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In 1984, Eliyahu M. Goldratt and Jeff Cox described in their novel “The Goal” how to improve a factory. You look for the bottleneck – the point that sets the pace of the whole – and concentrate all your effort on it. Any improvement elsewhere is probably wasted effort. Seventy years before Goldratt, the Ford Motor Company demonstrated this principle – Bottleneck Focus – on a grand scale.
A car for the many, built for the few
Situation
In 1908, the Model T comes onto the market. Henry Ford wants to build a car for ordinary people, and demand is high. In 1910, the company moves into its new Highland Park plant in Michigan. There, at first, cars are still assembled at fixed stations: workers and parts come to the car. In fiscal year 1912, Ford builds 68,733 Model Ts.
Link to the principle
Demand is not the problem, and neither is the design. How many cars Ford can sell depends on how fast they can be assembled. That is the bottleneck. More salespeople or more advertising would only have lengthened the waiting lists.
Testing it on a small scale first
Situation
In early 1913, Ford’s engineers test a moving line on one component, the flywheel magneto. Instead of one worker assembling the entire part, it travels past 29 workers, each of whom performs only a few operations. The time per part falls from about 20 minutes to 13, and later to around five. The model is said to have been Chicago’s slaughterhouses, where carcasses were moved along overhead rails from worker to worker.
Link to the principle
Bottleneck Focus does not mean blindly overturning everything. The team tests the idea at a manageable point, learns from it and then applies it to the real bottleneck.
The attack on the bottleneck
Situation
On October 7, 1913, the chassis itself goes onto a moving line. The car is pulled through the hall, the workers stay at their stations, and the parts are brought to them. The labor time for one chassis falls from around 12.5 hours to 93 minutes in 1914.
Link to the principle
Goldratt’s steps are easy to trace here. The bottleneck is identified: assembly. It is exploited fully: no waiting, no walking. Everything else is subordinated to it: the supply of parts has to follow the pace of the line. And the bottleneck is elevated: through a new way of working. The line sets the pace for the entire factory.
What the relieved bottleneck releases
Situation
Production rises from 68,733 cars in fiscal year 1912 to 170,211 in 1913, 202,667 in 1914 and 501,462 in 1916. Over the same period, the price of the Runabout, the most basic version, falls from $590 to $345. By 1927, around 15 million Model Ts have been built.
Link to the principle
A relieved bottleneck changes the entire system. Lower costs allow lower prices, lower prices bring more buyers, and more buyers justify more production. Ford did not have to improve everything. He had to improve the one point that was holding everything else back.
The next bottleneck
Situation
Staff turnover is high. Many departments have to hire 300 men a year to fill 100 positions. On January 5, 1914, Ford announces the five-dollar day. The minimum wage rises from $2.34 to $5 a day, more than double. But only those who have been with the company for at least six months, and whose way of life is approved by the company’s Sociological Department, receive the full amount.
Link to the principle
Goldratt’s fifth step is: once a bottleneck is resolved, look for the next one. Now the bottleneck is no longer the manual operations but keeping the people. Ford responds with money. The price of the new way of working – its monotony – is debated to this day.
Key takeaways
Key lessons
- First ask which step sets the pace of the whole.
- Do not improve everything a little; improve the bottleneck decisively.
- Try out new approaches where a mistake costs little.
- Align everything else with the pace of the bottleneck.
- Once a bottleneck is resolved, look for the next one right away.
Summary
In 1913, Ford had enough buyers and a mature car. What was missing was assembly capacity. Instead of making improvements in many places, Henry Ford and his engineers attacked the bottleneck: first on a small scale with the magneto, then with the assembly of the whole car. Labor time per chassis fell from 12.5 hours to 93 minutes, prices fell, and sales and production rose. After that, the next bottleneck emerged: keeping the workers.
Sources
- Eliyahu M. Goldratt, Jeff Cox: The Goal. First edition 1984.
