Wednesday, September 18, 2013

Efficiency and Principles of Organization - Going Industrial Organization - Chapter 3


WE have seen so far that the introduction of power and
machinery first inaugurated the manufacturing era,
and next gave rise to certain tendencies and policies in manu-
facturing. The most important of these were growth in
size of the manufacturing plant, and development of manu-
facture on a wholesale scale; and in connection with this
the re-apportionment of duties among the artisans employed,
so that it has become general for each to do only some
limited special part of the whole process of manufacture,
and to do this by repetitive reproduction of a fixed pattern.
While this has vastly reduced costs of production and
facilitated manufacture per se, it is evident that from the
works-management point of view it introduces very serious
problems. One is merely quantitative; the great size of a
modern factory makes it impossible for the manager to
oversee it all in person. Another is the division of opera-
tions among different workmen or departments. Each
single thing manufactured starts, or may start, in as many
different places as it has parts, each part again being not
an individual but one of a lot of like parts; and such a
lot of identical parts, though they start off together through
the shop, may- later on be divided and sub-divided and di-
verge to various finished products if they happen to be
standard to more than one pattern. The workman actually
engaged on the job has no idea of the destination of his
work and no responsibility beyond finishing his own indi-
vidual job to the standard pattern and quality, and perhaps
within some standard time.

Take a pocket knife for illustration. It has a blade of a
certain size and shape, which probably is used not only in
the one pattern of knife we happen to be considering, but
also in some two-bladed and some four-bladed knives made
by the same factory. It has certain German silver pieces,
probably drop-forged, possibly not made by the knife manu-
facturer at all, but bought in quantity from some other
maker. It has some bone or pearl pieces, still more prob-
ably purchased from an outside manufacturer and used in
a number of different styles of knife, sold at various prices.
It has certain steel springs, and thin brass plates, and a
number of rivets. All these parts in hundreds and thou-
sands are passing through the factory, and being assembled
into knives just like the one we happen to take as an ex-
ample, andJnto other knives of more or less varying design,
in a continuous stream year in and year out. Each indi-
vidual workman, as, for example, the man grinding the
blade, sees no more than his own job. But if the factory
is to succeed, John Smith's order for one dozen knives like
the one we have, to be shipped to Topeka, Kansas, must go
forward at a specified time, and must be billed to him at
a price that pays a fair profit, and still is low enough to
meet competition from other knife factories.

The manufacture of a knife is a comparatively simple in-
stance. In the case of some mechanical products such as
typewriters and automobiles, for example, there are hun-
dreds and thousands of separate pieces to be routed through
the factory, worked upon, and finally assembled into a unit
of product. The paths of the several parts are something
like the paths of letters in the mail; a myriad of units from
scattered sources are gathered into larger streams, travel
together so long as their paths can be economically united,
and then diverge again in new groupings to various indi-
vidual destinations. It is utterly impossible for any one
person to follow each transaction, and yet a positive and

sure result must be secured. And this is the function of
organization. System must do what the individual can not

It looks like an impossibly intricate problem; and yet if
we look again at the illustration used just above the Post-
Office we see that a fixed organization and fixed systems
of collection, transportation, and distribution produce a re-
sult in exact accordance with our plan and desire, and with
almost infinite variety and elasticity in meeting that plan
and desire. This is an illustration only not a close par-
allel; for in manufacturing we have the added condition
that each item handled is or may be worked upon and
changed during its movement through the factory, and
in all industry all operations and processes must be con-
ducted with strict regard to economy and efficiency. We
have not an unlimited Government appropriation behind
us, and we have the neighbor across the way competing with
us and by close bidding forcing prices down so that we
have to consider even small fractions of a cent. Still, the
illustration helps us to see what organization and system do

Organization is fundamentally a practical plan for sub-
dividing the conduct of any undertaking into parts, each
small enough to be handled by an individual, by a method
that enables all to work together.

The efficiency of organi-
zation depends on the wisdom and skill with which this di-
vision is made the success secured not only in selecting
efficient individuals, but in arranging that each may work
at his best efficiency, and all work may keep balance and
harmony in achieving the desired result.

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