September, 2013
Q U A L I T Y FA B R I C AT O R S , I N C .
Manufacturing Examiner
Consider This—Henry Ford’s Proven Lessons for
American Industry.
In their quest to understand lean and quality
principles, manufacturers need look no further
than to the father of the automobile production
system.
By William A. Levinson
“Six Sigma’s Growing Pains” underscores the perception that
Six Sigma is little more than an expensive designer label for
plain vanilla quality techniques that have been around for decades or even longer: techniques that delivered overwhelmingly
superior results under Henry Ford’s leadership during the first
part of the 20th century. We would currently know the Toyota
Production System as the Ford Production System had not the
deaths and retirements of key Ford personnel disrupted the
corporate culture.
Taiichi Ohno made no secret of the fact that he learned most of his methods from Ford, and the books that Ford wrote between
1922 and 1930 describe lean manufacturing very explicitly. “My Life and Work” (1922) has a detailed description of the benefits
of just-in-time manufacturing as well as the need to eliminate variation in delivery time to make it work smoothly. It also summarizes effective labor relations in one sentence: “It ought to be the employer’s ambition, as leader, to pay better wages than any
similar line of business, and it ought to be the workman’s ambition to make this possible.”
Ford also claimed to have done what Dr. Eliyahu M. Goldratt’s “The Goal” shows to be impossible: run a balanced factory at
close to 100% capacity. He achieved this by suppressing variation in production and material transfer time to essentially nothing.
Ford also describes design for manufacture, error proofing, motion efficiency, elimination of restrictive job classifications, and
almost every component of a world-class lean manufacturing system.
Lean manufacturing and Six Sigma do not present an either-or-choice because both systems use the same well-recognized
quality improvement techniques. Taguchi’s robust design technique may be a key feature of the Six Sigma toolbox, but Henry
Ford was well aware of the negative impact of variation on any job. Had Taguchi’s methods been available to him, he doubtlessly would have used them to reduce the effect of process variation if he could not get rid of the variation itself. The language
of upper management is the language of money, though, and the bottom lines of the Ford system and Six Sigma speak for
themselves.
Ford’s production chief Charles Sorensen described how the company's minority stockholders made out “in round numbers”
when Ford bought them out in 1919. Somebody who bought a dollar’s worth of Ford stock in 1903 walked away with $2,500 in
1919. This corresponds to an annual compounded gain of 63%, and it does not even account for dividends. Ford also quadrupled his workers’ wages in 20 years (a compounded annual growth rate of 7.2%). The postwar depression of 1918 had little perceptible effect on the company’s fortunes, thus demonstrating that Ford’s methods worked even under very unfavorable economic conditions.
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Manufacturing Examiner
Continued From Page 1
Six Sigma has not, in contrast, demonstrated that it can stand up to
bad economic conditions. Motorola moved its cellphone manufacturing operations to Mexico in 2001: “We’re moving our manufacturing
to lower-cost facilities so that we can be more competitive” (Fortune,
January 16, 2001). Most General Electric household appliances are
made offshore. Maytag, which registered LeanSigma as a service
mark, also closed U.S. manufacturing facilities and moved operations offshore. Ford believed (and proved) that effective use of the
American worker’s time made his or her relatively high wages irrelevant, so he would have regarded these three examples as prima
facie evidence that Six Sigma is far overrated. Ford’s system worked
across the board, it worked all the time, and it worked in every industry to which he applied it. The ability of a single farmer to feed
more than 100 people comes directly from Ford’s mechanization of
agriculture.
This does not mean there is anything wrong with the contents of the six Sigma toolbox. Mikel Harry’s and Richard Schroeder’s
“Six Sigma, The Breakthrough Management Strategy Revolutionizing The World’s Top Corporations” (2000) cites standardization
and best practice deployment as central elements of Six Sigma, but they were centerpieces of Henry Ford’s system more than
eight decades earlier. There is also no doubt that Six Sigma can deliver results in situations for which its measurement-intensive
methods (e.g. gap analysis) are designed.
Ford’s system, in contrast, relied heavily on common sense and on the frontline manufacturing worker’s ability to identify improvement opportunities even where no measurable “gap” existed. If a workstation produced 100% quality but the worker had to take
even two steps to move raw materials or finished goods, either the worker in question or a more experienced co-worker would
realize that this was a problem; a person can be paid to make parts, but not to walk or to move parts. Metal turnings or shavings
from machining operations attracted instant attention because, even in the absence of a quality “gap,” the process converted
some of the stock into waste instead of parts. Arnold and Faroute’s “Ford Methods and the Ford Shops” stated this explicitly in
1915.
Ford threw nothing away, not even scrap wood or slag from the blast furnaces, from which he could extract further value. A distillation plant that extracted saleable chemicals from the former brought in money to pay 2000 workers. The latter was converted
into cement or paving materials for resale. Ford paid less than nothing for the coke for his blast furnaces because the chemicals
he extracted from the coal were worth more than he paid for the coal. These practices are in fact what we now know as “green
manufacturing,” and Ford used them in an era in which he could have legally thrown into the nearest river whatever wouldn’t go
up the smokestack.
The only deficiency in Ford’s system was the absence of what we would now call a management system standard similar to ISO
9001:2008. Ford’s standardization of work methods was meticulous but the overall system was apparently dependent on a handful of key individuals. Ford suffered a series of strokes toward the end of his life. His son Edsel predeceased him, and Sorensen
retired at about the same time. Japanese industrialists were astonished several decades later
when visiting Ford executives did not recognize the Toyota Production System as their own.
Results speak for themselves, and those of the Ford/Toyota production system versus those
of Six Sigma cannot speak more clearly. This does not make Ford/Toyota and Six Sigma an
either/or choice because techniques are mutually supporting and synergistic. It means only
that it is better to rely on Henry Ford’s proven engineering and management practices than on
something like Six Sigma that apparently cannot stand on its own when the going gets really
tough.
William A. Levinson, P.E. is the author of “Henry Ford’s Lean Vision: Enduring
Principles from the First Ford Motor Plant”.
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Manufacturing Examiner
Procurement’s Best-Priced Deal May Stifle Innovation
By Michael Schrage
Every single innovation conversation I’ve had recently with business unit leaders, product managers and/or marketing executives
invariably focuses on the importance of partnership and collaboration with their best suppliers and vendors. If anything, they wish
their suppliers came forward with even more actionable and innovative ideas. Conversely, I have not had one conversation with a
procurement executive or officer for whom an innovation partnership with vendors was mentioned as a corporate priority.
When I politely point out procurement’s role in selecting, shaping
and paying for partnerships, the answer I get astonishes: We can
reimburse our suppliers and partners out of another budget. In
other words, innovation occurs when we bypass or disintermediate
procurement. How healthy is that? What kind of cultural—and financial—signal does that send both to the firm and its vendors
alike?
This dichotomy—schizophrenia is actually a better word—is a surefire invitation to conflict and dysfunction. When suppliers seized by a great idea toil overnight and weekends to present it, procurement argues that this wasn’t part of the
budget and behaves (quite reasonably) as if it is going the extra mile to compensate the supplier.
This dynamic is unsustainable. Either procurement has to become a genuine facilitator, enabler and champion of the
innovation ecosystem or companies have to downgrade and deemphasize the procurement process in order to make
innovation a known corporate priority.
Can strong procurement departments and strong innovation cultures co-exist? Yes, but only if the organization is honest about whether it creates more value by successful procurement or successful innovation.
The challenge is making procurement as explicitly accountable for enabling innovation as it is for controlling costs.
Asymmetry is the enemy. Procurement’s people have to enjoy comparable recognition and rewards for making a new
product or service profitable as for , say, successfully consolidating a supplier segment or driving cost out of an outsourcing deal.
If this means that procurement has to be a better real-time partner to, say, manufacturing or marketing to make sure
the money’s there to pilot a reprogrammed machine tool or a Cloud-enabled social media promotion, then good. I
have never come across a procurement department with a post-procurement “innovation budget” to fund emergent
ideas or supplier-driven proposals.
Similarly, other parts of the enterprises have to go beyond giving their requirements for procurement to engage in
more productive collaboration. “Gaming” procurement to guarantee that a desired vendor becomes the “supplier of
choice” is just as destructively manipulative as making “price” the centerpiece of a complex acquisition or marketing
partnership. Successful partnerships mean that selection is the beginning, rather than the effective end, of how procurement’s effectiveness is evaluated.
The real-world drawback with this declaration of innovation interdependence is neither cultural nor operational. It’s
leadership. When procurement and marketing or procurement and operations disagree about innovation opportunities
truly offer value for money, top management will frequently have to intervene. Realigning expectations around the
most effective relationships between innovation and price is something top management must choose to do. This may
seem counterintuitive in a time when executives are encouraged to delegate and empower. But, alas, the innovation
disintermediation and disempowerment provoked by procurers with their eyes a little too focused on the bottom line
have demanded this fundamental shift. If top management isn’t having candid conversations on precisely this issue,
then the operational reality is that procurement is running innovation.
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Manufacturing Examiner
The Ant Philosophy…..
By Jim Rohn
Over the years I’ve been teaching kids about a simple but powerful concept—
the ant philosophy. I think everybody should study ants. They have an
amazing four-part philosophy, and here is the first part: ants never quit. That’s
a good philosophy. If they’re headed somewhere and you try to stop them,
they’ll look for another way. They’ll climb over, under, or around. They keep
looking for another way. What a neat philosophy, to never quit looking for a
way to get where you’re supposed to go.
Second, ants think winter all summer. That’s an important perspective. You
can’t be so naïve as to think summer will last forever. So ants gather their
winter food in the middle of summer.
The third part of the ant philosophy is that ants think summer all winter. That
is so important. During the winter, ants remind themselves, “This won’t last
long: we’ll soon be out of here.” And the first warm day, the ants are out. If it
turns cold again, they’ll dive back down, but then they come out the first warm
day. They can’t wait to get out.
And here’s the last part of the ant philosophy. How much will an ant gather during the summer to prepare for the winter? All
he possibly can. What an incredible philosophy, the “all-you-possibly-can” philosophy.
Wow, what a great philosophy to have—-the ant philosophy. Never give up, look ahead, stay positive and do all you can.
About Quality Fabricators…...
Since 1973 Quality Fabricators, Inc. has been a leader in the fabrication and machining of precision metal products. While we
have grown from a 5000 sq. ft.,3 person job shop to over 120,000 sq. ft. value added business partner, we still have that focuses
on the personal touch that puts our customers first. What has advanced with our growth is our use of the latest technology and a
dedicated staff which brings a wealth of engineering and manufacturing capabilities. We pride ourselves on getting to know our
customers and their needs. We do this by understanding their requirements from the design through running of quick turn
prototypes to running low, medium, and large production volumes. As part of our culture, the staff continually reviews these
designs to exceed the customer’s expectations. These reviews generally result in a better design for ease of fabrication, higher
quality material and finishes and improved functionality for the customer. Our manufacturing floor takes advantage of lean
principles including; cellular manufacturing, efficient work flow patterns and visual inventory pull systems.
We deliver value-added services that enable customers to manage, improve and grow their businesses.
1035 W. Fullerton Ave.
Addison, IL. 60101
Phone: 630-543-0540
Fax: 630-543-1064
Mobile: 224-612-1149
E-mail: [email protected]