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From Mass Production to Lean Manufacturing

In the early 19th century, a revolution took place that changed the methods of industrial production. The shift was made from handcraft to industrial mass production, thanks to the innovative genius of Henry Ford.

The concepts introduced by Ford involved primarily the division of labor into standard single tasks in order to reduce the need for employee training, production lines to reduce the time used to transport semi-finished components, and machines that performed only one type of task.

The primary objectives was to reduce the dependancy of skilled workers as far as possible. In this way, financial benefits were materialised and the cost per unit for automobiles fell considerably.

At the same time, a new class of workers was formed who carried out simple and repeated work tasks. These tasks required minimal levels of knowledge and were correspondingly not very challenging for the workforce. The result was that automobile companies came to regard labor as a variable cost.

The labor component could easily be increased or reduced on very short notice, and one was then able to fit the use of labor according to changes in demand. This required access to a large pool of unskilled labor, something that the USA had in abundance up until the time of the Great Depression in the 1930s.

This would prove to be a formidable challenge for Henry Ford.

However, ths new trend in industrial operation, although a revolution compared to previous methods, was not entirely a benefit.

One challenge was the fact that the work methods were largely inflexible since a machine could only be used for one task.

This led to a situation where the customer’s freedom of choice and their wishes regarding the end product were not given any special consideration – something best described in the well-known quotation by Henry Ford, “Any customer can have a car painted any colour that he wants so long as it is black.”

Henry Ford was obliged to produce a limited amount of automobile types in great numbers in order to keep his unit costs low. This meant that it was not possible to adapt automobiles that met a variety of different needs.

Last but not least, mass production had a huge problem with quality.

In all the stages in production, products were manufactured in large batches to ensure maximum utilization of manufacturing equipment. The downside was that if a defect occurred, it usually was not discovered until after a large number of components with exactly that same error had already been produced.

In addition, there was a risk that the defective product could be sent futher down the line and built into assembled consumer products. The mass production solution to this problem was to have workers mobilised at the end of the production line who did only one thing: Repair brand new cars.

A considerable amount of time was spent in fixing defects that should not have occurred in the first place – a situation that was wasteful and very costly.

These were the problems that Toyota captured and learned from visiting Ford plants in the USA.

Toyota’s automobile production picked up speed in Japan after World War II. At this time, the domestic market was small and fragmented, workers resisted being regarded as only a variable cost as there was enough employment for everybody, and there was a complete lack of capital to purchase Western technology.

Something had to be done in a different way. This mindset charactised Toyota’s development and production in many areas, and the result was what we know today as the “Toyota Production System”.

The tremendous forward movement, with focus on quality, efficiency, and elimination of waste, got noticed in the United States, specifically among the major automobile manufacturers in the mid-1980s.

The automobile industry in the west realised it was beaten in all disciplines of industrial operations. Hence, a major academic and practical study was initiated with MIT as a partner. It aimed at learning from the Japanese automobile industry, and especially from Toyota.