Continuous Process Continuous Process Improvement: Improvement: So Who Cares?So Who Cares?

BADM 701BADM 701

Dr. Ron LembkeDr. Ron Lembke

Andrew CarnegieAndrew Carnegie

Telegraph operator to RR division Telegraph operator to RR division superintendentsuperintendent

Adopted latest technology, built first steel Adopted latest technology, built first steel plant laid out to optimize flowplant laid out to optimize flow

Focused on knowing, lowering unit costFocused on knowing, lowering unit cost Raise prices with everyone else in booms, Raise prices with everyone else in booms,

slash prices in recessionslash prices in recession

U.S. Steel ProductionU.S. Steel ProductionProduction: U.S. Production: U.S. EnglandEngland

18681868 8,5008,500 111,000111,00019021902 9,138,0009,138,000 1,862,0001,862,000

Steel Prices: (per ton)Steel Prices: (per ton)18701870 $100$10018901890 $12$12

How? How? Continuous Process ImprovementContinuous Process Improvement

The Richest Man in The Richest Man in the Worldthe World

Found out strike organizers, fired beforeFound out strike organizers, fired before 1886 “Triumphant Democracy,” Forum magazine- workers’ 1886 “Triumphant Democracy,” Forum magazine- workers’

right to unionizeright to unionize 1889 “Gospel of Wealth”: rich need to help the poor ($25m 1889 “Gospel of Wealth”: rich need to help the poor ($25m

annual income)annual income) 1892 Homestead strike: 12 hour gunfight, Pinkerton defeated 1892 Homestead strike: 12 hour gunfight, Pinkerton defeated

(12 died), state militia called in, strike breakers hired(12 died), state militia called in, strike breakers hired 1901 sells out to J. P. Morgan: $480m1901 sells out to J. P. Morgan: $480m Built 2,500 libraries. Built 2,500 libraries.

““The man who dies rich dies disgraced.”The man who dies rich dies disgraced.” 1919 dies, having given away 90%1919 dies, having given away 90%

#2 Richest person EVER#2 Richest person EVER

Data from Forbes. Picture from BusinessIntelligence.comData from Forbes. Picture from BusinessIntelligence.com

Skibo CastleSkibo Castle

Henry FordHenry Ford

Continuous Process ImprovementContinuous Process Improvement Advances in metal cutting allowed him to cut Advances in metal cutting allowed him to cut

pre-hardened steel, produce identical partspre-hardened steel, produce identical parts Standardized parts facilitated standardization of Standardized parts facilitated standardization of

jobs, moving assembly linejobs, moving assembly line Model T: Model T: 1908 $850 1908 $850

1920s: $2501920s: $250

Ford’s Rouge PlantFord’s Rouge Plant

Vertical IntegrationVertical Integration Owned forests, iron mines, rubber

plantation, coal mines, ships, railroad lines Dock facilities, blast furnaces, foundries,

rolling mills, stamping plants, an engine plant, glass manufacturing, a tire plant, its own power plant, and 90 miles of RR track

1927 Model A Production begins 15,000,000 cars in 15 years 120,000 employees in WWII

Rouge PlantRouge Plant

Details to the MaxDetails to the MaxIn his autobiographies “My Life and Work” (1922), and In his autobiographies “My Life and Work” (1922), and

“Today and Tomorrow” (1926), Ford gives great “Today and Tomorrow” (1926), Ford gives great detail on innovations he and his company have made, detail on innovations he and his company have made, including:including:

Glass making, Artificial leatherGlass making, Artificial leather Steering wheels out of ForditeSteering wheels out of Fordite heat treating -- saved $36m in 4 years (1922)heat treating -- saved $36m in 4 years (1922) Forging parts, wiremakingForging parts, wiremaking Riveting, bronze bushings, springsRiveting, bronze bushings, springs Why Black for cars?Why Black for cars?

Kingsford CharcoalKingsford Charcoal

Managing WorkersManaging Workers

“It is a reciprocal relation -- the boss is the partner of his worker, the worker is partner of his boss. Both are indispensable.”

-- MLAW p. 117

Paying for Good EmployeesPaying for Good Employees

“One frequently hears that wages have to be cut because of competition, but competition is never really met by lowering wages. The only way to get a low-cost product is to pay a high price for a high grade of human service and to see to it through management that you get that service.” T&T p. 43

Mindless WorkMindless Work

“Repetitive Labour -- the doing of one thing over and over again and always in the same way -- is a terrifying prospect to a certain kind of mind. It is terrifying to me. I could not possibly do the same thing day in and day out, but to other minds, perhaps I might say to the majority of minds, repetitive operations hold no terrors. In fact, to some types of mind thought is absolutely appalling. To them the ideal job is one where their creative instinct need not be expressed.” MLAW p. 103

Mindless WorkMindless WorkWhen you come right down to it, most jobs are repetitive. A business man has a routine that he follows with great exactness; the work of a bank president is nearly all routine; the work of under officers and clerks in a bank is purely routine. Indeed, for most purposes and most people, it is necessary to establish something in the way of a routine and to make most motions purely repetitive -- otherwise the individual will not get enough done to be able to live off his own exertions. -- MLAW pp 103-4.

Shigeo Shingo and ToyotaShigeo Shingo and Toyota Toyota’s quest for QualityToyota’s quest for Quality Focused on allowing product to Focused on allowing product to flowflow through the through the

plant as evenly as possible.plant as evenly as possible. Cheap affordability to JD Power #1Cheap affordability to JD Power #1 Reduce waste? Continuous process improvementReduce waste? Continuous process improvement Learned all about it from whose book?Learned all about it from whose book?

1977 1989

U.S. Auto QualityU.S. Auto Quality