FORD MOTORS PHILOSOPHY vs TOYOTA MOTORS PHILOSOPHY

Introduction

A manufacturing/production system consists of a conversion system, which transforms inputs into output. The way conversion is done depends upon the nature of product/service and the nature of demand for such product/service. Thus the types of production are broadly classified into two categories, the continuous and the intermittent. The first category is appropriate where large scale production is required and the second is suitable where demand is non-uniform and seasonal and the product is not standardized.

Ford Motors, as it is poised for mass producing standardized automobiles, naturally embraced the continuous production system. This essay attempts to compare and contrast the production philosophies and systems adopted by Ford Motors during 1930s and Toyota Motor Company during recent times.

As Kanigal, Robert [1997] laid the basis for the concept of assembly line, Henry Ford, adopted the concept in1914 with due consideration to Adam Smith’s philosophy of division of labour. He over simplified the tasks which led to specialization and business success (William A. Levinson, 2009). On the other hand, Toyota, which emerged as a different socio-industrial system, ironically had its roots in Henry Ford’s philosophy (James P.Womack, Daniel T.Jones, Daniel Roos, 2007)

However, TMC digressed from the traditional Detroit philosophy based on the concept of lean manufacturing and thus carved a niche for itself and grew to such an extent that the American automobile industry shook.

Henry Ford’s Contribution

Earlier, cars were a specialized luxury, available only to the elite. Ford’s mass production scheme made the automobile accessible for the common man even, by virtue of Ford’s vision, “a car for every man.” This philosophy got extended to the whole range of consumer products and services which came into the reach of every common man.

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Henry Ford’s team nurtured innovation in all the 4 ‘P’s (Product, Process, Position and Paradigm) to happen concurrently. The T-Model, which Ford and his team evolved formed the basis for emergence of an altogether completely new realm of thinking as regards manufacturing, which resulted in elimination of need for skilled labour (Joe Tidd, John Bessant, 2009). Though the basic elements existed earlier, Ford’s success lay in synthesizing them into a new form. The philosophy encompassed not only assembly operations, but supply chain and logistical aspects also.

Features of Ford System of Manufacturing

Standardization of products, components, equipment, process, tasks and tasks of control.

Time and work study, to identify the optimum conditions for carrying out a particular operation and job analysis, to break up the task into small, highly controllable and reproducible steps.

Specialization of functions and tasks within all areas of operation .there was considerable narrowing and re-utilization of individual tasks and an extension of division of labor.

Uniform output rates and systematization of the entire manufacturing process.

Payments and incentive schemes based on results.

Elimination of worker discretion and passing of control to specialists.

Concentration of control of work into the hands of management within a bureaucratic hierarchy with extensive reliance on rules and procedures.

The Toyota production philosophy

The system of production which, though had its roots in that of Ford Motors, has evolved as a distinctive one with unique features such as lean manufacturing, is known as Toyota Production System [TPS]. Sakichi Toyoda, his son, Kiichiro Toyoda and Taiichi are the founders of Toyota Motors. The founders and the engineer, Taiichi Ohno are the ones who appreciated and embraced the concept of Lean Manufacturing, founded on the original concept, being, JIT production (Sorensen, 1956).

The founders of Toyota based heavily on the work of Edward Deming and the literature written by Henry Ford. Lean manufacturing (Simon, 1996) concept was even seen during the times of Benjamin Franklin.

The business success and opulence of Detroit drove the Toyota team to be inquisitive about witnessing the assembly line and mass production. When the Toyotan delegation visited the US, they were not impressed. The Toyotan philosophy (Shigeo, 1996) aims at rationalizing the design of the manufacturing process and so it envisages elimination of three elements, being overburden [muri], inconsistency [mura] and waste [muda]. This entails that the process is flexible enough to be free from stress as it is supposed to generate waste. The Toyota system identified seven types of wastes, popularly called the “Seven Wastes.” They are over-production, motion (of operator or machine), waiting (of operator or machine), conveyance, processing itself, inventory (raw material), and correction (rework and scrap)

Of the three lapses, i.e. overburden, inconsistency and waste, the latter, muda, seems to dominate the thinking of man as they see the fruitful effects of TPS.

Origin of the concept of TPS

It is known that Toyota Motor Company has got its inspiration not from the Detroit Philosophy, but rather from their observations made on their visit to the US in 1950s. The Toyota delegation first visited the automotive plants of Ford Motor Company located in Michigan. But they convicted that many methods adopted by the industry leaders were not satisfactory or effective. Some of the lapses they identified were:

large amounts of inventory on site,

the way the work was performed in various departments – uneven pattern, i.e., with intervention of waiting between one operation and another operation resulting in islands of idleness,

re-work in huge quantities at the end of the process.

Later, the Toyotan delegation visited Piggly-Wiggly, the supermarket and observed how inventory management was carried out. The supermarket maintained scanty amounts of stock sufficient to cater to the customers and its employees for a short duration, stocks were reordered and instantly replenished. This indicated an important dimension, i.e., eliminating the need to maintain huge stocks and it was all done just-in-time. Taking cue from this philosophy, many US businesses made a direct attack on high inventory levels but ended in fiasco. This was because the American businesses did not understand the underlying issues. A principle of maintaining low levels of inventory also implies that proper alignment should be made with the vendors such that they were in a position to supply materials and components just-in-time. A complete delineation with the entire supply chain is necessary. This important aspect was ignored by the American automobile industry. It cannot be achieved overnight. Toyotans admitted that it took 20 years for them to implement JIT programme.

Tenets of Toyotan Philosophy

CONTINUOUS IMPROVEMENT

Challenge: Work without challenge makes people indolent and lackadaisical and nonchalant.

Kaizen: Capabilities, skills, efficiency and the like are not constant. They keep improving over time. Hence benchmarks need to be revised constantly. Innovativeness is a natural propensity.

Genchi Genbutsu: Try to find the root cause before making correction of the apparent defects.

RESPECT FOR PEOPLE

Respect: Others must be respected. There should be mutual understanding and a readiness to accept responsibility to build mutual trust.

Team work: Working together to achieve organizational and individual objectives through commitment.

LONG-TERM PERSPECTIVE

Short-term goals are mere derivatives of the long-term ones and the former are dependent on the latter and hence, priority shall be given to pursue/revise long-term goals.

THE RIGHT PROCESS PRODUCES THE RIGHT RESULTS

Creation of a continuous process flow facilitates inherent problems to be apparent at surface. Lacunae, if any, will come to surface; unevenness in loading of work stations will be indicated. Adopting “pull system of production” prevents overproduction. Under pull system of production, production scheduling is not done for large scale manufacturing. Master production schedule is made based on the current orders on hand. Once these orders are processed, the production process is stalled and rescheduled upon receiving new orders. Thus, products are pulled out of the system by customers.

As long as production goes, care should be taken to avoid unevenness of flow of the process. This requires every material, tool, equipment and labour to be readily available at the respective work station to avoid interruption. Defect to be nipped in the bud. This means that if the job on the assembly line or at a work center is found to be defective, the same cannot be passed to the next work station/center without being rectified of the defect. This gives two-fold advantage; first, all the output that comes out will be defect free and secondly, there is no need to invest on a quality assurance system.

Line stopping – Where, on an assembly line, if any defect is noticed by the operator[s], he is given discretion to stop the assembly line by means of a switch and hold it till the defect is rectified. Continuous improvement is based on standardization of operations/tasks and employee empowerment. Standardization of operations facilitates fixing benchmarks for employees and thereby provides for comparison of performance against benchmarks. Once they are met by the employees, the benchmarks will be revised. This way, performance and efficiency keep increasing year by year, leading to ever increasing performance and productivity.

Visual control system: This system alarms the workers of any lapse or defect that my arise during the production process. When the system identifies a defect, it alarms the workers through visual devices. Using fool-proofed technology: The Toyotan philosophy calls for using equipment of proven technology to ensure a steady and uninterrupted flow of the process as well as to get the output of the desired quality.

DEVELOPING PEOPLE AND PARTNERS ADDS VALUE TO THE ORGANIZATION

Leaders should be developed from among the employees who relish the philosophy, understand it thoroughly and are willing to share it with others. Exceptional personnel and teams who imbibe and nurture the aspirations of the company should be developed. Network partners and suppliers by sharing expertise should be honored and challenging assignments should be given to help them improve.

A SUSTAINED EFFORT TO RESOLVING ROOT PROBLEMS DRIVES ORGANIZATIONAL LEARNING

A personal involvement in a situation provides a thorough understanding of an issue. Decision making shall be done coolly through consensus, taking into consideration all possible options. Implementation shall be done quickly. This is based on the belief that collective wisdom is always superior to the individual’s. Creating an environment in the organization so, that every employee indulges in learning things and improves performance on a sustained basis. This makes the whole organization, a “learning organization.”

How Toyota Is Comparable To And Discernible From Ford

Production Philosophy

Toyota – Relies on piece-meal style of production, i.e., produces only when there is pull from the customer

Ford – Whereas Ford manufactured in large scale to create stock based on estimated demand

Nature of work

Toyota – Designed the work so, that workers had to be multi- skilled to perform complex tasks.

Ford – Over simplified complex operations such that workers needed low level skills

Standardization

Toyota – Though was influenced by the writings of Edwards Deming and Henry Ford, was embarrassed on eye-witnessing the assembly lines of Ford Motors’ facilities in Michigan.

Ford – Could demonstrate business success through the policy of standardization of products, components, equipment, process and control.

Pace of output

Toyota production system was continual and produced in small quantities as each customer merited. No pile up of finished goods.

Ford – Held the policy of turning over at uniform pace to create huge pile up of stocks.

Set up time & cost

Toyota – Fundamentally designed for continual flow meriting frequent changeovers and set ups, but this could be offset by the extra costs of blocking capital in the form of huge pile up of stocks, characteristic of Ford Motors.

Ford – As the scheduling is done for continuous run, changeovers are less frequent and so, low set up time and cost.

Workers’ discretion

Toyota – Allowed certain amount of discretion to workers on the assembly line such as empowering them to inspect the job for defects and to stall the flow on the assembly line to rectify the defect then and there and then let it go to the next work station to ensure zero defect situation and to eliminate the need of rework division.

Ford – Eliminated the scope for workers’ discretion to be used at the work place since each worker on the assembly line had to perform only a single task and the next task had to be done by the next worker. Workers had no authority to stop the flow of work as such, an incidence of defect is allowed to pass till the end of the process and the defective item is sent to rework division.

Process design

Toyota – Focused on three criteria while designing its production system, i.e., overburden, inconsistency, and waste. These words are simple, but have far reaching effects. The last criterion is pivotal for the success of the company. The seven wastes concept indicates a treat amount of insight of the Toyotans and it is unique of Toyota. But, ironically, Toyotan inspiration is rooted in the writings of Edward Deming, who happens to be the American. The fun lies in the fact that American automobile industry did not pay heed to Deming’s philosophy, but non-Americans exhibited faith in it.

Ford – Bureaucratized as far as administration/control is concerned. All employees have to observe scalar chain and abide by the rules and procedures

Long-term perspective in planning

Toyota & Ford – Both companies look into far future.

Developing people

Toyota – Promotes development of exceptional individuals and teams.

Ford – Does not focus on developing experts as it has over simplified the tasks, rather, workers might gain efficiency as they do the single task repeatedly.

Pay and incentives

Toyota – Provides ample scope for personnel to grow as it nurtures innovation, employee participation and so on.

Ford – The policy is to pay and provide incentives based on results.

Problem solving

Toyota – Employees are nurtured in such a culture that they address a problem through the root cause instead of taking a perfunctory look.

Ford – Employees are not trained along making deeper efforts in addressing problems. They used to leave the problem at perfunctory levels.

Summary

The world has witnessed a constant transformation as regards the automobile production/operations philosophy. The Ford’s mass production (produce to stock) philosophy received ample appreciation and was convicted to be the right path by most other manufacturers (1914). This has been evidenced by the way the Big Three, (Ford Motors, General Motors and Chrysler) flourished during early and mid 20th century. But the onset of Toyota production system, which is based on the philosophy of “lean manufacturing”, started sending tremors into the well complacent American automobile industry’s regime. The principle of Toyota Motor Company (TMC) to eliminate wastes and subsequent TMC’s success attracted other manufacturers who tried to copy, but in vain. They could not imitate the whole TMC’s philosophy as it is.