BULLONG, JOYLYN CBME1-2A-1-WS-7:30-11:30AM

EISMA, ERIKA COA 2A

LELIS, GENEVA

PICA, CHERSEA LIZETTE R.

SOMERA, STEFAN

OPERATIONS
MANAGEMENT AND
TQM

(LESSON 4: Historical Foundations

of Management)
 Henry Ford (July 30, 1863 – April 7, 1947)

History and Contribution

Henry Ford was an American industrialist and business magnate,

founder of the Ford Motor Company, and chief developer of the assembly line
technique of mass production. By creating the first automobile that middle-class
Americans could afford, he converted the automobile from an expensive
curiosity into an accessible conveyance that profoundly impacted the
landscape of the 20th century.

Henry Ford's success isn't just a story in a history book. What he did was
built on a strong foundation of good business practices. Everything from how he
treated his customers to his management of employees contributed to the rise of
Ford Motor Company.
THE MOVING ASSEMBLY LINE: THE CONTRIBUTION OF HENRY FORD IN
MANUFACTURING

The moving assembly line is a key contribution of Henry Ford in

manufacturing. Note that this manufacturing process involves assembling several
parts in a step-by-step fashion. Each part moves from workstation to workstation
and with every movement, several parts were assembled together until they
become whole. In other words, parts are added or assembled in sequence until
a final assembly is produced.

In his autobiography “My Life and Work” first published in 1922, Ford
mentioned that there are three principles of assembly. The first one involve
placing tools and workers in sequence of the operation so that each part travels
the least possible distance while in the process of finishing.

The second principle involves using work slides or some other form of
carrier so that when a worker completes his or her operation, he or she drops the
semi-finished assembly always in the same place. The third principle is about using
sliding assembling lines by which the parts to be assembled are delivered at
convenient distances.

A key advantage of the moving assembly line is that it allows faster

assembly with less labor compared to having workers carry parts to a single and
central workstation. It also takes advantage of compartmentalized work through
division of labor within the workforce. Ford Motor was able to inexpensively
produce larger outputs using this manufacturing process.

Note that there were several small automakers that emerged in the U.S. between
1890 and 1910. Ford Motor competed with these manufacturers. However,
through the implementation of the assembly line in its manufacturing process, the
company was able to outcompete other automakers.

Ford Motor introduced the Model T in 1908. This was a remarkable vehicle. It was
simple and light but durable enough to drive on primitive roads. The moving
assembly line made this vehicle more popular. Because the novel manufacturing
process allowed cost-effective and time-efficient mass production, the company
was able to lower the unit price of Model T and make it affordable for the average
consumer.
FORDISM: THE SOCIOECONOMIC CONTRIBUTIONS OF HENRY FORD IN THE UNITED
STATES

The moving assembly line immediately became a manufacturing norm

around the world. During the 20th century, manufacturers were able to lower the
cost of their operation while maintaining desired production levels. It also
standardized mass production.

In the United States, this manufacturing process improved the profitability

of manufacturers, thus allowing them to expand their operation, hire more
workers, raise salaries, and lower the price of goods. The greater impact was
economic growth driven by industrialization. Henry Ford and other manufacturers
fueled the American economy by improving productivity. They also raised
standards of living by creating more high-paying jobs. It is important to highlight
the fact that Ford employed a concept that revolved around mass production of
inexpensive goods and high wages for workers. Other manufacturers followed
suit. Observers called this concept Fordism.

Fordism is a notable contribution of Ford in the American society and

economy because it led to the emergence of novel business practices and
considerations that affected the social and economic profile of the U.S. The 1998
documentary “People’s Century: On The Line” produced by WGBH Boston
illustrated the socioeconomic impacts of Fordism. For example, the opening of a
Ford factory in Detroit during the 1900s resulted in a population boom as workers
and their families migrated to grab the available job opportunities.

In addition, the social composition of Detroit and other similar cities

changed as people from different ethnic backgrounds and cultural heritage
became part of the larger workforce. Note that a typical Ford factory employed
white Americans, African-Americans, and migrant Germans and Italians, among
others. Mass consumption also became a norm. The 20th century American
industrialization also marked the emergence of the American consumer society.
Companies such as Ford granted workers with buying power enough for them to
consume non-necessity goods. Ford workers could actually buy a Ford vehicle.
MAJOR DRAWBACKS: THE DOWNSIDE OF THE MOVING ASSEMBLY LINE AND
FORDISM

The positive contributions of Henry Ford in manufacturing and the

overall American socioeconomic landscape were undeniably. But there were
drawbacks. Ford Motor and other manufacturers limited the freedom of their
workers to join labor unions in an attempt to keep them from protesting against
policies and working conditions. However, in exchange for this limited freedom,
these industrialists and capitalists promoted the importance of having high
salaries and the possession of material objects. Henry Ford in fact encouraged his
workers to set aside a part of their salaries in order to save up for a new car. There
was an initial excitement and acceptance over the new socioeconomic setup.
However, the revitalized business or manufacturing processes created a
workplace environment that was boring and taxing. Furthermore, the
compartmentalization of work processes and division of labor brought by the
moving assembly line alienated workers. People soon became unhappy and
dissatisfied despite their higher standards of living.

According to the book “Levels of Socioeconomic Development Theory”

by David Jaffee, alienation is a natural result of industrialization, particularly
because of the division of labor and functional independence. This creates
powerlessness, meaninglessness, and social isolation. The documentary “People’s
Century: On The Line” also featured several former Ford workers who mentioned
that doing the same repeated job for several hours a day made their work boring
and taxing.

In summary, although Henry Ford was partly instrumental in fueling

economic growth and improving standards of living, the manufacturing process
and concepts or practices he popularized resulted in the exploitation of workers.
His industrialists and capitalist contemporaries also stirred the creation of values or
norms that leaned toward materialistic tendencies, thus paving the way for the
emergence of consumerism. Of course, it is still important to note that
consumerism is a necessary consequence of industrialism.
 Applications

MASS PRODUCTION

Mass production is system in which low skilled workers use specialized machinery
to produce high volumes of standardized goods.

ADVANTAGESOF MASS PRODUCTION

• High volume of production.

• Faster rate of production.

• Semi-skilled labor can be used.

• Economies of scale.

• The probability of human error and variation is also reduced.

• Product is made in advance and available for purchase.

DISADVANTAGESOF MASS PRODUCTION

• Highly expensive machinery

• It is inflexible because it is difficult to alter a design or production process after

a production line is implemented.

• All products produced on one production line will be identical

• Introducing variety to satisfy customers tastes is not easy

Additional Application:

1. Know Your Market

“If I had simply asked people what they wanted, they would have asked me for
faster horses!” – Henry Ford
Knowing your target market goes much deeper than simply knowing what they
want. Ford believed in offering his customers solutions to problems they didn’t
even know they had. Henry Ford knew he was going to build an automobile.
Before he built it, though, he conducted extensive research on who would buy it,
how much they could afford to pay, and what they would want and need in a
car. By the time the Model T was introduced, Ford already knew he had a large
market of potential buyers, what features would make the buy, and what to
charge them.

2. Efficiency Is King

“It has been my observation that most people get ahead during the time that
others waste.” – Henry Ford

From mass production via the assembly line to economical personal effort, Ford
and his company were captains of efficiency. The assembly line allowed Ford
Motor Company to produce automobiles quickly. Ford’s treatment of his workers
allowed the company to retain employees and produce quality. These two
factors combined to create ultimate efficiency. When Ford introduced his
assembly line at the first Michigan plant in 1913, his production of the Model T
doubled. Without hiring additional labor or skimping on quality, this feat is huge!
The improved production allowed Ford to drastically increase the affordability of
his car, dropping the price from $800 to $350, and increase his employees’ wages
from $2.34 to $5 a day without hurting his bottom line.

3. Focus On Quality

“Quality means doing it right when no one is looking.' – Henry Ford

When you’re excited about your product, it can be easy to find yourself in a rush
to launch. But to be really passionate involves a lot of due diligence. Ford insisted
that if his name was gonna be on the company, the brand would stand for
quality. He wanted to be 100% confident in his automobiles before they were sold.
Ethics aside, good quality is just plain good business, and it shows. Ford Motor
Company was the #3 automobile manufacturer within a few years of its launch.
4. Nothing Is Particularly Hard

“There are no big problems; there are just a lot of little problems.”

No matter what it is, nothing is truly that hard. There’s no task so big that it can’t
be broken down into smaller, more manageable parts. Ford said, “There are no
big problems; there are just a lot of little problems.” And that’s the philosophy by
which he ran Ford Motor Company. Instead of thinking about launching an entire
business, Ford took it one step at a time. First thinking about developing the
product, then pricing, followed by advertising.

5. Keep Employees Happy

'There is one rule for the industrialist and that is: make the best quality goods
possible at the lowest cost possible, paying the highest wages possible.'

This is a big one. Happy employees will make #2 and #3 seem like a piece of
cake, and there are a lot of ways to go about it. Generally, compensation,
workplace culture, and sense of belonging are the huge factors that affect
employee satisfaction. Ford knew his workplace culture was what it was. Factory
work is hard to make engaging and sexy. What he did to remedy this was unheard
of in his time; he doubled the salaries of his workers.

The effect of this was two-fold. Obviously making more money makes employees
feel happier about going to work. It also allowed most Ford employees to actually
be able to afford a Ford automobile, which increased their commitment to their
jobs.
 Model T

The 1909 Model T.

Courtesy of the Ford Motor Company

Assembly line manufacturing process
-The assembly line is often described as a process that uses machines to move
material from one place to another.

-Key components of the Industrial Revolution

ADVANTAGESOF ASSEMBLY LINE PRODUCTION

• Semi skilled labor required.

• Much lower cost in mass production.

• Speed.

• Comparatively less working hours required.

• Utmost accuracy.

• Less training requirements.

DISADVANTAGESOF ASSEMBLY LINE PRODUCTION

• Large capital requirement.

• Long time to get set up done.

• Not suited to custom parts or frequent design changes.

• Job loss.

• Monotonous work.

Summary
Henry Ford is widely known as the car constructor, the founder of the
Ford Motor Company, the pioneer of mass production and the inventor of the
moving assembly line, which many consider as the world’s greatest contribution
to manufacturing. In 1908, Ford started production of the Ford Model T, which has
become one of the most successful automobile in automotive history. But his
contribution far surpasses these excellent accomplishments. What are not well
known are Ford’s contributions to the just-in-time production, product platforming,
mass customization, vertical integration, designs for maintainability, ergonomic
considerations, employee management and other features of the manufacture.
The Ford’s production system has become the characteristic American mode of
production widespread all over the world.

Conclusion
It’s been a while since Ford was in business, but his strategies and the lessons
drawn from them are still super relevant in today’s business world. The lessons we
can draw from Henry Ford and the way he ran Ford Motor Company have clearly
stood the test of time. No matter what industry or stage of business you’re in, these
are important lessons that will help you optimize your business for today’s
marketplace!

REFERENCES

https://www.researchgate.net/publication/334136408_Analysis_of_Henry_Ford's_
contribution_to_production_and_management

https://pdfs.semanticscholar.org/a6b0/73afa699d875a28be75fb7474a48dbfe14
87.pdf?_ga=2.106110019.1557695751.1599815325-305845727.1599815325

https://www.versiondaily.com/contributions-henry-ford/
https://resources.saylor.org/wwwresources/archived/site/wp-
content/uploads/2013/08/Saylor.orgs-Scientific-Management-Theory-and-the-
Ford-Motor-Company.pdf

https://grasshopper.com/blog/useful-business-lessons-from-henry-ford-historys-
best-entrepreneur/

https://en.wikipedia.org/wiki/Henry_Ford

http://www.eyewitnesstohistory.com/ford.htm