Competitive Production Systemsfrom Ford to Toyota

2012-10-04

Anders Hellström

School of Innovation, Design and Engineering

1KPP202

Lecture 9 – Thur 4 Oct 13:15-16:15

• From Ford to Toyota• Organizational Change, 5 steps• Lean implementation, examples, Swedish LeanInitiative, Produktionslyftet• Groups status of INL 2 part B• Questions and discussionsAnders Hellström

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• What is a competitive production system?

• Take example from– Pharmaceutical industry– University education– Car industry

for 10 minutes…

Discuss in groups of 2-3 persons

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Economic activity within Manufacturing 1998 – 2008, at constant 1990 prices in US dollars. Source: UN Stats

A world wide 42% increase in manufacturing activity (at constant prices)

1998-2008. 36% increase in GDP

world wide 1998-2008(gross domestic product) 4

Globally increasing

manu-facturingactivity

5Lean production PPU402

A historic developmentCraft production• Make what the customer wants

=> Large demand for products with large scale manufacturing• Mass Production - Henry Ford

=> The challenge of producing customized products with efficient manufacturing• Lean Production – Taiichi Ohno

=> A business environment dominated by change and uncertainty

Is it possible to compete with craftproduction today?

Discussion

Craft production today…

Aston Martin, Koenigsegg etc.

… precision-made and designed in-house…… hand-made metal and carbon fibre …… craftsmen that produce low volumes of incredibly high quality…

The industrial revolution• The industrial breakthrough is often dated to

the end of the 18th century in England, the textile industry - forerunner– Changes in material supply

• The colonization gave possibilities for cheap material – cotton– Changes in ways to distribute products

• New ways for transportation gave possibilities to deliver products far away– Changes in the labor market

• Large-scale agriculture with increased productivity and the decreased mortality rates gave urbanization and a surplus of labor

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• Henry Ford is often said to be one of thepersons behind the development of massproduction– it was in Detroit that the first real mass-productive

production system for cars was born - Ford’s model Tbegan to be produced in 1908

A historic development

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A historic development

1800 – craft production of automobiles

No car dealers Hand built in small numbers Specified according to customer demands No standards – measuring problems => dimensional creep

A luxury item

• Henry Ford was 40 years old when he founded the Ford Motor Company, which would go on to become one of the world's largest and most profitable companies.

• Ford was launched in a converted factory in 1903 with $28,000 in cash from twelve investors.

• During its early years, the company produced just a few cars a day at its factory on Mack Avenue in Detroit. Groups of two or three men worked on each car from components made to order by other companies. Henry Ford (ca. 1919)

Henry Ford

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FORDMass production – Model T (1908)

Manufacturer Ford Motor CompanyProduction 1908-1927Predecessor Ford Model SSuccessor Ford Model A

Body style(s) Touring,, roadster, ton, closed cab ton truck, coupé, two door, center door, station wagon (SUV), convertible

Engine(s) 177 in³ (2.9 L) straight-4, 20 hpTransmission(s) Rear wheel drive, planetary gear, 2 forward speedsCurb weight 1,200 pounds (540 kg)Designer Henry Ford, Childe Harold Wills, Joseph A. Galamb and Eugene Farkas

Mass production, how?– The key to mass production of automotives:

• precision manufacturing• interchangeability of components• the simplicity of attaching them together• division of labor - the demand for versatile labor was

not important when the assembly operations werebroken down so that anyone could perform them

• the human being became interchangeable and insome cases eliminated by automation

• later - the moving or continuous assembly line

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Precision manufacturing Measuring standards e.g. Johansson gauges

There are only two people I take off my hat to. One is the president of the United States and the other is Mr. Johansson from Eskilstuna, Sweden.– Henry M. Leland, around 1920.

At the end of his career, in 1923, Johansson started to work for Henry Ford at the Ford Motor Company, in Dearborn, Michigan.

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Interchangeable parts• Eli Whitney (1780s-1820s) is sometimes credited with developing the

armory system of manufacturing in 1801, using the ideas of division of labor, engineering tolerance, and interchangeable parts to create assemblies from parts in a repeatable manner.

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The assembly line

• The assembly line concept was not "invented" at one time by one person, and no one person is the "father" of it.

• It has been independently redeveloped throughout history based on logic. Its exponentially larger development at the end of the 19th century and beginning of the 20th occurred among various people over decades, as other aspects of technology allowed.

• The assembly line was introduced to Ford by William C. Klann upon his return from visiting a slaughterhouse at Chicago's Union Stock Yards and viewing what was referred to as the "disassembly line" where animals were cut apart as they moved along a conveyor.

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• F. W. Taylor (1856-1915)– Published "Scientific Management" in 1911 –

factories are managed through scientific methods rather than by use of the empirical “rule of thumb”

– Taylor created planning departments, staffedthem with engineers

– Task allocation is the concept that breaking task into smaller and smaller tasks allows the determination of the optimum solution to the task

– Taylor have been credited with destroying the soul of work, of dehumanizing factories, making men into automatons

Scientific Management

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• F. W. Taylor (1856-1915)– Taylor’s attitude towards workers was full

of negative bias [Taylor, 1911]:“..in the majority of cases this mandeliberately plans to do as little as hesafely can”

– Even though Taylor has been extensively criticized, it is a fact that he had great impact on the view of manufacturing and the way to run operations

Scientific Management

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What do you think of Taylor and his principles?

Discussion

A historic development

Mass Production - disadvantagesExtreme work specialization and task allocation gave bad working conditions with monotonic and boring tasks in a high tempo

As a consequence a number of disadvantages with the mass production system surfaced:

High turnover of employeesAbsence and injuries due to the work environmentPoor motivation to improve the processesBuffers/work in progress

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Mass production dissadvantages

• In January 1914, Ford solved the employee turnover problem by doubling pay to $5 a day and cutting shifts from nine hours to an eight hour day for a 5 day work week (which also increased sales; a line worker could buy a T with under four months' pay).

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A historic development

Model T By 1918 half of all cars in America were Model T Large factory in Highland park 15 000 000 automobiles with the Model T engine ”You can paint it any color, so long as it’s black”

Ford succeeded in his quest to build a car for the masses!

A historic development The Ford dilemma

Bad organizationCentralizationTop-management – himslefThe concept was unworkable – almost drove the

company under in the 1930s when his mental powers declined

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A historic development

Mass Production – on it’s peak 1955

7 000 000 cars sold in USA Ford, GM, Chrysler - 95% of sales 6 models accounted for 80% of all cars sold

Is mass production still used today?

Why?

Discussion

Development towards ”Lean”

JITKanbanTQM

Kaizen

• With an increasing competition in combination with adecrease in the demand for products the industrial growthrate decreased from the 1960’s and onwards

• Labor efficiency by itself was no longer enough to compete

• A number of market trends influenced this development:

– A growing demand for customized products– Increasing quality demands– Market demands for new technology– The need for short and reliable delivery times

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A historic development

Toyota

Sakichi Toyoda founded the Toyoda Spinning and Weaving Company in 1918 Sakichi Toyoda invented Toyoda Model G Automatic Loom in 1924

- Non-stop shuttle change type – example of Jidoka- Jidoka - "intelligent automation" or "automation with a human touch”

Kiichiro Toyoda traveled to Europe and the United States to investigate automobiles Sold patent rights – price 100 000 English pounds

A historic development

Toyota

Vehicles were originally sold under the name "Toyoda”. Toyoda Model AA Sedan announced in 1936 Toyota Motor Company founded in 1937 Public contest for a new name – 27 000 suggestions Honsha Plant started operation in 1938 Trucks to military because of WW2

A historic development

Mass Production did not work in Japan

A tiny domestic market – demanded a wide range of vehicles Strong tradition in craftmanship – not interchangable humansWar – starved for capital Competition in mainly the USA

A historic development

Toyota – finacial crisis/labor dispute 1950

Compromise ¼ of workforce was terminated Kiichiro Toyoda resigned to take responsibility Reamaining emplyees two guarantees:

- life-time emplyoment- pay steeply graded by seniority not specific job functions

A historic development

Eiji Toyoda (40’s -)

Taiichi Ohno (40’s -)

Toyota Production System (60’s -)

Lean Production (The Machine that changed

the World – 1990)

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A historic development

Taiichi Ohno (1912-1990)

Workforce – short term fixed cost Detroit - muda (waste) None of the specialist was actually adding value Organized workers into teams with team leader Improvements - responsibilityA cord above every work station – stop the assembly line 5 why’s

Order in Money inProduction

time

The fundamental principle for Toyota

”All we do is focused on reducing waste in the time line from order to delivery”- Taiichi Ohno

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A historic development

Toyota Production System - improvements

- High-quality manufacturing and high-quality products- TQM – Total Quality Management- Continuous improvements- Long term agreements with suppliers- Teamwork

The House – Toyota Production System

Toyota Way Philosophy36

Lean Tools, to understand and to be able to describe and perform

• 5S• TPM (Total Productive Maintenance)• Andon• Standardized processes• Flexible staffing• Kanban• One-piece Flow• Pareto/Gannt/Ishikawa-diagrams etc• Pokayoke• SMED (Single Minute Exchange of Dies)• SPC (Statistical Process Control)• Takt• ...

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Is lean a toolbox or a philosphy?

Lean Tools

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The Toyota Way

• The Toyota Way describes the 14 principles that form the foundation of this uniquely successful management style. Popular as a reference, well spread and systematic.

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The Challenge of the Manufacturing Industry• Demand of consumers are changing more rapidly than ever before• Uncertainty of what products and what volumes

to produce are larger than before• Product life cycles are getting shorter

Quick change-over in production between different productsQuick phase in of new products

New technology Changemanagement

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Summary Historic development - industrial changes have been evolving and

influencing manufacturing industries over many years Mechanization, surplus of labor, new ways for transportation, and

the access to raw material enabled the industrial revolution and a change from craft production to mass production

The mass production era in the 20th century was enabled through interchangeability of parts that enabled the moving assembly line among other things

The focus of management in the mass production systems was labor efficiency and “Tayloristic” influences as means to increase productivity

Lean Production was born from the challenge of producing customized products with a flexible production system with less cost than a mass-producer

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Self studies See The Toyota Way book – study questions KPP202, see

homepage! They aim to stimulate your own studies of the text book.

Large part of the written examination will consist of the same or similar question.

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