2017 Spring Semester Pusan National University The Lesson

Pusan National University

생산시스템 특론 – 개론2017 Spring Semester

The Lesson of History

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1. Manufacturing in America

1.1 Introduction – important and fundamental

1. the ultimate test of an idea is the test of time

2. it is critical for managers to make decisions with the future in mind

1.2 The American Experience▪ Adam Smith (1723-1790) – Wealth of Nations

Invisible hand of capitalism

▪ James Watt (1736-1819) – first steam engine

▪ American borrowed English traditional common law, borrowed from Roman law and the Code Napoléon borrowed freely (and even stole) ideas from the Old World and adapted them to the New

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▪ Scientific management

▪ reductionist – analyzes systems by breaking them down into their component parts and studying each one

▪ holistic or systems perspective – Far Eastern societies

▪ Setup time

In American industrial engineering/operations research

literature – regarded as constraints

– optimal lot size

Japanese looking at the systems as a holistic sense not given

clear value is reducing setup time

SMED(Single Minute Exchange of Die) – Japanese automobile

industry became among the most productive in the world

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1.3 The First Industrial Revolution

▪ Prior to the first industrial revolution, production was small-scale, for limited markets and labor- rather than capital-intensive

domestic system

craft guilds

▪ 1st industrial revolution began in England during the mid-18th century in the textile industry

flying shuttle John Kay in 1733

spinning jenny James Hargreaves in 1765

water frame Richard Arkwright in 1769

the steam engine James Watt in 1765

partner – Matthew Boulton

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1.3.1 The Industrial Revolution in America

▪ It was not until the 1790s that a technologically advanced textile mill appeared in America-and that was the result of an early case of industrial espionage!

▪ no strong tradition of craft guilds

▪ large untapped sources of water power in the late 18th

and early 19th centuries

no need of steam engine

▪ Waltham and Lowell, Massachusetts in 1814 and 1821

- the famous cotton textile factories 월댐

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http://maps.google.co.kr/maps?f=q&source=s_q&hl=ko&geocode=&q=%EB%AF%B8%EA%B5%AD&aq=&sll=36.438961,128.056641&sspn=6.450473,9.832764&ie=UTF8&hq=&hnear=%EB%AF%B8%EA%B5%AD


Waltham, Mass.


1.3.2 The American System of Manufacturing

▪ production of interchangeable parts in the manufacture of complex multipart products

▪ 1851 : Crystal Palace Exhibition in London - American system of manufacturing

locks of Alfred HobbsSamuel Colt

mechanical reaper of Cyrus McCormick -> interchangeable parts

▪ 1765-1825 : Eli Whitney & Simeon North -> prove thefeasibility of interchangeable parts

Uniformity System

▪ Boorstein(1965) : “the greatest skill-saving innovation inhuman history”

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▪ mass production through use of vertical integration and interchangeable parts, started two important trends that impacted the nature of manufacturing management in this country to the present

▪ 1st : the concept of interchangeable parts greatly reduced the need for specialized skills on the part of workersWorkers, like parts, were interchangeable planning(by management) & execution (by workers) -> scientific management in the early 20th century

▪ 2nd : by embedding specialization in machinery instead of people, the American system placed a greater premium on general intelligence than on specialized training

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1.4 The Second Industrial Revolution

▪ pre-1840, most industry in America was small, family-owned, and technologically primitive

water power => anthracite coal field in eastern Pennsylvania↓

pig iron└-> makers of watches, clocks,

safes, locks, pistols↓

interchangeable parts1840s : sewing machines and reapers

▪ mass production required coordination of a mass distribution system

▪ 2nd industrial revolution was catalyzed by innovations in transportation and communication - railroad, steamship and telegraph

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1880-1890 : Bonsack machine for cigarettes

“automatic-line” canning process for food

Bessemer steel process

electrolytic aluminum refining

Bonsack machine

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http://en.wikipedia.org/wiki/File:Bonsack_machine.png


1.4.1 The Role of the Railroads

▪ Railroads were the spark that ignited the second industrial revolution for three reasons

1. America’s first big business2. Created a large market for mass-produced products, iron rails, wheels, spikes, wood, glass, upholstery, copper wire

3. Connected the country, providing reliable all-weather transportation for factory goods and creating mass markets for products

▪ Railroad became the birthplace of the first administrative hierarchies, in which managers managed other managers

Large amount of data and new types of analysis required

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1.4.2 Mass Retailers

- need for further advances in the management of operations

▪ mass distribution systems of retailers and mail-order houses

→ accounting practices

▪ advertising & marketing becomes important

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1.4.3 Andrew Carnegie and Scale

▪ (1835~1919) → Pennsylvania Railroad, from telegraph operator to division superintendent

▪ new Bessemer process for making steel with the management

methods of McCallum and Thompson 베쎄머 프로세스

⇒ unimagined levels of integration and efficiency

▪ A stickler for accurate costing – favorite dictums

– “Watch the costs and the profits will take care of themselves”

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http://en.wikipedia.org/wiki/Bessemer_process


1.4.4 Henry Ford and Speed

▪ High-volume production was commonplace in process industries such as steel, aluminum, oil, chemicals, food and tobaccos

▪ The importance of throughput velocity

▪ Nonstop, continuous stream Model N 1906 $600Model T 1908 $850

Highland Park plant labor time 12.5 hours → 1.5 hours

1916/17 1/3 market share1920 2/3 market share

▪ stubborn statement “the customer can have any color car as long as it’s black’”

▪ Ford’s precipitous decline is market share (from more than 60% down to 20%)

▪ Success ⇒ from speed

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1.5 Scientific Management

▪ Egyptians – built pyramid

▪ Machiavelli – visionaries

▪ Leonardo da Vinci

▪ Charles Babbage(1792-1871) measured work rates for

descriptive purposes only

1.5.1 Frederick W. Taylor

▪ persistently and vocally called for the use of science in

management

epithet[n.별명,통칭] “father of scientific management”

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▪ High speed steel

▪ Rules of thumb, tradition, standard practices were anathema to him.(저주,罵倒,악담)

▪ Manual tasks were honed to maximum efficiency by examining each component separately and eliminating all false, slow, and useless movements

▪ “Standard” was the rate at which a ”first-class” man could work using the “best” procedure

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▪ Taylor’s engineering outlook led him to the conclusion

▪ Functional foremanship → is replaced by eight different supervisors, each with

responsibility for specific function

1. inspector : responsible for quality of work2. gang boss : responsible for machine setup and motion

efficiency3. speed boss : responsible for machine speed and tool choice4. repair boss : responsible for machine maintenance and repair5. order of work or route clerk : responsible for routing and

scheduling work6. instruction card foreman : responsible for overseeing the

process of instructing bosses and workers in the details of their work

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7. the time and cost clerk : responsible for sending instruction cards to the men and

seeing that they record time and cost of their work

8. shop disciplinarian : takes card of discipline in the case of “insubordination” or impudence failure to do their duty

▪ Scientific management was a philosophy1. The development of a true science2. The scientific selection of the worker3. His scientific education and development4. Intimate friendly cooperation between management

and the men

▪ Taylor never enjoyed good relation with labor

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1.5.2 Planning versus Doing

manager – planningworker - working

▪ Taylorism spawned powerful tool but not a frame work in which those tools could achieve their full potential

1.5.3 Other Pioneers of Scientific Management

▪ Henry Gantt (1861-1919)– Gantt chart used in project management.

Preferred a “task work with a bonus” systemLess sanguine than Taylor about the projects for setting truly fair standards, and therefore be developed explicit procedures for enabling workers to protest or raise the standards.

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▪ Carl Bath (1860-1939) – “feeds and speeds” for metal cutting

▪ Horace Hathaway (1878-1944) – scientific management

▪ Harrington Emerson (1853-1931)

– dispatching in reference to shop floor control

▪ Frank Gilbreth (1868-1924)

– efficiency “motion study” –therbligs

1.5.4 The Science in Scientific Management

▪ Thus while scientific management fostered quantification of

management, it did little to place it in a real scientific framework

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1.6 The Rise of the Modern Manufacturing Organization

▪ large-scale, vertically integrated organization, mass product

-> end of World War I

1.6.1 Du Pont, Sloan, and Structure

▪ William C. Durant (1861-1947)

-> GM (General Motors) formed in 1908

▪ Pierre Du Pont (1870-1954)

– successor of Durant, installed Taylor’s manufacturing control

techniques & accounting system psychological testing for

personnel selection Return On Investment (ROI)

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▪ Alfred P. Sloan (1875-1966)

“a car for every purse and purpose”

Cadillac Buick Chevrolet Ford

Oldsmobile Pontiac

New procedure for demand forecasting, inventory tracking,

market share estimation.

The centralized, functional department organization is used by

firms with a single line of product in a single market.

The multidivisional, decentralized structure developed at GM is

the rule for firms with several product lines or markets.

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1.6.2 Hawthorne and the human element▪ the worker took on increased importance

▪ Taylor did not show the slightest appreciation for the psychological difference between work and play

▪ Hugo Munsterberg (1863-1916) – the acknowledged father of industrial psychology.A steady stream of industrial psychology textbook and psychological testing fad shortly after World War I

▪ Walter Dill Scott (1869-1955)– the application of psychology to industry“The Psychology of Business”

▪ Lillian Gilbreth (1878-1972) - one of the pioneers of the scientific management movement- humanization of the management process

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▪ Mary Paker Follett (1868-1933)

“not consent but participation is the right basis for all social relations”

▪ George Elton Mayo (1880-1949)

- Approaching the problem the perspective of the “psychology of the total situation”

“remarkable change of mental attitude in the group”

Hawthorne effect - 호손효과

▪ By emphasizing the need for listening and counseling by

manager in order to improve worker collaboration, the industrial

psychology movement shifted the emphasis of management

from technical efficiency, the focus of Taylorism, to a richer,

more complex, human relations orientation.

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1.6.3 Management Education

▪ Business school or industrial engineering programs, both of

which were emerging in the wake of the scientific management

movement at the turn of the century.

▪ Business program in America – 1881

▪ University of Pennsylvania’s Wharton School

Chicago

Berkeley 1898

Dartmouth

New York University

Wisconsin 1900

Harvard leading program of the time – Arch Shaw

“Library of factory management”

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1.7 Peak, Decline, and Resurgence of American Manufacturing

▪ golden era of manufacturing

– post World War Ⅱ period (1950s-1960s)

1.7.1 The Golden Era

▪ With its huge domestic market, ready capital, and well-trained,

productive workforce, America could produce and distribute

goods at a pace and scale unthinkable to anyone else

1.7.2 Accountants Count and Salesmen Sell

Because of the American technological advantage and the lack

of competition, continual improvement was unnecessary to

maintain market share, and managers learned to take the status quo for granted.(현상)

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market and manufacturing and

finance operation

“best and brightest” viewed as dead-end “career

breakers”

▪ The Marketing Outlook

IBM → declined the offer jointly developing copying machine.

Xerox → first was threatened its not-for-profit status

But created demand for paper copies

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▪ The Finance Outlook

Du Pont pioneered the use of ROI as a measure of the

effectiveness of capital in a large-scale enterprise shortly after

the turn of century.

An over reliance on short-term ROI discouraged managers from

pursuing high-risk or long-term ventures and thus further

aggravated the tendency toward the conservatism promoted by

the marketing outlook.

Like the marketing outlook, the finance outlook is too restrictive

a perspective for the entire firm. While managers of purely financial portfolios are certainly rational in their use of diversification to achieve stable returns, manufacturing firms that use the same strategy are neglecting an important difference between portfolio and manufacturing management:

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The preponderance(우세) of statistical evidence paints a negative picture of the effectiveness of the merger-and-acquisition strategy.

Scherer and Ross – in a comprehensive survey of firm structure and economic performance, sum up the effectiveness of the merger-and-acquisition approach with this statement: “The picture that emerges is a pessimistic one: wide spread failure, considerable mediocrity(平凡), and occasional successes.”

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1.7.3 The Professional Manager

1. strong demand for managers prompted an acceleration of the promotion process, under he “fast-track manager” system.

2. unable to nurture enough managers internally

▪ The Fast-Track ManagerWorse yet, the concept of a fast-track manager, first introduced to fill a genuine postwar need, gradually became institutionalized.The days of Carnegie and Ford, owner-entrepreneur-manager who knew the details of their business from the bottom up, were gone.

▪ Academization of Business Schools“fundamental disciplines”

“theoretical”“modernizing”

“scientific”

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1.7.4 Recovery and Globalization of Manufacturing

▪ Center for the Study of American Business (CSAB)

▪ Even more improvements in quality and product development

times would be needed in the next five years in order to keep

pace.

Efficiency trend

Quality trend

Integration trend

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1.8 The Future

▪ It is up to the next generation of manufacturing managers to

evolve the American system of manufacturing to its next level.

▪ “best practice”

▪ Firms that master the intricacies of manufacturing under the

new world order will thrive.

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Documents

2017 Spring Semester Pusan National University The Lesson