Chapter 4

There should be a constant supply of material throughout the entire work. The stock in process should flow through the plant in a rapid but thin stream. The quantity should be no greater than absolutely necessary to insure a steady supply for all of the workers, including the assembling and selling workers.

An excessive stock of this or that piece, or of all pieces, means that much capital idle, and it also tends to slackness of management. Frequently it is the outcome of carelessness.

A slip-shod management that disregards this point will use no care in purchase of material or in putting in the shop orders. All that is needed is to just hurry forward the stock that "happens" to be "out", and at the same time allow the accumulation of the unneeded stock to go on unchecked.

Immense storerooms for keeping finished stock are shown with pride, unmindful of the fact that every dollar's worth of unnecessary stock on the shelves in the stockroom, every dollar's worth of unnecessary work in the plant, represents idle money and faulty management.

If this money is to be retained in the business, the system should be changed so that the money will be put where it will bring the best return.

The excessive stock in process is sometimes an outcome of blind progressiveness--the blindness that fails to see that there is as much money tied up in stock in process and in finished product as there is in the entire machinery equipment.

An adaptable equipment facilitates keeping down the amount tied up in stock in process. The modern plant should take advantage of these modern methods and machines which tend toward profitable use of capital. Such machines are highly developed and true to the controlling ideal of adaptability and largest output per dollar of investment.

Cost of the Product.

The practice of disregarding the profit, when considering changes in machine equipment, is the natural outgrowth of the separation of the mechanical and the business departments.

The changes in the equipment are usually determined by the mechanical department, and this is done with particular regard for the quality of work and the cost per piece. The relation between the profit and the net labor cost is not considered.

The cost of the product of the average machinery-building plant may be divided into three nearly equal parts: the material, the labor, and the burden; or, in four equal parts, if a reasonable interest charge is made for the use of the capital invested.

The material is the iron, steel and other material that enters into the construction of the machine, and it is taken in the condition in which it usually comes to the machine shop.

The burden includes all expenses and salaries necessary for the maintenance of the business.

About one-half the amount paid for labor goes to the men who run the machine tools, and the other half is paid to workmen who do the other work, such as handwork, assembling, transporting, etc. Therefore, the cost of machining is either one-sixth or one-eighth of the total cost.

On top of the net cost of the product there should be a profit. If it is not there, the sooner something happens the better. If it is there, then it is proportioned to the volume of the output. Therefore, both the size of the output and the labor cost should be kept in mind.

The size of the profit per unit of output is not generally known to the mechanical departments. But even if it is not known, there is no reason for their being uninformed as to the importance of large output for cost of the plant.

Largest Profit Per Dollar Invested.

One of the most satisfactory policies of management is that which tends toward getting the best return or profit per dollar of investment.

We shall not refer to the quality of the product, the design, or any other elements which affect the good name and standing of the business, for it goes without saying that no business can be maintained where these are disregarded. The point to be brought out here is that, These thing being equal, the best scheme of management for profit is one that puts the capital where it will do the most good.

The above statement is one with which all will agree, but strangely enough there has been a tendency to tie up capital in ways that actually throttle the output of the entire business.

Furthermore, this is frequently done by increasing the portion of the investment that is irrevocably tied to the existing product, thus not only reducing the earning power of each dollar invested, but also increasing the hazard by tying the capital to the present product, which soon may be unsuited to the market demand.

One of the most common errors in this respect is the one that regards the reduction of the labor cost as the paramount consideration.

Reduction in labor cost has been the war-cry. The pay-roll has been talked about so much that it has seemed to become the whole thing. A man who declares that the labor cost per piece is not the most important element is at once branded as an advocate of old-fashioned methods.

It is needless to give assurance that there is no intention to disregard the labor cost. The net cost per piece is a very important element, but it should neither eclipse the question of profit per dollar invested, nor the risk of the capital tied up.

What is the gain if the means for reduction of the net labor cost reduces the profit more than the saving in labor? If doing so results in an actual loss of profit, why is it done?

We can readily see that the overhopeful managers may disregard the risk of the money invested, but we cannot see why the relative importance, or rather unimportance, of the labor cost should be so disregarded.

The machine tools in a plant usually determine its character. This character is not one that can be quickly changed, but every addition to the equipment does change it for better or worse. Usually the installation of a new machine is hailed as a progressive move, just because the new machine works better than the old, but its effect may be very bad. It may be changing the character of the plant adversely to the interests of all concerned. Therefore, the controlling spirit should see to it that each move is made on a basis that is economically sound.

It is in these changes that the scheme of management has a chance to make a great difference in the earning power of the entire business.

If too large a proportion of the total available capital is tied up in the machine equipment, the business is handicapped. There is a right amount which bears a certain relation to the total required to carry on the enterprise.

With a given amount of capital for machine equipment, the output of the plant will be seriously throttled if the net cost of labor per piece machined is allowed to become the controlling element.

The Workers Help Bring Success.

The inventor, the officers, and mayhap the foreman, taken all together, do not and cannot make a successful machine or business without this supplemental work or ideas that come from actual work of all workers.

This new kind of knowledge should not take away a man's courage; on the contrary, it should give him a true sense of value of existing, "going" things. With this knowledge he can confidently and earnestly push a machine that is the product of a good organization. He will know the great value of much experience and practise of each of the many men in the organization. He will neither kill the business by half-hearted indorsement, nor increase the hazard of investment by urging this or that modification. Nor will he advocate this or that machine being added to a line that is already too great.

The invention, the general organization, the proper direction of the business, are essential to success. But without that organization which is only obtained by actual, thoughtful experience of the men who do things, all the knowledge and industry of the leaders are utterly useless.

This knowledge produces a new kind of confidence that has greater faith in the existing and running things than in the claims for something that has not had the development of practice. It is the confidence that knows that the right fundamental ideas and the policy of "sticking to one thing" will accomplish the best results.

This is not a doctrine of optimism that holds there is no inferior machine. The "best" implies the existence of the inferior. In nearly all lines there are many grades from the best to the worst, but the loss of faith in the relative value of a machine is most commonly due to a lack of full knowledge of the other types, and it is this kind of loss of courage, confidence, or whatever it may be, that this chapter is intended to offset.

Have Faith in Your Products.

What has been said regarding the optimist, the pessimist, and the vacillating man, from the designing and manufacturing point of view of a machine business, applies with equal force to the business organization.

The business is pushed forward by men who have confidence in the project and in the product. If these men lose their faith in their own business, they not only lose their usefulness as pushers and managers, but they become drags on the industry, and remain so until restored to normality. The hazard of investment is greatly increased by such conditions.

Instances without number have been observed in which men who have been successful have become unsuccessful through loss of confidence due to acquiring the "dangerous half-knowledge."

The man who has acquired the dangerous half-knowledge should take a post graduate course in some institution where men are treated by all the most powerful agencies known to science. There may be no institutions of this kind in existence, but the great need will doubtless bring the establishment of many.

The men who have lost faith in their own machinery should be told that no company can survive the effects of weak-kneed advocates. Any company is better for a certain amount of aggressive competition. Any company can stand more or less opposition from its friends the enemy, but no company can continue to exist under the blighting effects of the men who have lost this confidence in them or their product.

The post graduate course for restoration of the near-wise man should include educational means of all kinds. The means should be especially adapted to the need of each student or patient.

There might be a phonograph in each room, which should work all night and all day. This machine should repeat over and over a few short sentences like the following:

"The only perfect machine is the one you do not know."

"Study the machines offered by your competitors, just to get the same degree of knowledge of the 'other' machines--not for the purpose of slandering or even mentioning--but just to restore your confidence in the relative value of your own machine."

"Don't try to get back your belief that your own machine is perfect--that has gone forever--only look at the other machines and learn that your own is the best."

This kind of confidence will not be exuberant, but it will have marked efficiency in the cold gray world in which you are to again try your strength.

Specialization.

We find that in keeping with the trend toward specialization, the machine shop is now manned and directed by specialists, whose close application to the technical science of their respective specialties has in a degree obscured other elements with which their interests should be coordinated. Among these we generally find the so-called human element. This feature of specialization, which is the natural result of concentration and undivided attention to the work in hand, has entailed a string of consequences that has lessened the spirit of fellowship and co-operation.

The workman in the old machine shop was known as a machinist, an apprentice or a helper. The machinist trade required skill at bench, vise and forge, and in the operation of the lathe and planer. It also required a general knowledge and resourcefulness which enabled the machinist to make good with the meager facilities. The large specialized shop of today was not known.

Today the machine shop is filled with a variety of machines which have grown out of the original types. Each shop's equipment is selected to serve the needs of that shop, and since each shop has a special purpose, its equipment seldom includes the full range of machine-shop machinery.

Today the work flows through the machine shop in lots of large numbers of pieces of a kind, and each machine, as well as each worker, is kept at one kind of work and usually at one simple operation.

The worker in the machine shop of today is no longer known as a machinist, because that term does not cover the present range of positions. Even the term "all-round machinist" is no longer satisfactory.

Specialization has made so many divisions in the work that it has resulted in developing men for special branches, so that today we have relatively few men who can skillfully operate for instance the engine lathe and planer. Even if there are those who ever had that ability, most of them have lost it through disuse.

The workers are now designated by many names indicating their special work.

The all-embracing term machine shop is divided into departments for drafting, designing, accounting, production, flow of work control, cost accounting and many other divisions. Each calls for executives and workers having special titles.

The subdivision of work has resulted in each executive and worker acquiring a high degree of ability and skill for work of his kind, and it keeps each one doing the highest class of work for which he is qualified so that his time is not wasted in the simpler operations which can be performed by men of lesser ability.

We can readily see the economic gain that accrues when the worker becomes more efficient; first, though the greater skill acquired as a result of fewer operations to perform, and second, through the use of the highly developed special machines, for then he is able to produce a greater value for a given expenditure of effort. We can also see the gain that results from specialization by the executives, for each one's attention is concentrated to the management of a smaller range of work; but the average mortal has not yet reached the point of accepting the fact that to some extent there should be a division between mental and physical tasks. It is needless to say that no one in these days would suggest even a possibility of a general division of the work along the line between the abilities of the brain and hand and in these days of construction and operation of intricate mechanisms like electric and telephone instruments and machinery, aeroplane, automobiles, railroad machinery, machine shop machinery, army and navy machinery, from the smallest instrument and small arms to the big machines like the battleship. The need of the man in whom is combined the ability of brain and hand transcends any possibility of our meeting the demand. But specialization does require both kinds of division. The one that divides along the line between mental and physical tasks provides great opportunities for those men who have special ability at either the mental or physical tasks. It is undoubtedly true that the greatest achievements have been attained by those who have been unable to combine the great mental and physical ability. Such men by nature and preference are most fitted and most comfortable in the positions in which there is a greater proportion of use for either the brains or fingers.

Every student of this subject early recognizes that the man at the physical task should not be unnecessarily distracted by the vexing problems of planning and directing the work. In some way this does not seem to fit a democracy, but rather seems to lead toward autocracy. However, let us keep in mind that specialization is essential, not only at each physical task, but at the tasks at which there may be expended a combination of the mental and physical, and also at those tasks that are wholly mental, and that a division should be made to get the best results from the whole organization. While it may seem autocratic to leave to one group the determination of the methods of work, and to another the task of doing the work, the fact remains that this is an element of specialization. That which seems so objectionable to a man with an alert mind, is not so objectionable when he realizes that many men of the highest type are happiest when given a chance to work out tasks unembarrassed by problems of procedure. While this has been one of the great tragedies of industrial life, when square pegs have been put in round holes, it is one of the most important questions that an engineer has to consider.

The human view will make us all labor towards the complete elimination of degrading tasks, by changing machinery and processes so as to fit the various types of men available. Through it all, we must see to it, that our scheme of work is true to the fundamental law of specialization, and that we recognize that there must be some division between the physical and mental tasks, and that this does not necessarily lead away from democracy. In fact, we must recognize there are two extremes. At one extreme we find the ideal of a highly specialized organization in which the greatest value in quality of work and quantity of output is possible through a complete co-ordination of the work of all types of men, each at his own kind of work, in which each can excel; and the other extreme in which we find a general disorganization which returns us to the primitive condition in which man's energies were most inefficiently used. Such a state is the natural result of anarchy, and it is a state that would leave this or any other country an easy prey to a country in which specialization existed.

One means team work of great wealth-producing capacity, and the other a state in which the struggle for mere existence would be severe.

The salvation of the world will be worked out if there is at least one well disposed nation that stands firmly for specialized industrial organizations. This will result in both industrial and military supremacy--for it is now well known that military supremacy cannot exist without the highest types of machinery building shops.

Such a nation could dominate all others and could ultimately check the disorganizing activities of the well-intentioned but shortsighted reformers.

The higher form fits our highest civilization and national security, and the other is a direct step toward chaos.

Nevertheless there is almost a stampede of sentiment against specialization and its product--the large industrial organization. This stampede has taken many of our otherwise well informed people, and now we are seeing its extreme effect in the iconoclastic fever that is raging in Russia and elsewhere.

We know that the individual, the industry or the nation that specializes will produce the greatest results with a given expenditure of energy, and we know that all this plan of specialization requires a co-ordination of the work of all.

There should be brought about through specialization the highest degree of ability on the part of the executive officers, as well as the highest skill of the workers, and each man should have the satisfaction of knowing that no one on the face of the globe can excel him at his specialty, and furthermore that his energies are expended in the best way to produce value.

Many men have already realized this ideal. Many industrial organizations have also attained it in a very high degree, and while there was a trend of some of the nations toward specialization before the war, there was developed in America a spirit of antagonism toward the large units that had grown up as a result of this specialization. Not that specialization was objectionable, but that industrial supremacy of an organization was thought to be a distinct menace.

Since it is in these specialized industries that the individual should find his best opportunity to produce the greatest wealth for a given expenditure of effort, such organizations should be maintained and all others should be gradually changed over so as to make the most economical use of the man power of the nation.

We have found by experience that industrial organizations are successful if they specialize. We have handed down to us the saying that "The Jack of all trades is master of none". Our brains accept these statements, we recognize them as facts, but owing to one of the irrational traits of the human being, it is one thing to believe and another to practice. It is one thing to superficially know that it is important for us to specialize as individuals, and it is quite another matter to bring ourselves to act in conformity with this fundamental law.

The great economic gain or advantage possessed by the Ford Company, and many of the other companies in this country, is not due to the fact that they have selected a wonderful model that is superior to others in every way, but it is based on the fact that specialization makes it possible for the various officers and workers to become the foremost men in their respective offices. Specialization of an industry becomes effective only when each man continues at a given job or work. Shifting men about the plant is harmful, excepting in so far as it may be good to promote men from position to position to fit the development of the men and the industry. The plant can be wrecked by changing men from position to position without changing the product. It can also be, wrecked by changing the form of its product in fact any change, whether it is a change of the product or a change of the men, which interferes with the continuity of operation of a man along habit lines is an economic loss to that organization.

We have stated that each man should specialize in order to produce the greatest value for a given expenditure of energy--that specialization of the industries is necessary.

That each man has some special knowledge that fits his environment.

That the skilled worker has a special knowledge for his duties.

We have pointed out the need of a closer relationship between the specialists. That they are all interdependent and must cooperate.

In setting forth the importance of the worker we must remember the equal importance of every other member of a well-balanced industry.

Lay directors and even lay chief officers are not necessarily a menace or even burdens, if they have a fair conception of human nature and the importance of each element in an organization, and the full necessity of coordination of all.

They should know, however, that every man should be paid first in cash and second in honor, appreciation, esteem, good will inspiration, commendation for his good work and good qualities, careful consideration of his troubles and a genuine knowledge that his interests are being justly considered.

INVENTION

The following chapter is given in its original form as a lecture to the Engineering Society of the Stevens Institute of Technology.

Its value in furnishing a side-light on the subject of habit, to which the preceding chapters have been more directly applicable, lies in its emphasis on the importance of the inventor (or designer, if you prefer) having clearly before him at all times the effect of habits of thought and action both in himself and in all others. These modes must be both conserved and combated in himself when building up favorable mental state. He must build on habit in order to have his mind continue in its application to a chosen subject, and he must combat any tendency to follow habit lines of thought that may have been established by observation of the older forms or methods. His inventions must be of a kind that will be readily made, sold, and used by men whose habits of thought and action he cannot readily change.