Total Cost Minimization - Coursework Example

Name Professor Course Date Total Cost Minimization Total costs are all costs that contribute to the total selling price. These costs include those of raw materials, labor, manufacturing, delivery, storage among others (Anderson 181-2). As the field of engineering has been advancing, there have been series of accompanying technologies developed to minimize costs. One should recall that the initial production of automobiles was mainly manual based which made it hard to satisfy the needs of the then customers. This was happening in the early 20th century when the company had to be forced to depend largely on workmanship’s hands (York 14-24). In this regard, the paper will address importance of cost minimization to engineers especially those in high cost economies and how Henry Ford used manufacturing engineering to reduce automobile’s total cost. This will also involve discussing how the development of assembly line as the major significant technological advancement has revolutionized industrial nations. There will be discussion on progressive production which will explore how machines and workers organize themselves to transform raw materials into unimaginable scale of production. Importantly, the discussion will shed insights into why Henry Ford preferred to use common proven designs in his plant, and what happened when he launched the Model A. Lastly, there will be explanation why he was forced to abandon his most profitable car of the model, Model T. There will be a conclusion to wrap up the discussion and give the general direction of automation, and therefore progressive production in automobile industry. Engineers should learn to reduce total costs because firms in which they work want to have efficient production practices. Therefore, in this regard, when costs are reduced, the firm can produce more output per unit input. If costs are reduced, the firm can be assured of higher economic returns. Therefore if there is efficient use of raw materials and low priced purchases, the company’s financial performance will improve. Cost reduction normally goes hand in hand with quality production. New technology and innovations that aim to reduce wastes and enhance the quality of production will obviously reduce costs. Related to this is the extension of the product’s life cycle, whereby through automation and assembling, it can be easy to extend the life of the product by just upgrading some parts. A company that reduces costs will have an admirable public image. In this regard, its overall reputation as the company that values consumer needs will rise (Greenleaf,23).Reduction in costs will also involve taking environmental responsibility. If the company minimizes wastes and therefore costs, it will be easier for it to meet targets of its environmental policies, regulations and standards. The principles that relate to cost minimization are inevitably peculiar to particular industrial activities (Anderson 181-6). To reduce total costs, Henry Ford decided to use manufacturing engineering that ensured progressive production. As the demand of his products started to increase, he found himself challenged, and therefore it was necessary that he looked into the solutions of improving efficiency and reducing costs. In this regard, he improvised automation which made the production of his products much easier and at a faster rate in comparison to previous manual production. Ford introduced moving belts into his plants that enabled enormous increase in production. Therefore as per unit cost reduced, sales of vehicles passed 250,000 units as in 1914. To reduce the turnover costs, Ford sought to hire and keep workers, and he surprised the world by paying each of them five dollars per day, an amount that doubles the then wage level. In this regard, he could attract new human expertise from other plants, lowering training costs and therefore raising productivity (Greenleaf 30-5). The assembly line is amongst the significant technological advancements of the 20th century. Assembly line has become a force of the every industrializing/ industrial nation on the earth. It enables, in a manufacturing process, parts to be added to others as a semi finished product moves from one work station to another until the final assembly emerges. This progressive process of assembly work enables the product to be assembled faster with much less energy compared to having workers carrying loads from one place to another. Assembly lines have become common in assembling complex items such as electronic goods, house hold appliances, transportation equipment and automobiles. Although there had been previous developments in assembly lines in form of pulleys, and actual industrial assembly lines, it was Henry Ford who perfected them. The Henry Ford’s conveyor belts could produce Model T vehicle within 93 minutes. By the fact that it enabled various units to be arranged together in sequences until they became final products, while resulting in mass production, Henry Ford has been regarded as the father of mass production. It also reduced the amount of man-hour labor required from 12.5 hours to 1 hour 33 minutes. This led to decreased total costs of the Model T vehicles, within the budget of average American. On safety dimension, by allocating each his station to work, he reduced the effects of every worker roaming, and therefore there could be experienced reduced injury. The mass production enabled the company to expand its production to other parts of Europe such as Germany, France, Britain and Denmark (Greenleaf 40-50). Due to the assembly lines, workers and machines could be organized for continuous flow of raw materials to be made into finished products at unimaginable scale; by 1924, the company produced over 10 million cars that were inexpensive to be afforded by nearly everyone in America. In 2013, it was estimated that the Ford Company produced more than 6 million vehicles. This method, known as progressive production, has made many factory activities to increase. It has inspired many continuous-flow productions that are currently being used in breweries, mills, industrial bakeries and canneries. According to many industrial analysts, Henry Ford’s core values of workflow, quality parts, efficiency and division of labor are still resonating in the minds of many industrialists. Automobile industry has very much grown because companies are forced to have assembly lines or else, they may risk being not able to compete; in fact by 1930, those companies that did not have them disappeared. Courtesy of the assembly lines, companies such as Toyota, General Motor, Lotus cars, Hyundai, have emerged strongly. Generally, progressive production aims at having workers who do not have to lift heavy things, bend or stoop over, have special training or do special jobs. Therefore, apart from the facilities being able to provide jobs at home, they can accommodate foreigners (VOA 1-8; York 34-44). Initially, Ford had preferred to use proven designs because the demand for Model T was very high, as the company did no face any serious competitor. It could produce with delay, low frequency and slowness because customers did not have any other alternative apart from waiting for the product to get completed. However, in mid 1920s, competition begun rising and sales of the company declined (VOA 2-4). Other automakers devised more modern styling, mechanical features and new payment methods for consumers to buy cars that the Model T lacked. Although his son Edsel tried to convince him to go with the trend, he refused and consequently by 1926, the sales of the Model T were plummeting. This convinced Ford to make a new model. The result was successfulness of Ford Model A, which was sold at a total output of 4 million units. With such huge sell, the company adopted a strategy of annual model change to cope with the biting technological innovations from competitor companies like General Motors. As it indicates, currently, engineers should device automation and computerization as tools to reduce costs in the entire process of production and counter consumer demands (York, 54-60). As already seen, by 1926, the company’s sales were flagging, which pressed Henry Ford to come up with a new model. He was to pursue a project that concentrated majorly on technical expertise. As wages were rising, people rushed to vehicles from other companies that offered more comfort and convenience. General Motors began outcompeting Ford by offering automobiles with special engines, cosmetic customization and other new convenience features (VOA 4-8). Therefore Henry focused majorly on mechanical aspects, which has become to be recognized today as Design for Manufacturability (DFM) Firms were competing a lot in technological innovation and therefore no one would like to keep the same generation of vehicles over years (York 61-74). In conclusion, it should be understood that Henry Ford, courtesy of assembly lines, could make greater profits because the market was not initially saturated and thus his company remained the only option. However, currently, as from the discussion engineering production of automobiles is challenged by improvement in technology, competition, satisfaction of customers and cost of production. More and more firms, among others, are venturing in computerization and automation to minimize overall costs. Even though this has resulted in employee layoffs, especially for those doing manual work, it has greatly improved engineering practice in the minimization of total costs. Works Cited Anderson, D.M. Design for Manufacturability & Concurrent Engineering: Cambria, CA: CIM Press, 2004.. Greenleaf, W. Monopoly on Wheels: Henry Ford and the Selden Automobile Patent. Detroit: Wayne State University, 2011. VOA. Henry Ford, 1863-1947: He Revolutionized the Auto Industry. VOA, 2012. York, M.J. Henry Ford: Manufacturing Mogul. Edina, MS: ABDO Publishing Company, 2011. Read More