The Just-in-Time (JIT) approach attempts to reduce costs and improve workflow by carefully scheduling material to arrive where needed at the proper time. Consequently, costs of inventories can be substantially reduced and the use of space can be conserved. In some cases this approach can contribute to an improved quality of the product.
What is not well known is Ford’s contributions to the JIT system, that is widely-known to be developed by Taichi Ohno, of Toyota. Below is an article that explicates Ford’s contributions to JIT. This article was originally published Peter Peterson in Management Decision, 2002, Vol. 40, Iss. 1/2; pg. 82, 7 pgs.
Just-in-time (JIT) production methods were popularized by the excellent results achieved by Japanese industry. When it became evident during the 1970s that the Japanese were gaining markets previously dominated by Americans, there was considerable interest in learning how Japanese industry operates. Then, during the early 1980s, Toyota’s highly effective JIT production system had a particular appeal to Americans who were trying to understand Japanese production methods. While Taichi Ohno, creator of Toyota’s production system, credits Henry Ford as the originator, it is now known that Ernest Kanzler, one of Ford’s subordinates, played a major role in developing JIT production methods. This article reports Ford’s and Kanzler’s contributions and explores the possible influence that Frederick W. Taylor may have had on the development of this approach at the Ford Motor Company.
When researchers examine the Japanese industrial renaissance they often find American ideas. This article describes such a situation. In 1980, Norman Bodek of Productivity Press searched for the origin of Toyota’s production system and its just-intime (JIT) method of production supply and inventory control. Interviewing retired CEO Taichi Ohno, who is credited with creating the Toyota System, Bodek inquired about the development of Toyota’s JIT method of production supply and inventory control:
Mr Ohno replied that he learned it all from Henry Ford’s book Today and Tomorrow. This conversation led to the reprinting of Ford’s book 62 years after its writing (Petersen, 1990, p. 95).
In searching further for the origin of this innovation, one could argue that Frederick W. Taylor might have influenced this accomplishment at the Ford Motor Company. Rising to fame around the same time, Taylor and Ford were aware of each other’s accomplishments. The purpose of this article is to explore the possible influence that Taylor had on the development of JIT production methods at the Ford Motor Company and then show how Ernest Kanzler developed this approach in collaboration with Henry Ford.
Following a short overview of JIT production methods, this article will summarize the experience and views of Henry Ford. Then a description of Frederick Taylor’s scientific management will be followed by a more detailed discussion of the possible influence that Taylor had on the development of JIT production methods at the Ford Motor Company. This article will then concentrate on the work of Ernest Kanzler and Henry Ford in developing JIT production methods.
JIT Production Methods (Just in Time)
Currently, JIT production methods are widely used in the USA. This approach is also taught in business schools and described in many business administration and management textbooks. The following textbook definition is typical. JIT is:
A system popularized by the productivity of Japanese industry that attempts to reduce costs and improve workflows by scheduling materials to arrive at a work station or facility “just in time” to be used (Schermerhorn, 1996, p. G5).
This approach can reduce carrying costs of inventories, maximize the use of space, and in some cases improve the quality of results. One author (and noted consultant in operations management) considers that “the JIT approach may be the most important productivity enhancing management innovation since the turn of the century” (Schonberger, 1982, p. 24). While Schonberger’s praise of JIT may be a bit excessive, there is general agreement that JIT is a valuable production management approach.
Another advantage of this approach is that purchasing and production can be accomplished on a small scale and no earlier than necessary. However, extra caution is needed because without the use of backup inventories, the arrival of material must be accurate and continuously fine-tuned. In addition, the material must be of usable quality and workers must use this material properly in the production process. Schermerhorn suggests that a wide range of special support is needed for the JIT production method to work effectively. Essential factors include the following:
- high quality supplies;
- manageable supplier network;
- geographic concentration (short transit times flora vendor plants to customer plants);
- efficient transportation and materials handling;
- strong management commitment (Schermerhorn, 1996, p. 481).
Experience and views of Henry Ford
At the age of 12, the sight of a steam engine on a country road fascinated Henry Ford (1863-1947). He had seen steam locomotives on rails, but “almost a half a century later, Henry Ford could still recall … the chance encounter that became the inspiration for his life’s work and dream” (Cahill, 1992, p. 6). When he was 16 he moved to Detroit and worked for the Edison Illuminating Company. While at Edison he built an automobile at night in a woodshed behind his home. On a morning in May 1896 Henry Ford test drove his first car. Driving once around the block “it was the first time a Ford car had appeared on the streets of the future motor capital of the world” (Simonds, 1943, p. 53).
Reflecting on those early days of his automotive career, Ford claimed: “My `gasoline buggy’ was the first and for a long time the only automobile in Detroit. It was considered to be something of a nuisance, for it made a racket and it scared horses” (Ford, 1922, p. 33). While many were involved in the invention of the automobile – such as Daimler and Benz in Germany, George Selden and the Duryea Brothers in the USA Henry Ford continues to be recognized as the primary inventor. In 1961 Greenleaf described Henry Ford as “the first inventor in any country to lay formal claim to the motor car as his exclusive invention” (Greenleaf, 1961, p. 5).
Henry Ford completed two more automobiles in 1899. However, as Ford’s attention became increasingly diverted, his boss at the Edison Illuminating Company asked him to discontinue his hobby or give up his job. Consequently, Ford quit his job and established the Detroit Automobile Company; unfortunately, within a year and a half his company was bankrupt. Then in 1901 he formed the Henry Ford Company, an effort that lasted only four months. Later, on June 16, 1903, the Ford Motor Company was formed. The Model T Ford was soon introduced and became extremely popular. To meet the high demand for his product, Ford revolutionized the manufacturing industry by using a moving assembly line for the mass production of automobiles. Further, to attract and retain capable workers, he increased the pay of his employees while decreasing the number of hours to be worked each day. At this stage of his career he was extremely popular and, most of the time, very successful.
Henry Ford made an impact upon the world. That is, the widespread use of the automobile had a major influence on how we live. “As I sat in a fast-food restaurant … exhausted from my long drive, eating food identical to dinners being served from Texas to Anchorage, I knew that my life, American life, was somehow wrapped up with that of Henry Ford (Nye, 1979, p. viii).
Like many public figures, Henry Ford had his share of criticism along with his accolades. While some of this criticism was probably deserved, portions of it contain elements of rumor and folklore. For example, “according to Ford’s personal secretary, Ford never claimed any knowledge of who he had been in previous lives, although one unsympathetic biographer reported that Ford believed he had been Leonardo da Vinci” (Ford, 1919, Accession No. 1, Box 17). As a person having strong convictions, his opinions were often quoted, and in many cases, out of context. For example, Ford claimed “the chief thing about a human being is his religion … Churches should be schools, non-sectarian shops” (Ford, 1947). In this particular case, Ford considers in his overall systems outlook that the spiritual and physical aspects of life should be integrated.
Along with much criticism it should be acknowledged that Henry Ford was popular with the American public. A Fortune Magazine special survey in May 1937 inquired about individuals who had been helpful to labor. In this particular case those surveyed provided strong support for Henry Ford:
73.6 percent chose Ford, while Senator Wagner (51 percent), Secretary of Labor Perkins (43.4 percent), the Chairman of General Motors Alfred Sloan (25 percent), President of the United Mine Workers John L. Lewis (32.6 percent), and Socialist candidate for president Norman Thomas (14.1 percent) (Fortune Magazine, 1937).
On the negative side, the views of some of Ford’s workers were not as flattering and are represented in the following:
In exchange for the identity numbers and our wages we gave to the Ford Motor Company not only eight hours of labor, but we also surrendered our personality, individuality, and inventive genius, if any (New York Times, 1928).
B.C. Forbes (father of Malcolm Forbes) in a segment he wrote in a book co-authored with OR Foster, was somewhat critical of Henry Ford, but Forbes also provided a few positive remarks that are rather significant:
Personally, I regard Henry Ford, despite many eccentricities, which always go with genius, as having done more than any other industrialist … to make it possible for millions of ordinary folks to own … and enjoy an automobile (Forbes and Foster, 1926, p. 109).
Forbes also described the Ford car as “an arch-enemy of Socialism, Communism, and other revolutionary `isms”‘ (Forbes and Foster, 1926, p. 109).
In examining his 1929 philosophy, we find concepts that go beyond the Ford factory. For instance, Henry Ford reflected on the importance of thinking. Believing that the secrets of life are open to the thinker, Ford (1929, p. 27) claimed:
… thinking is the work of digging to the foundation and has the aid of higher lights. Thinking calls for facts, and facts are found by digging. He who has gathered of this wealth is well equipped for life.
After the stock market crash of 1929 and as the nation moved into the depth of the Great Depression in 1932, many people looked for the underlying causes of this dilemma. Writing in 1930, near the start of the unemployment crisis, Ford gave his views about overproduction being blamed as the cause of unemployment:
Although there is much talk of the dangers of overproduction, the fear is not that the supply of goods will be too great. The real fear is that the supply of profits and wages may be disturbed (Ford and Crowther, 1930, p. 16).
As the Great Depression continued, many cost cutting measures impacted unfavorably on Ford’s workers. For example, the River Rouge Plant, once the model of industrial efficiency, became the lotus of labor unrest during the mid-1930s. Two researchers provide a rather harsh critique of Henry Ford during this period:
Henry’s reaction to the labor movement was to make the Rouge into an industrial concentration camp overseen by Bennett’s army of Service Department men … A meeting of any two workers was considered prima-facie evidence of a conspiracy (Collier and Horowitz, 1987, pp. 160-1).
A review of the many books and articles about Henry Ford leads one to conclude that there is a wide range of sentiments about the man and his accomplishments. In retrospect, a balanced and more objective view is needed. When it came to manufacturing cars, Henry Ford was a genius. His successful idea was to produce small, strong, simple automobiles. In terms of quality control, he did not believe in inspecting all of his finished automobiles. Instead, he concentrated on building high quality components and then focused on the proper assembly of cars built with these components. Constantly seeking to improve the manufacturing process, he considered that improvements were never complete and the best solutions never found. This emphasis on continuous improvement is not far from today’s emphasis on continuous quality improvement.
Ford developed and located small plants for the manufacture of components throughout the USA and eventually the world. The idea was to assemble cars near locations where they would be sold and to have component manufacturing plants ship the components as needed to the assembly plants. As a believer in not wasting transportation, he located component plants so that a minimum of transportation would be needed to move components to assembly plants. Once emptied of these components, the same transportation moved completed automobiles to dealers.
In reviewing Ford’s work it appears that one of his major innovations was the efficient system he developed among the component manufacturer, the assembly plant, the dealer, and finally the customer. In addition, while other auto manufacturers were shipping their fully assembled cars overseas, Henry Ford shipped component pans overseas and assembled them near the customer. For Ford, this provided substantial cost savings and high quality. Consequently, his overseas pannerships prospered and endured.
Frederick Taylor’s scientific management
Any discussion of the influence of Frederick Taylor’s ideas needs to be proceeded by a short overview of Taylor’s experience and views. While Taylor was not the first person in the nineteenth century to search and write about efficiency in the workplace he did provide a new and more popularized approach. Eventually, Taylor’s approach was titled “scientific management” and he became the major point of focus for efficiency in the US workplace. Known as the father of scientific management, Taylor “was a central figure in the development of management thought. Entering the American industrial scene at a time of transition from entrepreneurial, managerowner firms to large-scale, fully integrated corporations, Taylor gave a push and provided credibility to the idea of management” (Wren, 1994, pp. 130-1). The major theme of scientific management was the idea “that human efforts could be measured, analyzed and controlled by techniques analogous to those that had proved successful when applied to physical objects” (Aitken, 1960, p. 16). In fact, Taylor and many of his followers were engineers who tended to use a mechanistic approach when studying the workplace. Those advocating a more humanistic approach to management have criticized this approach during much of the twentieth century.
Taylor’s theory and practice of scientific management were successful in emphasizing:
- science, not rule of thumb;
- harmony, not discord;
- cooperation, not individualism;
- maximum output, in place of restricted output;
- the development of each man to his greatest efficiency and prosperity (Taylor, 1911, p. 140).
Charles Wrege and Ronald Greenwood in their monumental work about Frederick Taylor provide the following view: “Frederick Taylor advanced a total system of management, one which he built from pieces taken from numerous others – whom he rarely would credit, and in some cases perhaps did not know the origin of the idea” (Wrege and Greenwood, 1991, p. 253). It seems rather odd that Taylor and Ford did not collaborate. While Flick describes the time of the introduction of the automobile in America as 1895-1910 (Flick, 1970), Taylor made his major impact during the period 1885-1915. With the concurrent achievements and notoriety of both men, one might assume that they collaborated.
Possible Influence Taylor had on development of JIT production methods at the Ford Motor Company Henry Ford and his engineers made their initial progress in improving efficiency by reorganizing their system of production again and again. While similar in his approach to Taylor’s shop management, Ford did not personally collaborate with Taylor on any particular project or problem solving effort. In addition, although there was no direct relationship between Taylor and Ford there was a basic linkage of ideas. Ford’s subordinates were avid readers of Taylor’s accomplishments and philosophy and both Taylor and Ford were aware of each other’s approaches in the search for efficiency in the workplace.
In discussing this relationship, Keith Sward comments “They were applying in their own way … the theory of line production which Frederick W. Taylor, the ‘Father’ of scientific management, had worked out several years earlier in the American steel industry” (Sward, 1948, p. 33). In a further elaboration about the influence of Taylor on Ford’s work, Sward furnishes a more detailed explanation.
Taylor anticipated all the production methods that were to take Detroit by storm. A report of his epochal efforts to rationalize the steel industry appeared in print eight years before the incorporation of the Ford Motor Co…. Shortly before his death, Taylor had an even more direct effect on the growth of Detroit’s technology. In 1909 he delivered a four-hour lecture before a group of technicians employed by the Packard Motor Car Co. He returned to Detroit again in 1914 at the invitation of the local Board of Commerce. On this occasion his audience consisted of 600 foremen and superintendents drawn from all the leading automotive shops within the area (Sward, 1948, pp. 33-4).
Daniel Nelson in commenting on the importance of both Taylor and Ford provides an interesting perspective:
By 1915 Taylor had transcended his profession to become (with Henry Ford and Herbert Hoover) one of a trinity of earlytwentieth-century technician-philosophers (Nelson, 1980, p. 168).
Another person’s view adds that Taylor and Ford had substantially different approaches in the workplace:
Thinking out loud about the respective influences of Taylor and Henry Ford, German historian Ulrich Wengenroth, of Munich’s Deutsches Museum, slips into a kind of rhythmic dialectic: “Ford exerted control through the machine, Taylor directly on the person. With Ford, the power was behind the veil of the machine. With Taylor the power was blunt. Taylor wanted to improve people. Ford didn’t care.” And this sense of almost unseemly intimacy in Taylorism’s dominion over the individual haunts the imagination of our age. For it conjures up the specter of one human being exacting his will on another. It suggests men and women not chained to a machine but seduced into merging with it (Kanigel, 1997, p. 17).
Commenting on a lack of collaboration between Taylor and Ford, Robert Kanigel comments:
To judge by how often their names have appeared together, one might suspect that their legacies, Taylorism and Fordism, were one and the same, or else that Taylor had somehow invented the assembly line. They weren’t, and he didn’t (Kanigel, 1997, p. 495).
It should also be recognized that before Ford’s assembly line similar arrangements had been used in other settings. Indeed, “Oliver Evans’s nineteenth-century flour mill in Delaware has sometimes been cited as a progenitor of the assembly line. So have the conveyor-driven mold carriers of the Westinghouse Airbrake Company, and the conveyors and grain elevators of breweries” (Kanigel, 1997, p. 495). Further, in observing the “disassembly” lines used by Chicago meatpackers Henry Ford indicated, “If they can kill pigs and cows that way, we can build cars that way” (Kanigel, 1997, p. 495).
Although it might seem that Ford and his subordinates were somewhat influenced by Taylor, Henry Ford denied it:
As for scientific management, Ford denied its influence on him, as did his chief engineer, Charles Sorensen. Nor has anyone else close to Ford ever stepped forward to say that Taylor’s Shop Management made the scales fall from his eyes (Kanigel, 1997, p. 495).
Commenting further, Robert Kanigel balances his earlier view that Taylor did not influence Ford with a somewhat different point of view:
Most top Ford engineers, writes Ford biographer Allan Nevins, had by the early days at Highland Park “doubtless caught some of [Taylor's] ideas,” including time study. The company had a time-study department by 1912 or 1913 … After The Principles of Scientific Management came out, it was said, you could hardly buy a stopwatch in Detroit, so swiftly were they snapped up (Kanigel, 1997, p. 497).
It is fair to consider that Ford and his key subordinates were keenly aware of Taylor and scientific management but other than the use of management practices that were then popular, such as time study, it clearly appears that Ford and his key subordinates developed their own unique processes and approaches based on their own ideas and specific needs.
Work of Kanzler and Ford In developing JIT production methods
Many of the ideas developed by Henry Ford and his assistants are worth reviewing for their possible application today. One of these ideas, JIT production methods, is the idea discussed in this article. Other significant ideas at the Ford Motor Company include production of a relatively inexpensive car for the masses and the shipment of components (rather than finished automobiles) to distant assembly plants located near the consumer. In the case of JIT production methods, Ernest Kanzler accomplished the early stages of this approach at the Fordson tractor plant. Later, Ford with the help of Kanzler, implemented JIT production methods on a larger scale at the Ford Motor Company in 1920 and 1921. Prior to discussing this innovation by Kanzler and Ford, it is useful to describe how they interacted and got along with each other.
Ernest Kanzler had a close relationship with Henry Ford. In fact, they were indirectly related. Kanzler’s wife Josephine and Eleanor Ford (wife of Henry Ford’s son Edsel) were sisters. Further, “Ernest and Josephine Kanzler lived a few doors away from the Edsel Fords on Iroquois Avenue” (Lacey, 1986, p. 281). Ernest Kanzler rose from humble origins and, as a young lawyer, was hired by one of Detroit’s major law firms, Stevenson, Carpenter, Butzel and Backus. In 1914, when Ernest Kanzler became acquainted with Henry Ford, Kanzler’s law firm represented two clients in their suits against Henry Ford. As luck would have it, Kanzler was assigned to conduct research for both of these cases. At the time Ford first met Kanzler, “he used to twit the young lawyer, when Ernest and Josephine came over to Fair Lane with the Edsel Fords, by discussing the suits in great detail” (Lacey, 1986, p. 281). Consequently, the embarrassed young attorney would plead with Henry Ford not to discuss the cases. To this Ford responded, “Why do you want to be a lawyer, anyway? They’re parasites. Come to Highland Park and I’ll give you a job” (Lacey, 1986, p. 281). Initially resisting this offer, Kanzler accepted when “Henry Ford incorporated his new tractor company, Henry Ford and Son, in August 1916″ (Lacey, 1986, p. 281). Joining at the beginning of this new company, Kanzler played a major role in producing the first Fordson tractors before the conclusion of the Great War. Subsequently, in the postwar period, Kanzler along with his friend Edsel Ford helped run the company.
Much of Henry Ford’s success can be attributed to his production methods and his decision to sell cars at a price so low that even his assembly-line workers could afford to buy one. These low prices caused serious difficulties for his competitors. For instance, in 1920, “the stock of the General Motors Corporation began to wilt severely under the onslaught of the Ford price cuts” (Lacey, 1986, p. 285).
Near the end of 1920, a nation-wide recession was nearing crash proportions and Ford sales fell along with their competitors. “Ford was taking a loss of 20 dollars or so on each car” (Lacey, 1986, p. 285). As the crisis continued, Henry Ford faced the real possibility of bankruptcy:
[With] the prospect of bankruptcy in the winter of 1920, [Henry Ford] found ready targets for his aggression – particularly in the bureaucracy of his company, which he had always viewed with a jaundiced eye. His office staff was cut from 1,074 to 528, the telegraph office eliminated, the tax and controller’s departments merged with auditing. The desks, typewriters, filing cabinets, and paraphernalia of the surplus staff were taken out and sold, along with 60 percent of the telephone extensions – “only a comparatively few men in any organization need telephones,” said Henry (Lacey, 1986, pp. 284-5).
Henry Ford was determined to regain solvency by improving overall operations rather than seek help from Wall Street. Kanzler played a major role in the effort to improve efficiency from within the organization. In fact, Kanzler’s approach is quite similar to today’s JIT methods of production. In this regard, Kanzler noticed that during the Great War, excessive supplies were brought into the Fordson Tractor Plant prior to production. He found that these excess supplies tied up valuable plant space and millions of dollars.
To remedy this, Kanzler reorganized inventory schedules so that raw materials and pans were bought only when needed and that the freight cars used for delivery of these pans were used immediately to transport finished Fordson tractors to dealers:
After Henry Ford had acquired full control of his car company in 1919, he brought Kanzler over to work the same miracle at Highland Park (Lacey, 1986, p. 285).
It proved the saving of the situation in the winter of 1920, for Highland Park was stocked to the walls with spare parts. The inventory was valued by one estimate at no less than $88 million, and from this huge stockpile Kanzler carved out packages of components which were despatched as compulsory additions to every shipment of new cars, these shipments themselves being systematically increased by the factory to use up the large stocks of vehicles unsold because of the recession (Lacey, 1986, p. 285).
Kanzler’s JIT method took an unusual approach in delivering cars to dealers during the winter of 1920-1921. Approximately 6,000 Ford dealers received more cars than they ordered. Along with these extra cars was a delivery of an excessive amount of spare parts. In those days, a Ford dealer’s franchise required dealers to pay in full upon delivery for all cars and spare parts received. While a few dealers refused to pay for cars and parts they did not order or could not sell, most of the dealers borrowed money locally and paid in full. Obviously they wanted to retain their Ford dealer’s franchise. As a result, the Ford Motor Company reduced their excessive inventory of cars and spare parts and subsequently improved their critical cashflow position:
Back in Highland Park, meanwhile, the company had unilaterally changed its own schedule of payments to suppliers from 60 to 90 days, and had also used the generally depressed state of the market to cut its offer prices on raw materials and ready-made parts to the bone. By paying only a skeleton staff of executives and despatchers at Highland Park through the month of January, costs were reduced still further, and by the spring of 1921 Henry Ford could boast that he had paid off all his debts. He had an additional cash surplus in hand of no less than $20 million. Best of all, he had achieved this miracle without borrowing a penny from the bank. As they heard the news, 6,000 or so people around the country knew that they had done the borrowing for him (Lacey, 1986, p. 286).
At the conclusion of the 1920-1921 postwar slump, the Ford Motor Company was leaner and more competitive. For example, during the economically favorable months of 1919, Ford employed 15 workers per completed car per day. When the Highland Park Plant reopened in February 1921 after their downsizing, nine workers were employed per completed car per day. This improvement was accomplished by rehiring fewer workers and speeding up the line. Henry Ford pointed to his increased productivity as one more argument against the bankers. “If we had borrowed,” he said, “we should not have been under the necessity of finding methods to cheapen production” (Lacey, 1986, p. 286).
Ernest Kanzler and Henry Ford made a substantial contribution to what we refer to today as JIT production methods. While credit can be given to Kanzler for the approaches he developed during the war at the Fordson Plant, Henry Ford’s role should not be minimized. Ford’s emphasis on a wider systems approach developed naturally from his focus on the assembly-line. In fact, the concept of JIT evolves naturally when the idea of an assembly-line is expanded to include a further examination “up-stream” and “down-stream” of inputs and outputs.
Closing Remarks: Henry Ford, Just in Time
While JIT methods of production were popularized by the excellent productivity of Japanese industry, this approach had its origin earlier in the USA. Actually, Ernest Kanzler developed an early version of this approach at the Fordson Tractor Plant during the Great War. Then, due to difficult economic conditions during 1920 and 1921, Henry Ford, with the help of Kanzler, employed it on a larger scale throughout the Ford Motor Company. Although these efforts started with the observations and practical work of Kanzler at Fordson Tractor during the Great War, the overall credit for its wide application at the Ford Motor Company during 1920 and 1921 rests with Henry Ford. While Ford, and those close to him at work, were fully aware of Taylor’s scientific management it clearly appears that the innovations at the Ford Motor Company were based on their own ideas and need to respond to specific requirements in automobile manufacturing.
The JIT approach attempts to reduce costs and improve workflow by carefully scheduling material to arrive where needed at the proper time. Consequently, costs of inventories can be substantially reduced and the use of space can be conserved. In some cases this approach can contribute to an improved quality of the product. Today’s managers and those interested in efficiency in the workplace would be well advised to review the suggestions of earlier industrialists and their assistants such as Henry Ford and Ernest Kanzler. Many of their ideas are of practical value today.
Below are several videos highlighting Henry Ford’s contribution to Just-in-Time: