The Business Book

298

assembly line, cars were made by
teams of highly skilled craftsmen
who produced custom-made cars
using little more than hand tools.
The components used by early
manufacturers were usually
nonstandardized. This meant that
workers would spend time adjusting
components so that they could be
assembled. Ford removed this stage
by designing the world’s first
standardized car. Mass production
of the Model T, made from a
standard set of components, began
in 1910 in Highland Park, Michigan.
Ford’s second great innovation
was the conveyor belt. In the past,
skilled workers had to move around
the factory locating raw materials,
components, and tools. In some
factories workers were hired to
push partially assembled cars from
one workstation to another. Ford
believed these were unnecessary
steps that could easily be removed.
People were taken out of the
production process and were
replaced by specialized machinery,
including a conveyor belt that took
the work to the worker. Each

employee was asked to perform

a single task, using the same tool,

over and over again. As a result,

there was no time wasted

searching for, picking up, and

putting down an array of tools.

Finally, Ford removed variety

from the production process. Each

Model T produced was identical;

Ford believed in simplicity of

product, even down to the paint

color, which speeded up production.

Time spent resetting and cleaning

machines between batches was

avoided. A standard product made it

possible to institute continuous-flow

production, and the amount of time

taken to produce a car dropped from

over 12 hours to just over one and a

half hours.Ford’s decision to simplify

production by removing skilled labor

and time from the process enabled

him to produce his cars at a lower

cost, which he then used to reduce

the price, and that created a mass

market for the Model T.

Custom production

In more recent times, computer

manufacturer Dell achieved

stratospheric rates of growth in the

1990s by streamlining its supply

chain. Michael Dell, the founder of

the company, based his business

SIMPLIFY PROCESSES

Henry Ford made use of the conveyor
belt on the assembly line at his factory
producing the Model T. Workers
specialized in one task with one set
of tools, which lay within easy reach.

model on gaining a cost advantage

over his rivals. He did this in two

ways. First, Dell specialized in

selling custom-made computers;

customers could design their own

machine, which Dell assembled in

response to a specific customer’s

order. Dell held virtually zero stock

and production was pulled through

by the buyer. The main advantage

of this just-in-time method was that

Dell no longer had to pay the costs

associated with storing stock.

When a product was finished, it

was sent straight to the customer.

Going direct to the buyer

Dell’s second cost advantage was

that, unlike other PC suppliers,

it did not sell its products to

specialized retailers; instead, it sold

directly to the consumer via the

Internet. This meant that the

company no longer had to lose

some of its profit margin to third

parties. When Dell sold a computer

for $400, it received $400.

Eliminating retailers did not have

an adverse effect on Dell’s market

share. In fact, the reverse was true.

Most computer buyers preferred the

flexibility of being able to build

exactly the sort of computer that

they wanted, and also appreciated

the convenience of home delivery.

Simple can be harder

than complex: you have to

work harder to get your

thinking clean.

Steve Jobs

US Co-founder of Apple (1955 –2011)

Almost all quality

improvement comes via

simplification of design,

manufacturing, layout,

processes, and procedures.

Tom Peters