports that Taylor, the father of scientific management, was once a foreman and chief engineer at a time when foremen were primarily responsible for ensuring that standards were met by hiring competent people and firing incompetent people. Foremen also needed to ensure that the production output was sufficiently high. Taylor suspected his employees were intentionally working slower than they could work and he attempted to speed them up with the threat of termination, verbal persuasion and a piece-rate system. He also trained unskilled people in the basics of the jobs, but they started working at the same rate as everybody else once they were experienced. Taylor believed that through careful measurement he could determine the rate at which people could work. Unfortunately, the studies performed by Taylor were often more subjective and less scientific than he realized. For example, for experimenting Taylor recommends using people who are used to conducting experiments, but he does not describe how to conduct an experiment or what qualifications the experimenters need other than experience.
Aitken explains Taylor used job analysis and time study to determine the proper work rate for different jobs. Job analysis broke the work down into individual tasks and Taylor attempted to determine which steps were productive. Aitken used the sharpening of a machine tool to illustrate this part of Taylorism. A machinist may consider sharpening his tool to be part of his job, but Taylor looked at tool sharpening as a separate job that could be performed by somebody with less machine skill than the machinist, but who had skills as a tool sharpener.
The Rise of Lean Manufacturing
Shigeo Shingo was one of the people who created lean manufacturing and he was heavily influenced by Taylor's scientific management. Another person who was very influential in the creation of lean manufacturing was Taiichi Ohno of the Toyota Motor Corporation. He says that in the 1930s he heard that it took nine Japanese workers to do the same work as one American worker. He started thinking about the difference and concluded that there must have been a lot of waste in the way manufacturing was done in Japan. This idea was the beginning of the Toyota Production System, which is often called lean manufacturing.
The book The Machine that Changed the World, by Roos, Jones and Womack, explains the next step in the genesis of lean manufacturing was Toyota Motor Corporation’s Eiji Toyoda's 1959 trip to the Ford Motor Company's Rogue plant in Detroit. He observed that the plant could produce 7,000 vehicles in a day at a time when Toyota Motor Corporation had only produced 2,685 vehicles in thirteen years. Toyoda studied the Ford plant and wrote to Japan to say that “there were some possibilities for improvement.”
Roos et al. report that Taiichi Ohno was the genius who implemented lean manufacturing at the Toyota Motor Corporation. He started with stamping operations, which typically required a day for an expert to change the dies. Companies like Ford used many large and expensive dedicated dies that performed only one operation to reduce the need for die changes. Toyota did not have the economies of scale for so many dedicated dies so Ohno designed new dies that could be quickly changed by production workers. Ohno also realized that producing many small batches of stamped parts was cheaper than producing more parts than were needed. This led to reduced inventories and resulted in mistakes being caught much faster because defective parts can accumulate in inventory when thousands of parts are produced and stored before use.
In 1969 it was taking Toyota four hours to change dies that Volkswagen could change in two hours. Ohno wanted Shingeo Shingo to find a way for Toyota to change dies faster than Volkswagen. Shingeo Shingo reduced Toyota’s die change time to an hour and a half; however, Shingeo eventually got the die changing time down to three-minutes.
Ohno could not just implement his new manufacturing method and expect it to work. Lean requires an intelligent workforce that is willing to use initiative if a problem is detected. Mass-production workers typically fail to take initiative and forward information and this would not work in a lean system. Ohno could not force lean on the workers at Toyota and management decided that they must fire a quarter of the work force because of economic conditions. The workers took over the plant and management had to battle a strong union. A compromise was reached: the president of Toyota would take responsibility for the company’s troubles and step down from his position and a quarter of the work force would be terminated. The remaining workers received guaranties of lifetime employment and pay was to be determined by seniority and not by type of job. Employees would also receive a bonus based on the company’s profitability
Ohno realized that workers had become like machinery only in that they had become a fixed cost. This meant that the company must hold onto them in bad economic times, but it also meant that the company could safely train them without worrying that they would leave and take their skills and training with them. Workers in a traditional manufacturing plant perform a few very limited tasks and have no say in what they do. Ohno organized his people into teams that decided how their tasks would be performed and they even performed housekeeping and repairs, tasks which are handled by different departments in traditional manufacturing plants. This resulted in lower labor costs.
American industry thought that Japan's competitive advantage was in robots and low wages as well as support from the Japanese government. In 1980 Ford Motor Company finally realized something was going on in Japan so members of Ford went to visit a Japanese assembly plant to see what was going on. The Ford people observed that Mazda could assemble a car comparable to theirs with 60 percent of the effort and far less quality problems.
Chrysler spent part of the 1980s being supported by the United States government and it failed to implement lean methods. Ford and General Motors were both in severe financial trouble and they used lean methods to help save themselves. Ford learned about lean during its visit to Japan and General Motors learned because of its NUMMI plant, which was a joint venture with Toyota. Japan was successful in launching North American transplants during the 1980s, but Japanese companies preferred to start from scratch because they did not think they could fix traditional mass production plants. The NUMMI plant was the only exception and it had been closed by General Motors two years prior to it becoming a joint venture with the Japanese.
Dertouzos, Lester and Solow say that in 1990 NUMMI was comparable to Japanese plants in productivity and quality in spite of using American workers. NUMMI and other plants like it showed that American workers were not to blame for America's quality crisis during the 1980s. General Motors attempted to implement NUMMI-like lean methods at a plant in Van Nuys, California and failed because General Motors did not implement the job security that should go with lean manufacturing. Aguayo informs us NUMMI was producing 50% more vehicles than a comparable General Motors plant and it had the highest quality of any General Motors plants. General Motors management expected to find high technology at NUMMI, but NUMMI was using old machines and had replaced new machines that General Motors had installed with older machines.
Lean Manufacturing Today
Unfortunately, the tale of NUMMI does not have a happy ending. The plant was closed in 2010 after General Motors pulled out of the joint operation and Toyota decided not to continue the plant alone. Regardless of the fate of NUMMI; lean manufacturing is here to stay. The advantages offered by lean methods are especially important in an economy struggling to exit a recession and in face of competition from lands with low-cost-labor.
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