Management techniques have gone through many different stages and continue to evolve even today. In the early part of the 20th century as well as the high growth periods of the US economy after World War II, Fordism, was in the forefront, as it focused on mass production and mass consumption as a means of expanding the economy. However as the US economy went through slow growth years, this particular system did not work and other management systems took precedence. Yet there are many organisations that continue to use Henry Ford’s philosophy even in the 21st century. And it is the objective of this research document to study the relevance of the concepts introduced by Henry Ford and the impact and influence it has on 21st century organisations.
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Literature Reviews: When the transformation from the agricultural age to industrial mass production took place, Henry Ford and his philosophy that consisted of using specialized tools, assembly lines and using non-skilled labour in direct production were able to drive economic growth and expansion at unprecedented levels (Shiomi & Wada, 1995). Likewise it was Ford’s philosophy that was the driving factor behind the automobile industry and this system is still used to a great extent by the automobile industry to date. The automobile industry is still the world’s largest manufacturing industry and even though many of the leading car makers have automated their systems to a great extent and reduced their dependence on labour, they still use the assembly line method with the concepts that were introduced by Henry Ford (Shiomi & Wada, 1995). This is not to say that the assembly line method was the brainchild of Henry Ford but rather that the assembly line of today has been greatly influenced by him and has not gone through many major changes in the last seven or eight decades (Gowing, Morris, Adler & Gold, 2008). The moving assembly line that we have known through the years and is seen to date even in this age of advanced robotics being used in the automobile industry was introduced by Henry Ford (Laurie, 2000).
There are currently a few schools of thought that have been finding it difficult to decide if Fordism has had a direct impact on the current economic system that is not wholly based on mass production and consumption as it was after World War II but rather a more streamlined method that is associated with socio-economic phenomena, that is prevalent in all industrial countries throughout the latter part of the 20th century. While it may not be the same as the Fordism that was seen in the automotive industry during the era of Henry Ford, it is still largely based on the system that was formulated by him. In his system employees worked on a production line and the tasks that they performed were specialized in nature and most importantly it was repetitive. The modern day concept of Fordism centers round the following concepts as opposed to the concepts that were discussed above. These concepts are as follows
Production is in small batches rather than mass production
Economies of Scope are valued
The jobs and the products that are manufactured are all specialized
Information Technology is widely used
The emphasis is on the consumer rather than the different social classes in a society.
Instead of the blue-collar worker of the past we see a number in the rise of the white-collar workers due to this concept.
The workforce includes females as opposed to be male dominated like in the past.
The above concepts have come into play due to the saturation of the key markets, which worked against the concept of mass consumption. Due to this new concepts the emphasis is on uplifting the living standards, which in turn has changed the manner in which the market is viewed from the manufacturers’ end (production/manufacturing stand point). Rather than the consumers being seen as a mass market that can be served by one generic type of item, manufacturers began to see the consumers as individuals that made up many different segments of market. Therefore it occurred to the manufacturers that the consumers were better served if they were grouped in to batches and products and services were provided that fit the goals and needs of those specific segments rather than the mass market (Ray & Reed, 1994).
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Therefore the mass market concept that was introduced by Ford has now been narrowed to markets that are specific to luxury items, custom made products and positional goods. Production, which was homogenous in nature at the start of Fordism, is today more focused and therefore is diverse and can be differentiated. Further as stated previously the economies of scale of the Ford era have now evolved into Economies of Scale due to the diversification and differentiation that is taking place in the market place (Raynor, 2004).
The changes that have brought about the 21st century organisation, is largely due to factors such as the changing global economic and political landscape and the changes in prominent ideologies. Due to the declines that were seen in national production (that was prevalent in the post war America) for a more globalised production system of the late 80’s and 90’s, along with the increase of global markets and multi national companies, flexible specialization has replaced the mass markets of the post war era. Commanding the workers to behave in a certain way has now been replaced and management pays more attention to communication rather than ordering as was seen in Ford’s time. Further the centralized production process of yester year is now replaced by outsourcing, franchising, sub-contracting, part time workers, temporary workers, self employed individuals and work-from home individuals. Besides the economic changes that took place as stated above there have been many political changes that have taken place that has forced the evolution of Fordism (Thomas, 2004). The political changes are mainly the change from the class based political parties (as seen in the United Kingdom and the United States) to the political parties that are based on social movements, gender, race, religion and region. Labour Union influence is today almost non-existent North America and is now replaced by more localized entities that engage in plant based negotiations. Further the rise of an entrepreneurialistic culture has also lead to the evolution of Fordism. Even education today is less standardized as it used to be and become more specialized with the work force seeing a decline in the numbers of individuals opting for blue-collar jobs and rather joining the ranks of the white-collar workers (Lebowitz, 2004).
Italy is a very good example of how the concepts of Fordism have evolved over the years. In areas such as Milan, Turin and Genoa, production used to be focused on the concept of mass production for mass consumption, however during the 1970s and later, the clusters of small companies and manufacturing plants started developing in areas such as Tuscany, Umbria and Veneto to name a few. Each of these regions specialized and produced a different set of products that were all very loosely related to one another. Each of the factories often employed workers that numbered between five and fifty (a majority of which were below ten). This is what is called the economies of scope and a far cry from the economies of scale that we saw in the initial stages of Fordism (Williams, 1998). The feature of these manufacturing units was that the product that were manufactured were of high quality and the workers who were employed were highly skilled and highly paid due to the high level of skills. There was deep integration and much involvement between the entrepreneurs, the designers as well as the engineers in each of these plants and the plants themselves were design oriented and multi-disciplinary in nature.
Japan is another good example of the evolution of Fordism that took place. After world war II and the destruction of the country, the company structure within the country changed drastically, this caused the trade unions to be replaced with management friendly unions, increased number of individuals who were less specialized and more multi-skilled. Further the company had a pool of part time/temp and unskilled workers for periphery workers (Perkins, 2005).
Further due to the trade embargoes that the country was faced with after World War II, the production processes within the country could experiment on the domestic market and when the embargoes were finally lifted and imported technology and processes came into the Japanese market, the production industry was ready to absorb the techniques and better it through philosophies such as TQM (Total Quality Management) etc. Due to the price fixing that was prevalent in the market, competition in the domestic market could only be won by differentiation. Further due to the demand for a wide range of products the country was able to have a wide range of facilities that were flexible and able to changeover and produce a large product line. Therefore instead of standardizing the country had a huge number of factories and plants that were specialized in a wide variety of products. Sub-contracting and supply networks were first born in Japan, which changed the Fordist view that American companies of the time were diligently following. Instead of having costly production machinery, the evolved Fordist concepts were more focused on multi-purpose technologies that were affordable for small and medium scale producers who were flooding the market (Pettibone, 2006).
Findings: Even though assembly lines are thought to be a thing of the past and Henry Ford’s concepts of management are thought to be obsolete, the largest manufacturing industry in the world, which is the automobile industry, still uses the method and the concepts even though it has gone through a few transformations. However the concepts that were introduced by Ford has evolved to a great extent today and is used in companies in many different forms.
Analysis: With the two stage transformations that the concepts went through in the last century, Henry Ford’s concepts are still relevant in the 21st century as they were in the 20th century. While many may argue that his concepts have gone through many different stages of evolution this is not the case. The automobile industry that is still in existence in North America and around the world use many of Ford’s concepts, and many of the concepts that are in different stages of evolution. Therefore it can be stated that the Automobile industry being the largest manufacturing industry in the world is one of the most important examples of the impact that Fordism has had on the 21st century company.
The Automobile industry uses a combination of the mass production and flexible specialization. The flexibility that was introduced into mass production would not have been possible if Ford had not first introduced mass production, therefore even though Fordist concepts maybe hidden and changed beyond recognition over the years, it is apparent that without Ford’s concepts the foundation for modern day production would not have been built and therefore modern day theorist would not have had much to build on to get to where they are today (Bencivenga, 2002). Therefore it can be concluded, that even though Fordism and Ford himself is often forgotten in our flexible, technology driven, multi-skilled, multi-purpose, positional and customized production era, the influence of Ford and Fordism is very strong and none of this would have been possible without him and his concepts and methods.
Conclusion: Based on the huge number of organisations that still eliminate skilled labour in direct production, use special tools and equipment through the assembly line, all go to show that the concepts that were introduced by Henry Ford are still relevant even in the 21st century even though mass production/mass consumption cannot be considered as a economic driver for expansion. Further even in companies that the above is not true, the concepts in place are all concepts that have evolved from Fordism.
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