Platt Perspective on Business and Technology

Commoditizing the standardized, commoditizing the individually customized 2: some initial thoughts on a post-assembly line and mass produced world

Posted in strategy and planning by Timothy Platt on May 3, 2013

This is my second installment in a series on the changing nature of production and commoditization (see Part 1: a brief historical sketch as background for discussion.)

I wrote Part 1 as an admittedly cartoon simplification of the history of manufacturing, from small scale and individual production of one-off items to mass production of standardized products that would be marketed and sold. And I finished that posting at least thinking of a famous if perhaps apocryphal dictum attributed to Henry Ford as he built and sold his Model T automobiles: “you can buy one in any color you want so long at that is black.”

This is often cited in the context of consumer choice, or rather consumer lack of choice. And the alternative that is usually cited by way of comparison is the product and consumer choice variability and flexibility of more artisanal design and manufacturing. Consumer choice is very important here, but I would at least begin this discussion by considering the implications of what Ford said, from a different perspective: design and production, and the drive to carry through upon them as cost-effectively as possible so as to keep consumer prices down and still generate significant profits – while offering employees premium wages so as to maintain highest possible production and product quality.

Consider the impact of paint color in building and assembling a production line of cars, and to keep this simple consider the consequences that offering a car in just two colors: black or white would bring. In this scenario essentially everything under the hood and inside the car would remain the same and be standardized to a single SKU option per part that would have to be inventoried and shipped to the production line, as was the case for producing those single option Model T’s – except for the pre-painted body parts. When every one of them is black, any part A that has to be connected to a part B would work together with any part B. When these parts might be painted differently, only some parts A and B combinations would work and inventory flow would have to be adjusted to allow for this extra complexity. One obvious approach would be to warehouse assemble what amounts to two separate car body kits, one with a complete per-car painted assembly for black cars and the other with a complete painted parts set for building out a white car.

These two car colors would be expected to sell at different rates, and quite possibly with seasonal and regional differences so it would be necessary to track production and distribution requirements and both for the painted car body parts and kits, and for the completed cars as they leave the factory and are shipped to market. This adds organizational complexity and it in all likelihood means a larger headcount of employees will be required to support this extra work flow complexity. And that would in both cases increase overall production costs and costs to the consumer – if only by some small increment.

Now consider a situation where that first production model Ford automobile is produced in eight different body paint options, and with five different interiors with different upholstery colors and materials, and differences in the dashboard. Now parts acquisition and manufacturing, inventory warehousing and distribution, and shop floor parts management and work flow are all going to be a lot more complex and I add expensive and particularly when the operational details of running an assembly line system per se, are still under development. Depending on the variations on this basic car design supported, specialized tools may be needed for some car builds but not for others. And as more and more product variability is added, the basic assembly line concept of moving a car in production from one worker who completes one standardized step or at most a short series of them, and as rote processes begins to break down.

Think of these variables introduced here as stressors to the mass production, assembly line system and the most important of them are in end user options and the proliferation of end-product variability. Variability in what ultimately comes off of the assembly line, after all, is the one form of variability here that cannot be eliminated or even significantly reduced by operational process standardization and optimization.

I noted how pre-assembly kits of, in the above case, pre-painted body parts can be bundled for greater ease of assembly and with the right balanced numbers of all kit parts in the right place at the right time. Pre-assembly of subsystems can help and so does running same-build production in batches, where one basic build it done today because it is Friday, but a different one will be assembled this coming Tuesday. This is important when an assembly line has to be at least somewhat reconfigured for a different build. Though optimization can also mean setting up separate assembly lines that are tasked for different models or differently designed builds of a single model. I am not offering any suggestions here that Henry Ford would not recognize and in fact have used, and certainly as his company expanded to be able to effectively afford to run parallel assembly lines.

The overall goal in all of this is simplicity and the cost-effective efficiency that this can bring. That means consistent standardization. This, I add is where people like Frederick Taylor and his time and motion studies enter this picture too, as businesses sought to both develop and improve upon assembly line and collaterally supportive functionalities to create greater business efficiencies and increased marketplace competitiveness.

And with that I am going to fast-forward to the modern car and its production and distribution complexities – stemming in large part from the market driving demand for consumer options and choice and for much more than just paint colors. And I will turn in my next series installment to consider what might be considered an extreme case, case study with the Scion: a Toyota Motor Corporation brand manufactured primarily for their North American market. Meanwhile, you can find this and related postings at Business Strategy and Operations and its Part 2 continuation page.

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