Fordist Principles

Introduction In organizational development, there are different theories that are considered to be influential. One of which is the theory of Fordism. Fordism is a form of industrial production developed from Taylorism methods; the main aim is product maximization through tight control over movements and separating planning from executing tasks. This production management practice was widely criticized for its inhumane production system with regards to employee conditions and was then replaced by Fordism (Edwards 1990)

Fordism is a production ideology pioneered by Henry Ford during the post-war decades in the Western industrial countries which supported domestic mass production and allocation of relatively higher wages among labourers. Ford was credited for improving the production methods during that time through developments in the assembly line methods and manufacturing as implemented by Ford Motor Company.

Under the concept of Fordism, mass consumption considerations were integrated with production accountabilities in order to sustain economic growth (Hounshell, 1984). Ford believed in deskilling of car production was required to achieve ‘continuous improvement' and mass production.

Moreover, the Fordism philosophy has greatly influenced business operation management strategies that have transformed through time so as to address the current demands in the highly complex and competitive market environment. These include the principles of lean management, flexible system production, also called the Japanese management system, total quality management, just-in-time inventory control, leaderless work groups; globalization of consumer goods markets, faster production life cycles, as well as intensive product/market segmentation and differentiation (Hounshell, 1984).

Analysis As modern organizations grew larger, skills become increasingly fragmented and specialized and positions become more functionally differentiated. (Hardy & Clegg, 1996). The best organizations/suppliers continuously update and upgrade their service deliveries in order to answer the demands of their customers. Customers have the ever-increasing demand on getting their hands into the new products which can lead to change in supplier if expectations are not met.

This meant that organizations have to completely reformulate their conventional business aims and purposes from being process-focused to customer-centred. Organizations/suppliers are to highly differentiate their product range to meet and satisfy customers need. Rethinking and reformulating the organization on the other hand, entail the consideration of several factors such as various processes, technology, the environment as well as the success factors of people (Cohen & Moore, 2000). Hence, in order to bring out exceptional customer services within the organization operations, the management should employ fine-tuned organizational restructuring. (Lowenstein, 1997).

The author's choice of organization is an electronic goods company, XYZ Corporation, a company that produces huge range for electronic goods ranging from digital camera, notebook to LCD televisions. In the electronics industry, business organizations have never ceased in employing means to satisfy the requirements and tastes of the consumer population through intensive research and development.

This is evident in the confounding issues of market volatility, technological uncertainty (Celly, Kamauff & Spekman, 1999), and fast product life cycle (Katsikeas, Schlegelmilch & Skarmeas, 2002). Moreover, it is a management philosophy that seeks to integrate all organizational functions such as marketing, finance, design, engineering, production, customer service, and others to focus on meeting customer needs and organizational objectives (Hashmi, 2000).

A considerable number of electronic companies have developed into an essential part of the period of global competition, increasing development, improved business paradigms, and corporate reorganization. The continuing transformation from the traditional industrial framework with its hierarchical companies to a worldwide, knowledge-founded financial system and intelligent corporations necessitates human resource purposes to realign and relocate itself (Sobrero & Roberts, 2001).

As opposed to the core ideas of Fordism, the current business environment for electronics goods is characterized with the relevance and value of customer participation and not just consumption accountabilities as the most significant consideration in implementing operation strategies. With the constant demand of new quality products, economies of scale cannot be achieved under mass production and mass consumption.

High flexibility without holding on to huge stock of finished goods is necessary. Thus, the rigid Fordism theory is not appropriate in XYZ Corporation business environment. Flexibility manufacturing system is required. Continuous technology innovations are necessary to ensure competitiveness in the market and to meet customers' requirements who are always chasing for the latest innovation regardless of the price.

Flexibility manufacturing rest on the presumption that a competitive edge cannot be gained by treating employees like machines and that nobody in the manufacturing process but the employees, adds value, that the employee can perform most functions (lean production), reducing needs for buffer stocks (Just in Time) and producing a higher quality end product (Piore and Sable, 1985). Lean Production is a systematic elimination of waste – overproduction, waiting, transportation, inventory, motion, over processing, defective units and the implementation of continuous flow and customer pull. Lean Production is view as the production system of the 21st Century (Kotelnikov, 2006).

XYZ Corporations have their employees performing multi task unlike the Fordism where it emphasized on mass production with extreme division of labour where each employee has one task. Two of the key features of Lean Production involving employees are employee involvement and empowerment in which organizations organizing their employees by forming teams and giving them training and responsibility to do many specialized tasks, for housekeeping, quality inspection, minor equipment repair and rework and allowing also them time to meet to discuss problems and find ways to improve the process.

Another is having a multi-skilled workforce as employees are empowered to do many jobs, they must be provided with adequate training ((Kotelnikov, 2006).

Along with other electronic goods brand name, XYZ is seen as one of the most recognizable global brands. Its non mass production scale and depth of products enable XYZ to minimize risk of introduction of new models and spread costs over a wide range of models.

XYZ's wide range of brands allows the company to capture revenue from a broad section of consumer segments. XYZ's recognized superiority in high-tech production, up to date models push out to the market without delay gives it a large advantage over its rival. In the case of contract manufacturing, XYZ's service providers highly take into account the specific requirements of their client through customization of services and goods.

This is evident in short life cycles and increased variations among products in order to supply for the fast-paced product differentiation due to highly demanding and varying consumer tastes. As such, the focus of Fordism in the technicality and standardization of goods and services neglects the open and active participation of customers in influencing and to some extent dictating the succeeding market trends.

Organizations that capitalize on customers' active participation in organizational activities can gain competitive advantage through greater sales volume, enhanced operating efficiencies, positive word-of-mouth publicity, reduced marketing expenses, and enhanced customer loyalty (Lovelock & Young, 1979; Reichheld & Sasser, 1990). Rather than going after every potential source of revenue, XYZ Corporation eliminates useless assets that do not add value for customers' satisfaction. XYZ Corporation implements non bureaucratic policies and procedures for the benefit of the staff, customers and the company in general.

With all of the above, the Lean Value Chain of Production System Model below illustrates how XYZ Corporation at present gain competitive advantage by adding value to the overall its operation of the organization through efficient production system.

In order to ensure smooth logistics, XYZ Corporation has also set up their own in-house logistics company under the name of XYZ Supply Chain Logistics Co. XYZ Corporation utilizes the lean value chain management strategy also consider increasing the company relationship with its shareholders by separating the business system into a series of value-generating activities, namely: (a) inbound logistics, (b) operations, (c) outbound logistics, (d) marketing and sales, and (e) customer service.

In effect, from the receiving and warehousing of raw material from the suppliers, all through out the manufacturing and production process, as well as in the entire the distribution and sales of finished goods, the value-generating activities are supported by the infrastructure of the firm, its human resources management, and the technology it uses (Internet Center for Management and Business Administration, Inc., 2005).

Conclusions We cannot ignore mass production is still widespread. Many production companies particularly those small manufacturing companies producing specialized product still use and implement the applications of Fordism principles. Long hours and cheap labour are still one of the factors for profitability for these small manufacturing companies.

However, with the present business environment, with the improved of technology, the growing complexity of social and economic environment where consumers are more demanding than before, the core principles of Fordism cannot be implemented and be successful as before. The world has changed immensely in the past several decades which called for subsequent changes in different business industries.

It is important to take note that revolutionary changes have been productive and effective in meeting the demands of the consumers thereby improving the overall approach to efficient business management. The need for these changes were recognized, addressed and made possible through the initial efforts of business personalities like Henry Ford who contributed immensely to successive positive transformations and modifications in effective operation management.

References:

Celly, K.S, Kamauff, JW & Spekman, RE 1999, ‘Technological Uncertainty, Buyer Preferences and Supplier Assurances: An Examination of Pacific Rim Purchasing Arrangements', Journal of International Business Studies, vol. 30, no. 2, pp. 297+.

Cohen, S & Moore, J 2002, ‘Today's Buzzword: CRM', Public Management, vol. 82, no. 4, p. 10

Edwards, PK 1990, ‘Understanding conflict in the labour process: the logic and autonomy of struggle', in D. Knights and H. Willmott (eds) Labour Process Theory, Houndmills: Macmillan.

Hardy, C & Clegg S 1996, ‚Handbook of organization studies', London : Sage

Hashmi, K. 2004, ‘Introduction and Implementation of Total Quality Management '(TQM). Six Sigma LLC

Hounshell, D 1984, ‘From the American System to Mass Production, 1880-1932.' Baltimore: Johns Hopkins University Press.

Internet Center for Management and Business Administration, Inc. 2005, the value Chain, available at ww.netmba.com (Accessed May 17, 2006).

Katsikeas, CS, Schlegelmilch, BB & Skarmeas, D 2002, ‘Drivers of Commitment and Its Impact on Performance in Cross-Cultural Buyer-Seller Relationships: The Importer's Perspective', Journal of International Business Studies, vol. 33, no. 4, pp.757+.

Kotelnikov, V 2006, ‘Managing Your Value Chain: Receiving Raw Materials as Input, Adding Value, and Selling Finished Products to Customers' Available www.1000ventures.com (Accessed; May 17, 2006).

Lovelock, CH & Young, RF 1979, ‘Look to Consumers to Increase Productivity', Harvard Business Review, vol. 57, May-June issue, pp.168-178

Lowenstein, MW 1997, ‘The Customer Loyalty Pyramid.' Westport, CT: Quorum Books.

Piore, M.J. and Charles F. Sabel. 1985, Das Ende der Massenproduction. Berlin: Wagenbach.

Sobrero, M & Roberts, EB 2001, ‘The trade-off between efficiency and learning in interorganizational relationships for product development', Management Science, vol. 47, no. 4, pp. 493-511.