Looking ahead by looking back: Swift, even flow in the history of manufacturing
Schmenner, Roger W
LOOKING AHEAD BY LOOKING BACK: SWIFT, EVEN FLOW IN THE HISTORY OF MANUFACTURING*
Manufacturing history is too often neglected in operations management and its lessons lost. Its usefulness for testing theory is under-appreciated. This paper uses critical aspects of the history of manufacturing to provide support for the Theory of Swift, Even Flow as an explanation of productivity gain. The rise of Britain in the Industrial Revolution and the rapid overtaking of Britain by the United States and Germany are argued to be thoroughly consistent with Swift, Even Flow, thereby vindicating both theory and the usefulness of history.
(PRODUCTIVITY; THEORY; MANUFACTURING HISTORY)
It is tempting to look forward into the 21 st century and to think that a great deal of what manufacturers face is unprecedented. The pace of innovation and the strength and pervasiveness of competition seem unmatched in history. One can hardly be blamed if one fancies that the “rules” have somehow been changed. However, as scholars, we are duty bound to ferret out the generalizations that endure, and that could be expected to persist well into the 21 st century. It is appropriate then to reflect upon history and to uncover what lies in our past that can inform both our present and our future. Operations management has not had a rich tradition of such examination. Nevertheless, the history of manufacturing is nothing if not an empirical treasure trove that can be used fruitfully to test our hypotheses and theories, especially those that we suspect might have the staying power to carry us into the 21st century and beyond.
The origin of productivity advance is surely one of the major topics of both manufacturing strategy and economic history. Without sustained productivity gains relative to competition, a company can be left in the lurch. If we are to manage productivity well in this new century, we will need to understand what has led to productivity gain in the years during, and since, the Industrial Revolution. The principles that have accounted for the productivity gains of our past will almost surely support those of our future. With this in mind, we should be aware of some critical facts about industrialization over the centuries-and the sustained productivity gains that are its hallmark. These are the facts that cannot be ignored and which any theory of manufacturing must explain, at least in part. Permit me to enumerate them.
* Britain was the engine of the Industrial Revolution, and, within Britain, it was cotton textiles that first industrialized.
* China, India, and other countries of Europe were not the ones to lead the Industrial Revolution. Indeed, China and India are only now industrializing, and, arguably, in fits and starts.
* Japan, an archipelago of substantially fewer natural resources than found in either China or India, industrialized much sooner than any of the other countries in Asia.
* Portugal, Spain, the Netherlands, and France were wealthier countries than Britain before the Industrial Revolution. Yet, their wealth was quickly overtaken by the industrialization of Britain.
* The United States and Germany rather quickly overtook Britain as the leaders of what has come to be known as the Second Industrial Revolution, when industrialization spread to a variety of industries other than textiles.
2. A Theory to Consider
In a recent article, Morgan Swink and I argued.that the productivity of any process rises with the speed by which materials flow through the process and falls with increases in the variability associated either with the demand on the process or with the steps in the process itself. We argued that this proposition, which we dubbed the Theory of Swift, Even Flow, did much to explain distinctions in productivity across factories and also distinctions in productivity across different types of processes themselves: job shop, batch flow, assembly line, and continuous flow. For example, the admirable productivity of the continuous flow process stems not directly from its capital-intensive nature, but rather from the fact that materials flow through it faster and with less variation than they flow through other processes. That the continuous flow process is typically capital-intensive is largely incidental to its high productivity, although entirely comprehensible given the need for fast, uniform conveyance of materials and for the application of similar processing steps to successive waves of those materials. Swift, Even Flow helps to unify well-established “laws” of variability, bottlenecks, scientific methods, quality, and factory focus, and it shows how such “laws” work as they do. It also argues for just-in-time manufacturing principles, cellular manufacturing, and other, modern approaches to manufacturing management.
The purpose of that recent article was to discuss theory in operations management and to introduce two theories that we think hold promise. We did not attempt to defend both theories, arguing for that in subsequent papers. This paper attempts to take the argument to the next level by confronting the Theory of Swift, Even Flow with some assembled facts of manufacturing history. After all, if we claim that Swift, Even Flow explains why one factory is more productive than another, it also should be true that Swift, Even Flow should have played a role in explaining why one company outperformed others in history and, indeed, why some nations have outperformed other nations. Bolstering this claim is the object of this paper.
If the Theory of Swift, Even Flow is to be supported in the historical record, what should we expect to see? Consider the following:
EXPECTATION 1. Those companies that have exemplified swift, even flow should have done better than companies that were not concerned with either the speed or the variabilities of their production processes.
EXPECTATION 2. Those nations where groups of companies routinely pursued swift, even flow should have industrialized more quickly and to a greater extent than those other nations whose companies did not pursue swift, even flow in their manufacturing sectors.
EXPECTATION 3. Those elements of human character that support low variability (steadiness) and an appreciation for speed and rapid flow should be valued and encouraged in both the companies and the nations that are high-performing.
I do not argue in these pages that Swift, Even Flow is sufficient, in and of itself, to explain successful industrialization. Many more ingredients (culture, investments in marketing and distribution, capital, knowledge, etc.) are needed to provide a satisfying explanation. I do wish to argue, however, that Swift, Even Flow is a necessary condition for successful, and continued, industrialization as it does much to explain why the production operations of firms were able to make rapid and persistent productivity gains.
3. Bringing Together Facts and Theory
This paper owes much to two celebrated historians: Alfred Chandler, Jr. and David Landes. Among their works are three with particular relevance to an understanding of manufacturing and of productivity. Chandler is the author of the Pulitzer Prize-winning book, The Visible Hand, and of a subsequent, follow-on book, Scale and Scope. Landes, among his other works, has written the recent, critically acclaimed The Wealth and Poverty of Nations. In these works are numerous references to productivity and to the companies and countries that led the charge toward effective production, as well as many references to the companies and countries that lagged and subsequently fell by the wayside.
Britain and the Industrial Revolution
Let us keep the Theory of Swift, Even Flow in mind as we confront the facts of history, especially those critical facts enumerated above. It is appropriate to begin with the Industrial Revolution itself. Landes defines it in terms of the “factory system” that combined machines (“rapid, regular, precise, tireless”), inanimate sources of power (e.g., the steam engine), and the use of new, abundant, and typically mineral (as opposed to animal or vegetable) raw materials. The factory was where workers were brought together under supervision, using a central source of power. This innovation led to a rapid and sustained rise in productivity and, in turn, income per head. (Landes 1998, p. 186-187).
The Industrial Revolution first involved cotton textiles. In Britain at the time, wool was the fiber of choice, as it provided warmth. Yet wool manufacture was not easily converted to machinery. Cotton was a more “docile” fiber, to borrow Landes’s wording, and it was cheap, much cheaper than another docile fiber, silk. With cotton, there was a marriage of huge demand (undergarments, shirts, etc.) to increasingly effective manufacture, with a succession of scientifically based inventions to help the process become faster and better: the spinning jenny, the water frame, Crompton’s mule, the power loom, and allied gains in steam engines, metallurgy, and machine tools. Scale was not a particular issue, especially at the start (Landes 1998, p. 256). Instead, swift, even flow was what characterized the British factory system of cotton textiles.
But why Britain? Why not China or India or the other countries of Europe? China and India were the most populous countries and prosperous for the time. Both were blessed with abundant raw materials and skilled workforces. The Mogul emperor Aurangzeb of India had an income in the late 1600s that was 10 times that of his contemporary, Louis XIV of France, the creator of Versailles (Landes 1998, p. 156). China was a center of invention (the wheelbarrow, the stirrup, the compass, paper, printing, gunpowder, and porcelain), and the Chinese could build huge ships and make iron. Yet, the advantages that both China and India had were soon overtaken by the British.
It helped that Britain was a nation, with a common identity and characterized by equality (Landes 1998, p. 219). As the cotton textile industry developed, products were made for a “large national and international market and focused on standardized goods of modest price-just the kind that lent themselves to machine production” (Landes 1998, p. 222). Such a large and standardized market led to steady demand for cotton textiles (even flow), which was emphatically not the case in India, the former leader in the industry (Landes 1998, p. 227). Britain was the first to create a broad market for the common man.
Landes also takes pains to document the cultural factors that he argues contributed mightily to Europe’s and Britain’s rapid industrial growth. Of particular interest to him is the attitude toward time itself. For example, prior to the last quarter of the 13th century in Europe, time was the province of the Church. People’s lives were dictated by the bells of the Church, indicating when to pray (e.g., matins). Day and night were divided into equal hours, but, of course, the length of those hours varied with the seasons of the year. (This same demarcation of night and day into equal hours prevailed in Japan as well.) Nevertheless, the newly developing towns of the era had needs for more consistency-when to wake, when to work, when to open the market, when to close the market, and when to bank the fires-in French, “couvre feu,” from which we get our word “curfew.” To help bring on this consistency, what happened in the last quarter of the 13th century, roughly simultaneously in England and Italy, was the invention of the clock. It spread like wildfire, and it changed the way people in Europe thought. The Church initially fought the equal hours of the mechanical clock, but it eventually came around to accepting them (Landes 1998, p. 48f).
Britain was particularly enamored by the clock and what it meant for people. “The British were in the eighteenth century the world’s leading producers and consumers of timekeepers, in the country as in the city (very different here from other European societies)” (Landes 1998, p. 224). The British were, by nature at this point of their development, exceedingly conscious of time and eager to save it.
Furthermore, the Judeo-Christian sense of time is a linear one. Time is progressive. India did not think in this way. In Hindu thought, time was cyclical, returning to earlier stages and starting anew. Clocks and progressive time were not important. In China, time was the province of the emperor. The mechanical clocks brought by the early Europeans were viewed as interesting curiosities, but the Chinese never sought to learn how to make them, let alone live by them. Only the Japanese were swept up with clocks and mechanical time. They copied what the Europeans brought and they sought to miniaturize these clocks and to put their own stamp on their design. Track where time became important and, to a large extent, one tracks where industrial revolutions were made.
Before Britain launched the Industrial Revolution, other countries in Europe had taken turns as the wealth leaders on the continent. Portugal’s sea-going prowess led it around the Cape of Good Hope to the riches of the Spice Islands. Spain soon overtook Portugal with the gold of the New World, and the Netherlands muscled in on Portugal’s spice trade. France, too, was richer than Great Britain. Nevertheless, once the Industrial Revolution got rolling, Britain began to create wealth in excess of any the other countries had accumulated.
Landes presses the point that northern Europe, and particularly Britain, created a timevaluing culture that was conducive to the development of industry. He is sympathetic to Max Weber’s provocative explanation for the faster industrial development of northern over southern Europe. Weber’s thesis was that Protestantism defined and sanctioned “an ethic of everyday behavior that conduced to business success,” one that stressed “hard work, honesty, seriousness, the thrifty use of money and time” (Landes 1998, p. 174f). Landes makes a particular point of the attitude toward time.
Even in Catholic areas such as France and Bavaria, most clockmakers were Protestant; and the use of these instruments of time measurement and their diffusion to rural areas was far more advanced in Britain and Holland than in Catholic countries. Nothing testifies so much as time sensibility to the ‘urbanization’ of rural society, with all that that implies for rapid diffusion of values and tastes (Landes 1998, p. 178).
Lest one think that the Protestant ethic is about religion per se, Landes notes how the clock-loving Japanese developed very much the same kind of ethic (Landes 1998, p. 363). For Landes, then, it is an easy leap from Japanese values and culture to the fact that Japan industrialized first in Asia, most specifically after the Meiji Restoration of 1868.
The cultural preoccupation with time that helped lead Britain to create the factory system with its swift, even flows had some other, positive benefits. For example, making clocks better and smaller is just the kind of incentive that spawns industry. Think about the clock and later the watch. First, there was the craftsmanship required, the fine tools needed to work the materials, and, then, there were the materials themselves; steel, even crucible steel. And, there was mechanical engineering required, particularly for the increasing miniaturization of the works. There was a constant pressure to improve, for both accuracy and precision. It isn’t the wheelbarrow, the stirrup, or the compass; it’s not a one-off type of invention. The clock screams for continuous improvement.
The precision and accuracy associated with the clock is related to another, important development: science. And, science became one of the pillars upon which Britain’s industrial revolution rested. A pantheon of important scientists appeared in Britain starting in the 1600s: Bacon, Napier, Harvey, Newton, Hooke. The Royal Society began in 1660.
After a fast, early start, the science of southern Europe faltered. Consider Galileo, the father of experimentation. After path-breaking work, including improvements to the clock, Galileo (and other scientists in southern Europe) ran afoul of a most powerful institution, the Catholic Church. The Church was not about to grant Galileo and others the freedom of thought that we associate with breakthrough science. What happened to Galileo, for example, for his belief in the Copernican system? The Church forced him to recant. Northern Protestant Europe accepted Copernicus, but not Southern Europe. Even Descartes hemmed and hawed about it. So much for science in Italy, Spain, and Portugal, or in India and China, for that matter. France fell behind too. Protestant Europe accepted science, and with science one could think about forging an industrial revolution.
The problem of longitude is an apt example of Britain’s interests and mastery. While the Portuguese had solved the problem of latitude centuries earlier and had beaten everyone around the Cape of Good Hope to the East Indies, the major navigational problem lay with determining longitude. It was left to John Harrison, an Englishman, to create a marine clock that won the prize for solving the longitude problem. The consequence: now the British own time, and the world is compelled to call it by a British name, Greenwich Mean Time.
The upshot of this review is to establish that, in Britain, culture and product/market considerations combined to support a swifter, more even flow to what was made than had prevailed at any other time and in any other place. Making textiles swiftly and with less variation (by powered machines in factories) led to an explosion of productivity. None of the other, contender countries had this, nor did they have Britain’s combination of science, reverence for time, and large, steady demand that fed this explosion of productivity.
This is not to say that Swift, Even Flow did not exist elsewhere in Europe. One of the most celebrated stories of productivity is that of the Arsenal in Venice, where the galleys of the vaunted Venetian fleet were built and outfitted. The Arsenal was for centuries the largest industrial enterprise in Europe, built in 1104 and only dismantled with Napoleon’s defeat of Venice in 1797. The Arsenal was state-run, responsible for the warships of the Venetian navy and not for any of the merchantmen of Venetian commerce. It reached its heyday in the 15th and 16th centuries when it was famed for the speed at which a ship could be outfitted.
The productivity of the Arsenal was greatly aided by the fact that it built essentially one kind of ship, the galley: a long, low, narrow ship powered by both sail and oars, with guns mounted fore and aft, but not along the sides. The galley was effective in the often-calm waters of the Mediterranean. In addition, the Arsenal was very vertically integrated, making all aspects of the ship’s construction, from hulls to metal parts to rope. The separate parts were manufactured in dedicated warehouses located along a channel within the Arsenal’s walls. Hulls and other standardized parts such as masts, spars, benches, and oars were fabricated in batches and kept in inventories of up to 50 or 100 ship-equivalents. When the navy needed more ships for battle, the hulls, caulked and planked, began a trip through the channel where they were outfitted in assembly line fashion: rudder, mast, benches, spars, sails, cordage, ironwork, arms, etc. This outfitting of the galley could be done in under an hour. Given this speed, Venice preferred to hold its warships as work-in-process inventory on land rather than as floating inventory in continual need of maintenance. Unfortunately for Venice, much of the power of the swift, even flow of the Arsenal was dissipated in the late 16th century when ship design turned against the galley and toward the much larger ships-of-the-line and frigates (Lane 1934, pp. 129-175; 1973, pp. 361-364).
The American Contribution
Even as Britain led the world to the Industrial Revolution, it was relatively soon overtaken by two other countries: the U.S. and Germany. Let us concentrate on the Americans. For Landes, the “decisive and most distinctive American innovation, though, was not any particular device, however important, but a mode of production-what came to be called the American system of manufactures” (Landes 1998, p. 301). The American system of manufactures was all about standardization of product design and the interchangeability of parts. Both of these characteristics reduce variability in the production of an item and encourage swift manufacture. The American system of manufactures came early to the new nation. Landes writes of an 1815 French ship with a cargo of window glass of various sizes that had to give most of it away because the glass was not of the then standard size (Landes 1998, p. 302).
Indeed, American labor productivity was higher than Britain’s by the early years of the 19th century, if not before (Broadberry 1994, p. 531 If). Such a high level of labor productivity was not the result of a higher capital-to-labor ratio; Britain had more capital relative to labor than the US for most of the 19th century (Broadberry 1994, p. 522). This is an important fact because a high capital-to-labor ratio cannot be invoked to explain why American labor productivity was higher than Britain’s so early. Rather, the innovation that was new was the American system of manufactures. This innovation highlighted standardized designs and interchangeable parts that enabled materials in the factory to move more quickly, and with less variability, than was the case in Britain. Such a finding is consistent with the view that, at base, productivity (including labor productivity) is explained most appropriately by the Theory of Swift, Even Flow.
This conclusion is bolstered by the histories of the companies and industries that led America’s industrial development in the 19th century. Here is where another famous historian, Alfred Chandler, and his monumental, Pulitzer Prize-winning work, The Visible Hand, becomes indispensable. As Chandler sees it, the factory system that spread so quickly in the middle decades of the 1800s was characterized by a drive for high-speed throughput. Chandler explains the development of the continuous process factory, exemplified by the “the automatic all-roller, gradual reduction mill” used to process wheat and other grains. This mill, created by C. C. Washburn (a founder of what was later to become General Mills) and perfected by him and his rivals, the Pillsbury brothers, revolutionized the way cereal grains were processed.
The refining of petroleum after Drake’s 1859 discovery of oil in western Pennsylvania yields a similar story.
The refiners initially increased output per facility by applying heat more intensively. They developed the use of superheated steam distillation, which they borrowed from recent innovations in the refining of sugar. Next they devised the ‘cracking’ process, a technique of applying higher temperatures to higher boiling points to reshape the molecular structure of crude oil. Such cracking permitted as much as a 20 percent increase in yield from a single still. The output of stills was further expanded by the use of seamless, wrought iron and steel bottoms; by improving cooling as well as heating operations; and by changing the fundamental design of stills so as to increase further the temperature used.
As the individual units were enlarged and made more fuel-intensive, the operation of the units within a single refinery was more closely integrated. Steam power was increasingly used to move the flow of oil through the plant from one refining process to another. . . .
Increased size of still, intensified use of energy, and improved design of plant brought rapid increase in throughput. Early in the decade, normal output was 900 barrels a week; it reached 500 barrels a day by 1870. Large refineries already had a charging capacity of 800 to 1,000 barrels a day and even more. At the same time, unit costs fell from an average of 60 to 30 a barrel, and cost of building a refinery rose from $30,000-$40,000 to $60,000-$90,000. The size of the establishment was still small, in terms of capital invested, costing no more than two miles of well-laid railroad track. But the economies of speed were of critical importance. And one does not need to be an economic historian to identify the senior partner of the fastest refinery in the west in 1869. The high speed of throughput and the resulting lowered unit cost gave John D. Rockefeller his initial advantage in the competitive battles in the American petroleum industry during the 1870s (Chandler 1977, p. 254ff).
Rockefeller’s fortune thus derived from speed-a function of time. Not only Rockefeller’s fortune, but others as well. Andrew Carnegie’s Edgar Thomson Works in Pittsburgh was a model of factory design that facilitated the flow of materials. For Chandler the telling explanation is “economies of speed,” as he puts it, rather than economies of scale:
The rise of modern mass production required fundamental changes in the technology and organization of the processes of production. The basic organizational innovations were responses to the need to coordinate and control the high-volume throughput. Increases in productivity and decreases in unit costs (often identified with economies of scale) resulted far more from the increases in the volume and velocity of throughput than from a growth in the size of the factory or plant. Such economies came more from the ability to integrate and coordinate the flow of materials through the plant than from greater specialization and subdivision of the work within the plant (Chandler 1977, p. 281).
In his subsequent book, Scale and Scope, Chandler elaborates on the leading companies of Britain, the United States, and Germany in the eras before World War I and between the world wars. His comments and observations add to this theme of swift and even flow as it was the companies that valued swift, even flow that took the lead in industry after industry. Indeed, the industrialists of the time knew exactly what they were doing to harness the advantages of swift, even flow.
Consider some examples:
1. Albert Moxham, a key manager at Du Pont, then the leading producer of gunpowder, wrote to Coleman du Pont in 1902 that “The essence of manufacture is steady and full product” (Chandler 1990, p. 76).
2. The deleterious variation of the bullwhip effect was recognized as early as 1919 in the supply chain at Procter & Gamble and, as a consequence, the company abandoned its use of independent wholesalers so as to foster a swifter, more even flow from manufacture to market. It meant greatly increasing the company’s sales force and acquiring or building warehouses, but it permitted “a steady week-to-week flow” for Procter & Gamble’s factories. The change paid off handsomely (Chandler 1990, p. 155f).
3. Between 1914 and 1935, the tire industry realized the greatest percentage increase in production per man-hour during that period (433%) by concentrating on better accelerators to speed up the vulcanization of rubber (Chandler 1990, p. 108).
4. Plate glass was another industry that benefited from speed: “In the production of plate glass, three developments (in addition to improved transportation and communication) greatly increased throughput and reduced unit cost during the 1880s. One was the invention, by Frederick and William Siemens of Dresden, Germany, of the continuous-process tank furnace. The second was the use of gas (instead of coal) to heat the furnace. The third was the application of electricity to power and control the speed of glassmaking machinery” (Chandler, 1990, p. 114).
5. The American Michael Owens, just after the turn of the century, did much to provide the same kind of continuous flow processing to bottle making (Owens-Illinois) and to window glass production (Libbey-Owens-Ford).
Perhaps the most well-known American proponent of swift flow was Henry Ford. Shortly after the completion of the moving assembly line at the Highland Park works in the spring of 1914, the labor time in the production of the Model T dropped from 12.5 hours to 1.5 hours. The throughput time for the Model T, from iron ore to finished car, was as short as 33 hours (Ford 1926, p. 118f). By 1921, Ford was producing 55.7% of the passenger cars produced in America. Unfortunately, Henry Ford’s management style was disastrous. He fired many of his most competent managers, many of whom jumped ship to General Motors, which was backed by the du Ponts. (Chandler 1990, p. 205f). Ford soon lost its lead in the automotive market.
The Sorry Case of US Steel
The rise and fall of US Steel is an excellent case in point of the power of swift, even flow and what neglect of it can mean to a company’s competitiveness. Listen to Chandler:
… Andrew Carnegie, like John D. Rockefeller and Henry Ford, acquired industrial power and a vast personal fortune by understanding the significance of throughput. “Hard driving” was Carnegie’s term for it.
The story of steel differs from that of oil, however, in that the most effective first mover sold out. Senior executives of Carnegie’s successor company, the United States Steel Corporation-those who were lawyers and financiers-failed to appreciate the value of operating “steady and full.” They dissipated Carnegie’s first-mover advantages and thus permitted the rapid growth of challengers …. (Chandler 1990, p. 128).
What had been those first mover advantages? As the economist Peter Temin discusses, it was speed. The time it took to make steel was constantly dropping with the introduction of better sources of power and the introduction of a variety of innovations (Chandler 1990, p. 129). Unfortunately, all these first-mover advantages were dissipated by Elbert H. Gary, a lawyer who became the first chairman of the board of US Steel, at the request of J.P. Morgan who had bought out Andrew Carnegie in 1901. Gary’s policy was to maintain prices and not to exploit the power of swift, even flow, a policy that drove Carnegie’s old lieutenants at US Steel crazy (Chandler 1990, p. 134f).
For lack of attention to swift, even flow, the steel industry’s giant became an also-ran. Elbert Gary’s management of US Steel permitted Bethlehem Steel and others to grow and take market share from what was initially the industry’s overwhelming leader. Perhaps the most charitable comment one can make about such disastrous manufacturing management was that US Steel was spared as a target of the trust-busters of the early years of the century.
The German Experience and the British Revisited
Like the United States, Germany soon overcame the early British advantage and began impressive growth. Germany became more cartelized than did the u.s. but it created major players in several industries, notably chemicals, steel, and heavy machinery. The mechanisms behind swift, even flow undergird the German experience as they do the American one. The major German companies became well versed in the American system of manufactures (e.g., Ludwig Loewe), and they paid as much attention to flows in their major works (e.g., Siemens, Bayer) as did Carnegie (Chandler 1990, p. 476f).
The British did not press the early advantage they had built. Chandler argues that British entrepreneurs often reacted hesitantly to the new production techniques of the Second Industrial Revolution. They did not make the investments required in production, distribution, or organization. Personal or family management often prevailed, and it was not enough (Chandler 1990, p. 261f). Textiles did not keep pace technologically. Innovations like high-speed canning simply passed them by. In those industries where the British took up new, swift-flowing technologies, they became players (e.g., British-American Tobacco, Courtaulds in rayon, Pilkington in glass), but there were many industries where the British were content to be also-rans.
This exploration into history offers us several conclusions.
1. Swift, Even Flow works; it worked in times past, it works today, and it can be expected to work in the future. While it represents the old-fashioned way to make money, it is as contemporary as Michael Dell. And, it should continue to serve us well into the next millennium.
In particular, Swift, Even Flow explains much about the companies, industries, and nations that were able to improve productivity in manufacturing quickly and over a sustained period of time. The expectations introduced earlier in the paper are all supported by history. Consider them again.
EXPECTATION I. Those companies that have exemplified swift, even flow should have done better than companies that were not concerned with either the speed or the variabilities of their production processes.
The companies that, even today, we regard as the leaders in their industries pursued swift, even flow: Standard Oil, Carnegie’s steel interests, Ford Motor Company’s early years, the Minneapolis millers, Procter & Gamble. One could add American Tobacco and BritishAmerican Tobacco, both beneficiaries of the Bonsack cigarette-making machine, as well as Bayer and Siemens in Germany. Chandler details even more. On the other hand, US Steel is a prime example of how repudiation of swift, even flow can torpedo a company, even an industry leader.
EXPECTATION 2. Those nations where groups of companies routinely pursued swift, even flow should have industrialized more quickly and to a greater extent than those other nations whose companies did not pursue swift, even flow in their manufacturing sectors.
Britain started it all, but the u.s. and Germany, and the major companies in those countries, quickly set a faster pace of productivity gain. India, China, and southern Europe did not develop major companies that controlled industries. Much of their production remained outside the factory system and outside the American system of manufactures.
EXPECTATION 3. It should be shown that those elements of human character that support low variability (steadiness) and an appreciation for speed and rapid flow are valued and encouraged in both the companies and the nations that are high-performing.
In Britain, and later in the U.S. and Germany, standardization, steadiness of demand, and a devotion to knowing time and saving time became a part of the fabric of life. These are the countries that prospered first. Those nations that have only recently embraced science and a time-centered work ethic (e.g., India, China) are only now industrializing, despite the fact that they had early advantages in resources. Japan, early on, demonstrated a culture that valued time and homogeneity. And it was Japan that industrialized first in Asia-starting with cotton and silk and food products but quickly moving on to heavy industry, and doing so despite a lack of resources.
2. History is a neglected part of operations management, and it should not be. We sometimes act as if operations management history begins with Frederick Taylor, and, at that, we even debunk his contributions. If operations management, as a discipline, is to propose and test theories-theories that we can give names to and modify or reject as more and more facts are brought to bear-then it is critical that we turn to history as an important source of the facts the theories are to explain. As a social science, operations management does not have the luxury of many controlled experiments, so it is important that we use history as an experiment.
3. We too frequently forget the lessons of history, be they from the Arsenal in Venice or from the manufacture of bombers in World War II. As scholars we need to codify those lessons, organize them, and teach them so that, in the future, wisdom can be sustained, and not constantly re-invented. We would be wise, in my judgment, to initiate doctoral courses in the history of operations management and the history of thought in operations management, and to devote some time in our other courses to these lessons from history. We need to embrace the classics much more than we do.
Note: This paper is an elaboration and extension of the keynote address given at the Production and Operations Management Society meeting at the Graduate School of Business, University of Cape Town, Cape Town, South Africa in July 1998. My thanks to Morgan Swink, Philip Powell, and two referees for their comments on previous drafts of this paper.
* Received August 1998; revision received April and September 1999; accepted December 1999.
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ROGER W. SCHMENNER
Kelley School of Business, Indiana University, Indianapolis, Indiana 46202, USA
Roger W. Schmenner is the Richard M. and Myra Louise Buskirk Professor of Manufacturing Management at the Kelley School of Business, Indiana University. He serves as the Associate Dean-Indianapolis Programs and as co-director of Indiana University’s federally funded CIBER (Center for International Business Education and Research). He has also held faculty appointments at Duke, Harvard, and Yale, and two visiting appointments at the International Management Development Institute (IMD) in Lausanne, Switzerland (August 1986-July 1987, January 1992-July 1993). He was the president of the Production and Operations Management Society during 1997. Schmenner holds an A.B. degree from Princeton (1969) and a Ph.D. from Yale (1973), both in economics. He and his wife, Barbara, live in Carmel, Indiana. They have two sons.
Copyright Production and Operations Management Society Spring 2001
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