Continuous Process Continuous Process Improvement: Improvement:

The Lessons of HistoryThe Lessons of History

SCM 494SCM 494

Dr. Ron Tibben-LembkeDr. Ron Tibben-Lembke

Growth of Service EconomyGrowth of Service Economy

0

10

20

30

40

50

60

70

80

1850 75 1900 25 50 75 2000

Services

Industry

Farming

Continuous Process ImprovementContinuous 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 Now, you must be looking for ways to make

your customer happy, and meet their future your customer happy, and meet their future needs needs

If you aren’t someone else is, and is going to If you aren’t someone else is, and is going to take your businesstake your business

Cotton Gin at WorkCotton Gin at Work

Eli WhitneyEli Whitney introduced interchangeable introduced interchangeable

parts in large musket contract parts in large musket contract for U.S. Army for U.S. Army

Interchangeable parts the true Interchangeable parts the true secret of Ford’s successsecret of Ford’s success

Made possible by advances in Made possible by advances in measurement and tool steelmeasurement and tool steel

Beginning of StandardsBeginning of Standards

Before standardized parts, need ScrewsBefore standardized parts, need Screws 1860s Machine Tool industry: Silicon Valley 1860s Machine Tool industry: Silicon Valley

of its dayof its day All screws custom made by tool & die shops All screws custom made by tool & die shops

according to what they thought bestaccording to what they thought best William Sellers: 1864 “On a Uniform System William Sellers: 1864 “On a Uniform System

of Screw Threads” of Screw Threads”

Sellers vs. WhitworthSellers vs. Whitworth

3 cutters & 2 lathes vs. 1 cutter & 1 lathe3 cutters & 2 lathes vs. 1 cutter & 1 lathe Simple geometry vs. difficultSimple geometry vs. difficult Rounded top vs. straight: ease of manufacturing, ease of assemblyRounded top vs. straight: ease of manufacturing, ease of assembly

Not Just What you KnowNot Just What you Know

Machine tool makers didn’t want to be Machine tool makers didn’t want to be commoditized like gun makerscommoditized 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 Navy Board found it superior, asked Singer

Sewing Machine, Baldwin Locomotive which Sewing Machine, Baldwin Locomotive which would win (already adopted).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 British tanks & trucks couldn’t be repaired in

WWII because Britain adopted WhitworthWWII because Britain adopted Whitworth

Frederick W. TaylorFrederick W. Taylor Frederick W. Taylor: Frederick W. Taylor:

Father of “Scientific Management”Father of “Scientific Management” Find ways to improve work environment and work Find ways to improve work environment and work

processesprocesses Quantify, measure & track everything:Quantify, measure & track everything:

Time required to haul wheelbarrow:Time required to haul wheelbarrow:

B p aL

0 51 0 004827

127. . .distance hauled

Factory LifeFactory Life

“Schmidt”

Taylor’s Factory

Frank and Lillian GilbrethFrank and Lillian Gilbreth Systematically study a work environment and find the best Systematically study a work environment and find the best

way to achieve a particular taskway to achieve a particular task With Taylor, pioneered “industrial engineering” -- time and With Taylor, pioneered “industrial engineering” -- time and

motion studiesmotion studies ““Cheaper by the Dozen”Cheaper by the Dozen”

Motion CaptureMotion Capture

Lights illuminate key motion jointsLights illuminate key motion joints For Computer Generation, convert to 3DFor Computer Generation, convert to 3D

Barry ZitoBarry Zito

Chronocyclegraph light-1914Chronocyclegraph light-1914

BricklayerBricklayer

TypesetterTypesetter

Drill PressDrill Press

Pencil HolderPencil Holder

Color coded slotsColor coded slots Groove for grabbing pencilGroove for grabbing pencil

Ergonomic chairsErgonomic chairs

Andrew CarnegieAndrew Carnegie

Telegraph operator to RR division Telegraph operator to RR division superintendentsuperintendent

Adopted latest technology, built first steel Adopted latest technology, built first steel plant laid out to optimize flowplant laid out to optimize flow

Focused on knowing, lowering unit costFocused on knowing, lowering unit cost Raise prices with everyone else in booms, Raise prices with everyone else in booms,

slash prices in recessionslash prices in recession

Andrew CarnegieAndrew CarnegieProduction: US Production: US EnglandEngland

18681868 8,5008,500 111,000111,00019021902 9,138,0009,138,000 1,862,0001,862,000

Steel Prices: (per ton)Steel Prices: (per ton)18701870 $100$10018901890 $12$12

How? How? Continuous Process ImprovementContinuous Process Improvement

The Richest Man in The Richest Man in the Worldthe World

Found out strike organizers, fired beforeFound out strike organizers, fired before 1886 “Triumphant Democracy”, Forum magazine- workers’ 1886 “Triumphant Democracy”, Forum magazine- workers’

right to unionizeright to unionize 1889 “Gospel of Wealth:” rich need to help the poor ($25m 1889 “Gospel of Wealth:” rich need to help the poor ($25m

annual income)annual income) 1892 Homestead strike: 12 hour gunfight, Pinkerton defeated 1892 Homestead strike: 12 hour gunfight, Pinkerton defeated

(12 died), state militia called in, strike breakers hired(12 died), state militia called in, strike breakers hired 1901 sells out to J.P. Morgan: $480m1901 sells out to J.P. Morgan: $480m Built 2,500 libraries. “The man who dies rich dies Built 2,500 libraries. “The man who dies rich dies

disgraced.”disgraced.” 1919 dies, having given away 90%1919 dies, having given away 90%

Skibo CastleSkibo Castle

Henry FordHenry Ford

Continuous Process ImprovementContinuous Process Improvement Advances in metal cutting allowed him to cut Advances in metal cutting allowed him to cut

pre-hardened steel, produce identical partspre-hardened steel, produce identical parts Standardized parts facilitated standardization of Standardized parts facilitated standardization of

jobs, moving assembly linejobs, moving assembly line Model T: Model T: 1908 $850 1908 $850

1920’s: $2501920’s: $250

Ford’s Rouge PlantFord’s Rouge Plant

Vertical IntegrationVertical 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 MaxDetails to the Max

In his autobiographies “My Life and Work” (1922), In his autobiographies “My Life and Work” (1922), and “Today and Tomorrow” (1926), Ford gives and “Today and Tomorrow” (1926), Ford gives great detail on innovations he and his company great detail on innovations he and his company have made, including:have made, including:

Glass making, Artificial leatherGlass making, Artificial leather Steering wheels out of ForditeSteering wheels out of Fordite heat treating -- saved $36m in 4 years (1922)heat treating -- saved $36m in 4 years (1922) Forging parts, wiremakingForging parts, wiremaking Riveting, bronze bushings, springsRiveting, bronze bushings, springs

Managing WorkersManaging 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 EmployeesPaying 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 WorkMindless 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 WorkMindless WorkWhen 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 103-4.

Guess the Expert(s)Guess the Expert(s)

Andrew Frederick Henry

Shigeo Frank & Lillian

1. Product Flow1. 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. Inventory2. 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 Buying3. 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. Flexibility4. 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. Standardization5. 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…The envelope please…

Answer: Henry FordAnswer: Henry Ford

1. ML&W p. 143-4

2. T&T pp. 108-109

3. ML&W p. 143-4

4. T&T p. 81

5. T&T p. 122

The Lessons of HistoryThe Lessons of History

Continuously improving your products, your Continuously improving your products, your services is the only way you will surviveservices is the only way you will survive Ignore your customers, and they’ll go awayIgnore your customers, and they’ll go away

Those who do not learn from the past are Those who do not learn from the past are doomed to repeat it.doomed to repeat it.