executing the order, are contained upon the same card, which is very
convenient for future reference and comparison.
=Storing and Issuing Stock and Materials.= The orders having been put
in force in the shop, the next step is to obtain the necessary material
or stock with which to do the work.
All purchased stock, material, and stores are turned over to the
General Storekeeper, whose duty it is to classify them, store them
properly, and issue them only on properly authorized requisitions. A
large portion of his stock he obtains by making requisitions upon the
Purchasing Agent.
To account properly for the receipts and issues of this stock so as
always to have on hand what is wanted, and at the same time to avoid
carrying an unnecessarily large stock of any of the articles in store,
he uses a _Stock Ledger Card_ of the form shown in Fig. 22. This gives
the name of the article listed, and its dimensions, weight, etc. At the
right of this are entered the maximum and the minimum quantities to
be kept in stock. Whenever the stock on hand is reduced to near the
minimum quantity, the Purchasing Agent is requested to order enough
more to bring the quantity up to the maximum.
[Illustration: Fig. 22. Stock Ledger Card. Same form is printed also on
back of card.]
[Illustration: Fig. 23. Form of Requisition. Carbon copies of the
entries are made on the Invoice form, Fig. 24.]
In making requisitions upon the Purchasing Agent, the Storekeeper must
take into consideration the length of time necessary to obtain the
article wanted. Wire nails, wood screws, and such articles can usually
be obtained in 24 hours, while brass tubing may take three weeks. Iron
castings can be had in two days, while steel castings will frequently
require six weeks.
When articles are _received in stores_, the date and quantity will
be entered under the heading _Received_, and other quantities added
to these as received. Articles issued will be charged under the
heading _Issued_, giving the date and amount. The quantity on hand
may be quickly ascertained by adding the quantities received and the
quantities issued, and subtracting the sum of the issues from the sum
of the receipts.
[Illustration: Fig. 24. Form of Invoice. Entries are made by means of
carbon paper, duplicating those made on the Requisition form, Fig. 23.]
As most articles are purchased in considerable quantities and issued in
small lots, there will be few entries of receipts and a large number of
entries of issues; therefore the greater portion of the card is devoted
to records of issues. The card is printed with the same form on both
sides; and when the spaces on the first side are filled, the account is
balanced, and the results carried to the opposite side.
These cards are kept in filing drawers, where they are located in
alphabetical order by the names of the articles they represent.
A foreman, on receipt of a regularly numbered and authorized
production order or sub─production order, is thereby authorized to
make requisition for such stock and material as may be necessary to
use in the execution of the order. This he will do by the use of the
_Requisition_ shown in Fig. 23, entering the order number and date, and
specifying the quantities and descriptions of the articles required.
Ordinarily each requisition will contain but one article or class of
articles. At the bottom of the requisition, the foreman will enter the
name of his department and his own signature.
These requisition blanks are made up in pads (the form shown in Fig.
23), of white paper alternating with tinted paper on which is the
_Invoice_ form shown in Fig. 24. This latter form has its ruling and
other principal features identical with the form of the requisition, so
that by the use of carbon paper the foreman makes a duplicate on the
Invoice blank, of the order number and date, the articles required, the
name of his department, and his own signature.
[Illustration: Fig. 25. Returned Material Card.]
When the Storekeeper issues the articles, he first enters upon the
requisition blank the date issued, and then passes it to his assistant,
who notes the issue on the _Stock Ledger Card_, and then places it on
file. The Storekeeper will enter on the invoice the rate and value of
the articles issued, and the date of issue, and will sign it under the
foreman's signature. He will send it, with the articles issued, to the
foreman, who will in turn make it a part of his report of material used.
When the work on an order is completed, such serviceable stock and
material as may remain will be returned to the Storekeeper, together
with a _Returned Material Card_ of the form shown in Fig. 25. The
Storekeeper will enter upon it the value of the material returned,
credit it to the department from which it came, and sign the receipt
in the lower left─hand corner. The card will then be returned to the
foreman as his authority for deducting the amount from the material
account in the order in question.
=Follow─Up Methods for Tracing Orders in the Shop.= The Sub─Production
orders having been put into the departments, the first one will
order the material for starting the work. For instance, the first
step may be upon iron castings. Theoretically all stock and material
come from the Store─Room. Therefore we might say that upon a strict
construction of this general rule the castings should be furnished by
the Foundry and sent to the Store─Room, from which they might be drawn
upon requisitions the same as any other material. Practically this
would be not only a troublesome but an expensive method, requiring a
great deal of unnecessary handling and transportation. The problem
is much more practically solved by considering the Foundry as one of
the manufacturing departments receiving its raw material (namely, pig
iron) through storeroom accounts, and thus "constructively" from the
storeroom, while physically it is in the foundry yard. This answers the
demands of a theoretical as well as a practical view of the case.
Therefore the first sub─production order will go to the iron foundry,
which will make the castings and deliver them to such departments as
are required to do the first work upon them, as directed upon the
order. The sub─production order which this department has received,
directs to what department they shall be sent when completed; and so
on, until they have gone through the last department and are sent to
the Finished Parts Store─Room.
This arrangement is all right as far as it goes. If every man attended
strictly to his business and pushed work along as rapidly as possible,
and every foreman sent his work along to the next department as soon as
his department had completed its work, this plan _might_ work fairly
well. Unfortunately, however, these conditions seldom or never exist;
and there must be ways and means devised to keep the work moving and
to be able to _trace_ and _locate_ the work upon any order at any time
when information is desired upon it or its state of progress.
To accomplish this, there is a _Transfer Office_, located as
conveniently as may be for all departments, and serving as a sort of
"clearing house" for all departments in transacting inter─departmental
business so far as it relates to the transfer of the work in progress.
By this method, departments send all their work by way of the Transfer
Office, where proper records are kept of all such transfers, so that at
any moment the Transfer Clerk can locate any piece of work in progress
in the plant.
[Illustration: Fig. 26. Transfer Card.]
The operation of this method is as follows: The sub─production orders
are sent to the Transfer Clerk, who fills out two _Transfer Cards_, as
shown in Fig. 26, one of which he sends with the order to the first
department that is to do work on the order, and the other he retains.
This card provides spaces for the various departments, which are
designated by numbers. Following these are spaces for entering the
dates of transfers, the entries being made with a rubber stamp. After
these spaces are columns for the number of pieces of work received and
the number of pieces delivered.
When the first department has finished its work, the number of pieces
is entered in the column headed _Pieces Delivered_, and the work and
the card sent to the Transfer Office. The duplicate transfer card
that was retained by the Transfer Clerk was filed in a compartment
in a _Transfer Case_ corresponding to the department where the work
began. He stamps the date of transfer on both cards, entering the
number of pieces on his own, and sends the work on its way to the next
department, together with the transfer card. His own card he removes
from the compartment representing the first department, and places it
in a compartment representing the department to which he has now sent
the work.
Subsequent transfers are made in the same manner, small lots of work
actually being sent to the Transfer Office, but large lots or heavy and
bulky work being sent directly from one department to the next, but
under the personal direction of the Transfer Clerk or his assistant.
When the parts are completed and ready for inspection, the Inspector is
notified; and upon inspecting the parts previous to their being sent to
the Finished Parts Store─Room, he enters the results of his work in the
space at the bottom of the card that has accompanied the work in its
progress through the departments.
[Illustration: Fig. 27. Transfer Clerk's Card Tray.]
The Transfer Clerk's _card tray_ is shown in Fig. 27, and is made
with compartments of sufficient dimensions to hold the number of
cards expected to be on file in any one department at the same time.
The cards are filed in numerical order. In a large concern the usual
card─index method of guide cards is used, so as to render the work of
finding the right card when wanted, easy and expeditious.
=Tool─Room Methods.= A large number of small tools such as drills,
taps, reamers, and the like, and also numerous jigs and fixtures of
various kinds, are drawn daily from the Tool Room and returned there
after being used. The problem of keeping track of these valuable tools,
of knowing where to locate every tool that has been issued, and getting
them back promptly after they have been used, is an important one.
The simplest method of doing this is by the use of small brass checks
bearing the individual numbers of the men. For this purpose a _Tool
Check Board_, as shown in Fig. 28, is provided. This is lined off
in small square or oblong spaces, the number of spaces equaling or
somewhat exceeding the number of men employed in the departments served
by the Tool Room. At the top of each of these spaces is the name of
one of the men; and beneath the name two pins project about an inch
from the face of the board. Under each pin is the man's individual
number. Two forms of brass checks are used, a circular disc of ⅞ inch
diameter, and a rectangular one ½ inch by 1¼ inches. Each check
has a hole by which it may be hung on the pins, and each bears the
individual number of the man, the checks being used in pairs of one
circular and one rectangular check.
[Illustration: Fig. 28. Tool Check Board.]
All tools are kept upon shelves, divided for individual tools or, in
some similar manner; and in front of each tool is a pin similar to
those on the board, upon which checks may be hung.
The operation of this method is as follows: the circular checks (there
are usually twelve of them) are issued to the men of corresponding
numbers. The rectangular checks are held upon the left─hand pins under
the men's names. When a man goes to the Tool Room for a tool, or
sends a boy for one, he presents one of his circular checks. This the
Tool Keeper hangs on the right─hand pin under the man's name. He also
removes one of the twelve rectangular checks, and hangs it on the pin
in front of the space from which the tool was taken. If the workman
sends for another tool, another circular check is added to the first
one, and another rectangular check removed from the board.
It will be seen that there must always be twelve checks on the board
under each name, counting both rectangular and circular ones. The
absence of a tool from a shelf is accounted for by the rectangular
check hung on the pin in place of it, and the number of this check
shows what man has the tool. The number of circular checks on the board
shows how many tools each man has in his possession.
The result of this method is that tools can be issued and taken back
very rapidly; and accurate and positive records are very quickly made,
without the use of a book, card, slip, or writing of any kind.
At the end of the week, _all_ tools are turned in to the Tool Room,
thus enabling the Tool Keeper to check them up and rectify any possible
errors that may have been made during the preceding week. On Monday
morning, such tools as are needed are re─issued.
[Illustration: ENGINEERING DEPARTMENT, DOBIE FOUNDRY & MACHINE CO.,
NIAGARA FALLS, N. Y.]
COST─ANALYSIS ENGINEERING
=Definition.= Cost─Analysis Engineering is that branch of Engineering
which has for its object the analysis of costs of construction or of
operation, with a view to effecting a greater economy of production,
and with a view to securing accuracy in estimating the probable cost of
projected structures or operations.
=The Modern Manager a Cost─Analysis Engineer.= It takes few men to
design machines and structures, but it takes many men to superintend
their operation. Therefore the great field of activity for the engineer
of the future is in the field of operation rather than of design.
Until very recent years, engineers have rested satisfied with being
designers of labor─saving appliances. Now, however, they are beginning
to assume the broader and more profitable function of operating
the plants which their brains have created. To handle the ordinary
industrial enterprise successfully, involves:
_First_, the application of engineering ability in selecting and
improving the machines used;
_Second_, managerial ability in organizing the workmen, and in
stimulating them to produce a large output economically;
_Third_, advertising ability to sell the product.
The man who combines in himself the maximum sum of these three
abilities is the man best adapted to succeed as the executive of an
industrial enterprise. Since the introduction of systems of cost
analysis and unit─payments for work done, engineers have become best
qualified to act as managers of manufacturing plants. We include
contracting and railroading among manufacturing industries, for the
contractor manufactures structures, and the railroader manufactures
transportation.
Before cost analysis had been developed to its present stage of
excellence, the successful manager of men was usually one who had
relied upon his lynx eyes and his knowledge of the weaknesses of human
nature. He was often a man who owed his success largely to the fear he
could inspire in his subordinates. He was domineering; he held his men
to their tasks; he was, indeed, an industrial captain; and he used
army discipline. He regarded every worker as a thief who would not
hesitate at petty larceny of time, even in the face of the foreman, and
who delighted in grand larceny behind his back. His foremen were his
spies; and he set himself to spy upon his foremen. But cost─analysis
engineering is evolving a wholly different class of managers and
foremen.
To most people, a cost─keeping system means nothing but a sort of
bookkeeping; and they are unable to understand how a bookkeeper can
develop into a successful manager. But the truth is that modern cost
keeping involves cost analysis, and cost analysis involves a study
and comparison of methods and machines, and such a study leads to
improvements and to commercial success.
Cost keeping, in the sense that we use the term, has for its main
object the determination of the efficiency of men. A proper system of
cost keeping tells you daily what each workman or each gang of workmen
has accomplished. It is better than a foreman, for it cannot "stand in"
with the men. It is better than a foreman, for it costs you less and it
tells you more. A cost─keeping system tells you who are your good men,
and who are your lazy men. It shows you whom to discharge, and whom to
promote. It tells you whose wages are too high, and whose are not high
enough. And, finally, it leads to that ideal condition of industrial
organization known as _profit─sharing_. How often have we read in
novels of Utopia, where all men share in the profits of all business;
and how often have we smiled with incredulity at the prospect? Yet
Utopia is right here in America, in spots; and it is a Utopia far more
rational than that of the dreamers. There are many firms that pay
their men on a unit─price or bonus system. This is profit─sharing, and
it is a profit─sharing begotten by the use of cost─keeping systems;
for, when a manager has learned by cost keeping that certain men or
groups of men produce more than others, he soon perceives the advantage
of stimulating them to further use of brain and muscle by paying
them either a bonus for each unit produced in excess of a prescribed
minimum, or a unit─price for each piece of work performed. The men
invariably respond to this stimulus, and often in a remarkable degree.
It is nothing unusual for a man to increase his output 50 per cent
upon the introduction of a bonus system of payment; and there are
many instances of increase amounting to 200 per cent. Each man then
becomes a contractor, and works with the zeal of a contractor, for his
earnings increase as his energy and ability increase. This is practical
profit─sharing that any workman can understand. It is not something
vague and intangible, like 5 per cent per annum. It is something very
real and immediate, for a man can feel it in the pay envelope at the
end of every week.
Cost keeping, then, leads to better management, although dispensing
largely with submanagers. It substitutes the record card for the "big
stick," yet the record card itself is the biggest stick ever devised.
=The Science of Management.= The managing of industrial enterprises is
still more or less of an art; but the art is fast passing through the
period of evolution that produces a science. There are, unquestionably,
certain underlying principles of management which can be summarized
into rules or laws. These rules or laws constitute the science of
management, and it is our purpose to present certain of the more
important laws of management.
=Individual Incentive.= When a group of men undertake to do a certain
piece of work, such as shoveling earth into a wagon, the tendency is
for each man to do as little as his neighbor. The inevitable result
is that the shovels move with rhythmic precision, and the slowest man
becomes the pacemaker for the rest. If any one of the men is ambitious
to do a larger day's work, he is deterred by the knowledge that his
employer will never know that it is he to whom the credit is due for a
larger output. Then, too, the other men are apt to upbraid an ambitious
man, and urge him not to set a "bad example" by working fast. To offset
this tendency to fall to the lowest level of efficiency, employers have
placed foremen over their employees, the duty of these foremen being
to accelerate the motions of the men in any way possible. Each foreman
has an _individual incentive_ to get work done economically, for his
employer studies the total amount of work done by the gang under the
foreman, and rewards or punishes the foreman accordingly, the reward
usually consisting of praise and an increase in salary. But the workmen
under such a foreman have no _individual incentive_, and they will
shirk their tasks as far as possible. Clearly, then, the first law of
management is to create an _individual incentive_ for every employee to
do his best.
=Creating Individual Incentive in a Gang.= There are, and always will
be, certain kinds of work that must be performed by a group of men
working together, or, as we shall call it, a _gang_ of men. When
this is the case, the first step to be taken is to devise a method of
readily and accurately measuring the work performed _each day_──not
each week or each month──by the gang. The next step is to notify the
men that, for all work performed daily in excess of a specified number
of units of work, a bonus or premium will be paid for each excess unit.
Of this bonus, the foreman will get a specified percentage, and the
men will divide the rest among themselves. Thus a powerful individual
incentive is created. It is true that certain men in the gang will
remain less efficient than certain others, but the general average
output will be greatly increased. The foreman himself will have enough
incentive to see to it that the lazy or inefficient workmen in the
gang are discharged, for it will no longer pay him to play the part of
indulgence for the sake of being "a good fellow."
=Devising Ways of Dispensing with Gang Work.= Simply because it has
always been the custom to do certain classes of work by gangs, should
not deter a manager from endeavoring to devise a way of splitting
the gang up into individual units. Indeed, it should be self─evident
that if the creating of individual incentive is the fundamental law
of management, a great amount of study may profitably be devoted to
increasing individual incentive by doing away with gang work entirely.
To illustrate, let us assume that 12 men are engaged in shoveling
earth into wagons, working in two gangs of 6 men, with one foreman
supervising the 12. If a sufficient number of teams and wagons are
used, there will always be 2 wagons in the pit being loaded, and 6 men
shoveling into each wagon. As fast as a wagon is loaded, it pulls out,
and an empty one takes its place. If a manager is told that he can do
away with this system of gang work, he will usually reply that it is
impossible. Nevertheless, it is possible to reduce this gang work to
individual work in most instances, as follows:
Instead of having 2 wagons and teams in the pit all the time, have 6
wagons without teams──6 empty wagons. Assign two men to each wagon.
Provide a dividing board between the sides of each wagon, running
either longitudinally or cross─wise, so that each man has his definite
half of the wagon to fill. Then pair the men off according to their
respective abilities, putting the two best men on one wagon, the two
next best on another wagon, and so on. When a team brings an empty
wagon into the pit, let it be unhooked from the empty wagon and hooked
to a loaded wagon, thus saving team time, which would otherwise be
consumed in waiting for the wagon to be loaded.
It is possible to give many illustrations of this sort, but not
desirable, for our object is to indicate the laws that should
be applied, rather than to solve specific problems. The student
of cost─analysis engineering will derive his greatest stimulus
from applying the laws to specific cases that come under his own
observations.
=Prompt Reward.= Most men believe in Heaven, and many believe in Hell;
but few are greatly affected in their action by the hope of the one
or the fear of the other. Any reward or punishment that is remote
in the time of its application, has a relatively faint influence in
determining the average man's conduct. To be most effective, the reward
or punishment must follow swiftly upon the act. Hence a managerial
policy that may be otherwise good is likely to fail if there is not a
prompt reward for excellence. All profit─sharing systems have failed,
principally because of failure to recognize the necessity of prompt
reward, as well as because of failure to recognize the necessity of
individual incentive. The lower the scale of intelligence, the more
prompt should be the reward. A common laborer should receive at least
a statement of what he has earned every day. If, in the morning, he
receives a card stating that he earned $2.10 the previous day, he will
go at his task with a vim, hoping to do better. But if he does not know
what he has earned until the end of a week, his imagination is not apt
to be vivid enough to spur him to do his best.