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FACTORY ORGANIZATION
AND ADMINISTRATION

"Ms Qraw-MlBook Co, 7m

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FACTORY ORGANIZATION
AND ADMINISTRATION

ixJL

HUGO DIEMER

MAJOR ORDNANCE U.8.R., FORMERLY PROFESSOR OF INDUSTRIAL ENGINEERING, PENNSYL-
VANIA STATE COLLEGE; CONSULTING INDUSTRIAL ENGINEER; M.E. (OHIO STATE
UNIVERSITY); B.A. IN HISTORY, ECONOMICS AND POLITICAL SCIENCE (PENN-
SYLVANIA STATE COLLEGE) ; MEMBER AMERICAN SOCIETY OF MECHANICAL
ENGINEERS, TAYLOR SOCIETY, AMERICAN ACADEMY OF POLITICAL
AND SOCIAL SCIENCE, FELLOW AMERICAN ASSOCIATION FOR
ADVANCEMENT OF SCIENCE, MEMBER SOCIETY FOR
PROMOTION OF ENGINEERING EDUCATION, ENGI-
NEERS* SOCIETY OF PENNSYLVANIA; SIGMA xi

HONORARY SCIENTIFIC SOCIETY, ETC.

THIRD EDITION

McGRAW-HILL BOOK COMPANY, INC.

NEW YORK: 370 SEVENTH AVENUE

LONDON: 6 & 8 BOUVERIE ST., E. C. 4

1921

THE. MAPLE. PRESS. YORK. PA

DEDICATED

TO THE

CAUSE OF INDUSTRIAL
PEACE AND CO-OPERATION

PREFACE TO THIRD EDITION

IN preparing the third edition of this text, the principal modi-
fications which have been necessary in order to conform to the
evolution of management and standards of present-day practice
have been in those chapters which relate to general organization,
the personnel department including employment and industrial
relations, and functional control of production. Minor changes
have been incorporated in various chapters to conform to current
methods.

As stated in the preface to the first edition, this book is in-
tended to be of service to officers of manufacturing corporations,
works managers, superintendents, accountants, and the heads
of such departments as purchasing, stores, personnel, cost, and
production, and in fact to all employees of manufacturing cor-
porations who desire to acquire a comprehensive grasp of the
problems treated. It is the result of a good many years' expe-
rience on the part of the writer, of which time about one-half
was spent as an employee and about one-half as a consultant
and executive.

The work has gradually acquired its present form as the result
of magazine articles and of lecture courses delivered for a number
of years to students in engineering colleges and before commercial
and manufacturing organizations and it is believed that while
primarily intended for the actual practitioner in manufacturing
work, it will be of value to engineering students.

It has been a source of gratification to the author that this
book of his has stood the test of time so satisfactorily, as has
been evidenced by its continued sale year after year to industrial
executives and employees as well as being used as a text in lead-
ing colleges of engineering, business administration and com-
merce and finance.

It is the author's hope that the present revision may result in
a continued usefulness of the book.

HUGO DIEMER.

25 FOUNTAIN STREET,

NEW HAVEN, CONN.,
Aug., 1920.

vii

PREFACE TO SECOND EDITION

IN rewriting this volume, the material has been rearranged in
what appeared to be more logical sequence, and such new matter
has been added as the more important developments in the
science of management have demanded. The paragraphs have
been numbered and given topical headings. References have
been added at the close of each chapter to specific portions of
modern books bearing on the subject matter of the chapter.
These changes are made with a view to making the book more
useful as a help to those who wish to make further studies of the
topics treated and to facilitate the use of the book as a text.

HUGO DIEMER.
STATE COLLEGE, PA.,
December 15, 1913.

PREFACE TO FIRST EDITION

THIS book is intended to be of service to officers of manu-
facturing corporations, works managers, superintendents, account-
ants, and the heads of such departments as purchasing, stores,
cost, and production, and in fact to all employees of manufactur-
ing corporations who desire to acquire a comprehensive grasp of
the problems treated. It is the result of some twenty years' expe-
rience on the part of the writer, of which time about one-half
was spent as an employee and about one-half as a consultant.

The work has gradually acquired its present form as the result
of lecture courses delivered for a number of years to senior stu-
dents in engineering colleges, and it is believed that while pri-
marily intended for the actual practitioner in manufacturing
work, it will be of value to engineering students. .

HUGO DIEMER.
STATE COLLEGE, PA.,
July 1, 1910.

vin

CONTENTS

CHAPTER I

. PAGE

THE PRINCIPLES, FIELD AND METHODS OF INDUSTRIAL MANAGEMENT. . 1
Influence of tradition, precedent, and analogy on industrial
organization — Data relating to industrial management. Where
found — Is there a science of management? — The field of industrial
management — Efficiency in finance — Efficiency in organization —
Efficiency in accounting — Efficiency in industrial plants — Effi-
ciency in the selection and handling of employees — Efficiency in
production systems and methods — Efficiency in distribution and
selling — The methods of industrial management — Prominent
principles of management — Regulative principles of management —
Methods of the science of management — Taylor's definition of the
methods of industrial management.

CHAPTER II

INDUSTRIAL FINANCE .14

The corporation — The corporation charter — Where to incorporate
— Governmental control of corporations — State corporation com-
missions— Organization prior to incorporation — Capitalization —
Bonds — Preferred stock — Common stock — Depreciation.

CHAPTER III

ORGANIZATION AND CONTROL 22

Organization — Organization something distinct from management
and system — System — Control — Numerical- Military Type — Spe-
cialization— Functionalized type — Selecting organization and con-
trol— Specific duties — A comprehensive industrial organization —
Statistical division — Division of materials — Plant, equipment
> and processes division — Routing — Scheduling — Motion and time
studies — Preparing instructions — Standardization of equipment —
System division — Progress of an order — Applying above principles
to smaller industries — Types of organization charts.

CHAPTER IV

TYPICAL FACTORY ORGANIZATIONS 39

Existing organizations widely different — Importance of charting —
The works manager's position — Organization chart of a typewriter
factory — Chart of an automobile factory — Chart of an engineering
works — Chart of an electrical machinery factory — Chart showing
the functions of the planning department.

x CONTENTS

PAGE
CHAPTER V

FACTORY ACCOUNTS 51

Accounts required by modern management different from old
customs — Double-entry principles to be applied to cost accounts —
The three fundamental cost accounts — Subdivision of these accounts
and monthly closing — "Raw material" account — "Work in
process" account — "Finished-stock" account — Methods of allot-
ting expense burden — Separate man-hour departmental and general
rates — Method of establishing the hourly machine rate — Segrega-
tion of works expense from selling expenses — Detailed cost statistics
and records — Proper classification of expenditures — Detailed cost
posting methods — Gantt type of charts.

CHAPTER VI

DEPARTMENTAL REPORTS 58

Purpose of departmental reports — Bureau of statistics and records —
Typical factory reports — Drafting department reports — Produc-
tion or planning department reports — Reports of finished product —
Shipping department reports — Cost department report — Weekly
and monthly reports — Discussion of reports — Graphical reports —
Quarterly reports of the most important component parts — Pay-roll
analysis — Money value of direct and indirect production — Pur-
chases.

CHAPTER VII

FACTORY LOCATION 71

Importance of plant location — Considerations influencing selection
of a certain town or city — Influence of raw materials — Labor con-
ditions affecting selection of factory site — Transportation facilities
— Sales market as affecting plant location — Cost of plant as affected
by site — Branch factories — Railroads as an Aid in factory location
— Selecting the site in a given town — Local trade centers — Local
transportation — Local labor market — Local sales centers — Sub-
urban sites.

CHAPTER VIII

THE PLANNING OF FACTORY BUILDINGS; AND THE INFLUENCE OF DESIGN

ON THEIR PRODUCTIVE CAPACITY 80

Process mapping — Routing — Processing equipment — Arrangement
of equipment — Floor space occupied by equipment — Arrangement
of departments — Consecutive and simultaneous processes — Use of
templets in arranging departments — Service departments — Visi-
bility of work and economy of transport — Single-floor or multi-floor
building — Allowing for future expansion — Service equipment —
Heating and ventilating apparatus — Lighting apparatus — Fire pre-
vention— Water supply — Sanitary engineering — Mechanical trans-
portation— Power generation and transmission — Floors — Struc-

CONTENTS xi

PAGE

tural and architectural details — Employment of professional
industrial engineers to aid in planning of buildings.

CHAPTER IX

PERSONNEL DEPARTMENT t jog

Personnel organization — Employment — Job analysis — Desirable

qualifications of employees — Applications for employment

Employment record — Record of office employees — Psychologic
and physical tests, industrial and family tests, industrial and
family history — Release cards — Cipher code of characteristics of
employees and exemployees — Efficiency records — Safety and
compensation — Education — Apprenticeship system — Suggestion
system — Social betterment and welfare work — Medical division —
Labor turnover — Shop rules.

CHAPTER X

OFFICE MANAGEMENT 136

Functions of office manager — Handling mail — Messenger service —
Filing system — Relative location of offices — Desks.

CHAPTER XI

THE ORDER DEPARTMENT 142

Functions of order department — Classification of orders — Manifold
copies of orders — Example of order series — Instructions as to order
system — Special orders — Changes in orders.

CHAPTER XII

BILLS OF MATERIAL 152

Bill of material defined — Grouping of parts — Special parts —
Departmental bills of material — Assembly groups — Bill of material
as tracing or cost record — Changes in bills of material — Getting
work started before completion of bill of material.

CHAPTER XIII

THE DRAFTING DEPARTMENT 159

Functions of drafting department — Numbering parts — Stand-
ardization of parts — Recording data for standard detail parts —
Drawing lists — Filing tracings — Stock of blue-prints — Changes in
drawings or patterns — Blue-prints for shop use — Titles of drawings
— Detail drawings for shop use — Specifying limits of accuracy-
Making and issuing blue-prints — Checking drawings — Time-cards
in drafting department — Chief draftsman.

CHAPTER XIV

THE PATTERN DEPARTMENT 169

Orders to make patterns— Time-keeping system in pattern shop-
Recalling or altering patterns— Checking patterns and recording
their travel and location.

xii CONTENTS

PAGE

CHAPTER XV

THE PURCHASING DEPARTMENT 175

Functions of purchasing department — Qualifications of purchasing
agent — Requisitions on purchasing department — Purchasing de-
partment order form — Following up deliveries — Securing favorable
terms — Recording and classifying material, equipment and supplies
— Returned goods — Freight, express and drayage — Checking
invoices.

CHAPTER XVI

STORES AND STOCK DEPARTMENT 185

Classification of materials — Perpetual inventory of castings —
Perpetual inventory of manufactured parts — Bin tickets — "Find-
ing lists" — Numbering storeroom bins — Replenishment of stores —
Monthly balances showing money value as well as quantity of
stores — Use of tabulating machine in obtaining money value of
daily material receipts and disbursements — Withdrawing materials
from stores.

CHAPTER XVII

PLANNING AND SUPERVISING PRODUCTION . 201

Title of department controlling production — Reasons for functional
control — Carrying the functional organization into the shop —
Qualifications of head of production or planning department —
Relation of production or planning department to other depart-
ments— Routing — Instruction cards — Rate-fixing clerk — Order-of-
work clerk — Production or tracing clerk — Tracing individual
parts — Moving work in process — Rush orders — Tracing groups of
parts or complete machines — Hastening purchased items — Weekly
report for foremen's meeting — Shop tags — Detachments or split
lots — Transfer clerk — Estimate of times of completion.

CHAPTER XVIII

FOUNDRY SYSTEMS 224

Castings requisitions — Moulders' and core-makers' order copies —
Daily record of work done — Daily delivery record — Consecutive
job list — Foundry tracing card — Scrapped material — Clerical help
required — Indirect foundry labor — Daily cupola reports — Foundry
time ticket — Weekly cupola reports.

CHAPTER XIX

THE MACHINE SHOP AND TOOL DEPARTMENT ' . 236

Arrangement of machines — Foremen«and gang bosses — Tool room
independent of machine shop — Relieving foremen of clerical work
— Moving work in process — Call bells — Issuing blue-prints —
Repairs to machinery and transmission apparatus — Orders for
making tools — Record on small tools — Repetition work by tool-
makers — Tool-steel tests — Scheduling machine-shop work — Tool

CONTENTS xjii

lists for manufactured parts— Identifying different brands of tool A
steel— Check system— Bolts, clamps, washers and nuts for
"setting up"— Storing tools— Selection of machines— Proposals
for new machinery equipment.

CHAPTER XX

SHIPPING AND RECEIVING DEPARTMENTS 253

Relation of shipping and receiving to other departments— Copies
of orders to be sent to shipping department— Notice of items ready

for shipment — Stores and inspection records prior to shipment

Packing rooms— Packing cards and lists— Shipping records-
Shipping program for carload shipments— Car records — Freight
payments — Record by serial numbers of machines shipped —
Routing, classification and rates — Receiving departments —
Reports of material received — Reports of castings received —
Express charges — Returned goods — Patterns received.

CHAPTER XXI

TIME TAKING > 268

Time-clocks and numbering men — Clock card used as job ticket —
Time-stamps — Weekly time-sheet instructions to time-takers —
Individual operation time-slips — Time-slips for clock stamping —
Time-slip with ordinary operations printed on — Tabulating
machine systems — Pay-roll distribution and localization of depart-
mental expenses.

CHAPTER XXII

COST DEPARTMENT 281

Competition and costs — Importance of cost department — Duties
and qualifications of head of cost department — Cost system must
be adapted to product — Development of a cost system — Merging
cost records into regular double entry accounts of accounting
department — Material costs — Raw material costs — Costs of manu-
factured component parts made in quantity on stock orders and
drawn from storeroom — Current- value of actual invoice price as
basis for material costs — "Material burden" — Labor or time post-
ings on cost records — Checking labor postings against pay-roll —
"Non-productive" or "indirect" labor — "Standing orders" —
Plant additions, new equipment and fixtures — Typical list of
"standing orders" — Items constituting expense burden — "Fixed
charges"— "Percentage on labor" method of apportioning expense
burden — Use of separate expense percentages for different depart-
ments— Expense percentage different for different kinds of product
— Hourly expense rates — Departmental hourly expense rates or
local burden rates — Hourly machine rates — Machine rate should
always be separate and independent of other expenses not connected
with ownership and operation of machines — Wide variation in costs
in same establishment shown by applying the above different

xiv CONTENTS

PAGE

methods of apportioning expense burden — Importance of manu-
facturers in same industry using same methods of apportioning
expense in their cost systems — Cooperation between accounting
and cost departments — Notification of completion of orders — Cost
summaries — Comparative individual part costs — Comparative com-
plete machine or assembly group costs — Competitors' prices.

CHAPTER XXIII

AIDS IN TAKING INVENTORY 304

Advantages of "perpetual" inventories — Classification of items to
be inventoried — Tag system of taking annual inventory — Checking
inventory — Material in transit — Classification of work in process
and finished product — Units of measurement — Shop order numbers
for work in process — Depreciation on obsolete goods — Collecting
inventory tags — Sold goods — Classifying materials — Equipment
inventory — Depreciation and repairs on equipment — Duplicate
inventory tags — Proper percentage of depreciation — Inventorying
patterns and drawing — Perpetual inventories to be verified by
actual count — "Replacement" values — Cost system as an aid to
inventorying — Congested and disorderly stock-rooms — Precau-
tions regarding inventory taking.

CHAPTER XXIV

INSPECTION METHODS IN MODERN MACHINE SHOPS 317

General classification of inspection — Inspection of raw materials
and purchased items — Inspection of manufactured product —
Dimensional inspection — Floor inspection — Verification of inspec-
tion— Altering inspected parts — Inspection of assembled groups —
Erection inspection — Electrical Inspection — Final inspection and
test of complete machines — Organization of inspection depart-
ment— Qualifications of inspectors — Errors and defects — Testing
distinct from inspection — Test reports and records.

CHAPTER XXV

RATE FIXING AND TIME STUDIES 329

Former time standards not a reliable basis for rate fixing — Analysis
of work into preparatory and supplementary steps and active work
— Rate fixing on non-repetitive or "job" work — Foreman's time
standards usually guess work — Analysis of machine speeds and
feeds to be undertaken prior to rate fixing — Instruments and devices
needed for time study — Idle time of machines — Taylor's description
of correct time study — Confining rates to new operations and new
pieces — Form for taking observations for time studies — Computa-
tions and statistics as an aid to observations — Notice of new rates
— Time study and rate fixing to be permanent rather than tempo-
rary— Abridged time studies for transient work.

CONTENTS xv

PAGE

CHAPTER XXVI

WAGE SYSTEMS 342

Wage system must be adapted to conditions — Fixed hourly or day
rate — Efficiency records under day-rate — Comparative time
records — Piece-rate system — Piece rates must not be cut — Differ-
ential piece-rate system — Records of piece-rate earnings — Gain-
sharing methods — Premium wage system — Modifications of
premium system — Notices to employees describing premium wage
system — Combined bonus and premium system — Notices to
employees, describing combined bonus and premium system —
Bonus system or "task work with a bonus" — Individual job bonus
system — Incentives to securing continuous efficiency — Figuring
premium or bonus pay rolls — Notifications to workmen of gains or
losses under premium or bonus system.

CHAPTER XXVII

PRINCIPLES UNDERLYING GOOD MANAGEMENT 359

Clear-cut organization — Mutual confidence and cooperation —
Officials to be relieved of petty duties — Internal harmony essential
— A successful business the accumulation of many men's ideas —
Suggestion systems — Committee meetings — Systematic and scien-
tific selection and placing of men — Justice in wage systems — Suffi-
cient clerical force — Apprenticeship systems — Industrial and
vocational education-continuation schools — Bureaus of voca- •
tional guidance — Educational activities must not be hampered
by factional influence brought to bear by organized business or
organized labor — Some examples of good apprenticeship systems —
Cooperative schools — Employment of industrial engineers in an
advisory capacity.

CHAPTER XXVIII

A BIBLIOGRAPHY OF WORKS MANAGEMENT 374

Reading and study necessary for the man who aspires to success in
business administration and industrial management — A business
or shop library for managers and employees — A bibliography of the
classical or pioneer literature of works management or industrial
engineering prior to 1904 — A standard reference library of industrial
management and industrial engineering — A comprehensive library
of supplementary reading for a school of engineering or school of
business administration or public library.

INDEX 389

FACTORY ORGANIZATION AND
ADMINISTRATION

CHAPTER I

THE PRINCIPLES, FIELD AND METHODS OF INDUSTRIAL
MANAGEMENT

1. Influence of Tradition, Precedent, and Analogy on Industrial
Organization. — If we were to look for the influences which have
helped to establish the principles of industrial management,
we would have to go back earlier even than the beginnings of
civilization. When two barbarian tribes made war on each
other that tribe which possessed the best fighting organization
won out.

Principles of military management were appreciated in the
remotest antiquity. Training in discipline and knowledge of
different methods of attack, utilizing men best fitted to handle
certain kinds of weapons, and disposing of these various classes
of men in the most effective ways, how many should be in each
group, who should be the leaders in each group, how these
leaders should act in concert under the direction of general lead-
ers, were problems of management which were considered and
solved 6000 years ago in Egypt, Assyria, and Persia.

Similar problems in organization and management presented
themselves in connection with the disposition of the captured
prisoners who were usually sold into slavery.

As trade by caravan and vessels developed, new kinds of
problems in organization and management developed.

Again as various tribes allied themselves under common
leadership they developed governmental and legal organization
and administration.

We find at a later date the organization and management
of slaves in conducting productive industries, such as brick
making, stone hewing, lumber cutting, weaving, and transporta-
tion. Still later there came about the development of the
so-called guilds and free castes of skilled workmen.

2 FACTORY ORGANIZATION AND ADMINISTRATION

Elaborate and complicated organizations are to be found
in the management of the superstitious rites and religions of the
various tribes and nations.

We may summarize the sources of tradition, precedent, and
analogy from which modern industrial rnanagement has been
supplied" with formative influences as arising from:

(1) Military tradition and usage.

(2) Slavery and serfdom.

(3) Customs of trade and navigation.

(4) Civic and legal customs.

(5) Religious organizations.

(6) Existing industrial organizations.

The ancient and existing industrial organizations which exerted
their influence include such as the primitive condition of indi-
vidual independence followed by the establishment of toolmakers,
crafts, such as the arrow-makers and artificers of weapons.
Analogies have also been drawn from the domestic system which
was prevalent in England in the fifteenth century, where groups
of families devoted themselves to specialized activities. In the
family system the principle of co-operation is exemplified and
specialization and sub-division of labor is applied. In the
merchant and craft guilds the master craftsman was the pro-
prietor. He was the business manager as well as the most
skilled workman. Prior to the organization of the big trading
corporations, the individual or group shipping undertaking
affords an analogy. In these undertakings negotiations were
carried on between the crew and the officers as to what should
be the shares for owning the ship, for navigating it, for the ship's
surgeon, the steward, and so on, and what should be the com-
pensation of each man in the organization, this agreement being
ordinarily binding for only a single exploit.

With the advent of the industrial revolution covering the
period of the middle eighteenth century to the early nineteenth
century when the epoch-making power and machinery inventions
startled the world, the introduction of the factory system in
which dormitory and shop were combined, brought into play
principles of organization derived from various of the foregoing
forces, but with an autocratic control adapted from the feudal
manor.

2. Data Relating to Industrial Management. Where Found. —
The data of industrial management are enumerated in allitera-

THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 3

live form by Charles B. Going in a series of words beginning
with the letter M, which he designates as ''Materials, Markets,
Money, Men, and Machinery."

While this list of words is suggestive it will be a little more
comprehensive to enumerate the various sciences from which
industrial management draws its data and to which it is closely
related.

Selecting first from the list given by Mr. Going the subjects
of markets and money it is quite apparent that a study of these
two topics leads us to an investigation of the science of economics
with the view of selecting from that science such data and rules
as apply to industrial management. An investigation of the
science of economics will lead us to such topics as finance,
accounts, and statistics.

We will not have gone far in our study of economics before
we find we are bound to get into the fields of social and polit-
ical science as containing some data relating to industrial
management.

Looking again at the list of words beginning with M we find
Men. The selection of the right men to do certain work and
a selection of the best work for certain men leads us into the
field of psychology. We do not need to go far into this field
until we begin to realize that the simplest forms of tribal and
family life demanded of the leader some instinctive knowledge
of the feelings, impulses, and desires of others. He must respect
prejudice, be able to persuade to action, secure confidence and
obedience. All of these powers imply some knowledge of his
own conscience. It is singular that psychology as a vital factor
in works management has not been recognized until within the
very last few years.

The topics of materials and machinery come under the head-
ing of technical engineering. Engineering knowledge is required
also for the proper solution of problems connected with the design
and layout of factory plants and buildings, their service equip-
ment including power plants, transmission apparatus, light,
heat, ventilation and sanitation, elevators, cranes, mechanical
transportation, and the various machines required in the proc-
esses of the industries.

We might then summarize as the sciences closely related to
the science of management:

A (1) Economic, social and political science.
/ (2) Psychology.
I (3) Engineering.

4 FACTORY ORGANIZATION AND ADMINISTRATION

3. Is there a Science of Management? — The simplest defini-
tion of science is knowledge methodically digested and arranged.
Every science has a subject matter and methods more or less
peculiarly its own. Botany, physics and chemistry each have
more or less distinct fields and more or less diverse methods.
The science of management has its own fields. Tt.

analyses, classifies and explains the factors which Contribute to __
bring about emcient industrial conditions and results. _It also
Ms methods peculiarly-its own.

4. The Field of Industrial Management. — Industrial manage-
ment is one of the most important economic factors of our time.
It is intimately related to problems of individual and national
welfare. Hence any improvements that tend to lessen waste
and promote, health, wealth and happiness in any of the fields
of action or Departments controlled by the industrial manager
are full of a human interest and appeal over and above any
technical merit.

Efficiency in industrial management involves efficiency in«
each of the various divisions with which any management has to
deal. A general list of the fields of action covered by industrial
management in which there is opportunity for developing
efficiency, would include the following: (1) Finance, (2)*
Organization, (3) Accounting, (4) Industrial plants, their*
service and process equipment, (5) The selection and handling
of employees, (6) Production Systems and Methods, (7) Distribu-
tion, including selling and advertising.

5. Efficiency in Finance. — Many concerns are over-burdened
by reason of the financing not having been accomplished with
the best judgment and ability. More money than necessary
may have been spent in promoting. Again, if properties, patents
or good will have been paid for by shares of stock, the amount of
stock given in payment may have been excessive. In either of
these cases the establishment is loaded with a burden of which it
cannot rid itself. On account of this well-known fact it fre-
quently happens that a man who is primarily a financier is put
at the head of an industrial establishment; and we are then
afterward confronted by the condition that although our financ-
ing was efficiently done, we have a man at the head of the business
who is primarily a financier and knows nothing about manu-
facturing. He is carried on the pay-roll at a heavy salary, which
becomes a constant drain on the establishment. In the case of
a bank or brokerage house, this type of man is valuable every day.
On the other hand, from the standpoint of the best interests of

THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 5

the manufacturing concern, he is valuable only in cases of
financial crisis and is frequently unable to present the true state
of internal affairs of the factory to the ultimate ownership.

6. Efficiency in Organization. — There is a wide field open to
investigation as to the kinds of departmentalization which have
proven most effective in various industries. Another question
is that which deals with the extent to which departmentalization
shall be carried in various sizes of the same industry — for example,
the determination of what is the best form of departmentalized
organization for a steam-engine manufacturing company employ-
ing 150 men as compared with the departmentalized organization
for similar companies employing say 300, 600, 900, or 1200 men.

Efficiency in organization demands definite knowledge of
methods of securing individual effort and enthusiasm as well as
departmental co-ordination. It demands a knowledge of what
has been accomplished by department meetings, by meetings of
line officers with separate staff heads, by club, athletic and
welfare work among employees, and other means of securing good
will and loyalty.

It demands definite knowledge as to how far matters of policy
and general procedure may be made the subjects of thought and
discussion by men in the ranks and the lower officials as well as
by higher officials; and on the other hand, to what extent' methods
as well as results shall be considered and initiated by the higher
authorities.

It demands up-to-date knowledge of the evolution of functional
control from the form originally recommended by Dr. Frederick
W. Taylor to its present-day practical application to the general
organization as well as internally, not only in the manufacturing
department but in the accounting, purchasing, sales, and per-
sonnel departments.

7. Efficiency in Accounting. — At the head of the accounting
department we must have a man who knows how to prepare a
balance sheet that will stand the criticism of the most conserva-
tive auditor on the one hand; although on the other hand he
must be so conversant with current practice as not to fail to list
as assets everything to which his company is justly entitled. He
must know what constitutes under-valuation as well as what
constitutes over-valuation.

He must see the advantage of co-ordinating the manufacturing
records with the accounting system. He must realize the great

6 FACTORY ORGANIZATION AND ADMINISTRATION

advantage accruing from carrying in terms of money such records
as the current accounts of stores, of raw materials, of work in
process, and finished stock, and closing these into a monthly bal-
ance sheet. He must appreciate the advantage of differentiating
the expense accounts so as to allocate them to different kinds of
product in a manner that will represent the true costs and true
profits of different kinds of product so as to enable the concern
making a varied product to compete on the basis of actual
knowledge of true costs with a concern specializing in only one of
the varied products which his company makes. Here again the
old-fashioned bookkeeper type of accountant who urges for a
single expense rate based on the old-time percentage plan,
because in his opinion it costs less to get this than a differentiated
hourly expense rate for the different kinds of product, is wholly
out of place and distinctly harmful to the interests of the ultimate
ownership in an industrial establishment.

An efficient head of an accounting department needs to have a
broader view of his sphere of action than is possessed by a book-
keeper. He must be broad minded enough to avoid blocking
the path of progress of the progressive works manager by clinging
to old-time methods. The particular old-time methods which
he needs to revise are those which have to do with manufacturing
and expense accounts. These he needs to rehabilitate so as to
show every month or every four weeks classified profits and losses
on products and classified expenses per unit of product and per
unit of time.

J He must be discriminating enough to appreciate the modern
£\ conception of the differentiation of the work assignable to a

f treasurer, a comptroller, an auditor, a statistician, and a cost

^ service engineer.

• * ' He must realize the importance of scientific allotment of
Jl budgets to departments and the furnishing of departments with
ji the necessary follow-ups and break-downs.

/I 8. Efficiency in Industrial Plants may be said to include
efficiency in plant, in equipment, in the departmental arrange-
ment, in power generation and distribution, heating, ventilation,
illumination, sanitation, and mechanical transportation of
material, and in machine and tool processes.

Efficiency in factory location demands a knowledge of economic
and trade conditions acquired only by a very careful study.
Efficiency in buildings and the arrangement of departments in

THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 7

these buildings requires a careful study of process mapping and
of the types fitted to different classes of industry. Efficiency in
equipment required a technical knowledge of all of the processes
involved. The problem for one industry is always a probletiflby
itself, yet industries can be classified and types of plant can be
selected which are best adapted to certain types of industry.

9. Efficiency in the Selection and Handling of Employees. —
The problems of selecting the right man for a given task and
selecting the right kind of work for a certain man involve a care-
ful analysis of both the work and the men. This requires a
knowledge of the industrial processes 'whether they be mechanical
or mental and also a knowledge of the physical and psychological
qualities of various types of individuals.

The control of industrial relations^problems is so important
a factor in industrial management th ft the position of personnel
manager is one ranking with that! of works manager. The
present day tendency is to make the personnel manager respon-
sible directly to the Company President. In corporations where
a number of Vice Presidencies have been created to enable
important executives to secure an interest in and recognition
by the proprietorship, the personnel manager is a Vice President.

10. Efficiency in Production Systems and Methods. — The
word " production" indicates the making or manufacturing of
commodities. Engineering as applied to production means'
the planning in advance of production so as to secure certain
results. A man may be a good mechanic but no engineer. The
distinction between the mechanic and the engineer is that the
mechanic cuts and tries, and works by formulae based on empiri-
cism. The engineer calculates and plans with absolute certainty
of the accomplishment of the final results in accordance with
his plans, which are based ultimately on fundamental truths of
natural science.

Instinct and experience are valuable guides to the work of
either the mechanic or the engineer, but they serve only as the
coast-line does to the mariner without chart or compass. Guided
by the chart and compass of his certain knowledge, the engineer
is as positive of results in designing, for instance, a machine he
has never before seen as is the mariner of reaching a port he may
never before have set eyes on.

The mechanical engineer has to do with the design, construc-
tion, testing, and operating of machines. The mechanical engi-
neer designs with certainty of correct operation and adequate
strength.

8 FACTORY ORGANIZATION AND ADMINISTRATION

It is the business of the production engineer to know every,
single item that constitutes his finished product, and every step
involved in the handling of every piece. He must know what is
the most advantageous manufacturing quantity of every single
item so as to secure uniformity of flow as well as economy of
manufacture. He must know how long each step ought to
take under the best attainable working conditions. He must
be able to tell at any time the exact condition as regards quantity
and state of finishedness of every part involved in his manu-
facturing process.

Efficiency in production systems and methods demands a
thorough understanding of the matters connected with the phases
of manufacturing which are included in what is at the present
time designated as the planning department. This involves a
knowledge of the correct handling of such matters as bills of
material, drawing lists, perpetual inventories of stores, purchase
records, process maps, route diagrams and charts, instruction
cards, time and motion studies, tool lists, order of work and
tracing records, methods of promptly moving work in process
from department to department, as well as best methods of carry-
ing on the productive processes of an industry, including such
matters as feeds and speeds of machines, belt, chain and motor
drives, repairs to machinery, and inspection and test of product.

The engineer must be able not only to design, but to execute.
A draftsman may be able to design, but unless he is able to execute
his designs to successful operation he cannot be classed as an
engineer. The production engineer must be able to execute in
the most efficient manner the work as it has been planned.

11. Efficiency in Distribution and Selling. — There are many
correspondence courses in salesmanship offered at the present
time. A study of any of these courses will reveal the large field
open for work in the interests of greater efficiency. Efficiency
in the selling department recognizes the fact that it is not
quantity of sales which merits extra pay. That particular sales-
man or selling office is entitled to the greatest reward who has sold
goods on which the manufacturer has made the largest profits,
whether it has been the result of quantity of sales or of careful
selection, with an effort to sell those things on which the manu-
facturer could realize the greatest profit.

Progressive efficiency in selling demands extensive research
work in various industries to accumulate data covering the

THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 9

methods and actual costs of selling. It is only by the accumu-
lation and comparison of such data that we, as a nation, can make
progress in reducing distribution costs.

The research work above indicated is coming to be designated
as sales engineering, requiring analytical ability applied to
marketing and product problems. It is coming to be recognized
that sales engineering demands a distinctly different type of
man from sales production or actual selling.

Finally it must be recognized that economies in production
together with lower costs of manufacture will result in continual
manufacturing activity only if some corresponding reductions
in selling prices are made. National and international economy
demands that production of all kinds be maintained at a maxi-
mum; and in o^der that this condition may exist, we must be
content with such profits as will provide fair returns in the way
of dividends on actual investment, sinking funds to co^er depre-
ciations and a reasonable reserve for bad business years. After
these obligations have been met, however, there is no justifica-
tion from an economic standpoint for adding any further profit
over cost of production to increase selling price. .

12. The Methods of Industrial Management. — A committee
of the American Society of Mechanical Engineers made an ex-
tensive canvass in the fall of 1912 to determine what were the
new elements in modern management as well as what the com-
mittee designated as the regulative principles of industrial man-
agement. The committee confirmed Adam Smith's statement
made in 1776 in his "Wealth of Nations," in which he held that
the application of the principle of division of labor was the basis
of manufacture. The committee also agreed with Charles Bab-
bage, who in his work entitled " Economy of Machinery and
Manufacture" written in 1832, added another principle, namely
the transference of skill. The committee quotes from Adam
Smith's " Wealth of Nations," as follows:

"This great increase of the quantity of work which, in consequence
of the division of labor, the same number of people are capable of per-
forming, is owing to three different circumstances; first, to the increase
of dexterity in every particular workman; secondly, to the saving of the
time which is commonly lost in passing from one species of work to
another; and lastly, to the invention of a great number of machines
which facilitate and abridge labor, and enable one man to do the work
of many."

10 FACTORY ORGANIZATION AND ADMINISTRATION

They also quote from Charles Babbage's "Economy of Ma-
chinery and Manufacture" as follows:

"That the master manufacturer, by dividing the work to be executed
into different processes, each requiring different degrees of skill and
force, can purchase exactly that precise quantity of both which is neces-
sary for each process; whereas, if the whole work were executed by one
workman, that person must possess sufficient skill to perform the most
difficult, and sufficient strength to execute the most laborious of the
operations into which the art is divided."

The committe also reported that methods of analyzing and
recording operations were early developed. Charles Babbage
gives a table from a French investigator showing the number of
operations, time for each, cost of each, and expense of tools
and materials for making pins in France in 1760.

13. Prominent Principles of Management. — As a result of the
above investigations the committee state that they conceive the
prominent element in present-day industrial management to be:
the mental attitude that consciously applies the transference
of skill to all the activities of industry.

The committee report the following as the most satisfactory
answers to the question: "What are the regulative principles
of industrial management?"

The regulative principles of management along scientific
lines include four important elements:

(a) Planning of the processes and operations in detail by a
special department organized for this purpose.

(b) Functional organization by which each man superintend-
ing the workman is responsible for a single line of effort. This
is distinctly opposed to the older type of military organization,
where every man in the management is given a combination
of executive, legislative and judicial functions.

(d) Equable payment of the workers based on quantity and
quality of output of each individual. This involves scientific
analysis of each operation to determine the proper time that
should be required for its accomplishment and also high payment
for the worker who obtains the object sought.

Another correspondent finds the .solution of problems of
management in the observing and regulating of three classes of
industrial phenomena:

THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 11

"(a) The economic results of different arrangements and forms of
materials and operations upon them, either to produce equipment or
product. This covers the whole field of recorded experience from
invention and design of product and tools down, through the successive
shop processes to ultimate finished product and its tests in service. It
is the object of the scientific method to make the best of this experience,
in its essential details, readily available for all concerned, and to see
that it is actually absorbed and put in practice.

"(b) The economic results of varying executive methods for effect-
ively directing human efforts as a whole in the use of the above experi-
ence. This covers the entire field of building up, co-ordinating and con-
trolling the supervising organization of a plant with its statistical and
recording systems.

"(c) The economic results of steps taken to raise the industrial
efficiency of the individual worker in every grade of service. This
covers the whole problem of labor reward, intensified ability, conserved
energy and the general relations of employer and employee."

14. Regulative Principles of Management. — Messrs. Church
and Alford have attempted to condense the above regulative
principles still further and have denned them as : (a) The system-
atic use of experience; (b) The economic control of effort; (c)
The promotion of personal effectiveness.

The first includes the use, in all essential detail, of traditional
knowledge, personal experience and the results of scientific
study on the part of the executive force. It implies the accumu-
lation and use of records and the setting up of standards.

The second includes the division and subsequent co-ordination
of both executive and productive labor; the planning of single
lines of effort, the setting of definite tasks and the comparison
of results; and the effective training of the workers. It implies
the previous acquisition of skill by the executives.

The third includes a definite allotment of responsibility and
the adequate, stimulative encouragement and reward of both
executive and productive labor; the development of contented
workers, and the promotion of their physical and mental health.
It implies the most thorough comprehension of the human being.

15. Methods of the Science of Management. — In the first
edition of this book the writer outlined the methods of the
industrial engineer as follows:

He considers a manufacturing establishment just as one
would an intricate machine. He analyzes each process into
its ultimate, simple elements, and compares each of these simplest

12 FACTORY ORGANIZATION AND ADMINISTRATION

steps or processes with an ideal or perfect condition. He then
makes all due allowances for rational and practical conditions
and establishes an attainable commercial standard for every
step. The next process is that of attaining continuously this
standard, involving both quality and quantity, and the inter-
locking or assembling of all of these prime elements into a well-
arranged, well-built, smooth-running machine. It is quite
evident that work of this character involves technical knowledge
and ability in science and pure engineering, which do not enter
into the field of the accountant. Yet the industrial engineer
must have the accountant's keen perception of money values.
His work will not be good engineering unless he uses good
business judgment. He must be able to select those mechanical
devices and perfect such organization as will best suit present
needs and secure prompt returns in profit. He must have
sufficiently good business sense to appreciate the ratio between
investment and income. He must be in close enough touch
with the financial management to be able to impress upon them
the necessity of providing sinking funds to provide for the more
perfect installations and organizations which future demands of
a more educated and enlightened public will necessitate.

The industrial engineer to-day must be as competent to give
good business advice to his corporation as is the skilled corpora-
tion attorney. Upon his sound judgment and good advice
depend very frequently the making or losing of large fortunes.

The recognition of industrial engineering as a distinct field
of engineering has become an established and permanent fact as
evidenced by such strong and prominent organizations as the
Society of Industrial Engineers and the Taylor Society. The
latter was originally organized under the name of the Society
to Promote the Science of Management but changed its name in
honor of Dr. Frederick W. Taylor after his death. Still further
recognition of industrial engineering as a distinct field of engineer-
ing is evidenced by the increasing number of colleges and univer-
sities establishing departments of industrial engineering and
distinct courses in industrial engineering. These courses have
been designated in some colleges as courses in engineering ad-
ministration and involve a great deal more than one or two series
of lectures on industrial management. They usually cover
separate classes in charge of specialist professors teaching such
subjects as cost accounting, time study, functional control in the
shop, personnel management, and factory layout and equipment.

THE PRINCIPLES OF INDUSTRIAL MANAGEMENT 13

16. Taylor's Definition of the Methods of Industrial Manage-
ment.— Fred W. Taylor summarizes the methods of industrial
management as follows:

(1) The Establishment into Scientific Form of all of the Working
Data and Rule of Thumb Knowledge Relating to a Given Industry. —
As an example of the practical application of this method we
have Mr. Taylor's own exhaustive treatise on " The Art of Cutting
Metals."

(2) The Scientific Study of the Workers.— To illustrate what
sort of investigation this involves we may again refer to Mr.
Taylor's investigations as to the physical and temperamental
qualifications of men best adapted to such work as shoveling
iron ore, carrying pig iron, etc.

(3) Bringing the Science to the Worker. — This is accomplished
through the medium of functional foremanship. Each functional
foreman is an expert teacher in his speciality.

(4) The Assumption by the Management Itself of Its Due Share
in the Above-mentioned Three Divisions.

REFERENCES

CHEYNEY: "Industrial and Social History of England," Chapters II-IX.
COMAN: "Industrial History of the United States," Chapters II-IX.
DAY: "History of Commerce," Part IV.

WRIGHT: "Industrial Evolution of the United States." Parts I, II and IV.
GOING: "Principles of Industrial Engineering," Chapters I and II.
Transactions A. S. M. E., 1912. Report of Committee on Present State
of Industrial Management: No. 1378, pp. 1131-1229.

Tuck School Conference on Scientific Management: pp. 28-35.

CHAPTER II
INDUSTRIAL FINANCE

17. The Corporation. — The present-day theory of a corpora-
tion is that it is an organized body of individuals who have
agreed to co-operate in the conduct of some enterprise in accord-
ance with federal and state laws as well as certain by-laws made
by themselves. This theory is quite different from that, of the
previous generation which held that a corporation was an
intangible, invisible, entity, with perpetual existence, otherwise
having all the attributes of a natural person. The present-day
theory of the corporation does not segregate the directors and
stockholders from the invisible and frequently well-named
soulless mystery the corporation itself. To-day the officers, the
directors and the stockholders are themselves the corporation.
The acts of the corporation are the acts of the directors and their
agents. Inasmuch as the directors are the agents of the stock-
holders, the stockholders are responsible for the acts of the
directors in so far as the directors are acting within the limits of
the authorization conferred on them by the stockholders them-
selves. The fact that the courts are interpreting more and more
the corporation as a body of individuals each of whom shares in
the responsibility for the acts of the corporation itself should
serve as a warning to stockholders, directors, and responsible
officials in all corporations to exercise care and forethought in
seeing that there can be no charge substantiated that any acts
of the corporation violate common law, statutory law or public
policy. The commission of such acts, according to present-day
intrepretation of the courts, involves not only the intangible,
invisible thing known as the corporation but may mean civil
and even criminal action against the individuals composing the
corporation as well as those individuals in particular responsible
for such acts.

18. The Corporation Charter. — Incorporation is secured by
the granting of a charter. This charter is usually granted by the
office of the secretary of state of the state in which incorporation

INDUSTRIAL FINANCE 15

is sought, after the publication of the application for a stated
time in certain newspapers. In its ordinary form the charter is
furnished by the office of the secretary of state in brief standard
printed form which refers to the act or acts of the legislature and
also sometimes to the constitution of the state issuing the
charter, as specifying in further detail the terms under which the
charter is granted. This standard printed form of charter is,
however, not the only form of charter issued. Certain large
corporations, in order to secure the widest freedom of action
possible, have had their attorneys prepare charters so worded as
not to conflict with the laws of the state in which incorporation
is sought, but securing a wider range of possible activities than
would be expressly stated in the standard form of charter. Appli-
cations for special forms of charter thus prepared have usually
been granted, although the question has been raised by outsiders
whether the wide scope of activities allowed in some cases is in
accordance with the interest of public policy.

19. Where to Incorporate. — The natural place for an indus-
trial organization to incorporate would seem to be the state in
which its plant is located, or, if it operates plants in several states,
the state in which its principal plant is located. There is a
certain prestige gained by being known as a home industry
rather than a foreign corporation, the word " foreign" being used
in the sense of belonging to another state. Incorporation in
the home state might involve the acquisition of a certain amount
of good will from the people at large of that state. Again there
is a tendency in some states to license or tax foreign corporations
and exempt home corporations from such licenses or taxes.

Certain states limit the powers of corporations so far as the
scope of their business activities is concerned more than other
states and this may be a deciding factor in selecting the state in
which to incorporate. Again the cost of the charter varies in
different states. Certain states which grant special privileges to
corporations levy a heavy tax in the form of incorporation fee,
while other states, which are more strict with regard to privileges
allowed corporations, charge a relatively small fee. The form
of capitalization desired may decide the selection of the state 'in
which to incorporate. The conservative and closely held
corporation may choose to issue but one kind of capital stock and
sell this stock for cash only. Such a corporation can afford to
incorporate in the state in which its plant is located no matter

16 FACTORY ORGANIZATION AND ADMINISTRATION

how strict may be the corporation laws of that state. On the
other hand a corporation may wish to issue stock in exchange for
property contributed by subscribers or in exchange for services
rendered by promoters. Certain states are more liberal than
others with reference to the matter of allowing stock to be issued
for such things as property, services, patent rights, bonus, good
will, franchise, etc., than other states. Again some states allow
corporations to buy and sell stocks of other corporations, while
other states prohibit this. The conservative corporation has
everything to gain by incorporating under laws of a state which is
strict and has nothing to gain by incorporating under the laws
of a state having so-called liberal corporation laws. . On the other
hand there are many successful corporations which have been
organized by capable business men who had very little money
themselves to start out with and who it is claimed could never
have capitalized their businesses if they had been compelled to
conform to the corporation laws of some of the stricter states.

20. Governmental Control of Corporations; — So far as their
intra-state business is concerned, namely the business entirely
within the state in which they are incorporated, corporations are
subject to (a) the terms of the charter under which they are
operating; (b) the by-laws adopted by the stockholders; (c) the
constitution of the state; (d) the statutes of that state; (e)
common law; (f) public policy. So far as inter-state acts of
corporations are concerned they are subject to (a) the federal
constitution, (b) the federal statutes and (c) the interpretation
by the federal courts of questions as to whether they are violating
common law or public policy. It has been frequently urged that
all corporations doing inter-state business should be subject to
federal incorporation. Advocates of federal incorporation are
hoping that the confidential data accumulated by the federal
government in connection with the federal corporation tax as
well as the principle of federal control carried with the act, may
open the way for the construction of such a federal incorporation
act.

21. State Corporation Commissions. — The establishment of cor-
poration commissions in various states to pass on the soundness
of the financial plans of corporations seeking to sell their securities
and to determine whether these companies shall be allowed to sell
their securities in that state or not, is another recent phase of
governmental control. These commissions have been designated

INDUSTRIAL FINANCE 17

in popular parlance as "blue sky commissions" for the reason
that corporations having very little tangible property to show
back of the securities they are offering have been designated as
"blue sky companies."

Popular demand to-day is for the establishment of corpora-
tion commissions in the states, who shall look after the interests
of the investor and consumer as well as the just rights of incorpo-
rators and apply a uniform standard to all in questions of ap-
praisal of the value of tangible and intangible assets for which
securities are proposed to be issued.

The valuation of corporation assets by a commission would be
desirable from the standpoint of the investor and consumer in
such cases as the following:

A has a business actually worth $10,000. He agrees with
B that B shall put in $10,000 cash and secure a half interest in a
company which is to be incorporated with $30,000 paid up stock
on the following plan. An appraisal committee is to prepare an
inventory showing the value of A's business as $20,000 instead
of its real value of $10,000. The corporation will buy from A
hie business for $20,000 worth of stock. B subscribes for $10,-
000 worth of stock and pays for it in cash. A secret contract
is made by A and B whereby A agrees to transfer to B $5000
worth of stock apparently for cash at par value. B agrees to
write out a check in favor of A for $5000, A is to get this check
cashed and is to return the cash immediately back to B. The
paper records show that B has paid par value in cash for his
original $10,000 worth of stock, also that he paid A par value
in cash as per bank account and checks which can be shown for
his additional $5000 worth of stock. A and B now each own
$15,000 worth of stock which has cost each of them only $10,000
and they are in a position to sell stock at a profit to minority
stockholders. The figures and conditions of the hypothetical
case given can, and usually are adjusted to suit any particular
case under existing corporation laws. A strict corporation
commission with capable appraisers might prevent A from having
his business appraised at more than $10,000 valuation. It is
apparent, however, that to secure such results the commission
would have to be absolutely non-political and provided with a
sufficiently large and capable force of appraisers to do its work
thoroughly.

22. Organization Prior to Incorporation. — The real organiza-

18 FACTORY ORGANIZATION AND ADMINISTRATION

tion of most corporations is planned or " slated" prior to the first
subscribers' meeting. The promoters get together and deter-
mine what shall be their compensation, who shall be the directors
and officers, what shall be the by-laws, how the stock shall be
allotted in the case of over-subscription, what course shall be
followed in case of under-subscription, and many other details,
which are apparently solved by the free action of the subscribers
at the first meeting. At the first meeting somebody usually
nominates a temporary chairman as previously agreed on.
This motion is usually unanimously carried. Then the temporary
secretary is nominated and usually unanimously elected. Next
a motion is made that the chairman appoint a nominating com-
mittee to nominate officers. This motion is also usually carried.
It has been advocated that statutes should be passed providing
a set of rules governing the conduct of subscribers' meetings.
Such statutes would be very desirable, as under existing condi-
tions promoters claim that there is no law which requires even
the usually accepted rules of parlimentary procedure to be fol-
lowed in conducting a subscribers' meeting. For instance if
one of the subscribers ventured to move that the nominating
committee be elected by ballot or that directors be nominated
by petition and elected by ballot the temporary chairman could
simply declare such a motion out of order and declare in order
only such motions as are made by the promoters in accordance
with the agreed program.

23. Capitalization. — The simplest form of capitalization is
that in which there is only one kind of stock, the shares of which
have been paid for in cash at par value. This simplest form,
however, is less usual in the present generation than formerly.
The requirements of modern industrial undertakings for large
working capital, and expensive plants and equipment have made
it necessary for the industrial corporation established in recent
years to pattern itself somewhat after the railroad in its methods
of capitalization.

24. Bonds. — Industrial bonds are at present confined almost
exclusively to first mortgage bonds secured by real estate and
plant. It frequently happens that the citizens of a town desirous
of securing an industrial plant will donate the ground and sub-
scribe locally for first mortgage bonds of a sufficient amount to
put up either the buildings alone or the buildings and equip-
ment. In such cases a contract can be made between the bond-

INDUSTRIAL FINANCE 19

holders and the corporation regulating the amount that is to be
set aside per unit of product to meet interest on bonded indebted-
ness and to provide a sinking fund for paying off the bonds.
For instance, in the case of an automobile factory the contract
printed on the bond might specify that $20.00 per car is to be
set aside for every car sold, to meet the interest and sinking
fund requirements on the bond issue.

Equipment bonds and debenture bonds have not as yet been
employed to any extent in industrial undertakings. It is possible
that the future may see their more extensive use in this field.

25. Preferred Stock. —Preferred stock has priority of claim
over the common stock in sharing any profits. Formerly pre-
ferred stock was usually non-voting stock. A good deal of
preferred stock in recent years however is voting stock. In
some cases it becomes voting stock only if the dividend on the
preferred stock has not been paid. It is becoming the custom
to limit the amount of preferred stock issued by industrial
corporations to a figure which fairly represents the value of
unburdened tangible assets. For instance if the real estate and
buildings were covered by a mortgage securing a bond issue, and
if the equipment were not so burdened, then the preferred stock
issue might represent the value of the equipment, the raw mate-
rial on hand, work in process in the shops, and the finished stock
on hand. Industrial preferred stocks usually pay a rate of divi-
dend from 1 to 2 per cent, per annum higher than the bonds.
In some cases it may not be necessary to issue both bonds and
preferred stock. Under such circumstances the bond issue has
the advantage of being more easily marketed and paying a lower
rate of interest than would have to be paid on a preferred stock.
On the other hand preferred stock if it is non-cumulative does
not carry with it the same obligation to pay the dividend every
year as is involved in the compulsion to pay the interest on the
bonds. Most industrial corporations, however, make extreme
efforts to pay dividends on their preferred stock as the failure to
pay such dividends always results in a sharp decline of the
market value of all securities of the corporation. If the pre-
ferred stock is cumulative, any dividend which has not been
paid in any one year remains as an obligation to be paid out of
future profits before any dividend can be paid on the common
stock.

26. Common Stock. — Common stock is in most cases the only

20 FACTORY ORGANIZATION AND ADMINISTRATION

voting stock. The conservative industrialist sometimes prides
himself on the fact that his company has issued but one kind of
stock, namely, common stock. It is difficult under present-day
methods of finance to dispose of common stock at par for cash,
in view of the widespread custom of using common stock as a
bonus to be given away to subscribers to bonds or preferred
stock of new corporations.

What relation may the amount of common stock bear to other
securities issued? The conservative method of issuing common
stock is to retain as unissued stock a sufficient quantity of
authorized common stock so that the total outstanding securities
of all kinds will not exceed the total volume of business done in
a year representing an average condition of trade. Under such
circumstances the profits on a year's business should be ample
to pay interest and sinking fund requirements on the bond issue,
as well as dividends on the preferred and common stock and
permit some allotment of undivided profit to a surplus fund.
Take for example an industrial corporation doing a business of
$1,000,000 worth of sales a year. We might reasonably expect
that after all production costs and expenses were met, together
with all selling and office expenses outside of officers' salaries, a
favorable balance of $100,000 would be left. This $100,000
would have to be utilized to pay interest and sinking fund on
bonds, interest on stock, officers' salaries and leave some surplus
on hand, approximately as follows:

Interest at 6 per cent, on $100,000 bonds $6,000

Sinking fund 4,000

Dividend at 7 per cent, on $300,000 preferred stock 21,000

Dividend at 6 per cent, on $600,000 common stock 36,000

Surplus or depreciation fund 3,000

Total exclusive of officers' salaries 70,000

Balance left for officers' salaries $30,000

The above figures are not very far out of the ordinary for a
$1,000,000 concern. One does not have to do much figuring to
demonstrate that a concern with $1,000,000 capitalization can-
not afford to pay more than about three $10,000-a-year salaries
to officers, unless the profits on the business are abnormally high.

It is frequently attempted to controvert such figures as the
above by the statement that certain officers who are receiving
salaries of from $10,000 to $25,000 per year are actual producers

INDUSTRIAL FINANCE 21

in that ^hey are, as the case may be, exceptionally capable
financiers, organizers, managers, designers, or sales managers,
and that their salaries should be considered as part of the cost
of production. Such arguments are not so easily met where the
industry in question is a natural or artificial monopoly. But
where there is competition, either domestic or foreign, the cost
of the output and salaries paid for equivalent service are deter-
minable. Exorbitant salaries to officers and to favored stock-
holders have not been recognized until quite recently as one of
the greatest obstacles to American trade supremacy and to the
proper distribution of the benefits of the science of industrial
management.

The years 1915 to 1920 show a far greater increase each year
in the total outstanding capital stocks and other securities of
corporations as compared with the increase of tonnage of coal
and steel and bushels of grain and similar actual production.
Since the latter are after all the real measure of the increase in
the world's wealth, the exorbitant increase in outstanding capitali-
zation will sooner or later be recognized as a harmful element in
diminishing the purchasing value of a dollar and in increasing
the cost of living — an element of as great importance as under-
production or profiteering. A comparison of statistics published
by Babson or Bradstreet of production measured in the concrete
of products as compared with the increase of capitalization,
presents the case very clearly.

27. Depreciation. — Depreciation of plant and equipment is a
loss incurred every year. Inasmuch as losses and assets are
listed on the same side of the balance sheet it is important to
discriminate between an item which shows depreciation as a
loss and an item which shows a depreciation fund in the form of
a bank account, or securities purchased to offset this loss. In
order to make the matter clear it is always well to specify after
the words " depreciation fund" the form which this fund takes.
Writing down the word " depreciation" only, without specifying
the nature of the fund might lead a reader to believe that no
actual fund existed and that the depreciation was merely a loss.

Depreciation cannot be satisfactorily determined by the use
of arbitrary tables. In a given industry each type of plant and
equipment has a determinable period of useful active life. At
the end of this period the plant or equipment has also some
residual value, as scrap or second-hand outfit. To determine

22 FACTORY ORGANIZATION AND ADMINISTRATION

the depreciation, subtract the residual value from the initial
cost. To distribute this depreciation by annual allotments over
the period of useful active life is not so easy as would at first
sight appear. One's first thought is that if we divide the total
depreciation by the number of years of useful life we would have
the annual depreciation. We need to bear in mind, however,
that depreciation funds invested in securities are accumulating
interest. Hence we need to determine from annuity tables the
amount to be set aside each year in order to net us at the end of
the period of useful life the total depreciation sum.

The ultra-conservative enterprise with plenty of funds may
invest such sums in bank or in securities. The argument against
this practice is that the business itself must yield more profits
than such investments. Hence the depreciation reserve it is
argued is best reinvested into tangible assets of the business,
preferably equipment. If this is the form of investment, the
question arises as to whether the annual amount of depreciation
shall be considered as (a) the quotient of the total depreciation
divided by the period of useful life, or an annuity table sum based
on (b) ordinary savings bank interest rates, or (c) the average
dividend rate of the given business. Evidently (a) is the most
conservative and (c) the least conservative practice.

Depreciation must be recognized as something which happens
every year and must be met. It is an obligation which cannot
be shifted from one year to the next in anticipation of a year of
good profits. Auditors and critical investors are paying more
and more attention to the manner in which a corporation manage-
ment provides for distribution as one of the important means of
gauging the integrity and stability of the corporation in question.

REFERENCES

LOUGH: "Corporation Finance," Chapters I-XIV.
COOPER: "Financing an Enterprise," Parts I-IV.
BENTLEY: "Corporate Finance and Accounting," Chapter I.
CONYNGTON: "The Modern Corporation," Chapters I -XII.
SULLIVAN: "American Corporations," Chapters I-VII.
ENNIS: "Works Management," Chapter VII.

HUMPHREYS: "Lecture Notes on Business Engineering," Pages 258-318,
53-61, 29-39.

HATFIELD: "Modern Accounting," Chapter VII.
COLE: "Accounts," Chapter VIII.

CHAPTER III
ORGANIZATION AND CONTROL

28. Organization. — Organization consists of the laying out of
the scope and limits of action of the various individuals and
groups of individuals whose work is required for carrying on the
objects of the establishment. It consists further of the uniting
of these individuals and groups of individuals in such a manner
as to co-operate for the common good, harmoniously, promptly,
and economically. There is no greater source of economy than
conservation of human energy through efficient organization.
To obtain the largest possible return from a given expenditure
of capital and labor, the industrial organization must be logical,
systematic and scientific. A well-designed organization will \_
do much to bring about mutual confidence and co-operation.
The confidence of the men must be obtained. They must ap-
preciate that it is to their own interests as well as to the interests
of the community and stockholders to deliver the right kind of
work. The right kind of organization will do much toward
developing the right sort of industrial intelligence among all the
working men, a factor of more importance than superlative refine-
ments in the testing department.

29. Organization Something Distinct from Management and
System. — Organization is distinct from system and management.
An industrial establishment may have excellent filing and
accounting systems, but no well-defined lines of organization.
Again there may be clearly defined organization, but very poor
management. The distinction between organization, manage-
ment, and system is important, and must be fully appreciated.
We organize to manage. We manage largely through system.
We manage successfully when we apply not only the principles
fundamental to correct organization and system, but when
we take into account all the principles and methods of industrial
management. Some enthusiasts on industrial and business
psychology while recognizing the importance of dealing correctly
with the human factor in works management, do not lay enough

24 FACTORY ORGANIZATION AND ADMINISTRATION

stress on the other basic principles and methods of industrial
management. Management is the whole, of which organization,
system, industrial psychology, and other elements and methods
are parts.

30. System. — There is a pronounced tendency by consulting
experts to lay the greatest emphasis on certain methods of analy-
sis and synthesis and certain peculiar forms of record and equip-
ment. Certain experts have gathered together certain peculiar*
methods and have added to them certain principles of manage-
ment, and then dubbed the whole the " Blank System of Manage-
ment." Proprietors who have seen the benefits gained by certain
of these methods and systems in their particular industries are
enthusiastic in their praise and advocacy of them. These
methods and systems where they have been successful, are as
deserving of praise and reward as great mechanical inventions.
But it must be borne in mind that if we are endeavoring to
formulate basic principles of the science of management, they
are merely illustrative factors. To illustrate specifically, Mr.
Carl Barth has invented a remarkable slide-rule for determining
the best methods of metal removal by machine tools. Mr.
Sanford Thompson has invented a high-grade decimal stop-
watch. Both of these gentlemen are as much authorized to
speak of their methods as the Barth System or the Thompson
System, as certain men who have attached their names to methods
and systems which they designate as " Systems of Management."
Both of the gentlemen in question, however, recognize that
while there may be a science of management, it would be as
incorrect to speak of a system of management, as it would be to
speak of a system of economics, or a system of psychology.
Even Dr. Taylor, who has done more than any one individual in
establishing the principles and methods of industrial management
on a scientific basis, prefers the term " Scientific Management"
to the term "The Taylor System." Special methods and
systems represent practices based on a foundation of centuries of
experience by earnest men in actually doing the world's work.

31. Control. — To lay out a new organization or to analyze an
existing organization we must determine first the processes and
classes of activity required of plant, equipment alTd individuals.
This demands a knowledge of all the interior workings of an in-
dustrial establishment. The process of building up an orgfhiza-
tion that shall be the best for a certain factory depends primarily

ORGANIZATION AND CONTROL 25

upon scientific research work, having for its object the dissection
of the entire series of internal workings into the elementary steps.
We must list these in detail. Following this analytic process
comes the even more difficult synthetic one of preparing a struc-
ture which shall be the most efficient possible engine of industrial
production of its type. We must determine which of these prime
elements are to stand alone, and which are to be combined, so
that the general result will make a well-arranged, well-built,
smooth-running machine, as it were, of the entire aggregation.

Such determination requires an inspection of the establishment
with a view to determining what type of control is applicable
to its various branches. Control may be based on the principle
of military authority as exemplified by the line officers, on
specialization, on functionalization, or on a combination of dif-
ferent degrees of two or more of these principles. Each of
these principles will be dwelt on in further detail.

32. Numerical-Military Type. — The numerical type of de-
partmentalization and control, sometimes designated as the mili-
tary type, divides the men into groups in such a manner that each
group receives its orders and instructions of all kinds from one
man only. In this type in its extreme form, workmen are de-
finitely instructed that in all matters they are expected to receive
and obey orders from their gang boss only, he in return being
responsible only to the assistant foreman, the assistant foreman
to the foreman, and so ^n. In its modified type, instructions
may be taken from any line officer superior in rank. This modi-
fied type is quitej3ossible without conflicting orders.

33. Specialization. — The principle of specialization demands
that all similar duties, handicrafts "and* trades be selected and
performed by one man or group of men so far as processes and
classes of activity permit. The departmental division then
follows processes, trades, handicrafts and classes of labor and
equipment. The principle of specialization has come into pretty
general application even in conservative establishments. It is
exemplified in the manufacturing side by such departments as
lathe, automatic screw machine, miller department, etc., and in
the commercial side by such departments as correspondence,
sales, etc.

Specialization is an economic necessity, but over-specialization
is to be avoided. After all it is the all-around men, the versa-
tile, widely informed department heads, who form the vertebrae

26 FACTORY ORGANIZATION AND ADMINISTRATION

of the backbone of a successful organization. Among laborers,
mechanics and minor bosses, it is safe and proper to go to ex-
treme limits in specializing, but among those who are to fill posts
of higher responsibility, we should avoid drawing the lines of
specific organization with prescribed limitations of authority
so closely as to thwart ambition.

This desideratum can be brought about by grouping allied
specialized departments with a general officer as the head of the
group. Such general positions afford incentives in the way of
promotion to specialists and also provide insurance of succession
when an unexpected vacancy occurs. It is impossible to foresee
or prepare for the unexpected vacancy or other contingency
which will demand experience in exercising independent judgment
and all-around knowledge of an industry, qualifications which
are stifled by over-specialization and too great limitation of the
powers of higher officials.

With the development of the manufacturing side, we begin
to have, not only increased departmentalization by handicrafts,
trades and types of machinery, but we have as a rule the division
of metal machine-shop work into three classes, namely tooling,
group assembly, and final assembly or erecting. Next comes
the recognition of the advantage of distinct departments of works
engineering (including power, light and heat), design of product,
tool designing, stores, orders, shipping, cost and other factory
accounts, etc. Many organizations have developed specialized
departmentalization without the development of the principle of
functionalization.

34. Functionalized Type. — This term is used to designate a
type of control in which there is delegated to a staff officer or de-
partment, absolute control over certain features, performances or
functions common to all departments but distinct from special-
ized duties. To distinguish between specialization and func-
tionalization we may define a specialist as aiTmdividual who is
expert in a certain trade, handicraft or science which is an essen-
tial constituent of the particular industrial process of the given
establishment. A functional staff officer or bureau, on the other
hand, investigates a single phase or aspect common to all these
handicrafts, trades and sciences.

Functional management is more than the assignment of the
one function to a specialist, which is the distinguishing feature of
specialization. v Functionalization determines what functions

ORGANIZATION AND CONTROL 27

come into play in managing all departments, each functional head
for any one function being supreme in that function in all
departments.

It is by means of the functional departments and staff officers
that the efficient modern organization best accomplishes the
co-ordination which is so necessary after departmental speciali-
zation has been well instituted. Functional organization and
control which does away altogether with line control, is a dis-
tinguishing feature of Doctor Taylor's methods. He has
three functional heads in what he designates as the plan-
ning department, namely, a head for the order-of-work clerks,
a head for the instruction-card men and a head for the cost-and-
time clerks. In the shop side he has four functional heads,
namely, the gang boss, the speed boss, the inspector and the re-
pair boss. An eighth functional head, namely, the shop disci-
plinarian, acts in the capacity of arbitrator of all differences.
The functional men in the planning-department group operate
as a whole through the head of the " order-of-work" clerks, who
is the medium connecting the planning room with the shop bosses
and through them with the mechanics and laborers (see Fig. 1).

There has been an evolution in functional control so that while
Fig. 1 represents the principle, this principle is actually carried
out in varied ways. Those who have kept in close contact with
the evolution of functional control realize that recognition is
accorded as a rule to the two major classes of men, which may be
designated as the analytic, scientific or engineering type on the
one hand and the production, result-getting, following instruc-
tion type on the other hand.

A type of functional control which may be applied either to a
business as a whole or internally in any department, consists of
grouping the entire activities of a business and those internally
of each department, under five functional headings, consisting of
Planning, Preparation, Scheduling, Production, and Inspection.
For example, in functionalizing a general organization, under
"Planning" would come " Sales/ * Advertising, and " Ware-
house" departments; under "Preparation" would come "Eng-
ineering" and the activities designated in the Taylor Chart as
under "Planning;" under "Scheduling" and "Production"
would come "Manufacturing," "Purchasing," and "Personnel
Service;" under "Inspection" would come "Accounting,"
"Costs," "Statistics," and "Auditing."

35. Selecting Organization and Control. — It would be very
difficult to set down a standard type to apply to all industrial

FACTORY ORGANIZATION AND ADMINISTRATION

establishments. However, it is quite possible to present a'
conventional general type of combined staff and line control
adaptable with modifications to most industries. This con-
ventional type is then to be carefully inspected and studied by
all persons who are to lead in carrying out the plans for organiza-
tion prior to adopting any given system. In deciding on what
production, cost system, or wage system to use, it should be
remembered that men of exceptional ability may devise systems
of exceptional merit, but they must either keep personal repre-
sentatives of high ability permanently in charge of those systems,
or else turn them over to average proprietors and employees
to handle. And it is the personal inefficiency of the average

PLANNING

PERFORMING

*FiG. 1. — Chart prepared by F. B. Gilbreth to illustrate functional control
according to F. W. Taylor.

proprietors and men who operate the systems that determines
the practical limitations of their usefulness. No system should
be forced onto employees. Their co-operation must be secured
first.

In planning a new organization, meetings should be called of
the various existing officials and department heads. These
meetings should be continued until a form of organization has
been agreed upon. The sum total of the knowledge of a number
of intelligent men is generally greater than that of any one of

ORGANIZATION AND CONTROL

them, and action taken by an executive after consultation with
the leading members of an organization, even if it is not in exact
accord with majority opinion in some instances, is generally
conservative and safe. In management, and particularly in
developing an organization whose function it is to manage,
the personal equation cannot be ignored.

It is more important to know who your men are, how they are
inter-related, their personal peculiarities, their feeling toward
yourself and others, and the political organization of the plant

STAFF

(SEE

CHART )

( FIG. 3 )

CHIEF
ENGINEER

WAREHOUSE SUPT.
SHIPPING

4- +

OKUEftS
PLANS
PREPARATION
SCHEDULES

STORES
RECORDS
FOLLOW UP
ON
PURCHASES

TIME STUDIES
TIME RECORDS
INVESTIGATION
OF COST SERVICE
DATA.

INSPEC

DESIGN OF ^
TOOLS AND
METHODS

FIG. 2. — Chart illustrating line features of line and staff control in a
large industrial organisation.

as a whole, than to know the intimate details of production,
although the latter is essential. You cannot treat any two men
in the same way and get the best results from each of them. The
most successful organizer and manager is the one who knows his

30 FACTORY ORGANIZATION AND ADMINISTRATION

assistants, makes allowances for their peculiarities, and makes it a
point to promote personal good will among them.

36. Specific Duties. — Specific duties must be clearly set forth
not only for each group of individuals and various departments,
but a schedule of individual responsibilities and routine should
be prepared for the use of each individual in each department.
In addition to defining departmental and individual duties, the
duties of groups and committees must be listed. Charts and
diagrams should be prepared to show responsibility and inter-
relation of various departments, officials and committees of the
organization as a whole. Similar departmental charts and dia-
grams should be prepared for the various departments and sub-
departments. Each chart should be supplemented by such
extensive, explicit, detailed instructions as are required to make
it perfectly clear.

It should be borne in mind, however, that an organization
must be impersonal and must be built up along the lines of
specialization, functionalization, and control, and not along the
lines of individual personal abilities of present incumbents of
positions.

In addition to charting the organization, it is customary to
write up a detailed description of the responsibilities and duties.
This is designated as the " organization recond."— This Is supple-
mented by further written descriptions of the operation of
systems. These descriptions are usually designated as pro-
cedures and are given consecutive numbers so that they can be
indexed and revised and easily identified.

37. A Comprehensive Industrial Organization. — Fig. 2 is
presented as a comprehensive conventional model organization
embodying the best contemporary features of staff and line
control. The staff functions are limited to research, investiga-
tion and recommendation. All routine is carried on by the line
departments. It is strongly urged that the staff be organized
as distinct from the men having to deal with regular routine,
and that all staff bureaus be collectively under the leadership
of an industrial engineer as head of staff who should be a broadly
educated man. We might designate him as an engineer-econo-
mist, although he may have advanced and developed through
one of the branches of the organization dealing with engineering
accounts, or, on the other hand, through a department dealing
with men, or one dealing with machinery.

ORGANIZATION AND CONTROL

Fig. 3 illustrates the proposed staff organization under four
general divisions, namely: (1) Statistics; (2) Materials; (3)
Plant, Equipment, and Processes; (4) System. The term
" Division " is used to emphasize the distinction between the
staff divisions and major departments. Briefly outlined, the
functions of these staff divisions are as follows :

38. Statistical Division. — This division, like all of the staff
divisions, is a division which has no direct disciplinary control
over any of the various departments which keep records. It is

INDUSTRIAL ENGINEER

A BROADLY EDUCATED MAN

WELL VERSED IN THE SCIENCE OF MANAGEMENT
IN CHARGE .-DIRECTS RESEARCHES AND CONFERENCES
BETWEEN STAFF AND LINE.

AN ACCOUNTANT

AN ENGINEER WHO 18

AN INDUSTRIAL

SYSTEM DESIGN AND

TRAINED IN THEORY OF

AN EXPERT IN TESTING

ENGINEER IN CHARGE,

INSTALLATION.

ACCOUNTS, STATISTICS,

MATERIALS IN CHARGE.

THIS BRANCH OF

PLANNING OF PROCEDURES

GRAPHICAL REPORTS,

STAFF DIRECT MATTERS

AND PRINTED FORMS.

SYSTEM AND BUSINESS

PERTAINING TO:

NO NEW PROCEDURE OR

METHODS AND FORMS,

BUILDINGS

FORM EFFECTIVE UNLESS

AND ALL PHASES OF COST

EQUIPMENT INCLUDING

AUTHORIZED BY

ACCOUNTS IN CHARGE.

MACHINES, TOOLS AND

HEAD OF THIS DIVISION.

STANDARDS

PROCESSES

ROUTING

SCHEDULING

MOTION AND TIME

STUDIES.

FIG. 3. — Chart illustrating staff features in a large industrial organization.
The staff functions are limited to research, and recommendations. The
routine is carried on by the line departments shown in Fig. 2.

primarily a research and advisory division, the result of whose
investigations and whose recommendations are brought up at
such meetings of department heads and others as may have been
predetermined. It is the duty of the Statistical Division to see
that records by various departments are not merely kept and
stored away, but that from each set of records is secured a method
of most effective analysis, so that the records of the past may be
compared with the records of the present and conclusions may be
drawn as to future action.

32 FACTORY ORGANIZATION AND ADMINISTRATION

The individuals engaged in this division must be experts in
theory of accounts, the science of statistics, the art of graphical
presentation and cost accounting. The tendencies and facts'
indicated by an analysis of the records must be brought forcibly
to the attention of all individuals whose actions, based on experi-
ence and intuition, differ from the action indicated by an analysis
of figures, records and statistics. It should be the aim of an
organization to make history first and then to record it. The
records of matters that are done and over with should be adequate
but brief. Useless statements and reports should be eliminated.
Detailed cost-keeping can be and usually is over-done.

What constitutes a delightful problem for" an accountant
may be of no use as an aid to executive control. It is not so
important .to know exactly how bao! a mistake has been as it is
to know that mistakes are" being made in tinle to stop them.
An important-lunction of the bureau of statistics is to see that
approximately accurate daily records are prepared which indi-
cate quickly what the general trend of events is in each depart-
ment of the plant. Direct contact with current work is brought
about by the committee system, introduceo!" by C. U. Carpenter,
by which department heads responsible for the prosecution of
routine work frequently meet the members of the staff divisions.

39. Division of Materials. — This division is advisory as to' the
fitness of materials, as indicated by the technolo^ ofthe various
materials employed, with constant attention to cost reduction
as well as the bettering "of product. Its head should be an
engineer thoroughly conversant with the testing of materials.

40. Plant, Equipment and Processes Division. — This division
will consider and decide upon methods of routing, scheduling,
motion and time studies, preparation of instruction sheets and
cards, standardization of equipment. In all of these matters
the work of the staff division ends with the successful carrying
out of a nethod recommended by it. The routine is carried
on by men adapted to carry out routine work successfully.
For instance, many of the decisions of this staff division are
applied to the routine work of the planning or production de-
partment, which is not a staff division.

41. Routing. — This involves a study of the processes and
product and the preparation of process maps for the various
classes of product and the determination of most predominant
paths, some of them consecutive, some of them simultaneous,

ORGANIZATION AND CONTROL 33

together with the floor spaces, weights, bulks, etc., involved,
and recommendations as to rearrangements of equipment and
departments, and proposals as to building modifications and
extensions. It consists further in the designation of which
department, machine and class of individuals are to perform the
operations indicated.

42. Scheduling. — This consists of the determination of the
sequence in which all orders which are to be worked on by the
various departments of the establishment are to be listed so as
to determine their precedence and the methods of preparing a
definite program, in order that the shop may be provided by
the production or planning department with a daily schedule
covering the sequence of all work for the day. Scheduling
naturally divides itself into two sections, one having to do with
the scheduling and tracing of an order from the time of its first
receipt or issuance as part of a manufacturing program to the
time it is translated into many production orders by the produc-
tion on planning department, the other having to do with the
scheduling and tracing of the individual production orders.

43. Motion and Time Studies. — Motion study consists of the
analysis of each process into its ultimate simplest steps, and the
elimination of useless or improper motions. This process is
prerequisite to, and more difficult than, time study, which consists
of the timing with a stop-watch of the elements indicated by
the motion study. That motion study is more difficult than
time study is proved by the revelations disclosed by Frank
Gilbreth's application of ttfe motion-picture camera to assem-
bling operations. Motion study research can be applied to ac-
counting, designing and drafting methods and equipment, as
well as to mechanical and trade processes.

44. Preparing Instructions. — The results of the researches in
routing, motion studies and time studies are to be taken up with
the most skilled men in each process, these being the men
usually detailed-a«- demonstrators while the motion- and time-
study observations are being made, due allowance being made
if the demonstrator is a so-called pacemaker, and detailed
instructions are to be prepared which are to be the standard
practice and are not to be departed from. Proposals for different
steps or methods from the standard are, however, to be en-
couraged through the medium of a suggestion system, and
duly rewarded if they result in improvement.

34 FACTORY ORGANIZATION AND ADMINISTRATION

The instruction sheets are to be furnished to the production
or planning department for all new operations in just the same
manner that the designing department furnishes the detailed
shop working drawings for the designed product. In this
particular respect it may be said that the staff division does,
after all, come in touch with the routine work of the shop.
However, having once decided on the instructions, the staff
division is through with them as soon as they are working
satisfactorily.

In the use of instruction cards, only absolutely necessary
information should be issued, and this in the briefest possible
form. There is a tendency among systematizers to require
voluminous instructions to be issued to workingmen who have
neither the time nor ability to read and absorb them rapidly,
even if they have the inclination to do so. However, where the
instructions are an attempt to present to the working man the
time and motion analysis necessary to be followed by him in
order to get his work out in the required time and earn his bonus,
there is a good reason for statements such as "Read instructions
—3 min.," "Pick up piece, 1/10 min." etc.

45. Standardization of Equipment. — This covers standardiza-
tion of tools, appliances and fixtures by an expert in tooling
processes, who may wish to co-operate with the motion- and time-
study man or men in securing data.

46. System Division. — This division of the Industrial Engi-
neering Department has to do with system design and installa-
tion. The planning of our procedures and approval of printed
forms are duties of this division. No new procedure or printed
form is effective unless inspected by or authorized by the head
of this division.

47. Progress of an Order. — The table in Fig. 4 shows how an
order passes through the various departments under the super-
vision of the line departments. The numbers in front of each
division indicate the sequence of steps in the progress of the
order. The superintendent of planning 'and recording has con-
trol over the manufacturing program and through his scheduling
department controls the daily order of work. The methods of
scheduling are determined by the staff organization. The rou-
tine of the scheduling of the regular work is carried on by the line
organization.

There may be few industries large enough to require fully
manned departments for all of the activities indicated. No
matter how small the industry is, however, it must be analyzed

ORGANIZATION AND CONTROL

minutely and the above principles of the science of management
applied in its organization and operation. A department need

PROGRESS OF AN ORDER

Departments

in charge of

Chief Engineer

Departments in charge of Supt.
of Planning and Recording

Departments in

charge of Supt. of

Foremen, Mechanics

and Laborers

Order Dept.

1. Order entered.

2. Order scheduled and followed
to tracer in production dept.
This following up by schedule

clerk includes processes 3 to 9
inclusive.

Designing Dept.

3. New designs
made.
Drafting Dept.

4. Drawing list
made.

Production Dept.

6. Stores records checked and
requisitions made on purchasing
dept.

Purchasing Dept.

7. Purchases entered.

5. New drawings 8. Receiving dept. notified.

made.

Production Dept.
9. Detailed shop order prepared

including:
9a. Routing.
9b. Instruction cards.
9c. Tool lists.
9d. Time standards.
9e. Order of work.
9f. Tracing of work through

shops.

11. Inspection

Dept.

Inspection and
tests.

10. Work in shop
department.

12. Time and costs.

13. Shipping.

FIG. 4. — Progress of an order through the line departments of an industrial
establishment. Note that routine work is not handled by the staff bureaus,
whose fields are research, conference, and recommendations.

not consist of many men. It may consist of but one man, or
one man may conduct several departments, but his specific

36 FACTORY ORGANIZATION AND ADMINISTRATION

duties, routine and responsibilities must be accurately deter-
mined and carried out, otherwise the industry is being carried
on in a slip-shod, inefficient manner. In other words it is unor-
ganized and the basic principles of the science of management are
not being applied.

48. Applying above Principles to Smaller Industries. — The
above outline is intended to be sufficiently comprehensive to
apply to an industrial organization of considerable magnitude.
Extensive as it may seem it is not nearly as elaborate as the
complete organization chart of a large railway system.

In making a study of the existing organization of the plan-
ning and recording departments, the first step is to write out a

Clerk
Mr. I.
Drawing
'and Pattern
Records and
Patt'rn Storage.
Mr.H. and / TOOL DESIGN
DEPARTMENT
Mr. A. AND
ASSISTANT

Purchases of
Machinery
Mr. B. /Design

of Special
Machines
Mr.C. and
4 draftsmen

Tracers

Mr.G. and

C men

'Research
Study of
Tool Steels
Mr.F. and
.Assistant

Mr. B.

Jigs.

Mr.D. and
4 draftsmen

Punches
and Dies
Mr.E. and
3 draftsmen,

FIG. 5. — Departmental internal organization circle.

functional list, without names of individuals, showing the duties
of each department and of each man in each department. With
this functional analysis as a basis, there can be built up such as
impersonal functional list or chart as appears best adapted to
the company's conditions. The complete removal of the personal
element is absolutely essential. After the new chart has been
prepared, comes the selection of each man, of that man above all
others that will best fit each place.

After the listing of each distinct departmental function, out-
side of the direct productive departments as above, or including
the directr^rQductive departments also, the next process is the
merging together of such departments as must necessarily be
combined in establishments of moderate size, which cannot carry
a list as long as the above, of distinct departments. The dis-
tinct listing of functions is advisable, however, whether each

ORGANIZATION AND CONTROL

function represents a department or not. The next steps in
this direction would be the charting, first of the organization as

( Cost \ I \ f Finished}

Inventory
I Accounts I \ / \ /

\- I \ / f"w

DZ£f} I**™**} ratan
MP^ / \* } \VentiU

FIG. 6. — General organization chart.

it now exists, and secondly, of any improved or ideal organiza-
tion which it is hoped to secure.

38 FACTORY ORGANIZATION AND ADMINISTRATION

49. Types of Organization Charts. — There is probably no
better method of charting than that of circles connected by
lines or arrows, each circle representing a department, and the
lines or arrows representing either their subordination to each
other, or, by some different type of line or by using a separate
chart, representing also their geographic juxtaposition, or the
manner in which the work is handled first by one department
and then by another. This method of charting was first used by
Messrs. Garcke & Fells, and adopted by J. Slater Lewis and
subsequent investigators into the matter of factory organization.
Fig. 5 is an example of this method of charting applied to internal
departmental organization. This example will suffice to show
the method of division of duties coming under each functional
head. I believe it to be a good plan for each department to have
a chart showing the organization within that department, as
well as a chart of the general factory organization, so that each
man may see his place and not labor under any delusions as to
his authority or his prospects. In Fig. 6 is presented a form
illustrating this method of showing the general organization
scheme. The scheme here shown is presented merely as an
example for illustration.

REFERENCES

ENNIS: " Works Management," Chapter VIII.

PARKHURST: "Applied Methods of Scientific Management," Chapter I.

GOING: " Principles of Industrial Engineering," Chapter III.

TAYLOR: "Shop Management," Paragraphs 233-240.

EMERSON: "Efficiency" Chapter IV.

KNOEPPEL: ''Installing Efficiency Methods," Chapters VIII, IX.

CHAPTER IV
TYPICAL FACTORY ORGANIZATIONS

50. Existing Organizations Widely Different. — Factory organi-
zations as they exist to-day present as wide a range of physio-
logical structure as the whole animal kingdom. We can well com-
pare some establishments to a mass of protozoa. Others may
be likened with justice to tlie highest "orders of "vertebrates, with
their complex systems of organs, muscles, and nerves. In the
lower and extinct types of animal life" we find beings with few
organs/ and often with the same organ many timBS duplicated.
As the ages have passed, these types have decreased in number,
being unable to resist the more highly developed classes. In the
higher types we have no duplication of vital organs. The
same is true of factories. The crude types, lacking in some
organs, and with much duplication of functions, must pass away
and give place to the vertebrate type, with its higher physiolog-
ical development.

It is evident that the designing of organizations for the newer,
larger, and more complex establishments becomes of constantly
greater importance.

51. Importance of Charting. — In the great majority of manu-
facturing establishments the company officers are far more
conversant with the details of financing, accounting, and selling
than they are with those of manufacturing. From time to time
questions of business policy arise which have an intimate
connection with cost of production, time of delivery, stock of raw
material, stock of finished f>arts, condition of work in process
of manufacture, and similar matters.

At such times many officers realize that whereas in the settle-
ment of questions of financing, accounting, and selling they had
clear-cut records at hand to guide them in forming policies, on
the other hand, when it came to questions involving the* factory
itself, they were dependent wholly upon opinions of superintend-
ents or foremen, these opinions having no firmer foundation
than intuition. The realization of their helplessness and the

40 FACTORY ORGANIZATION AND ADMINISTRATION

absence of reliable and accurate knowledge of manufacturing
conditions has been an incentive to progressive officers of manu-
facturing establishments to devise more thorough systems of
executive control of the factory. More and more it has been
appreciated that some graphic method of showing inter-depart-
mental relations is necessary if responsibility is to be placed.

52. The Works Manager's Position. — The most successful
factory organizations are those in which all departments having
to do with production in any manner whatever are subordinate
to and responsible to one general head, the works manager, who
has a thoroughly competent assistant ready to take the chief's
place at any time, and who is recognized as the acting works
manager in the absence of his superior. This form of control is a
typical characteristic of the most successful manufacturing
organizations. There must be no paths whereby company
officers or any other departments in any way deal with depart-
ments responsible to the works manager except through the works
manager's office.

In manufacturing, next in importance to the centralization of
executive authority is clearly defined functional, departmental
and divisional lines, with a responsible head and assistant head
for each department. The business which has its factory de-
partments so organized that each department head is responsible
to the works manager, without any intervening bosses, will be
far more free from internal dissensions than one in which this is
not the case. Yet one hears of company officers gleefully telling
how they are " keeping them guessing," in referring to their
most capable men and the question of where they stand in the
organization. There are corporations who deliberately pursue
this course as a fixed business policy, giving as their reason that
they do not want to give any man too much power. Some
corporations also follow the policy of purposely providing some
overlapping or duplication in order to set up rivalry ancT"com-
petition. They allow departments and executives to rise or fall
as these departments and executives are able to establish con-
fidence in themselves and their organizations. While there are
some points of merit in such procedure, it is always athwart with
danger because while some men proceed along the lines of es-
tablishing efficiency and good will, others will proceed with
strictly German ruthlessness, using every form of intrigue to
malign or belittle the work of their rivals or of anyone who they

TYPICAL FACTORY ORGANIZATIONS

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42 FACTORY ORGANIZATION AND ADMINISTRATION

think stands in the way of their realizing to the full their most
selfish ambitions. Another reason for failure to establish clear-
cut departmental lines lies in company officials making promises
and offers to high-grade men in order to get them into their
employ — promises they know they cannot fulfil on account of
numerous similar promises to other employees. Such policies
are suicidal to a business in the long run.

A few examples of successful organizations of factories are
illustrated in the accompanying charts.

53. Organization Chart of a Typewriter Factory. — Figure 7
shows the factory organization of the Remington Typewriter Co.,
of Ilion, N. Y., as reported a number of years ago. The prin-
ciples illustrated by this chart, however, still hold good. The
same is true of all the succeeding charts. This company is
engaged in what is generally called "a straight manufacturing
proposition." That is to say, things are not built to order, but
the product is fixed and thoroughly standardized. Hence
designing and drafting do not appear among the list of depart-
ments under the control of the works manager. It will be noted
that there are nine general departments, viz.: (1) General
office of works; (2) Purchasing; (3) Finished parts and production
orders; (4) Shipping; (5) Inspection; (6) Labor; (7) Cashier
(including time and cost keeping); (8) Works engineering, and
(9) Manufacturing. The head of each of these departments is
directly responsible to the works manager and assistant works
manager and no one else.

It is noteworthy that this company has put under the works
manager such departments as shipping, purchasing, time and
cost keeping. In the great majority of American shops, where
principles of good organization have not become well recognized,
we find the head bookkeeper or some company officer looking after
purchasing, time and cost keeping and shipping, leaving all the
rest of the functions departmentalized, as shown on this Reming-
ton chart. The shop Superintendent therefore, in addition to
being the head of the manufacturing department with all its
subdivisions, must also look after stock and production orders,
employment, inspection, works engineering, power plant, and so
on. Being badly over-worked he usually has an assistant
Superintendent under him and a general foreman under the
Assistant Superintendent, shop clerks under the general foreman,
and so on, each being looked on as more or less of a "boss" in
the works, but without clearly defined limits of authority.

TYPICAL FACTORY ORGANIZATIONS 43

The type of man usually filling the position of shop superin-
tendent in the average American shop is often not capable of
filling the broader position of works manager. Frequently
company officers, though capable of financing, accounting and
selling are also incapable of acting as works managers. Most
shop superintendents when relieved of the many duties which are
shown segregated in this chart make excellent heads or super-
intendents of " manufacturing departments."

Another interesting feature of the Remington chart is the
division of the labor department into two branches, one having
to do with hiring, employment records, and general labor, and
the other having to do with industrial betterments. This per-
mits of combining a good hiring boss, on the one hand, and a
trained welfare man or sociologist, on the other, who can pool
their abilities to the best end for practical results.

It is quite likely that with the development of the idea of the
Personnel Department many other activities are now included
In the general head of the Personnel Department.

It will also be noticed in the Remington chart that all pro-
duction orders emanate from the finished parts and production
order department. No factory operation of any sort whatever,
whether for stock, upkeep or betterments may be made without
the proper order issued by this department. The stock of parts
required for manufacturing purposes is entirely separate from
stock for shipping and repair purposes. Also the stock of raw
material is under separate jurisdiction, being under the pur-
chasing department. All stocks, in each of the above classes,
are regulated by definitely established maximum and minimum
quantities.

54. Chart of an Automobile Factory. — Fig. 8 illustrates the
factory organization of the National Motor Vehicle Co., of
Indianapolis, Ind., as it existed 'some years ago when the writer
was Superintendent. It will be noted that the title of Superin-
tendent in this shop carried with it many of the duties which
at the present time would be assigned to the works manager.
This type of factory is one in which designing and drafting
comes to the front to some extent although not quite as promi-
nent as in a works building special machinery to order or build-
ing a line of varied engineering prbduct. Here the product is
redesigned or modified annually and there is more or less rede-
signing and experimenting throughout the season. It will be noted

44 FACTORY ORGANIZATION AND ADMINISTRATION

TYPICAL FACTORY ORGANIZATIONS 45

that we have one general circle entitled company officers. The
proprietorship of this company centered itself in two company
officers who had not definitely divided responsibility between
themselves, although,we had a very well-mapped-out chart from the
company officers downward through the three-fold control exer-
cised respectively over the purchasing agent, superintendent and
the chief engineer in charge of the designing department.
Various department heads were apt to receive conflicting in-
structions from the two proprietors previous to charting the
organization. The posting of the organization chart had
the effect of eliminating most of these conflicts. Glancing
at the chart, we will note that the purchasing department had
charge of shipping and receiving, this work being divided into
three groups: (1) Shipping, (2) Receiving, (3) Stock of raw
material and purchase parts. The superintendent had charge
of not only the manufacturing department but also the produc-
tion and cost department, as well as the works engineering
including power, light, heat and plumbing. The production
and cost department had three divisions: (1) Production orders
and cost, (2) time keeping, (3) stock of finished manufactured
^arts. The manufacturing departments were as follows: (1)
wood-working, (2) tool department, (3) forge department, (4)
machine department, (5) sub-assembly groups, (6) erecting
department, (7) plating and polishing, (8) painting, (9) trimming,
(10) testing and inspecting, (11) final assembly after painting.
Subdivisions of some of the more prominent manufacturing
departments are indicated on the chart; for example, the tool
department has three subdivisions, viz: (1) Tool designing and
tool making, (2) tool and blue-print storage, (3) machinery
repairs. The forge department has three subdivisions, (1)
General blacksmithing, (2) tool forging, (3) case hardening and
annealing. The machine department is also subdivided thus:
(1) Lathes, (2) screw machines, (3) drill presses, (4) millwright,
shafts and belts and oiling, (5) vise and handy men, (6) milling
machines. Of course there were some other machines including
planers, shapers and boring mills in the department called the
lathe department. The circle entitled sub-assembly group has
eight subdivisions: (1) Men working on frames, (2) men work-
ing on rear systems, (3) men working on front systems, (4) men
working on assembling clutch, shaft and universal joint groups,
(5) vise hands working at laying out and high grades of vise

46 FACTORY ORGANIZATION AND ADMINISTRATION

work, (6) wiring and dash, (7) transmission, (8) steering head
and control parts attached to same. The erecting department

ASSISTANT
TREASURER

— I

ESTIMAT-

ING AND
SHIPPING

SHIPPING
RECORDS AND

CORRESPONDENCE

SHIPPER

—

ING

STENOGRAPHER

STENOG-
RAPHERS

PURCHASING

STENOGRAPHER

1 PURCHASED

AND CLERK

EXECUTIVE OFFICE

PRESIDENT AND

MANAGER

FACTORY

8UPT.

PRODUCT-
ION AND
TRACING

DESIGN
AND
ORDER

PATTERN
SHOP

MACHINE
SHOP

BOILER

AND SHEET

METAL

FIG. 9. — Showing the organization of a strictly engineering business con-
ducted by the Western Gas Construction Company of Fort Wayne, Indiana.
Here the designing department takes the initiative on all orders, since prac-
tically all product is built to order. The chart covers the entire organization,
including accounting and selling. The advisory board, which consists of
heads of all departments, meets once a week and makes and receives
recommendations from the president and manager, who is himself an
expert mechanical engineer. In plotting this chart the rectangular method
of procedure has been employed.

is shown in eight subdivisions: (1) Engine, transmission and
axles, (2) control and brakes, (3) steering wheel, (4) wiring

TYPICAL FACTORY ORGANIZATIONS 47

and batteries, (5) muffler, radiator and brakes, (6) dash, fittings
and steps, (7) piping and tanks, (8) mileage test. It will be
noted that the repair work and demonstration is put under the
jurisdiction of the designing department, the idea being that in
this manner the chief designer will keep in very close touch with
the performance and wear of the machines.

55. Chart of an Engineering Works. — Fig. 9 shows the
organization of a strictly engineering business as laid out by
the writer for the conditions existing at the Western Gas Con-
struction Co., of Fort Wayne, Ind. Here the designing depart-
ment takes the initiative on all orders since practically all pro-
duction is built to order. The company is engaged in contract-
ing for gas works. The chart covers the entire organization
including accounting .and selling. The advisory board, which
consists of the heads of all departments, meets once a week and
makes and receives recommendations from the President and
Manager, who is himself an expert mechanical engineer. In
preparing this chart a rectangular method of procedure has been
employed. It will be noted that on the commercial side there
are three controlling heads, each head directly responsible to
the executive office. These are: (1) Head of sales department,
(2) head of purchasing department, (3) assistant treasurer.
The sales department it will be noted controls assembling and
shipping, the purchasing department controls stores, the treasury
department has control of accounts, including cost accounting
and all stenographic and clerical and filing work. On the manu-
facturing side there are four general heads: (1) A factory super-
intendent, (2) head of production and tracing department, (3)
head of designing department, (4) head of equipment and erect-
ing department. The factory department has charge of the pro-
ductive departments of the factory, including the pattern shop,
foundry, machine shop, boiler and sheet metal shop. The
machine-shop foreman has also jurisdiction over the blacksmith
shop and tool room. The production department has jurisdic-
tion over the shop clerks. The design and order department
has charge of all the drafting, issuing of all shop orders and check-
ing, library, filing and technical data. The equipment and
erecting department has charge of the erection equipment,
and of the erecting men, who are scattered through the world,
and the erectors' tool room.

56. Chart of an Electrical Machinery Factory.— Fig. 10

48 FACTORY ORGANIZATION AND ADMINISTRATION •

shows the organization of a large electric machinery manufac-
turing company. It will be noted that the control passes from
the stockholders, via Board of Directors and the chairman of

* r

o
|

•c JL

the Board to the President, and from him through four controlling
heads, viz: Comptroller, first Vice-President, Second Vice-Presi-
dent and Third Vice-President. The Comptroller's jurisdiction
covers two divisions: (1) That of auditor, (2) that of treasurer.

TYPICAL FACTORY ORGANIZATIONS

In the auditing department we have works accounting, traveling
and claim agent, general accounting and invoice department.
In the treasury department we have the legal work on collections,
collecting department and credit department. The First Vice-
President has jurisdiction over the works management. He

X — x

JTIG> 11.— Chart prepared by C. W. Adams of the Link Belt Mfg. Co.
and published in Factory Magazine, illustrating the functions of the planning
department.

exercises control over three distinct groups: (1) Head of engineer
ing and his assistant, (2) purchasing department, (3) manager of
works. The Second Vice-President exercises his control over two
distinct groups: (1) Sales, (2) Publicity, including (3) shipper,

50 FACTORY ORGANIZATION AND ADMINISTRATION

(4) welfare and employment department. Each division super-
intendent has jurisdiction over the general foreman and the
general cost clerk of his division.

The Second Vice-President has control of selling and adver-
tising, he exercises his control over two general heads: (1)
Sales manager, who has control of the various district sales
offices, (2) publication department, which has control over the
printing, publishing and advertising departments. The Third
Vice-President has jurisdiction over two branches: (1) General
legal department, (2) patent department.

57. Chart Showing the Functions of the Planning Department.
— Fig. 11 shows how the planning department relieves the shop
foremen of handling many details which they are expected to
look after in the unorganized shop. Before an order goes to the
shop it goes first to the drafting room who see that all drawings
are provided, such drawings for shop purposes being usually
simplified to include only such references and dimensions as are
necessary in the shop. The drafting department furnishes a
complete bill of materials. The bill of material goes to the
balance of stores clerk who makes any purchase requisitions nec-
essary and also indicates what parts are in finished stock. The
checked copy of the bill of material goes to the route clerk who
indicates the process-map through the factory. From him it
goes to the instruction-card man who indicates the detailed
operations entailed. From him the bill of material, route sheet,
and instruction cards go to the rate-fixing clerk who indicates
the standard times. Thence the order and all accompanying
papers go to the order of work clerk who sees how it is to fit into
the manufacturing program and the schedule of work to be done.
Thence it goes to the production clerk who sees that the various
work orders are properly put into the shop in proper sequence
and properly followed up.

58. The illustrations given in this chapter outline for the most
part typical line organizations. The principle of staff features as
illustrated in figure 3, chapter 3, and of functional control as
described in paragraph 34, can be introduced effectively into
any of these organizations without danger of disruption. In
fact, this process is at the present time going on in virtually all
progressive industrial organizations in America.

REFERENCES

ARNOLD: "Factory Manager," pps. 117, 236, 275, 323.
EMERSON: "Twelve Principles of Efficiency," Chap. II.
KIMBALL: "Principles of Industrial Organization," Chap. VII.

CHAPTER V
FACTORY ACCOUNTS

59. Accounts Required by Modern Management Different
from Old Customs. — There are certain accounting methods in
connection with modern management which vary from old-
fashioned accounting methods, yet whose introduction is abso-
lutely necessary before the industrial manager can get a correct
and prompt survey of cost of production.

Inasmuch as these methods are different from those formerly
in general use by bookkeepers who had obtained their training
in business colleges, the industrial manager is apt to have
difficulty in getting them installed in cases where he does not
have direct supervision over the bookkeeping department.

60. Double -entry Principles to be Applied to Cost Accounts. —
Cost records are always most satisfactory and intelligible if
they are constructed on the basis of the theory of double-entry
bookkeeping. To meet these requirements we need merely to
bear in mind that in double entry we debit what we receive.
When we receive nothing we debit the person with whom we
are transacting business. We credit what we give. When we
give nothing we credit the person with whom we are transacting
the business. Another fundamental principle which is the basis
of all trial balances and balance sheets is that total debits must
equal total credits. According to Hatfield the fundamental
equation of double-entry bookkeeping may be stated in the
form:

Goods account (debit) = proprietorship account (credit).

This equation may be expressed in somewhat more complete
form as follows:

Assets (debit) + negative proprietorship accounts (debit) =
capital account (credit) + profits (credit) + debts (credit).

Resources and losses are always a debit; liabilities and gains
are always a credit.

61. Controlling Accounts. — Accounts which involve a prepay-
ment or anticipation of an expense or a series of expenses, to be

52 FACTORY ORGANIZATION AND ADMINISTRATION

adjusted exactly at certain definite fiscal or financial periods, are
designated as controlling accounts. Controlling accounts play
an important part in connection with cost-keeping. A single
expense account which may be a general controlling account
may receive summarized periodic entries from a considerable
number of subdivided detailed expense accounts which serve to
assist the cost-keeper in determining as far as possible the expense
burden factors, of every product and every service.

62. The Three Fundamental Cost Accounts. — The old custom
provided three basic cost accounts, which with some modifica-
tions still constitute the basis of modern cost-keeping. These
accounts were designated as "Material," "Labor," and "Ex-
pense."

63. Subdivision of These Accounts and Monthly Closing. —
One of the important changes is that instead of having the
accounting department carry only the three fundamental
accounts mentioned, new accounts have been substituted as fol-
.lows, namely, "Raw Materials," "Material Burden," "Direct
Labor," "Labor Burden," "Expense Burden," "Work in Process,"
and "Finished Stock."

64. "Raw Material Account." — This account is debited as
material is received, with the amount of its cost as per invoices,
and is credited with the total charges to "Work in Process"
for all materials drawn for work in process, per orders on store-
room. The debit balance should represent the cost value of
raw materials on hand at the opening of each period, which
should be monthly, the account being closed monthly, or by
four-week periods. "Material Burden" is a general account
which is debited with the monthly or periodic totals of all costs
of carriage on materials received, including freight, express, and
drayage, cost of buying, including purchasing department salaries
and expenses, cost of storing and handling, including all store-
room salaries and expenses, as well as the monthly total of
all salaries and wages paid to receiving department clerks, and
laborers' time spent in hauling and placing materials received
into the store-rooms.

"Material Burden" account is credited with the burden
amounts charged to "Work in Process" account. These charges
are usually on the basis of percentage-on-raw-material-cost,
based on the ratio of the "Material Burden" account during

FACTORY ACCOUNTS 53

the past period or several periods to the "Raw Material " account
during the same time.

65. "Work in Process" Account. — This account is charged
with all materials drawn for work in process per orders on store-
room, which have been credited to "Raw Materials" account,
as well as with all "Material Burden" items which have been
credited to "Material Burden.'7 It is also charged with all
Direct Labor charged to production orders during a given period
as well as the Expense Burden. This Expense Burden may be
determined by a number of alternate methods as described
under the heading of "Methods of Allotting Expense Burden."
If the Expense Burden includes in addition to Indirect Labor,
also all other expense factors, there will be no further charges
to Work in Process, but if the expense burden is divided into
different kinds of expense factors, such as "Indirect Labor
Burden," "Machine Burden" and "General Expense" burden,
these will also have to be charged to "Work in Process." "Work
in Process" is credited with the total of all orders as soon as
finished, or in other words just as soon as they become "Finished
Stock."

66. "Finished Stock" Account. — This account is charged
with the total of all work in process just as soon as an order is
transformed from work in process into a finished order. "Work
in Process" account is credited with the same amount. "Fin-
ished Stock" is credited with the manufacturer's cost price as
established for the various articles to be made, whenever any
articles are shipped. This "Manufacturer's Cost" price is then
made the basis of operations of the selling department. " Manu-
facturer's Cost" price may be slightly higher than the sum of
"Raw Material," "Material Burden," "Direct Labor," "In-
direct Labor," "Machine Burden" and "General Expense
Burden," in order to allow for slight fluctuations in cost. Any
apparent profits accumulated in this way can be transferred to
reserves, for meeting depreciation of plant and equipment, once
a year. Fig. 12 illustrates graphically the theory of cost ac-
counts as above indicated in its simplest form.

67. Methods of Allotting Expense Burden. — Percentage on
Wages. — The oldest method and the one still in most general
use is the percentage on wages method established by finding
the ratio in percentage, which the sum total of Indirect Labor,
"fixed charges" and all other expense accounts in a given period

54 FACTORY ORGANIZATION AND ADMINISTRATION

bears to the sum total of Direct Labor in the same period. Its
greatest weakness lies in the fact that it over-charges high-priced
labor which may use shop and equipment and share running
expenses only a short time, and under-charges low-priced labor
which may use shop and equipment and share running expenses

FIG. 12.

a long time, in creating a direct-labor cost of the same dollars-
and-cents value.

The ' 'fixed charges" include the allottments from constant
expenses such as rent, interest, insurance, taxes, general officers*
salaries, etc.

68. Hourly Expense or Man-hour Rate. — A more recent
method, and the one which is in use by all machine-tool builders
using the uniform cost-accounting methods recommended by
the National Machine Tool Builders' Association, is the hourly
expense rate obtained by dividing the sum-total of all indirect

FACTORY ACCOUNTS 55

labor, "fixed charges" and expenses during a given period by
the sum total of direct-labor hours in the same period.

69. Separate Man-hour Departmental and General Rates
and Hourly Machine Rates. — A third method, probably in the
least general use, but destined to become far more widely used
is one which establishes (a) an hourly rate for each department,
local to that department (b) a general hourly shop overhead
rate (c) an hourly rate for each machine or group of machines.
Rates a, b and c are mutually exclusive and the sum total of all
expenses allotted from these three channels must approximate the
total of all indirect labor, "fixed charges" and all other expenses in
the same period. Inasmuch as the charges to " Work in Process "
and corresponding credits to the various expense accounts during
a given period are the results of calculations based on averages
of preceding periods, the exact balancing in order to close the
expense accounts must be left to an adjustment entry which may
result in either a debit or credit to the expense account at the
opening of the next period. If a considerable item, this adjust-
ment entry may demand a modification of the rates for allott-
ing expense burden during the next new period.

The establishment of local departmental burden rates affords
the proper basis for comparing local expenses from month to
month, as well as holding down costs on product which passes
through departments having low local burdens.

70. Method of Establishing the Hourly Machine Rate.— A
number of different considerations enter into the establishment of
the hourly machine rate. Among these are the following: (1)
The interest and depreciation on the purchase price of the
machine ; (2) the annual cost of repairing the machine and keep-
ing it supplied with lubricants and cutting tools, etc.; (3) the
floor space occupied by the machine and the stock lying about it;
(4) the power consumed by the machine.

With the previous year's expense accounts as a basis, an
estimate is made of the total maintenance of all machines.
Out of this grand total or budget, each machine tool is given a
certain definite allowance or allotment for the coming year.
A card is then written out for each separate machine tool, and
after determining approximately the number of hours that the
machine will run during the year, its hourly operating rate is
established for the next year by dividing the total budget by the
estimated hours that the machine is to be used. Every time that

56 FACTORY ORGANIZATION AND ADMINISTRATION

the machine is used, it is credited with the amount it earns as
its hourly rate, the amounts being posted on the card record for
that machine tool from the cost department's records, showing
amount or semi-annual period it is found likely that the postings
on any card will over-run or fall short of the amount allotted the
given machine changes must be made in the individual machine
rate. The exact balancing at the close of a year will be left to
an adjustment entry which may result in either a debit or credit
to the machine expense account at the opening of the next
period. With careful allotment of rates these adjustment entries
will be relatively small and required only in order to make
an exact balance at closing.

71. Segregation of Works Expenses from Selling Expenses.—
It will be noted that at the outset it was recommended to keep
out of General Expense account, items relating to "Material
Burden," such as transportation, hauling, purchasing and
stores. Similarly all expenses of the finished stock-room and
all shipping department expenses outside of outgoing freight
charges can be kept in a separate account, which is entered
into the general total for determining the Expense Burden.

All distinctly selling expenses should be kept separate and
the sales department made to show a profit on the basis of the
difference between Manufacturer's Cost and Selling Price.
Administrative expense which is neither a direct charge to
Works Management nor Selling, may be equally divided between
Manufacturer's Cost and Selling Cost.

72. Detailed Cost Statistics and Records. — Very little has been
said in this discussion as to the forms for posting these records.
The nature of the business will determine whether these records
are to be based on unit prices per quantity of output, per variety
of output, or per individual lot or item, whether each individual
item is to have its cost figured regularly or at intervals. Most
books on cost-keeping are filled with examples of forms for record-
ing the statistical data. A minimum of stress is laid on these
features in this discussion in order to bring out more strongly
the importance of the foregoing general principles.

The extent to which detailed costs are obtained depends very
largely on the nature of the business. In some industries it will
be satisfactory to obtain costs by processes, in other industries
by classes or groups of products, in others by weight or bulk
and in still others by departments or by machines.

FACTORY ACCOUNTS 57

73. Proper Classification of Expenditures. — The first thing
for an accountant to determine with regard to an expenditure
is whether it is a charge to assets or to revenue. We must deter-
mine whether the expenditure was (a) for materials, supplies or
labor for regular production (b) for materials, supplies or labor
for special production which is to be charged to customers (c)
for distinct additions to plant or equipment (d) for maintenance
of existing plant or equipment, or (e) for replacement of worn-out
plant or equipment.

If the system of accounts heretofore indicated is in use, which
shows the value of raw materials, work in process, and finished
stock each month, then there is apparently no need for the carry-
ing over of heavy purchases under (a) and (b) to be diffused over
several months, as the month's operating profits and losses are
easily determinable and quite independent of whether heavy
purchases have been made in any one month or whether the pur-
chases have been unusually light. In the matter of items under
class (4), namely the replacement of wornout plant or equipment,
such items would be paid for out of depreciation fund if such
exists. If such does not exist and the expenditure is of consid-
erable magnitude, the expenditure should be diffused over such
period as may be determined on as fair to ordinary production.

It is frequently the case that good discrimination is exercised
in properly distributing expenditures for which there is a sup-
plier's invoice whereas no such discrimination is used in dis-
tributing expenditures of the materials and labor of the industry,
so that the apparent cost of production varies widely, whereas
if expenditures were properly allotted there would be no such
apparent discrepancies.

74. Detailed Cost Posting Methods. — The methods, records
and forms required for finding and posting costs are discussed
fully in a later chapter on The Cost Department.

REFERENCES

GOING: "Principles of Industrial Engineering," Chapters V and VI.

HUMPHREYS: "Lecture Notes on Business Engineering," pages 498-510.

DAY: "Accounting Practice/' Part II.

KNOEPPEL: "Maximum Production." Chapters III and IV.

CHURCH: "Expense Burden."

BRISCO: "Economics of Business," Chapter VI.

WEBNER: "Factory Costs, Parts IV and V.

EVANS: "Cost Keeping and Scientific Management," Chapters I to IV.

REDFIELD: "The New Industrial Day," Chapters IV and V.

CHAPTER VI
DEPARTMENTAL REPORTS

75. Purpose of Departmental Reports. — Departmental reports
serve two purposes — they enable the head of each department
to know conditions in his own department, and they enable the
management to get in concise form definite knowledge as to each
department.

The first requisite of a departmental report is that it serves
some really useful purpose. This fact is often lost sight of. In
some establishments, reports are made covering data which have
very little if any practical value. This is a danger which must
be carefully avoided. Whenever a works manager finds reports
accumulating on' his desk which he finds he passes by week after
week, without drawing any useful information from them, he
would better discontinue such reports altogether.

On the other hand, there is no better way of keeping in inti-
mate touch with the whole field of a large establishment than
through the medium of well-planned periodic reports. Just what
should such reports cover? The purpose of this chapter is to
determine methods of furnishing classified periodic information
to the executive office covering existing conditions and out-
look of every phase of the manufacturing side of a business.

Certain reports need to be made in order that the executive
department may at any time know the exact conditions prevail-
ing in every department. Such reports, although comprehensive,
should be condensed. Hence, the method of preparation may,
in certain departments, require that department to keep detailed
records which can be referred to if necessary in explaining the
summarized information in the reports.

76. Bureau of Statistics or Records. — The duty of determining
the nature of the departmental reports, as well as how these
reports are to be condensed or transformed into graphical or
statistical form, is best placed under the jurisdiction of a staff
bureau of statistics, or in the case of a smaller concern, a single
statistician. This bureau or single official should be subordinate

DEPARTMENTAL REPORTS 59

to no one excepting the works manager and should confer with
the various departments furnishing reports, explaining fully the
objects sought to be accomplished.

It is recommended that any reports prepared by certain depart-
ments be returned regularly to the department from which the
reports originate. It is desirable that all reports be provided
with spaces where they can be checked in the statistician's office,
indicating that the report has been noted, or that they be
stamped in the office of statistics after having been noted and
approved, and that there be a private secretary in the statistician's
office who has a list of reports that should come in, with the dates
on which these reports fall due. The private secretary should
see that these reports are presented to the statistician's office
when due, and that they are returned from there to the depart-
ment concerned after having been noted, such statistical posting
from them having been done in the statistician's office as may be
deemed desirable.

77. Typical Factory Reports. — Let us take first the general
factory office. The general office of the factory receives the orders
from the sales department, turns them over to the proper order
departments, and advises the sales department of promise dates
of delivery. This would be the routine in a factory which does
not .regularly ship everything from stock. The nature of the
reports from the general office department to the statistician will
vary with the class of manufacturing done. For instance, the
reports of this department in a hosiery mill, employing 1200 people
in the manufacture of a few dozen varieties of hose, will be quite
different from the reports in a factory employing three hundred
men in the manufacture of a dozen types of machinery, in-
volving some ten thousand different component parts, to cover
the whole line.

In general the things the works manager wants to know
periodically are: First, the condition of orders; second, the con-
dition of stock; third, the cost of product and of running of plant.

It is not the purpose of this chapter to discuss financial reports
such as should be received by the general office management
from the accounting department. The particular class of re-
ports here referred to are such as are to be rendered to the works
manager of a factory.

Certain reports should be made every week, and turned into
the works manager's office on Monday of each week, such reports

60 FACTORY ORGANIZATION AND ADMINISTRATION

covering the week ending the previous Saturday. These weekly
reports are then discussed at a meeting of an advisory board or
council consisting of heads of all responsible departments.

Weekly reports of this character can be presented to the
manager either in the form of a statement on a regular printed
blank, or in the shape of a typewritten statement from the head
of the department. A printed sheet for this purpose is shown
in Fig. 13. This may be used for a general office department
report of machine orders entered, a shipping department report

COST DEPT'S REPORT OF EMPLOYEES AVERAGE WAGE RATES
AND PRODUCTIVE AND NON-PRODUCTIVE LABOR.

NO EM-
PLOYEES

AVERAGE
WAGE

PAY-ROLL
FOR DEPT

HOURS
FOR DEPT.

HRS.
FOR DEPT.

PRODUCTIVE

HRS.
FOR DEPT.

DUCTIVE HRS
FOR DEPT.

GENERAL OFFICE DEPT'S REPORT OF MACHINERY ORDERS ENTERED.

WEEK ENDING:

ORDER
NO.

NAME OF CONSIGNEE

NO.
MACH.

WEIGHT

DATE
TYPE VOLTAGE GAUGE TO BE

SHIPPED

GENERAL MONTHLY SUMMARY.

TOTAL NO.MACHINES SHIPPED TO DATE THIS YEAR

NO MACHINES ON HAND READY FOR SHIPMENT THIS DATE THIS YEAR

' ORDERS STILL TO BE SHIPPED AT THIS DATE THIS YEAR

TOTAL PAY ROLL TO DATE THIS YEAR

SHOP EXPENSE

MATERIAL ACCOUNT TO DATE THIS YEAR

Fig. 13 (middle), Order Report; Fig. 14 (top), Cost Report; Fig. 15 (bottom),
Monthly Summary.

of machines shipped, and a manufacturing department report
of machines ready for shipment.

The general office department report is turned into the statis-
tician's office by the head of the general office or correspond-
ence department, and on it are listed the most important items
for which orders have been received during the preceding week.

DEPARTMENTAL REPORTS 61

The form shown would apply to a business in which electrical
mining machines are manufactured. A little ingenuity will adapt
the principle involved to any other class of manufacturing.

78. Drafting Department Reports.— The second report in
which the manager is interested is that of the drafting depart-
ment, covering bills of material sent to the production depart-
ment. For this report no printed form is necessary. It can
be written on the typewriter. A list of bills of material actually
sent to the production department should be followed on the
same report by a list of such orders as have been received during
the week requiring bills of material, but for which the bills of
material have not been issued. Drafting department organiza-
tion counts for a good deal in this matter, and the routine should
be so fixed that all bills of material for orders received by the
bill of material division of the drafting department from the
general office department during any week are issued during
the current week, including orders received on the last two days
of the week, except for entirely new designs.

A comparison of the drafting department report of bills of
material sent to the production department, with the general
office department's report of machinery orders entered, will
indicate what orders remain in the drafting department, for
which that department has not yet prepared bills of material.

79. Production or Planning Department Reports. — The pro-
duction or planning department in its turn should send a report
of bills of material disposed of, and sub-orders sent to the shop
like the drafting room's report. This statement requires no
printed form and can be written on the typewriter. Routine,
too, must here be fixed so that all bills of material received during
the week are disposed of that week, with a possible exception of
bills of material received on Saturday. A list of bills of material
disposed of should be followed on the same report by a list of the
bills of material left over. The first part of the report shows
orders which have been sent to the shop for actual work during
the previous week. By comparing this report with the two pre-
ceding reports it is easily understood to what extent the produc-
tion department is lagging behind the orders received.

80. Reports of Finished Product. — The manufacturing or
tracing or testing department's report of machines ready for
shipment forms the next link in the chain of reports. This report
is made by one of these departments from its records or obser-

62 FACTORY ORGANIZATION AND ADMINISTRATION

vations, and covers all orders of any magnitude completed during
the preceding week which are ready for shipment.

81. Shipping Department Reports. — On a printed form, similar
to that used for the preceding reports, a report of the shipping
department may be presented. By comparing the shipping
department's report of machines shipped with the manufacturing
department's report of machines ready for shipment, the manager
can discover about how much time elapses between the shop's
report of completion of an order and shipping it. Such a com-
parison will also indicate what part of the product goes into fin-
ished stock instead of being shipped.

82. Cost Department Report. — Another report, that of the
cost department, covers the labor conditions in the factory, and
is one of the most important. The printed form for this report
is shown in Fig. 14. This report, considered by men who have
had an insight into manufacturing, enables them to feel the pulse
of the manufacturing department. Considered in connection
with the previous reports, it forms the basis for telling whether
certain departments are working at their best efficiency or not.

83. Weekly and Monthly Reports. — All the reports which
have been mentioned are best submitted weekly under ordinary
conditions. In addition to these weekly reports, there will be
in any business certain monthly reports. These monthly reports
will be kept on hand for reference until the next monthly report
is ready. Such a monthly report can be well presented on the
same printed form as that shown in Fig. 13. The machine
orders are arranged in this case in order of urgency. Comparison
of this monthly statement with reports for previous months will
show to what extent shipping capacity is taken up.

For summarizing some of the principal reports which have
been submitted by the different departments, a general monthly
statement is prepared by the private secretary in a works man-
ager's office. The items given in this report indicate the number
of machines shipped during the year up to the day of the report,
and comparison of this number with the same items, same date,
previous year. Fig. 15 shows such a report.

For particular purposes, carefully prepared reports, as above
indicated, can be made nearly as effective as the results obtained
from a monthly closing of the books. The latter process is, in
many businesses, totally out of the question.

84. Discussion of Reports. — To gain any real advantage from

DEPARTMENTAL REPORTS 63

reports, however, they must be given attentive consideration,
and thoroughly discussed by a council consisting of the heads of
all departments affected by the reports. A great many manu-
facturers realize the advantage of such council meetings, but
fail in lacking the initiative of getting such meetings started and
keeping them up. These meetings are becoming more and more
a feature of successful manufacturing establishments. The meet-
ings are best held at such times when they do not interfere with
the lunch hour, or personal time of employees. A morning
period from 10 A. M. to not later than 12 has been found the most
satisfactory.

85. Graphical Reports. — To many managers graphical sum-
maries of reports present a lifelike picture of conditions in a most
comprehensive manner, and suggest remedial steps, where mere
tabulated figures would not have been such a stimulus. This
is particularly true when the works manager is an engineer, or
has had scientific training, and is accustomed to the graphical
method of presentation and consequent analysis.

I have known of instances where the most important and
radical steps were inspired by reflection over a graphical chart.
On the other hand, there are managers who can appreciate only
the numerical and tabulated figure method of making charts
or reports, and who consider any conversion of numerical records
into graphics as needless waste of time. It is well worth while
for those who have not used graphical methods to consider that
every successful manager makes scientific use of this imagination
when his intuition or judgment tells him that certain steps are
necessary. If certain helps to guide this intuition or judgment
can be gotten from graphical charts which do not require a great
deal of time or expense to prepare, then the charts are certainly
worth while.

Such a graphic report (Fig. 16), showing graphic comparison
of orders received, orders shipped, and orders in production,
arranged by classes of product, can be easily prepared.

Similarly, other elements in manufacturing can be visualized.
Fig. 17 shows a graphic comparison of labor and material costs
with estimated value of product. The lowest line is that repre-
senting supervision and clerical labor. This will not vary as
much as the other lines; the next line is measured from the line
just drawn as a base line, and shows the cost of unskilled labor
(the items given are expressed in dollars, and laid off to scale) ;

64 FACTORY ORGANIZATION AND ADMINISTRATION

GRAPHIC COMPARISON OF

ORDERS RECEIVED, (7); ORDERS SHIPPED. (2): ORDERS IN PRODUCTION, (3) :

TYPE OF
MACHINE

BELTED DYNAMOS

DIRECT
CONNECTED DYNAMOS

LOCOMOTIVES
5 TON AND UNDER

NUMBER

5 10 15 J

03 ip 15 2

OS 1O 15 2

)

(?)

(3)

-x

v A

(

**«

;'
5

i e

)

(

,•

;

,-'

(

)

I IA

(

•,

(

/ P

(

•^

[

•\

~t IA

)

\l'/

JUT

(

ii^i

•>

;

JUL

)

(i r;

(

v \

v X '

;

' U<

"*5

)

^ J

FIG. 16.— For the manager who has learned the value of graphic repre-
sentation of facts, nothing can compare with a chart as a means of getting at
the essence of a mass of figures. The data given in this chart is hypothetical
and the quantities taken are arbitrary. The value of the graphical method
is well brought out, however, and the arrangement necessary to secure the
results here shown is applicable to a great variety of conditions. The rela-
tive condition of three of the facts essential to the manager — orders received,
orders shipped, and orders in production — is made evident at a glance four
times a month throughout the year. Pay-roll periods often make satisfac-
tory intervals by which to plot the condition of production on a chart, but
periods suitable to the business must be taken,

DEPARTMENTAL REPORTS

while the third line is the cost of skilled labor. Cost of material
used in the month's production is graphically presented by line

CO o.

CJ u?

Z «

£ S

HO
O ";

if ?
U t
Z s

^ LJ

$ o

a a

i i i

i i i i
<m o Q

FIG. 17.

" expense" material for

four, and the fifth line is the exact cost of

the month for office and shop operation and maintenance

The

66 FACTORY ORGANIZATION AND ADMINISTRATION

sixth line represents the "fixed charges," including depreciation,
interest, and all other shop charges. The seventh or top line is
measured from the base line, and represents the estimating de-
partment's valuation of the month's product delivered to the sales
department, and not including selling expense. This is based
largely on established cost values, or "standard costs" of the
items produced.

So long as all the area underneath the sixth line does not pro-
ject above the seventh line there is a likelihood of profit and
indications are for efficient production. The reverse is the case
when the sixth line projects.

It is well worth while to put one or two experienced cost or
production department men at this estimating work. If they
are of the right caliber, they will get results not far from accurate
without going to extremes in detail, and will be able to present
very interesting matter. It is in many manufacturing establish-
ments wholly impracticable to make a general business statement
more than once a year. The nature of their business is such
that an attempt to close all records and show monthly results is
entirely out of the question. Yet the strain of the uncertainty,
consequent on a year's wait, can be relieved by estimates and by
reports.

Further departmental reports may cover such matters as the
following :

86. Quarterly Reports of the Most Important Component
Parts. — These should cover the total number of each component
ordered to be made during a quarter-year, the total number
shipped during the same period, the total number delivered to
shop or finished parts stock during the quarter, and a comparison
of these data with the same items during the previous quarter-
year. This report will serve as a valuable guide in establishing a
manufacturing program for stock of leading component parts, a
matter which needs to be considered in a comprehensive way,
taking into consideration capacity of shop as regards labor and
equipment, probable sales, etc., no matter how automatic the
routine of reordering for replenishment on the part of stock-
record or production department clerks may be.

87. Pay-roll Analysis. — Each pay-roll should be analyzed so as
to show the leading classes of indirect labor, and their proportion
to direct labor by classes of work and by departments. This
requires as a starting point the classification of each workman's

DEPARTMENTAL REPORTS 67

daily time record and the assembling of these classifications into
pay-roll periods by departments.

88. Money Value of Direct and Indirect Production. — Where
there is a complete stores accounting system installed, it is pos-
sible to have periodic reports of the money value of the parts
turned into stock-room, value of completely assembled product
turned into stock (all goods going in to stock previous to ship-
ment), value of work in process by closing of cost records to a
certain da.ter value of additions to plant and equipment made
by the shop.

89. Purchases. — Classified report of money value of all pur-
chases during a given period compared with same for correspond-
ing previous periods.

90. Gantt Type of Charts. — Mr. H. L. Gantt devised a type of
progress, summary, and production charts which have come into
such general use that it is desirable to describe them.

These charts are devised to enable one to make a rapid com-
parison between what has been done and what should have been
done or what was expected to have been done or happen.

They are not substituted for balance and detailed records but
are devised to enable an executive to take action without the
necessity for looking up a mass of figures. These charts may be
divided into three general classes:
1st — Summary Charts

2nd— Order Charts

3rd — Production Charts

Summary Charts show:

1. Requirements by periods of time, and total requirements.

2. Contracts placed to meet these requirements and total
amounts contracted for as compared with estimated requirements.

3. Deliveries in each period of time as a percentage of require-
ments and total amounts delivered.

These charts may also show:

4. The amounts issued in each period of time and total amounts
issued.

An inspection of these charts will show:

(a) To what extent the requirements have been covered by
contracts.

(b) To what extent requirements have been met by deliveries.

68 FACTORY ORGANIZATION AND ADMINISTRATION

(d) The amounts still to be contracted for.

(e) The amounts still to be delivered on contracts.
(/) The amount in stores.

The Order Charts show the condition of each order for any
major article. These are usually on separate sheets and at the
top of the sheet there is a summary for that article.

The Production Charts contain a detailed record by groups of
components into which an article may be divided; also a detailed
record of the state of progress on each component in the group.

The important facts to be recorded on Production Charts are:

1. The groups or items completed;

2. The groups or items in process;

3. The groups or items for which there is material on hand;

4. The extent to which the scheduled program is being met.
The method in which these charts are constructed is as follows:

The sheet of paper contains a number of horizontal lines, and at
the left of the sheet are recorded the items or components; at
the right of the sheet are groups of columns indicated by vertical
lines, each week being represented by five, six, or seven columns.
The one constant is time. The amount to be done in the time
unit is always represented by the same length of line.

Required and Ordered. — The amount ordered, or contracted
for, for delivery during any period, is represented by a light line
in that period, as a proportion of the total amount required.

The cumulative amount ordered, or contracted for, as com-
pared with the total required, is shown by a heavy line.

On Hand and Received. — The amount on hand at the time the
chart was started is indicated by a heavy dashed line.

Received. — The amount received during any period is repre-
sented by a light line as a proportion of the amount required
during that period.

The total amount received is represented by a heavy black line
as compared with the total amount required.

Issued. — The amount iss'ued during any period is represented
by a light line as a proportion of the estimated requirement for
that period.

The total amount issued is represented by a heavy line as com-
pared with the total estimated requirement.

Order Charts. — A thin black line starting at the beginning of a
period represents on the scale of that period the amount received
during that period, and a heavy black line the total received to
date.

DEPARTMENTAL REPORTS

Angles. — Angles placed opposite a certain item and under a
certain date indicate the beginning and close of the period
covered by the plan or expectations.

Entries. — Actual accomplishment or the extent to which the
program has been executed is indicated by short vertical lines
drawn at right angles below the heavy black lines. These
indicate the point to which the cumulative line has been brought
by the respective increments. If no parts or articles are corn-

status

Sept.l

Bullets

I P

MOH

Primers

I P

MOH

Bandoliers

I P

MOH

Chests

I P

MOH

FIG. 17 A. — Gantt type of production chart.

pleted in a period, the letter "Z" indicating zero, is inserted
in the corresponding time space.

Change of Schedule. — If the work is not completed as scheduled
and a second schedule is made for the amount still to be delivered,
additional angles are inserted with small figures 2 or 3, indicating
the limiting time of the new schedule, and the old deliveries
during the period are replaced by the new schedule. These

70 FACTORY ORGANIZATION AND ADMINISTRATION

charts are usually made on thin paper so that they may be copied
by blueprinting or reproduced by the photostat process.

Production Chart. — A production Chart is made in the same
manner as the preceding charts. The Production Chart will
have in general three lines devoted to each group of item.

The first line will show the amount to be completed during each
period.

The second line will show the amount to be started during
each period.

The third line will show the amount for which material should
be on hand during each period, and how these requirements are
being lived up to.

Fig. 17A is an example of this type of chart.

REFERENCES

CARPENTER: "Profit-making Management," Chapters III and XIV.
COOK: "Factory Management," Chapters IV and X.
GANTT: "Organizing for Work," Chapters V and VIII.
BRINTON: "Graphic Methods for Presenting Facts."
HASKELL: "How to Make and Use Graphic Charts."

CHAPTER VII
FACTORY LOCATION

91. Importance of Plant Location. — The problem of factory
location presents two general aspects : first the selection of a given ,
town or city, and second the location of a factory site in a given
town or city. The problem of factory location is one that pre-
sents itself to the industrial engineer who is working for the lowest
cost of production. Location means everything to the retail
establishment, it means less to the factory as a rule; yet its im-
portance is often overlooked. A well-managed factory may fail
in a poor location while a poorly managed one often owes its
very existence to the location.

92. Considerations Influencing Selection of a Certain Town
or City. — The selection of a town or city for a factory site is
influenced by considerations regarding: (1) raw material, (2)
labor, (3) transportation, (4) market, and (5) money outlay.

93. Influence of Raw Materials. — So far as the cost of raw
materials is concerned, that location will be the best which will
make total resultant freight charges of all raw materials the
minimum.

As a simple example, we may take the case of an establishment
manufacturing paving brick. It has been estimated that the
relative weights of clay, finished product, and coal required in this
industry are approximately as 40, 30 and 3. In a case of this sort
it is evident on a brief inspection that in the matter of choice of
factory site as between coal fields, clay beds, and nearest market
or distributing center, the most advantageous point of location
would be next to the clay beds. Of course, the combination of
several favorably influencing conditions will be more desirable,
such as clay beds with cheap fuel close at hand. Such conditions
exist in natural gas fields in several sections of the country.

Similarly the best location for a blast furnace is a site where ore,
coke, and limestone may most conveniently be brought together.
About two-thirds of the Lake Superior ore is at present melted
in the vicinity of Pittsburgh, and most of the remainder in Ohio

72 FACTORY ORGANIZATION AND ADMINISTRATION

and Illinois. The reason for this is apparent when one remem-
bers that the total weight of fuel required in furnace work is
about 20 per cent, of the weight of the iron produced.

Nearness to coal is to be had in Pennsylvania, Ohio, Indiana,
Illinois, Missouri, Iowa, Kansas, Kentucky, Tennessee and
Alabama. The Lake Superior region furnishes about two-thirds
of all the iron ore in the United States and most of the remainder
comes from the Appalachian region, from Maryland southward.

94. Labor Conditions Affecting Selection of Factory Site. —
From the standpoint of ease of securing satisfactory labor, the
city presents a far more advantageous labor market than a town
or country site.

Skilled labor is most easily obtained on short notice in a city.
In the country town labor is cheaper, and the workmen are likely
to be more contented. They are likely to marry and have homes
in pleasant surroundings, and the inducements for the wasting
of their earnings are not so great as in the city. At the same time
the country factory is looked to as bound to exercise a paternal
interest in the employees and town — a responsibility from which
the city factory is relieved.

A surburban site, convenient to a belt railway, such as exists
in most of the larger trade centers, presents many advantages of
both city and country. It permits the purchase of sufficient
ground for a factory site to allow for future expansion. It has
the labor market of the city to draw from and offers the workmen,
who choose to live close at hand, the opportunity of pleasant home
sites.

95. Transportation Facilities. — The cost of transportation of
both raw material and finished products is a factor of vital impor-
tance to the manufacturer who is at the mercy of a single railroad.
Where such is the case it has been claimed that it is the tendency
of the railroad at first to show a willingness to do everything
possible to develop a good trade for the manufacturer, but after
the establishment of such a good trade, to tax the traffic all that
it will bear. To avoid this contingency it is very desirable that
the location be such as to afford a choice of several routes or a
choice of railway or water routes in receiving and transmitting
shipments. As between railways and water ways, the latter
have the advantage of cheapness, whereas the former have the
advantage of greater speed.

A factory producing an output of considerable bulk, and which

FACTORY LOCATION 73

will not suffer from slight moisture, would be advantageously
located on a water way. The greater expense of railroad trans-
portation is largely due to the high speed demanded for passenger
traffic. A system of freight railways especially arranged for
heavy tonnage and moderately slow speeds it is claimed, would
be of great advantage to the economic distribution of factory
products.

A location convenient to receipt of raw material by way of the
cheaper waterways, and at the meeting of railways, makes a
most favorable location for a factory site. Examples of manufac-
turing centers so located are found in Pittsburgh, Buffalo,
Cincinnati, Cleveland, Milwaukee, Chicago and St. Louis.

In the case of light machinery, or of any output in which the
labor is considerably greater than that of materials, nearness to
raw materials is of minor importance, the largest cities are always
the best places for the securing of the most skilled labor, and they
offer also advantages of promptest shipping facilities for manufac-
tured products, and of a sales market close at hand. Industries of
this sort are naturally most numerous in the larger cities of the
country, such as New York, Philadelphia, Boston, Chicago, and
so on.

It will be apparent that numerous cities much smaller than the
examples mentioned, will answer many of the requirements for
most economic factory location. While the history of the past
seems to point toward the large city as the most favored factory
site, there are many examples of success in the smaller towns.
The labor agitator finds the small town a poor field. The pleas-
ant surroundings and sunshine of a home tends toward content-
ment— the worst enemy of the walking delegate.

96. Sales Market as Affecting Plant Location. — As regards the
choice of a town or city with reference to the nearness to sales
market, it is quite evident that the factory from considerations
on this score should be at the point from which it could ship with
relatively equal promptness and relative cheapness of expense
to each of its principal sales centers. The location of many
factories in surroundings not at all favorable to cheapness of
production has been due to the fact that their founders, realizing
the local demand, started the establishment in the best sales
market, and, having usually at the start a limited capital, the
local site itself was usually not influenced by considerations of
what would be the best site for cheap production, but what

74 FACTORY ORGANIZATION AND ADMINISTRATION

would be the cheapest site obtainable in quarters not too unfa-
vorably situated.

The oldest manufacturing establishments of the country have
been located chiefly in distributing centers, or cities where business
men conveniently meet and commodities may be easily exchanged.
In addition to the advantages from a selling standpoint such
centers presented the advantage of abundance of labor. The
convergence of railroads in larger centers of this sort has also
offered facilities for the securing of raw materials and shipping
of products.

The advantage of direct contact with the consumer that is
offered by a factory in the large city is well worth considering.
Frequent instances may be found where, after the removal of a
factory which has found its city site disadvantageous as compared
with a location in the suburbs or the country, some new-comer
has been able to start a thriving establishment near the old
site with perhaps less profits but still reaping the advantage of
this close touch with the market.

The cities that form the best sales markets are those where
trade-routes meet or toward which they converge. Similarly good
sales markets are afforded by cities at the convergence of navi-
gable rivers, such as Pittsburgh and St. Louis, or at points where
the limits in direction of a waterway necessitates trans-shipment,
such as Chicago, Cleveland, and Cincinnati.

Another class of cities forming good markets is found in cities
which are collecting and distributing points in an exceedingly
productive region, such as Indianapolis and Kansas City.

In cases where the factory is not needed as an adjunct to sales
department, considerations as to cheapest site, cheapest trans-
portation of raw material and finished product, and good labor
markets should be of great importance in determining the location.

97. Cost of Plant as Affected by Site. — The question of money
layout is frequently one on which too much stress is layed. It
frequently happens that the enterprising citizens of a small
town are willing to furnish a free site for a factory. They may
even go so far as to raise the cash bonus usually obtained by the
sale of building lots in the vicinity of the proposed factory site.
Such inducements may often be based upon sound logic and may
result in good to all concerned. There have been, however,
cases where even with such advantages the factory has failed
and the enterprising citizens have lost money they have invested

FACTORY LOCATION 75

in town lots because insufficient consideration had been given to
more important factors. The final decision is only to be made
after giving each its proper weight.

Cheapness of factory site has in many cases formed the basis of
the possibility of a new company competing with older companies.

98. Branch Factories.— Even the large corporations which
have come up by a result of mergers of minor companies have of
late years tended toward the establishment of a number of various
complete plants located in various centers in place of what seemed
to be the original tendency, namely the centralization into a few
large plants and the conducting of distinct processes or functions
by each plant rather than the making of the same product in more
than one plant.

It is possible that the era of combination may be followed by
just as rational a period of decentralization. There are too many
intermediary agencies that raise the cost of production and
distribution to make the centralization and combination of all
factories an economic consideration. There is a legitimate most
economic territory, and a corresponding maximum capacity for
economic production, that points toward distributed production '
as an ultimate condition, even with centralized capitalization.
This tendency is well illustrated by the procedure of the United
States Steel Corporation.

99. Railroads as an Aid in Factory Location. — The industrial
agents of railways are continually gathering and distributing
data regarding favorable sites for prospective • industries. In
some cases their reports and recommendations indicate careful
study, and the obtaining of definite knowledge at first hand.
In other instances the data collected are apparently based upon
replies to circular letters addressed sometimes to leading merchants
or hotel keepers, and sometimes to secretaries of commercial
clubs or boards of trade. Where the latter is the case, it is
evident that the work done by the industrial agent is purely
clerical. The replies sent from various towns along the line are
usually from people whose horizon is limited, and who, for the
sake of booming their town, will always be willing to make rosy
reports. If there happens to be a deserted factory building in
the town, the enterprising citizens can see a fine field ahead for
the manufacture of almost anything that could be suggested,
for the sake of having the old site reoccupied if even for a limited
time.

76 FACTORY ORGANIZATION AND ADMINISTRATION

So far as distributive establishments are concerned, local
advice is apt to be valuable, but even then, personal knowledge
based upon a visit to the town should be added by the industrial
agent. On the other hand, information regarding location of pro-
ductive industries gathered from purely local sources is likely to be
erroneous.

The country is, however, full of real opportunities for pro-
ductive industries. There are no people in better position to
make a careful study of the conditions governing them than
railway officials. The ability to give reliable advice can be based
only upon personal study of natural resources, trade and market
facilities, and economic statistics. The pursuit of such studies,
and the exercise of sound judgment consequent upon them, re-
quires a knowledge of manufacturing processes and industrial
economics in addition to ability of high order.

Census reports and state departmental reports are always more
or less retrospective. The true function of the railway industrial
agent is to look ahead clearly, making only such cautious use of
reports and statistics as a sound judgment dictates.

The problem of selecting a factory site is one which at some
time or other is bound to confront practically every manufacturer.

If at such times the manufacturer has made a careful study of
the question from all points of view so that when he has to make
a purchase of real estate he knows exactly what he needs, he is
far less likely to suffer handicap which may result in decrease of
profits, or even failure, than if he has not made such a study.

When a business is small, high freight rates on raw material or
other disadvantages due to location of the plant are not felt
nearly so keenly as they are when the business has been enlarged
and must strive for a constantly widening market.

100. Selecting the Site in a Given Town.- — Having considered
fully the question of the location of the town or city, let us now
take up the question of the picking out of the factory site in that
town.

At first sight it would seem as though, there were hardly any
doubt but that a manufacturing establishment, which uses heavy
raw material which has to be shipped from some distance, would
be best located on a railroad track, and yet if we go through any
of our manufacturing cities we find that in many of them probably
the majority of such manufacturing establishments are located
away fron railroad tracks. The small establishment thrives best

FACTORY LOCATION 77

near the great buying centers which are usually away fronYtnd
railroad tracks and it is also nearer a good supply of ]abo> than
it would be if located on a railroad track.

101. Local Trade Centers.— There is also often an advantage
in being located in a center which is already known as one where
certain classes of manufacturing prevail. For instance a clothing
shop would likely be manifestly out of place in a center devoted
to the manufacture of machine tools and vice versa.

102. Local Transportation. — In changing locations in a given
city a manufacturer should get positive knowledge concerning
the cost of trucking to his various city customers and where there
will be extra drayage charges from his local supplier to the new
site, also what the drayage or switching charges will be to the
various railroads from his new site as compared with the same
charge from his present location.

The factory site on a water way without railroad facilities is of
little advantage nowadays. On the other hand a location access-
ible by both water and railroad is particularly desirable. The
wonderful manufacturing development in recent years in such
cities as Detroit, Cleveland, and Buffalo, is evidence of this.
Such a location is especially desirable for industries using bulky
raw materials such as timber and iron ore. Since the waterway
will serve these raw materials with low transportational charges
and a railway is convenient for shipping out finished products,
such a site offers especial advantages.

In selecting railroad trackage the particular class of raw
material which may be found along the line of a certain railway
may decide the question of site in favor of a certain railroad even
though outward shipping facilities on that road may not be as
good as those of another. For instance, a company making sewer
pipe or fire brick might prefer to be located on a road which
passes through the fields from which it draws its raw material
even though that road might not be as able to handle outgoing
shipments as well as another railroad.

103. Local Labor Market.— Nearness to a general labor market
may even have to give place to nearness to a specialized labor
market. For instance, there is a constantly increasing trend of
machine-tool builders toward the Mill Creek Valley settlement of
machine-tool shops in Cincinnati. A similar trend of manufac-
turers of automobiles is toward the favorite driveways of Detroit,
whereas both Detroit and Indianapolis are recognized as good

73 : FACTORY ORGANIZATION AND ADMINISTRATION

z
o

-1

FACTORY LOCATION 79

labor markets for workers on automobiles and automobile parts.
Even in getting into the specialized centers, however, another „
factor needs to be considered, namely, the nearness to the work-
ing man's home. Other things being equal, the working men will *
prefer to work in that shop to which they can walk or to which
the street-car trip is shortest, hence it is important to find out
where the majority of the workers live who are employed in the
special industry involved and to locate the new factory near to
the working men's homes.

104. Local Sales Centers. — Nearness to the sales center of a
city may in many establishments be especially important since ^
personal visits from buyers will thus be encouraged. This is
evidenced in many of the jewelry and other small manufacturing
businesses in our large cities.

In buying land at the outskirts of a city, the purchaser should
assure himself of the adequacy of such factors as are dependent
on public service corporations, such as supply of water, light and
power, and street railway transportation.

The busy manufacturing plant located where many people will
see it, has an advertising value worth many pages of paid space
in newspapers and magazines. A number of successful auto-
mobile factories have for this very reason been located on roads
which are favorite drives.

105. Suburban Sites. — In considering the cheapness of a site
in the suburbs or outskirts, attention must be given to such ques-
tions as cost of survey, of laying water and sewer lines, of road
improvements, of side-walks, of grading and other preliminary
work; also the cost of the building operations in a location where
all the material and equipment have to be hauled a long way.

The general run of real estate agents do not have available
such data as are indicated in the above outline and a manufacturer t/
selecting a site is lucky if he can secure the services of a real estate
man who has made a special study of factory sites in his town.
Such a specialist is likely to be in much demand and will have
little time to waste on promoters, cranks and inventors without
any real money to invest.

Fig. 18 summarizes in the form of a chart the leading con-
siderations with regard to Plant Location.

REFERENCES

DAY: "industrial Plants," Chapter III.
TYRRELL : " Engineering of Shops and Factories," Chapter II.

CHAPTER VIII

THE PLANNING OF FACTORY BUILDINGS AND THE

INFLUENCE OF DESIGN ON THEIR PRODUCTIVE

CAPACITY

106. Process Mapping. — In general the first step in solving
the problem of laying out a complete factory plan, or an addition
to an existing plan consists of the determination of the general
processes required to produce the various products of the estab-
lishment, and indicating the paths followed by the product in
passing from process to process. The best way to begin is to
take an existing plant making the product under consideration,
or one nearly like it. Take one class of product if there are vari-
ous classes, or one component if there are various components.
Draw a phantom perspective sketch of the building or build
a small skeleton framework of the building, putting in the
floors but omitting the walls (see Fig. 19). If the phantom
drawing on paper is used, take colored crayons, letting a certain
color of crayon represent a certain product or component, and
follow the product or component from process to process, from
department to department, and from floor to floor of the existing
factory. Use a separate color of colored crayon for each sepa-
rate principal product or principal component and trace the proc-
essing for each in the same way. If the small wooden frame
model has been used, colored threads can be used in place of the
colored crayon lines.

107. Routing. — Routing is a more detailed form of process
mapping, and consists of the listing of every process on a com-
ponent part. A general route map is usually prepared for the
various groups and sub-groups which go to make up a machine
or other compositive product, and a route-list is then prepared
for each component part. Thus the distinction between process
mapping and routing may be shown by stating that in process
mapping, departments would be the limit of differentiation; in
routing, on the other hand, we would assign work to specific
machines. A still further differentiation is designated by the

THE PLANNING OF FACTORY BUILDINGS

82 FACTORY ORGANIZATION AND ADMINISTRATION

items on the detailed instruction card or instruction list, which
lists each distinct step under the heading of lathe work, etc.
The making of detailed instruction lists is more fully discussed
in a later chapter. This minute subdivision of processes is not
considered in connection with factory planning, but process map-
ping and routing play an important part in the layout of build-
ings and departments.

108. Processing Equipment. — Knowing the approximate man-
ufacturing program or year's output, it becomes necessary to
determine the equipment required for the production of a given
quantity of output. It is evident that this investigation requires
at least a general knowledge of the time standards of the various
processes.

As an example of the methods to be pursued in estimating
equipment required let us take the case of the manufacture of a
line of side-crank steam engines, and determine machine-tool
equipment required for machining the crank shafts:

Size engine

No. of engines
of this size to
be built in a

Lathe operations and
time for one

Total
lathe
time for
one

Total
lathe
time on
crank

Center

Rgh.

Fin.

year

and face

turn

engine

shafts

H. M.

H.M.

7& 8X10

100

.20

.40

.50

1.50

108-20

9X14

.25

.45

1.00

2.10

42-20

10 & 11X16

.25

.45

1.00

2.10

42-20

12 & 13X18

.40

1.00

1.30

3.10

62-20

14 & 15X20

.40

1.00

1.30

3.10

31-10

16 & 17X22

1.00

1.30

1.45

4.15

42-30

18 & 19X24

1.15

1.30

2.00

5.15

26-15

20 & 22X27

1.30

2.00

2.45

6.15

31-15

24 & 26X30

2.00

2.30

3.30

8.00

40-00

Total lathe ti

me on crank sha

f ts

426.30

From the above estimate of the time required to do the lathe
work on a crank shaft for the entire line of engines, it will be
seen that there is 426 hours and 30 minutes of estimated lathe
time on the crank shafts. Experiments made by the Lodge &
Shipley Machine Tool Company with an electric recorder wired
to a contact piece on the belt shifters on all of their lathes showed
that their lathes were running about 50 per cent, of the time.

THE PLANNING OF FACTORY BUILDINGS 83

By constant attention for a period of six months they were able
to increase this period to 75 per cent., which probably represents
as good an attainment as is possible. In most shops the lathe
may be estimated as running not over one-half of the time so
that for the purpose of estimating the time that a lathe will be
engaged with a given class of work we must double the actual
estimated time of doing the work. Hence, we should say that
the crank shafts would require two times 426 hours and 30
minutes or 853 hours of lathe-department time.

The immediate conclusion is that one lathe will be ample
equipment to do the work on crank shafts and that it can also
be used for work on some other parts.

The above example is given to indicate the process of esti-
mating machine-tool time followed in going into detail. In order
to be accurate one should, of course, have complete bills of
material covering all the machines proposed to be built, also a
complete estimate of all operations on all parts. This it will be
seen is entirely out of the question as the method to be pursued
in preliminary work, as such estimating for a line of engines
alone would require the constant time of an expert for a number
of months. One can, however, make such generalized investi-
gations as will tend to put him on the safe side in providing
sufficient machinery.

Frequently data are gathered on the equipment for a given
quantity of output necessary in the existing plant or in other
plants making a similar product, such data serving as a guide or
check on the adequacy of the equipment for the proposed new
plant or extension.

109. Arrangement of Equipment. — Having determined on the
processing equipment, according to the methods above indicated,
this equipment must then be arranged in the most advantageous
manner so as to secure the least unnecessary traveling and hand-
ling of materials, so as to secure the allowing of abundant space
for storing of rough materials and partially finished product
around the machinery and so as to leave ample passage for trucks,
industrial railways, cranes, or other methods of transportation.
Sufficient room must be allowed to provide convenient access
to all parts of a machine, and for the removal of any machine
when necessary.

It has been agreed that the floor space in the main shop is
too valuable to use as storage space. At the same time there must

84 FACTORY ORGANIZATION AND ADMINISTRATION

be sufficient work in sight that the employees may see that they
are not " working themselves out of a job."

Having determined on the equipment required in a given
department the best procedure is to cut paper templets to scale
to represent each item of equipment and secure final arrangement
by pinning these templets into various trial positions until the
best possible arrangement has been secured.

110. Floor Space Occupied by Equipment. — In order that the
templets may be of proper size it is necessary to know the approx-
imate floor space of the various kinds of equipment required.
Data of this sort may be obtained by writing to the manufacturers
of the equipment in question. As an example of the kind of
data to be obtained, the following tables of floor spaces are given :

FLOOR SPACE OCCUPIED BY LATHES

Lodge & Shipley Machine Tool Company, Cincinnati, Ohio

Swing Space occupied

14 in. 37 in. X 11 ft. 3/4 in.

16 in. 44 1/2 in. Xll ft. 3 3/4 in.

18 in. 50 in. Xll ft. 6 3/8 in.

20 in. 50 in. Xll ft. 6 in.

22 in. 57 1/2 in. Xll ft. 5 in.

24 in. 59 in. Xll ft. 4 1/2 in.

27 in. 64 in. Xll ft. 4 in.

30 in. 67 1/2 in. X 13 ft. 11 1/4 in.

36 in. 67 1/2 in. X 13 ft. 11 1/4 in.

42 in. 78 in. X15 ft. 1 in.

48 in. 78 in. X 15 ft. 1 in.

FLOOR SPACE OCCUPIED BY RADIAL DRILLS

Bickford Drill & Tool Company, Cincinnati, Ohio
Size of working surface Floor space required

No. 1, 2 1/2 ft. X3 ft. 90 in. X 97 in.

No. 2, 2 1/2 ft.X3 1/2 ft. 90 in. X 109 in.

No. 3, 2 1/2 ft. X4 ft. 90 in. X 121 in.

FLOOR SPACE OCCUPIED BY MILLING MACHINES

Cincinnati Milling Machine Company, Cincinnati, Ohio

Horizontal Millers

Working surface Floor space

No. 2, llin X7 1/4 in. 77 3/4 in. X92 in.

No. 3, 13 1/2 in. X55 3/4 in. 83 in. X 106 1/2 in.

No. 4, 16 1/2 in. X64 1/4 in. 97 in. X 125 1/2 in.

No. 6, 19 in. X76 1/2 in. 105 in. X 145 1/2 in.

THE PLANNING OF FACTORY BUILDINGS 85

Vertical Millers

Working surface Floor space

No. 2, 11 in. X7 1/4 in. 84 in. X89 in.

No. 3, 13 1/2 in.X55 3/4 in. 89 1/2 in.X 103 1/2 in.

No. 4, 16 1/2 in. X64 1/4 in. 100 in. X 125 1/2 in.

FLOOR SPACE OCCUPIED BY UPRIGHT DRILLS

Cincinnati Machine Tool Company, Cincinnati, Ohio

Swing Floor space required

21 in. 18in.X48in.

24 in. 21 1/2 in. X 58 in.

28 in. 24 in.X 67 in.

32 in. 26 in.X 71 in.

36 in. 28 3/4 in.X 79 in.

42 in. 30 in. X 90 in.

FLOOR SPACE OCCUPIED BY PLANERS

American Tool Works Company, Cincinnati, Ohio
22 in. X5 ft. planer 4 ft. 8 in. wide by 12 ft. long

24 in. X6 ft. planer 4 ft. wide by 14 ft. long
26 in. X6 ft. planer 5 ft. 2 in. wide by 14 ft. long
28 in. X6 ft. planer 5 ft. 4 in. wide by 14 ft. long

30 in. X8 ft. planer 5 ft. 8 in. wide by 18 ft. Sin. long

33 in. X8 ft. planer 5 ft. 11 in. wide by 18 ft. Sin. long

36 in. X8 ft. planer 8 ft. wide by 19 ft. 4 in. long

FLOOR SPACE OCCUPIED BY SHAPERS

Cincinnati Tool Works Company, Cincinnati, Ohio

15 in. shaper 60 in. wide by 42 in. long

16 in. shaper 66 in. wide by 43 in. long
18 in. shaper 72 in. wide by 46 in. long
21 in. shap'er 82 in. wide by 53 in. long

25 in. shaper 90 in. wide by 54 in. long
30 in. shaper 98 in. wide by 60 in. long

111. Arrangement of Departments. — After having determined
on the equipment and its arrangement in each department, the
lay-out of each department being prepared separately first, the
next step is the arrangement of the departments and their sur-
rounding buildings with respect to each other.

It is not advisable to consider proportion, dimensions, or loca-
tion of various departments until one has determined for each
department its equipment, space required for same, storage
space, and passage areas. It is desirable in this connection to

86 FACTORY ORGANIZATION AND ADMINISTRATION

investigate data covering actual equipment in use in shops
making the same or similar product to that contemplated, and to
reduce these data to such units as floor space per unit of output
and floor space per employee.

It must be evident that a wide variety of output cannot be
advantageously built in a single shop. It sometimes happens
in the machine-manufacturing business that a single shop must,
on account of trade conditions, manufacture both light and heavy
machinery, or machinery and light detail fittings. In such
cases careful planning of departmental arrangements, equipment,
and organization is particularly necessary, so as to keep the sepa-
rate costs of production of each type distinct, and at a price
reasonably near the minimum for each class. Again, it has been
found that the building of groups of parts representing a complete
organ of a machine, in a single department, is often more likely
to bring about more economic production than an arrangement
in which all pieces travel through the whole shop in which each
distinct class of machine tools is grouped by itself.

112. Consecutive and Simultaneous Processes. — The route
charts for the various kinds of product will indicate that certain
groups must arrive at a state of completion simultaneously. The
departments and buildings must be arranged so as to adapt
themselves to the equipment and flow of work, following always
the lines of least resistance as regards not only losses in trans-
mission apparatus but losses in activity of working men. The
proper arrangement of departments and of machines with regard
to each other depends upon statistical knowledge of the most
predominant paths of travel of the material in process of manu-
facture. Such observational information alone can determine
to best advantage also the location respectively of rooms for
stores, stock, tools, grinding, etc. Where a number of simul-
taneous machine-tool operations must terminate in a central
assembling or erecting department it may be desirable to have
two or more buildings running east and west, for example, contain-
ing the preliminary simultaneous operations, these buildings
terminating in a single north and south building in which the
assembling and erecting are done.

113. Use of Templets in Arranging Departments. — Having
determined in the foregoing manner the general dimensions of the
various departments, and given due consideration to depart-
mentalization by processes as against departmentalization by

THE PLANNING OF FACTORY BUILDINGS 87

product, as well as to simultaneous and consecutive processes,
templets should be prepared showing the general proportions of
each department, and these templets shifted around until the
most desirable arrangement of departments with reference to
each other is secured.

114. Service Departments. — The process-maps and route-
charts will be found valuable guides in determining to best advan-
tage the location of the so-called " service" departments, such
as rooms for stores of raw material, stocks of finished parts,
tools, blue-prints, grinding, lavatories, etc.

Lockers and wash-rooms should be so planned that thorough
discipline and system can be maintained with regard to them.
Good discipline and system in these incidental features is bound
to react on the work of the shop as a whole. Workmen should
register time after depositing clothes, etc., in lockers, and not
before, and location of lockers and time-clocks should favor this
method.

115. Visibility of Work and Economy of Transport. — Outside
of the locker and wash-rooms, the only portions of the shop which
it is desirable to have partitioned off and not subject to visibility
are such departments as need isolation on account of the work to
be carried on in them by reason of gases, smoke, dust, or similar
objectionable features. The requirements of modern factory
regulations, however, usually specify exhaust systems for removal
of all of these objectionable gases, smokes, dusts, etc., so that a
forge-shop or grinding department may be seen in modern fac-
tories under the same roof as the machine shop and without any
separating wall or partition.

It is important that as much floor space as possible should be
visible at all times. Hence all "L's", "E's" and "HV should be
avoided in favor of the plain rectangle with all departments under
one roof.

Economy of transport demands a minimum of passage ways.
Passage ways encourage aimless wandering and loitering.

116. Single-floor or Multi-floor Building. — Considerations of
visibility and the avoidance of unnecessary walking or elevator-
riding, argue for the single-floored structure as against multi-
floored buildings. Even the single gallery in monitor-roof
buildings is best avoided, as it forms a more or less isolated set of
areas not readily visible, and increases walking, stair-climbing,
elevator-riding, and trucking.

88 FACTORY ORGANIZATION AND ADMINISTRATION

The questions as to whether the fixed charges due to increased
cost of building and land will not be in excess of the economies due
to visibility and economy of transport, must be given due consid-
eration. The cheapest type of building calculated on the basis
of fixed charges per square foot of floor area, is a three-story
building 40 to 50 ft. wide and 100 to 120 ft. long. As a general
rule for medium heavy and heavy work, the single-floored build-
ing will show up favorably even where land is costly. The lesser
fire-risk and greater productivity per unit of floor area must be
set off against the interest and other fixed charges per unit of
floor area. Moreover a large tract of valuable land is bound to
rise in value, and would mean a greater value of real estate in time,
though it might also mean higher taxes. ' The fixed charges should
be calculated for the various proposed sites and types of buildings
and compared with estimates of comparative economies or losses
in productivity.

117. Allowing for Future Expansion. — The site selected, as
well as the shape of the building, must be such as to allow for
expansion. This demands the possession of land enough to allow
for the extension lengthwise of a building and such lateral expan-
sion in the way of increased width of single buildings or additional
buildings as may in time be needed. One way of securing
ease of expansion is to have at hand a plan for buildings to house
double, triple, or quadruple the production at present planned
for, and make the present plans in such a manner that the future
plans can be easily worked out.

A well-designed building will provide facility of enlargement,
maintaining the same balance of floor area. This demands the
recording of all increases of departmental area whenever they have
become necessary, and the use of such records in preparing the
designs for new buildings. It has been aptly stated that a well-
designed factory building or set of buildings should be as flexible
and adaptable to enlargement as the "unit" system of filing
cabinets. Fig. 20 shows the rear view of the factory of Ludwig
Loewe atWittenau, near Berlin. It will be noted that either the
saw-tooth shop or either of the lateral buildings may be extended
toward the rear, preserving the same balance of area.

118. Service Equipment.— By service equipment is generally
understood all machinery and apparatus necessary for running
the factory and not constituting processing machinery. Under
the heading of service equipment would come such apparatus as

THE PLANNING OF FACTORY BUILDINGS

heating and ventilating appliances, lighting apparatus, fire pre-
vention equipment, water supply, sewage system, mechanical
transportation, power generation and transmission.

119. Heating and Ventilating Apparatus.— With regard to
heating and ventilating, it can safely be said that the loss in labor
efficiency and consequent output per man due to faulty installa-

90 FACTORY ORGANIZATION AND ADMINISTRATION

tions will certainly be found to be enormously greater than the
cost of proper heating and ventilating facilities.

The heating of most factory buildings is best accomplished by
the indirect pressure system, using the exhaust steam of one or
more non-condensing engines as complete or auxiliary heating
medium. Fig. 21 is a view of the shops of the United Railway
Company, Baltimore, Md., showing hot-blast heating apparatus
and exposed distributing ducts. A more pleasing interior finish
can be secured by concealing ducts under floors and in walls.
This may involve the use of rectangular ducts, and alterations in
length of the ducts as they would be used if exposed, and such
alterations must be designed by competent engineers.

In many cases the heating system has been very carelessly put
up, without any plans or specifications having been prepared for
it. As a result, heating is often insufficient or poorly balanced,
and circulation defective. A system of heating should always be
planned by a competent engineer. Owing to the very long pipe
lines necessary in factory buildings of the modern type, direct
radiation systems for factories, even when designed in the best
possible manner, are likely to have poor circulation and to be slow
in action in cold days unless a vacuum system of circulation is
used. The hot-blast system of heating the air in heating cham-
bers supplied with steam coils, and delivering it under pressure
from a blower, possesses the advantage of heating a shop quickly
in the morning, and of uniformly distributing the heat, if it is
properly designed and installed, so that, although the total heat
units required to heat the air will be theoretically greater than
with direct radiation, the tremendous gain derived from uniform-
ity of temperature and comfortable workers will far more than
counterbalance the additional cost of operation when using the
indirect pressure system, as compared with direct radiation. The
pressure is always outward, hence there is a freedom of drafts
and, when properly installed, an avoidance of the accumulation
of the total heat radiated at the top of the building, as is so apt
to be the case with the direct radiation system. The cubical
contents of most factory buildings are so large that sufficient
number of changes of air per hour are secured by drawing only a
portion of the air for circulation from out of doors, so that the
expense of the indirect pressure system when applied to factories
can be made a good deal less than that of the same system as
applied to public buildings, where the cubic space per person is

THE PLANNING OF FACTORY BUILDINGS

many times less and the number of changes per hour must be
much more frequent. Of course, if the air in the shop is vitiated
by the processes of manufacture going on, the foregoing remarks
will not apply. It will always prove economical to provide pure
air. This is especially true of a factory located in unsanitary
surroundings, in which circumstances it will be profitable to
provide air shafts of considerable height to draw in pure air or
provide other means of purification.

Clean air as a money saver in mercantile establishments and
offices has not received the attention - it deserves. One can

FIG. 21. — Hot blast heating system as applied to shop of the Jaxon Steel
Products Co., Jackson, Mich. Courtesy of the Austin Co., Cleveland, Ohio.'

daily see on display, in the show windows of high-grade dry goods
establishments, fabrics and gowns worth thousands of dollars,
which are being badly damaged by sooty and dirty air.

The same conditions prevail, to a greater or less extent,
throughout these establishments. The depreciation due to dirty
air could be reduced 90 per cent, by the introduction of air-clean-
ing devices whose cost is trivial compared with losses now taking
place.

Most engineers and writers on heating have confined their
attention, in the matter of the use of the pressure system, to

92 FACTORY ORGANIZATION AND ADMINISTRATION

calculations as to how to provide sufficient heat to overcome the
heat losses through walls, windows, roofs, floors and open doors,
and have apparently failed to appreciate the importance of fur-
nishing better health and greater activity of employees from
breathing wholesome air, which always results when the pres-
sure system is properly installed.

In a building thus ventilated there need be no drafts, as the most
healthful conditions are reached by keeping all windows tightly
sealed. The outlet of air is best secured by a separate set of
ducts leading to the roof.

This system is so common that it seems almost impertinent to
mention it. Nevertheless it is equally common to see great
black streaks radiating from the hot-air ducts, showing how full
of soot and dust the air is which is forced into the building, though
it is otherwise full of oxygen and far more healthful than the air
furnished by any other system of heating and ventilating.

The black streak, however, is entirely unnecessary, and can be
absolutely avoided by proper systems of air washing — a process
accomplished by either of two systems of spraying; the first
method is used where only a moderate water supply is available;
the second, where abundant water is at hand.

The first plan, for cases where it is necessary to be economical
of water, is that of using a "coke" washer. In this system the
air is drawn through a series of cages filled with coke, over which
fine streams of water trickle. The coke absorbs the soot and dust,
and will serve in this way without replenishment for at least a
year.

Fig. 22 shows a typical hot-blast heater with coke air washer.

The second and better plan is that used where an abundance
of water is available. This plan consists of blowing the air
through several curtains of fine streams of water. The drying is
effected by passing the air alternately over and under a series of
baffle plates. The centrifugal force, where the air makes the
sharp turns about the edges of the baffle plates, separates the
moisture so that the air can be furnished at any degree of humid-
ity desired.

In order that there may be no discomfort with sealed windows
in summer, the air can be passed over refrigerator coils, making it
possible to secure any degree of coldness.

Another advantage, from the standpoint of economy as well as
of health, accompanies the use of .air-washing systems, namely,

THE PLANNING OF FACTORY BUILDINGS 93

the ability to humidify the air to any desired degree. The nor-
mal degree of humidity of the human body is between 60 and 70
per cent, and with this degree of humidity the body is just as
comfortably warm at 65° F. temperature as it is at 70° with a low
condition of humidity, say 15 to 20 per cent., which is the usual
condition of artificially heated atmosphere where the air is not
humidified.

This means that a fuel saving of 7 or 8 per cent, can be effected
by furnishing air of lower temperature but of higher humidity. It
should also be borne in mind that it is seriously detrimental to
health to breathe air having so low a degree of humidity as is
furnished by most heating systems. The result is an excessive

FIG. 22. — Hot-blast heater with coke air washer: C, screen through which
outside air enters; D, tempering coil fed by steam pipe E; F, by-pass so air
can go through without touching tempering coils; G, coke air filters moistened
by perforated water pipe H; I, catch basin; K, blower; O, partition permit-
ting part of the air to be blown over heater coils and part or all to be blown
through ducts without passing over heater coils.

evaporation from the membranes of the body, which is productive
of catarrhal diseases. In addition, one is more apt to contract
a cold when passing from an atmosphere of 15° relative humidity
and 70° F. temperature into outside zero weather with 70° F.
of humidity than if the normal percentage of moisture had been
maintained within the building.

Humidity control is effected through the agency of a ther-
mostat. This is possible because of the discovery that the
amount of moisture which a body of air will absorb during any
given length of time in contact with water is more dependent on
the temperature of the water than on the temperature of the air.
Hence, when the thermostat indicates that the temperature of
the air surrounding it is changing, it follows that the absolute
humidity must be changed in order to preserve the relative hu-

94 FACTORY ORGANIZATION AND ADMINISTRATION

midity at a constant percentage. The temperature of the spray
water is therefore changed by a steam jet, acting through a device
similar to an injector, over which the thermostat! c motor has
control. Another duty which the spray system of air cleaning
accomplishes very efficiently is that of cooling the ventilating air
in summer. The entering air is placed in contact with an im-
mense amount of cooling surface, namely, the total area of the water
globular surface. The air can thus be cooled by about 80 per
cent, of the initial temperature difference between the spray
water and the entering air. In order to use the same water a
second time, ice must be placed in the settling tank, or such tank
provided with brine coils connecting with a small refrigerating
machine, to keep down the temperature.

120. Lighting Apparatus. — Abundance of light is as important
as abundance of pure air. Natural light should permeate the
whole shop during all hours at which it prevails out of doors, and
not only work-benches and machines, but stairways and all pas-
sages, should be light. The saw-tooth roof, with glass portion
toward the north, gives the most agreeable and diffused light.
It should be borne in mind that with saw-tooth roof construction,
the side windows in the walls can be dispensed with altogether,
although this practice is by no means common. To determine
how far inward good light will penetrate, a very close approxi-
mation can be secured by taking a 45° triangle and laying the hy-
pothenuse along the extreme edges of the glass in either side
windows or saw-tooth roof windows. In shops of ordinary height,
this will limit the well-lighted area to a distance of from 20 to
25 ft. from the windows, and will limit the width of the saw-tooth
"bays" to about the same, unless unusually high windows are
introduced or prismatic glass is put into the upper window
sashes.

Fig. 23 shows some structural details of the saw-tooth roof
construction used in the shops of the Blake & Johnson Co.,
Waterville, Conn. An interior of this same shop is shown in
Fig. 24, showing how well the light is distributed.

Skylights are generally undesirable on account of their admit-
ting so much direct sunlight, and also on account of their liability
to breakage of glass and obstruction by snow. In the case
of the saw-tooth roof, facing the north, clear window glass may be
used, since it is never exposed to the direct rays of the sun.
Windows in the ventilating portion of the central roof gable will

THE PLANNING OF FACTORY BUILDINGS

96 FACTORY ORGANIZATION AND ADMINISTRATION

§1

CJ '
co '

T3
0
C3

THE PLANNING OF FACTORY BUILDINGS 97

need shades, unless made of ground or yellow glass. As to the
side windows, except those facing the north, they are exposed to
direct sunlight if there are no closely adjacent buildings. Shades
usually receive rough treatment in a shop, and are certainly
shortlived, hence opaquing the glass is usually preferred to instal-
ling shades. If the nature of the work is clean enough to permit
their use, buff color is recommended, since this variety does not
shut out too much light. Ground or cathedral glass panes
may be desirable in certain locations where it is advisable to
keep out direct sunlight or to obstruct the view inward or
outward.

Prismatic glass has been used to advantage in places where the
light requires to be deflected inward into the space desired to be
lighted, as in basements, or in a space darkened by neighboring
walls or in top floors with little or no side-lights, but receiving
light from sloping skylights. A ribbed pressed glass acting
somewhat like a prism may be found to answer in some cases
where the more expensive plate-glass prisms might be considered
too costly.

As to artificial light, there is but one kind to be considered
in a modern establishment having its own power plant, and that
is the electric light. In some cases where the factory generates
its own gas it may be found that a carbureted producer-gas will
be more economical than electric light, even with prompt renewal
of Welsbach type of mantles.

As wide fluctuations in the loads of electric generators are ac-
companied by low efficiencies, it will sometimes be advisable to
have a distinct engine and dynamo for lighting purposes. Arc
lamps on the incandescent circuit are desirable for general illumi-
nation, supplemented by incandescents for individual machines
and benches. For monitor roofs where lights must be high above
the floor to afford free space for crane service, the flaming arcs
will be found advantageous. The mercury vapor lamps are less
expensive to operate than the flaming arcs, but proportionally
less satisfactory owing to the weird color effects accompanying
their use. It may be found desirable to alternate them with
flaming arcs to secure sufficient white light. Good light demands
that the wiring be of ample size to prevent drop enough in voltage
to produce any dulling of incandescent lamps. Wire guards
should not be used on lamps excepting where really needed. Their
cost and interference with light renders it doubtful whether

98 FACTORY ORGANIZATION AND ADMINISTRATION

they are any real saving. For delicate work, the so-called
"tipless" incandescent lamp provides the most perfect illumina-
tion, being free from the circles of darkness that are cast by
lamps sealed at the bulb end. Some provision must of course
be made for artificial illumination when the power plant is shut
down, by connection to a public electric or gas circuit, or, if this
is not available, by a stock of oil lamps for emergency use.

Eye-strain causes brain fatigue and materially deteriorates
manual efficiency. Hence careful consideration needs to be
given to daylight and artificial lighting. The efficiency of any
lighting system depends, not on the number of lights supplied,
but upon the extent to which this system enables the eyes to per-
form their duties with least effort and strain.

With good daylight, all parts of a machine are about equally
illuminated. At night, however, with the commonly prevailing
system of localized lights, the illumination of machines is very
uneven, one part being very highly illuminated and other parts
being in comparative darkness. With suitable diffusion, direc-
tion and intensity of light, operators can see their work far better
with a low foot-candle value of illumination than they can with
the high foot-candle values of concentrated illumination.

The eye adapts itself to artificial illumination in such a way
that the intensity of light required for good vision at night is
only a small fraction of the intensity of average daylight. As a
rule, the general illumination of a shop at night is wholly neg-
lected. In order to read ordinary writing, a minimum illumina-
tion of about one foot-candle is required. A good reading light
should be about two foot-candles. In most shops, the general
illumination falls below this. A good indoor daylight illumina-
tion needs to be only about forty foot-candles, although this
may be considerably increased or decreased without discomfort.
Where the daylight is insufficiently diffused, prismatic glass
should be used.

With a highly concentrated artificial light and a dark field
just outside this concentrated area, conditions are such as invari-
ably result in eye-strain. Continued subjection of the eyes to
this kind of illumination results in decrease of vision until the
workman is unable to perform his work with accuracy or rapidity.
A strong objection to the use of concentrated lights is the glare
due to reflection of the bright image of the light, which is thrown
into the eye of the operator.

THE PLANNING OF FACTORY BUILDINGS 99

The general illumination of a shop should not be so inefficient
as to make it appear gloomy. A low degree of general illumina-
tion makes it impossible for the foremen to exercise the same de-
gree of supervision at night as in the daytime.

The remedy for many of these objectionable features lies in
the introduction of suitable illumination, proper care of lamps,
reduction of the intrinsic light sources, and improved diffusion
and direction of light.

121. Fire Prevention. — Too much stress cannot be laid on
the great importance of the absolute fireproofing of such parts
of buildings as are intended for the reception of the almost
unreplaceable requisites of manufacturing, such as drawings,
patterns, and inventory. Drawings and patterns of tools, jigs,
etc., are too often carelessly treated, since there may be but one
article completed from them, but their loss in case of destruction
of the tools by fire would be enormous. Consultation of the
publications of the National Underwriter's Association, the
Factory Mutual Fire Insurance Association, various well-known
insurance companies, and the building codes of the various states
will be of great aid in settling questions connected with the
installation of adequate fire prevention equipment, including
such matters as automatic sprinklers, fire pumps, fire hose
attachments indoors and outdoors, fire walls, fire doors, etc.

122. Water Supply. — It is important that ample drinking
water be available, distributed to sanitary drinking fountains
within easy reach of all employees. If there is any question as
to the healthfulness of the general water supply of the factory a
separate system of healthful drinking water should be installed.
Small electric water purifiers for industrial water supplies are
now standard articles.

123. Sanitary Engineering. — Questions relating to sewage,
baths, and lavatories should receive the attention of capable
sanitary engineers.

124. Mechanical Transportation. — In mechanical transporta-
tion equipment are included cranes and hoists, trolley tracks
and trolleys, automatic conveying apparatus, industrial rail-
way equipment and trucks, also facilities for unloading and load-
ing freight cars and wagons. In regard to cranes it is necessary
to determine the span and lift, whether the main crane is to be
motor driven or hand propelled, whether the hoist is to be a hand
hoist or motor-driven hoist, also whether the hoist and load

100 FACTORY ORGANIZATION AND ADMINISTRATION

carried is to run on a drop crane which can make connections
with similar drop frames on other cranes in the bays so as to
enable the hoist with its load to be transferred from the main
aisle into side aisles.

In order to determine the power required for driving electric
cranes the following data given by Mr. S. S. Wales, before the
Western Society of Pennsylvania are useful:

An electric crane is divided into three general parts — bridge,
trolley and hoist, each of which has its own motor and con-
trolling system, and each subjected to different conditions of
work.

For the bridge, where the ratio of axle-bearings to diameter
of wheel is between 1 to 5 and 1 to 6, the following table will
answer our purpose for weights and traction for different spans:

Let L = working load of crane, in tons.

W = weight of bridge alone in tons.

W = weight of trolley alone in tons.

S = speed in feet per minute.

P = pounds per ton required.

Span W P

25ft 0.3L 30 Ib.

50ft 0.6L 35 Ib.

75 ft 1 . 0 L 40 Ib.

100ft 1.5L... 45 Ib.

For the trolley the weight and traction may be assumed as
follows :

L Lb. P

1 to 25 tons 0.3L 30 Ib.

25 to 75 tons 0.4 L 35 Ib.

75 to 150 tons.. . 0.5L.. . 40 Ib.

Power required for bridge:

(L+W+w)XPXS
33,000

= horse-power.

As the nominal horse-power rating of a series motor is based
on an hour's run with a rise of 75° C. above the surrounding air,
and as conditions of bad track, bad bearings, or poor alignment
of track wheels may be met with, in factory operation 1 1/2

THE PLANNING OF FACTORY BUILDINGS ' ' 101

times the above result should be taken as the proper size motor
for the bridge.

For trolley:

Horse-power =

33,000

use factor of 1 1/4 X above for size of motor.

For hoist assume: 1 h.p. per 10 foot-tons per minute of hoisting.

D. Selby Biggs reports following results of a test (Iron and Steel
Institute, 1903) :

30-ton crane, 25 h.p. motors, 220 volts
Weight 16 tons.

Horse-power.
Max. Avg.

Heaving 11.1 6.2

Cross travel 9.2 4.4

Longitudinal travel 5.5 0.6

In many cases trolley track and trolleys are desirable for
mechanical transportation where the bridge type of crane would
be out of the question. In laying out a trolley system it is neces-
sary to determine approximately the location and number of lineal
feet of straight trolley rail and approximately the number of
feet of curved rail, the number and style of switches, carrying
capacity, method of attachment of the trolley rail, number of
trolleys and carrying capacity of same.

For sending light trolleys and light materials from central
storerooms to branch storerooms, store service apparatus such
as cable drives or pneumatic tubes may be found very convenient.
The locations of the various stations for such service should be
determined in the plans for such systems. With regard to indus-
trial railway equipment the location of the tracks, the weight of
same, also the gauge need to be determined, location of switches
and turn tables, also the types and number of cars to be used.
If locomotives are wanted for the industrial railway system we
must determine whether they shall be driven by gasoline engines
or storage batteries and electric motors.

With regard to truck systems the main routes need to be laid
out; also determine the approximate number of trucks required,
location of central depot, number of motor trucks to be used.

102 ''FACTORt'-OttGANIZATION AND ADMINISTRATION

The open areas must be wide enough to permit the passage of two
trucks in the aisles and the side tracking of trucks around the ma-
chines. A truck system involving the retention of the material
in the trucks with as little unloading and reloading and with as
little hauling of empties as possible is an important feature and
one deserving attention in any establishment. It involves the
building of a considerable number of trucks and departmental
supervision, but is likely to result in economy. In some instances
trucks are desirably built so as to pick up and deliver a sheet
steel keg for holding working processes. An ample supply of
metal "tote boxes" for holding small parts will facilitate stock,
moving and lessen losses of small parts. In some establishments
the transfer of work in processes from department to department
is delegated to a distinct department known as the "stock-
moving department." In other establishments the inspection
department has j urisdiction over the stock movers. At the Lodge
& Shipley Company in Cincinnati an inspector accompanies the
motor trucks which move all material duly inspected from one de-
partment to another, the inspector handing the tracing depart-
ment job slips representing work inspected on each trip.

125. Power Generation and Transmission. — Economy usu-
ally demands the location of the source of power and heat at the
side of the building, somewhat nearer the end which is likely to be
elongated. It should be provided with easy means of access for
delivery of fuel and for removal of ashes. The use of sloping
trestles is often an advantage in bringing cars to the level of upper
floors or platforms in the case of power-plant, foundry, etc. A
system of outdoor tracks' and of outdoor cranes and power shovels
should be considered and provided wherever, on investigation, it
would appear to be an economic move.

In estimating the total power requirements we need to deter-
mine, first, the power required by the processing machinery;
second, the power required by the various service equipment
other than lights; third, the power required by electric lights.

In determining the power required by various machines it is
desirable to secure data from the manufacturers of various
machines as to the power requirements of their machinery. If
possible these data should be accompanied by actual tests made
in the work of the plant itself or in a similar plant.

The following are typical data as furnished by machine tool
builders:

THE PLANNING OF FACTORY BUILDINGS

103

HORSE-POWER REQUIRED BY MACHINE TOOLS

Lathes
Lodge & Shipley Machine Tool Company, Cincinnati, Ohio

Swing

Style

Horse-power idle

Horse-power aver-
age cut

14 in

Cone head.

1 73

14 in.
16 in.
16 in

Patent head
Cone head
Patent head ....

.39
.377
53

2.56
1.93
3 78

18 in

Cone head

3 27

18 in.
20 in.
20 in.

Patent head
Cone head
Patent head

.77
.53
1.54

6.28
4.25
10.55

POWER REQUIRED BY RADIAL DRILLS
Bickford Drill & Tool Company, Cincinnati, Ohio
Working surface Idle Average load

No. 1, 2 1/2 ft. X3 ft. 3/4 h.p. 2 h.p.

No. 2, 2 1/2 ft. X3 1/2 ft. 3/4 h.p. 3 h.p.

No. 3, 2 1/2 ft. X4 ft. 3/4 h.p. 3 h.p.

POWER REQUIRED BY MILLING MACHINES
Cincinnati Milling Machine Company, Cincinnati, Ohio
Working surface Horse-power Average Motor

No. 2, llft.X7 1/4 in.
No. 3, 13 1/2 in. X 55 3/4 in.
No. 4, 16 1/2 in. X64 1/4 in.
No. 5, 19in.X76 1/2 in.

POWER REQUIRED BY UPRIGHT DRILLS
Cincinnati Machine Tool Company, Cincinnati, Ohio
Swing Average horse-power

3/4 h.p.

idle

load

recommended

1/2 h.p.

3 h.p.

5 h.p.

3/4 h.p.

5 h.p.

7 1/2 h.p.

Ih.p.

7 1/2 h.p.

10 h.p.

1 1/4 h.p.'

10 h.p.

12 1/2 h.p.

21 in.
24 in.
28 in.
32 in.
36 in.
42 in.

1 1/2 h.p.

2 h.p.

3 h.p.
3 h.p.

HORSE-POWER REQUIRED BY PLANERS
American Tool Works Company, Cincinnati, Ohio

22 in. and 24 in. planers 2 1/2 to 3 1/2 h.p.

24 in. to 30 in. planers 4 to 5 h.p.

30 in. to 36 in. planers 6 to 8 h.p.

36 in. h.p. 12 to 15 h.p.

104 FACTORY ORGANIZATION AND ADMINISTRATION

HORSE-POWER REQUIRED BY SHAPERS
American Tool Works Company, Cincinnati, Ohio

15 in. shaper 1 1/2 to 2 1/2 h.p.

16 in. shaper 2 to 3 h.p.
18 in. shaper 2 to 5 1/2 h p.
21 in. shaper 3 to 6 h.p.
25 in. shaper 4 to 6 h.p.
30 in. shaper 5 1/2 to 7 1/2 h.p.

HORSE-POWER REQUIRED BY SHAPERS
Cincinnati Shaper Company, Cincinnati, Ohio

H.p. idle H.p. light H.p. med. H.p. heavy

load load load

16 in. G. G. 0.5 0.75 1.0 2.0

16 in. E.G. 1.0 2.0 3.5 5.0

20 in. B. G. 1.2 2.5 4.0 6.0

24 in. B. G. 1.5 3.0 5.0 7.0

HORSE-POWER REQUIRED BY GEAR CUTTERS
Cincinnati Shaper Company, Cincinnati, Ohio

H.p. idle H.p. light H.p. med. H.p. heavy

load m load load

26X10 0.8 1.5 " 2.5 4.0

36X12 1.2 2.0 4.0 6.0

A number of data on horse-power required for driving machine
tools are given in data sheets from Machinery, No. 12, September,
1902.

The average power losses in a motor shaft drive and counter-
shaft are given by C. H. Benjamin as 25 per cent., hence after
having determined the horse-power required by the various
machines 25 per cent, should be added for the losses due to shaft,
countershaft and belt drive.

126. Floors. — Factory floors are often responsible for much dis-
comfort. The wood floor is the only one that is conducive to
c6mfort, since wood is a poor conductor of heat. Hence the
wooden shoes worn in many cold and earthen-floored foreign
shops, the object being to keep the feet less cold. A wood sur-
face on concrete floors is advantageous for other reasons than those
of comfort. The dust from concrete when it is abraded is
injurious to machined surfaces. Moreover, a wood floor furnishes
a good grip for bars used in moving heavy castings, machines,
etc. Short lengths of hard maple, even of poor grade, are to be
preferred to softer woods for flooring. The short lengths facili-

THE PLANNING OF FACTORY BUILDINGS 105

tate repairing. The best floors for factories are constructed of
3-in. yellow pine flooring, grooved on both sides and with sepa-
rate tongues. The separate tongue makes it possible to take
up and remove or repair the floor with very little waste. This
yellow pine floor is next covered with a sound deadener of tarred
paper, and on top of this is placed the surfacing of 3/4-in. hard
maple.

For heavy machines and on testing floors, metal floor plates
with "T" slots, sunk in concrete, are often desirable.

In ground floors made of concrete with wood surfaces, it has
been found that asphalt or coal tar mixed with the concrete, or
used as a surfacing, prevents the rise of moisture through the con-
crete to the hard-wood surfacing. The most satisfactory ground
floors are constructed with steel "I" beams, laid in concrete, with
asphalt moisture-proof coat and hard-wood surface. '

127. Structural and Architectural Details. — In designing fac-
tory buildings considerations of utility and economy must come
first, and architectural effects must subserviently adapt themselves
to these prime requisites. The building must be designed with
regard to intake and output, adapting the arrangement to the
equipment and flow of work, following always the lines of least
resistance as regards both losses in transmission apparatus and
losses in activity of live operators.

The general form of the framing of the building designed to
conform with the ideas suggested will not include many varieties.
It may have the central monitor with sloping sides, the central
monitor with saw-tooth construction on the sides, or the entire
shop may be of the saw-tooth roof construction. The central
monitor gives a more pleasing architectural effect than the saw-
tooth roof over the whole building, although the monotony of a
saw-tooth roof structure is easily relieved by a multi-floored ad-
ministration portion. Fig. 25 is a view of the Potter & Johnston
Co. factory at Pawtucket, R. I., a good example of the last-
mentioned style.

It is not the aim of this presentation to take up such features
of building construction as have not directly to do with the pro-
ductive output. Hence it will be unnecessary to treat of such
matters as materials for foundations, side-walls, framework,
roof, paint, etc., excepting to reaffirm the general statement that
inasmuch as interest and depreciation affect costs of production,
as they are greater or less, so it is desirable to construct that type

106 FACTORY ORGANIZATION AND ADMINISTRATION

of building which will result in least total sum of combined in-
terest, depreciation, and insurance.

The very cheapest factory building can be constructed of wood
framing of just sufficient strength to withstand the stresses to
which it is subjected, and covered with corrugated steel siding
and tar paper or asbestos paper roofing. Such construction in-
volves a rather high insurance rate, high cost for heating, de-
preciates rapidly, and is unsafe. The slow-burning type of wood
construction uses much heavier timbers for framing and thick
flooring, the idea being that, coupled with' a good automatic
sprinkling system, no fire can gain great headway, and that only
the surfaces of timbers, or certain sections of the building, will
be destroyed. The slow-burning all-wood type of construction
is apt to be no more expensive and a better fire-risk than light
steel and brick construction. A more permanent building than

FIG. 25. — Factory of Potter & Johnson Co., Pawtucket, R. I., showing
administration front, saw-tooth shop, and power plant, all practically under
one roof.

the all-wood slow-burning type, and a better fire-risk than the
light steel and brick, is presented in the brick and wood slow-
burning type of construction. This last-named type of construc-
tion is apt to fill in most cases the requirement of that type of
building which presents the lowest combined charges for interest,
depreciation, and insurance, although its cost is but slightly ex-
ceeded by a construction of reinforced concrete, which will be
accompanied by still lower fire insurance rates. Reinforced
concrete presents difficulties in tearing down which may in some
cases cause a preference for slow-burning brick and wood.

In designing a building it must be borne in mind that while
it must be so planned as to place to greatest advantage the ma-
chinery of manufacture, there will always be a great deal of work
that depends upon human attendance, and that it is just as im-

THE PLANNING OF FACTORY BUILDINGS 107

portant that the human machinery be provided with such sur-
roundings and arrangements as will make it the most efficacious.
Such arrangements are too often looked upon as philanthropic or
advertising measures, when in fact they are part of the productive
equipment. The output of man as a machine is regulated first
of all by the amount and quality of fuel or nourishment supplied,
as food and air and heat. Poor air and insufficient light and
warmth inevitably result in poor work, both as regards quantity
and quality, even though the workers might be picked for their
cheerful and sunny dispositions. But another factor enters,
namely, that of contentment. Agreeable and healthful sur-
roundings will tend more than anything else to remove the chief
cause, next to lack of proper and sufficient vital supplies, which
is responsible for diminished labor efficiency, namely, discon-
tent. Hence it becomes important to consider what features
of building construction influence comfort.

Except when specific reasons to the contrary appear, the
cheapest building is to be constructed in which it is physically pos-
sible to do the work well. A building must provide shelter from
weather, afford good light and ventilation, and must be able to
resist all stresses to which it is subjected by equipment and
employees, besides offering reasonable resistance to weather and
conflagration. Beyond these considerations any additional
elaborations are excusable only when charged to advertising
account.

For psychological reasons it is desirable that the building
present a pleasing appearance rather than that of an ugly
monster or prison. Hence any architectural artifices are to be
commended that will relieve monotonous continuity, such as in
the case of a long building, the use of projecting pilasters, which
also add to the rigidity of the structure, or the use of external
projections for elevator shafts, stairways, or lavatories, if such a
location is found otherwise desirable. Where a low building with
central monitor and single gallery is used, it may be desirable to
have elevators and stairways at the inside of the gallery on
account of their thus feeding a wider territory with a shorter
amount of walking and hauling than they would if placed at the
outer walls.

An architect with an eye for beauty will know of many devices
for making an ugly sky-line pleasing, converting a plain stairway
at the front or side of a building into a pleasing terrace, etc.

108 FACTORY ORGANIZATION AND ADMINISTRATION

When, by reason of increased business, a manufacturing estab-
lishment finds it necessary to erect an extension or to put up a
new plant, the progressive firm seldom plunges headlong into
building. The necessity for alteration leads to a careful investi-
gation of such matters as the travel of work through the factory,
the maintenance of proper balance of floor area, the provision for
a rational growth, an investigation of processing and service
equipment, and other important considerations.

128. Employment of Professional Industrial Engineers to
Aid in Planning of Buildings. — In the planning of extensions and
new buildings, the owners of a business will usually find it most
profitable to employ the services of an experienced industrial
engineer or firm of industrial engineers to relieve their own super-
intending staff from the additional labor involved in such plan-
ning— a strain which, without outside assistance, might seriously
handicap the regular productive work of the factory. "Usually
the industrial engineer should be retained and allowed to com-
plete his plans and reports prior to the engagement of an architect,
as the structural and architectural features cannot be intelli-
gently handled until the industrial engineer's work is practically
completed. Conferences and consultations should be arranged
for between the architects and industrial engineers before final
contracting is done.

REFERENCES

ENNIS: " Works Management," Chapter X.

TYRRELL: "Engineering of Shops and Factories," Chapters III to XXX.
PERRIGO: "Modern Machine Shop Construction, Equipment and Man-
agement," Chapters I to XV.
DAY: "Industrial Plants."
SCHNEIDER: "Specifications for Buildings."

CHAPTER IX
PERSONNEL DEPARTMENT

129. Personnel Organization.— Recent years have witnessed
the evolution of what, was formerly known as the labor bureau
or employment department into a much bigger and more im-
portant factor in general management, now recognized more
generally by the name of " Industrial Relations" or " Personnel
Department."

;• The ordinary activities of a modern Personnel Department
may be grouped under the following divisions :

1. Male Employment Division, including contact with sources of supply,
selection and placement of male employees.

2. Female Employment Division, including contact with sources of
supply, selection and placement of female employees.

3. Educational Division, including shop training, vestibule school,
apprentice school, night classes.

4. Safety Engineering and Compensation Division, including sanitation
and working conditions in general.

5. Medical Division, including physical examination, hospital, visiting
nurses, matrons, and direction over rest rooms.

6. Recreational Division, including athletics, social clubs, lunch rooms,
etc.

7. Records Division, including service and efficiency records, payrolls
and statistics.

8. House Organ Division, covering the management of the Company
newspaper for employees.

9. Pass and Service Division, including the issuance of passes, the assign-
ing of lockers and locks, management of sales and loans to employees, and
taking charge of clearances and unclaimed wages, etc.

10 Industrial Relations and Wage Adjustment Division, including
transfers, promotions, grievances, wage adjustments and direct tie-up
of Personnel Department with shop foremen.

11. Administration, organization and control of labor policies and above
divisions. This is covered by the Head of the Personnel Department and
his personal staff of supervisors.

130. Employment. — It is best to have the Male and Female
Employment Divisions under independent control. A capable
woman has much more freedom to exercise her good judgment
if she is put in complete charge of female employment.

109

110 FACTORY ORGANIZATION AND ADMINISTRATION

The Employment Divisions have to deal with determination
of available sources of supply, planning of methods of recruiting
and advertising, ascertaining and recording the shop and office
labor requirements; must survey labor conditions and rates of
pay of other plants, see that applications for employment are
made out correctly, determine the priority of requisitions, re-
cord progress in filling requisitions for help, interview and hire
applicants.

131. Job Analysis and Specifications. — The eagerness with
which engineers adopted time study and planning department
methods and the wonderful results obtained from these methods
were so engrossing that until within the last few years little
attention was paid to an equally important part of Dr. Taylor's
philosophy of scientific management. I refer to that portion
in which he defines scientific management as follows :

". 1st. The determining in each industry of the peculiar science of that
industry by gathering information from all sources. These sources might
include laborers, office boys, janitors, salesmen, mechanics, accountants,
and in fact, anyone connected with the industry.

2nd. The systematizing of these data into principles, laws, and instruction.

3rd. The study of the work as it s related to the men.

4. The study of the type of man required for each class of work.

5th. Bringing the science to the men.

It is quite evident that the modern terms of shop analysis, men
specifications, and shop training schools indicate merely a
natural evolution of Dr. Taylor's conceptions of the human
problems involved.s

Fig. 25A is a typical job analysis .or man job specification.

132. Desirable Qualifications of Employees. — Taylor lists
the following nine qualities as those which he states go to make
up a well-rounded man: (1) brains; (2) education; (3) special or
technical knowledge; manual dexterity or strength; (4) tact;
(5) energy; (6) grit; (7) honesty; (8) judgment or common
sense; (9) good health. He adds that plenty of men who pos-
sess only three of these qualities can be hired at any time for la-
borer's wages; add four of these qualities together and you get a
higher-priced man; the man who combines five of these qualities
begins to be hard to find. Those with six, seven, and eight are
almost impossible to get.

Doctor Katherine Blackford sets forth as fundamental require-
ments of all employees: health, intelligence, honesty, and indus-

PERSONNEL DEPARTMENT HI

try. Doctor Blackford has gathered interesting statistics show-
ing according to her deductions definite relationships between
texture of skin and flesh, physiognomy and complexion, and
psychologic characteristics.

Kind of work Shop Symbol

Description Heavy Light Medium Hauling Lifting...

Clesn Dirty, _ .-Medium Hot Sitting Walking Standing. .

Day Work Low High Ave. Overtime.

Earnings

Piece Work Low__.High Ave.__

PROMOTION BREAKING IN PERIOD

SPECIFICATION Male Female

Weight Height Eyesight Age__

Education. _NS PS HS COL

Prerequisite experience

English, Understand Talk___Write

Arithmetic: Add Subtract Multiply___Divide_

REMARKS

Date.

FIG. 25 A. — Job analysis or man job specification, (Card 8" X 5").

Sheldon classifies qualities of men as (1) mental faculties
(objective) including reasoning, judgment and recollection;
(2) mental faculties (subjective) including intuition, memory and
emotion; (3) physical qualities, including health, strength and
vigor; (4) moral qualities including honesty, industry, loyalty,
enthusiasm and temperance.

112 FACTORY ORGANIZATION AND ADMINISTRATION

Doctor Blackford's mode of classification affords a good basis
for systematic selection of men. Sheldon's philosophy is founded
on the belief that by training, suggestion and education, latent
positive or desirable qualities can be developed, and negative
qualities and habits eliminated. Sheldon's philosophy should
prove useful in the upbuilding of an existing set of employees to
higher standards.

Vocational guidance bureaus are beginning to gather data
based on psychologic and physical measurements and records of
family history, environment, and education, which will prove
of inestimable value in the future in the matter of selection of
employees for given work and the selection of the most appro-
priate work for given individuals. If we combine Sheldon's
philosophy of the certain possibility of improvement with Dr.
Blackford's methods and the methods of vocational guidance
bureaus, we can easily refute the notion that there is any fatal-
istic predestination as to the occupation of every individual;
vocational guidance supplies for the present only the best man
for a given job and the best job for a given man. It does not
follow at all that that man must spend his life at that job. It
lies with the individual man and with his employers to fit him
for greater efficiency.

Doctor Munsterberg has made some most interesting studies
in determining the qualifications required for greatest efficiency
in certain occupations such as telephone service, electric railway
service, ship service, etc. The correctness of his tests is proven
by the certainty with which the tests reveal individuals fitted
for the employment for which the tests have been devised, and
eliminate those not fitted for it.

Munsterberg selects three purposes of business life: (1) To
find the men whose qualities make them best fitted for the work
they have to do; (2) to find the psychologic conditions which will
secure the greatest and most satisfactory output of work from
every individual; (3) to produce most completely the influences
on human minds, which are desired in the interest of business^
In other words, we must answer the questions how to find the
best possible man, how to produce the best possible work, and
how to secure the best possible effects.

133. Requisitioning Help. — All help should be requested
through the medium of requisitions made on the Personnel
Department. Requisitions for office help should all pass through
the Office Superintendent or a person delegated by him, to
determine priorities, check wages and salaries, etc. In a similar

PERSONNEL DEPARTMENT

113

manner all requisitions for shop help should pass through the
hands of the Manufacturing Superintendent or a person desig-
nated by him, to take care of priorities and wages and to follow
up the requisitions as to their execution.

REQUISITION FOR OFFICE HELP

COVERING ONE PERSON ONLY

DATE WRITTEN

DEPARTMENT

DIVISION OR SECTION LOCA

TION DATE WANTED

MALE AGE
FEMALE TO

STARTING SALARY
TO

POSITION

DO YOU CONSIDER THIS
POSITION PERMANENT

IF TEMPORARY, FOR
WHAT PERIOD OF TIME

DUTIES OF POSITION

SHOULD THE EMPLOYEE BE.A GRADUATE OF

GRAMMAR HIGH I BUSIN
SCHOOL SCHOOL | COLLE

.58 COLLEGE SPECIA
3E COURSE |

L COURSE IN

EXPERIENCE REQUIRED

NECESSITY FOR THIS.ADOITIONARY HELP

ENLARGING FORCE | REPLACEMENT | |"°R™GE

1 TEMPORARY RUSH

EXPLANATION

ADDITIONAL FL RNITURE OB
EQUIPMENT NECESSARY

SIGNED

APPROVED CHE

CKED

CHIEF CLFRK OR OFFICE *

EAO OEPT HEAD

OFFICE SUPT

POSITION
Fll 1 ED ON

REQ'N

DATE

NAME OF NEW EMPLOYEE

FIG. 255.— Requisition for office help, (4"X 6").

REQUISITION FOR SHOP HELP

(ONLY ONE CLASS OF WORK ON A REQUISITION)
SHOP DATE FILED DATE WANTED

MALE
REQUIRES FEMALE FOR

(CLASS OF WORK)

DEFINITE DETAILS
THIS POSITION REQUIRES THE FOLLOWING QUALIFICATIONS AND TRAINING

ITAIL HEAVY ENGLISH ENDURANCE

STRENGTH MECHANCIAL TECHNICIAL I

PERMANENT OR TEMPORARY

If TEMPORARY
PROBABLE
DURATION

RATE, DAY WORK

CHANCE
PROBABLE PIECE WORK RATE PROMOTION

SIGNED BY

APPROVED BY

FOREMAN OR PROCUCT
REQUISITION FOR SHOP HEI

ION OVERSEER GENERAL FOREMAN

•' " * " PRODUCTION SUPERINTENDENT

FIG. 25C.— Requisition for shop help, (4" X 6").

Fig. 2oB shows a typical requisition for office help and figure
25C, one for shop help.

114 FACTORY ORGANIZATION AND ADMINISTRATION

134. Applications for Employment. — A form to be used in
keeping record of applications for employment is shown in Fig. 26.
These applications are best filed according to the kind of work,

APPLICATION FOR EMPLOYMENT.

Kind of work wanted.
Name

Street Address.
Date of Birth _
Married?

Town.

Place of Birth-

Served.

.years Apprenticeship with

Previously employed as follows:

FROM

WITH WHAT COMPANY

IN WHAT CAPACITY

Wages expected .

Do you belong to any Labor

(Last line not to be filled by Applicant.)

FIG. 26. — Application for employment record. White card, 6 inches wide,

4 inches high.

Name ofEmploi
Date Employed

EMPLOYMENT RECORD.

("APPLICATION FOR EMPLOYMENT" CARD TO BE FILED WITH THIS CARD.)
ifi nheeJr. JVft.

partment. Hate of Wag

fliinn

Employment approved b
RECO

zrintendent.

RD OF SERVICE AND ADVANCES IN WAGES.

Date of
Report

Quality
of Work

Quantity
of Work

Cleanli-
nets

Proficiency
and

Disposition

Punctu-
ality

Date of

Advance-
ment

Advanced
to

Supt's Approval
of Advance

EMPLOYMENT OR ADVANCES MUST BE APPROVED BY SUPERINTENDENT BEFORE PAY-ROLL ENTRIES ARE MADE

FIG. 27. — Employment record. White card, 6 inches wide, 4 inches high.

the guide card specifying whether lathe hands, milling-machine
hands, etc.

PERSONNEL DEPARTMENT 115

135. Employment Record. — As soon as an applicant is em-
ployed, it is desirable to fill out a more comprehensive record
than is contained in the application for employment. Fig. 27
is a form for employment record. This record, it will be noted,
serves also as a record of service and advance in wages.

136. Record of Office Employees.— A form for building up a
record of office employees is shown in Fig. 28.

RECORD OF OFFICE EMPLOYEES,
Dept

Nami

Address.

How to reach by 'phone-
Position

When entered this com.'s employ-
In what capacity-

Later positions with this company

(Give dates, nature of work and salary in each capacity)

Amount of present salary and date of present salary put into effect.

Previous experience and references.

Approved.

FIG. 28. — Form for employment record of office employees. White paper,
81/2 inches wide, 11 inches high.

137. Psychologic and Physical Tests, Industrial and Family
History. — The foregoing employment records include pretty
nearly all the data on which satisfactory returns can be obtained
through the medium of reports from the average foreman and

116 FACTORY ORGANIZATION AND ADMINISTRATION

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122 FACTORY ORGANIZATION AND ADMINISTRATION

timekeeper. It is quite apparent that if we are to apply modern
principles of intelligent selection of employees and training them
to higher efficiency, we must build up more comprehensive data
as a working basis for the trained expert in our labor bureau
who will keep up this important part of the establishment's
activity. Figs. 29 to 35 inclusive are here given to indicate
the comprehensiveness of such records as are necessary to afford
a basis for intelligent selection and placing of employees and for
progressive training to higher efficiency of apprentices and such
older employees as will avail themselves of such opportunities as
continuation school, part-time school, or night school. The

RELEASE CARD.

PAY ROLL DEPARTMENT MUST BE NOTIFIED AS SOON AS ANY EMPLOYE IS LAID OFF,
DISCHARGED, OR QUITS VOLUNTARILY.

Date Mr. Check No

( been"laid off" \
has this day and hour 1 been discharged >

^ uot;/t u too/tu-/ j/c-tf/ r r> ir

1 quit voluntarily )

Reasons assigned

He has turned in all Checks, Tools, Wrenches, etc., the property of this
Company, and is entitled to his wages in full.

Dept. Foreman. Tool Room Foreman.
Noted Superintendent.

FIG. 36. — Release card. White card, 6 inches wide, 4 inches high.

forms given here are in use at the Vocational Guidance Bureau
of Cincinnati. Schedule I is the school record, Schedule II the
record of Physical Examination, Schedule III the record of
Psychologic tests and measurements, Schedule IV, the indi-
vidual's industrial history, Schedule V, Economic data regarding
the individual's home, family and earnings.

The problem of satisfactory labor is one which goes far beyond
the mere matter of keeping record of the men's previous employ-
ment or their promptness and regularity of present service.

PERSONNEL DEPARTMENT

123

138. Release Cards. — When a man leaves he should be given
a release card which serves as a notice to the pay-roll department.
Fig. 36 shows such a release card, which must be signed by the
tool-room foreman and department foreman, showing that the
man leaving has turned in all tools, checks, and other property
of the company, and that he is entitled to his wages in full, or
minus certain deductions for unreturned checks, tools, etc.

It is desirable to designate a certain person as "clearance
interviewer" and obtained a record of the reasons given by all
employees cleared, for leaving. This clearance interviewer may
be able to save a number of desirable employees. His reports
should be summarized and presented to the Manufacturing
Superintendent.

139. Cipher Code of Characteristics of Employees and Ex-
employees. — In order to keep information confidential, the fol-
lowing cipher code, or one similar to it, may be very advanta-
geous: (In the example given, the figures corresponding to the
various traits have been purposely disarranged so as not to
reveal the cipher.)

1. Laid off. 23.

2. Discharged. 24.

3. Quit. 25.

4. Struck. 26.

5. Trouble with foreman. 27.

6. Trouble with other em- 28.

ployees. 29.

7. Wanted higher wages or piece 30.

rate. 31.

8. Wanted shorter hours. 32.

9. Objected to piece work. 33.

10. Objected to premium system. 34.

11. Bad health. 35.

12. Too old. 36.

13. Too young. 37.

14. Better job.

15. Did not report for work. 39.

16. No work. 40.

17. Not suited to class of work. 41.

18. Skill, excellent. 42.

19. Skill, average. 43.

20. Skill, poor. 44.

21. Production, fast. 45.

22. Production, medium. 46.

Production, slow.

Interested; ambitious.

Careless; indifferent.

Obedient; reliable.

Disobedient; unreliable.

Diligent; energetic.

Indolent; wastes time.

Prompt; regular.

Not prompt; irregular.

Good disposition.

Bad disposition.

Non-union man.

Union man.

Loyal; faithful.

Discontented; unreasonable.

Agitator; trouble maker.

Untruthful.

Dishonest.

Intemperate.

Striker.

Talks too much.

Borrows money; dead beat.

Desirable man.

Undesirable man.

124 FACTORY ORGANIZATION AND ADMINISTRATION

140. Records Division. — This Division keeps on file records
covering all data which it is desired to have on hand with regard
to former and present employees.

Fig. 3QA shows the front and Fig. 3GB the reverse of a typical
record form for employees.

TARTED SHOP OH DEPARTMENT POSITION RATING LEFT

FIG. 36 A. — Record form for employees. (Front side.)
Yellow cards are used for male employees and white cards for female
employees.

141. Efficiency Records. — Efficiency records may be made
much more useful and specific in a shop using piece-work, bonus,
or premium system, than in a shop where the efficiency records are
based wholly on the opinions of foremen. A well-conducted shop
will keep an efficiency record of employees in the ranks that will
enable the labor superintendent to encourage and keep the best
workers, and to weed out the bad ones. Many shops have an
employment record giving sundry details as to a man's street
address, previous employment, the size of his family, etc., but

PERSONNEL DEPARTMENT

125

I have seen few of even such meager records as are kept intelli-
gently and in good order, and which are ever studied or frequently
consulted. I have introduced individual workmen's records
showing each man's successes and failures in merit wage systems,
but I have found it difficult to secure the careful study of these

QUALIFICATIONS AND ABILITIES

SPECIAL EDUCATION

Common school

High school

55?" -

YEARS OF SERVICE

ORGANIZATION

Trade- Night 01

Business school

RGE M

VN M

MAIN OCCUPATION

2ND EtST OCCUPATION

3RD BEST OCCUPATION

APPLIES FOR

RATING -TRADE TE8T8

PHYSICAL NOTES

BIRTHPLACE

OF FATHER

3IRTHPLACE
Or MOTHER

Fold Here

MO. DAY YR. APPLICATION

Impresses of
Interviewer

FIG. 365. — Record form for employees. (Reverse side.)

efficiency records which should be accorded them by persons in
authority. What use can be made of such records? If we dis-
charge the inefficient workers, what guarantee have we that new
men will be more efficient? To this question I would answer that
the efficiency records will reveal to us which men need to be given

126 FACTORY ORGANIZATION AND ADMINISTRATION

a chance to do better work, and they will show also which men in
the shop are most capable of showing them. The workingman
will take more kindly to a demonstrator selected from among his

Name Add

ess

Born Age

Married ' H,red

Wages

Served Years Apprenticeship with

Last Employed bv

Waees

Date
of
Rep't

Charac-
ter of
Work

Quan-
tity of
Work

Quality
of

Work

Clean-
liness
at

Work

Profi-
ciency
as
Work-
man

IE Punctuality

Work-
ing

Prem.
Gain
$ C.

Advancement

I ill

w °

« « •£ » Remarks

FIG. 37. — Efficiency record. (General.) White card, 6 inches wide, 4

inches high.

peers and fellows than to a speed boss or speed expert hired from
abroad. It is easy to pick out in a machine shop one's best mill-
ing-machine hand, the best lathe hand, the best drill-press hand,
and by paying a higher hourly rate while on demonstrating work,

WORKMAN'S EFFICIENCY AND PREMIUM RECORD

EMPLOYE EMPLOYE
NAME NUMBER DEPT. RATE

WEEK ENDING

.OIAL
ON 80.

SUCCESS

BONUS

REMARKS

TOTAL FOR PERIOD

FIG. 38. — Record of efficiency and earnings under combined premium and
bonus system. White card, 6 inches wide, 4 inches high.

to have them serve as instructors to the poorer men. The great
majority of men who have fallen below a standard of good per-
formance will make a success of their tasks when helped in this

PERSONNEL DEPARTMENT 127

way. Fig. 37 shows a form for efficiency record. An additional
form is shown in Fig. 38, showing efficiency under bonus wage
system.

142. Safety Engineering and Compensation Division. — This
Division has supervision over sanitation and accident prevention
and in some industries also over fire prevention and plant pro-
tection. Activities of this Division cover planning of new safe-
guards, outlining the work of the shop safety committees,
investigating proposed shop changes in co-operation with the
proper engineering department, investigating safety suggestions,
approving or altering new shop layouts and designs for new
machinery and for safeguards. This Division looks after the
preparation of danger signs, carries on experiments with new
safeguards, and prepared safety bulletins. It must keep a
statistical record of accidents and file all accident reports;
classify compensation cases and keep accounts of compensation
cases. It must install and maintain sanitary equipment,
advertise safety work, supervise safety education; must prepare
disputed cases for court and adjust and settle claims. It must
provide for the inspection of plant and yard from the safety view
point; must investigate and . classify accidents; investigate
complaints and inspect records of accidents and settlements.
The technical features of these important activities should be
delegated to a man with the requisite engineering education
to work out. The compensation work may demand the services
of a man with legal training.

143. Educational Division. — The Educational Division should
be under the direction of an experienced educator who will be
able to co-ordinate and assist in planning the educational activi-
ties in all divisions, whether they relate to marketing classes
for experienced salesmen, classes in organization and manage-
ment for minor executives, training classes in accountancy or
stenography, classes in Americanization and citizenship, direc-
tion of the work to be carried on in a training course for college
graduates, in the shop vestibule school or in tho shop apprentice
school. This Division will have to arrange for advertising the
courses to be given, arrange for class rooms, schedule classes,
work of the classes, record the grades and class standing of
members of the various classes and courses, investigate quality
of instruction, inspect attendance of classes, determine the use-
fulness and effectiveness of the classes, and recommend a reward
for employees whose work justifies same. One phase of the

128 FACTORY ORGANIZATION AND ADMINISTRATION

educational side of the shop which requires more attention than
is usually given it is the apprenticeship system. In most shops
this is a farce. Some of the larger shops, however, are introduc-
ing apprentices' schools, and paying attention to the character
of the boys they are employing, weeding out the undesirable
ones and holding tight to the good ones.

No matter how we may scoff at paternalism and the coddling of
the workman, there is no denying the fact that to make better
men and women of the rank and file is a great fundamental step
in the direction of a disposition on the part of the employees to
become better help. Give them better 'air and better surround-
ings and they will have better health and better dispositions.
But we must do more than this. We must have better craftsmen
with better technique in their trades. It is right here that we are
weakest, and it is here that we will first feel foreign competition.
The all-around machinist is almost extinct — the man who knows
how to get best results out of a lathe, a milling machine, a planer,
a shaper, a drill press, and a boring mill. Machine-shop foremen
who have advanced from the ranks are. as a rule men who
are proficient on but one tool, and are not competent judges
of the best way to do work on all the different machines even in
their own departments. The great majority of workmen in
shops to-day have not had any schooling beyond the seventh or
eighth grade. Their shop apprenticeship has not made them all-
around craftsmen. The philanthropy expended in the erection
of manual training high schools has failed to reach the great mass
of working people who have never got that far along in school life.
It is this great majority of our people who never get beyond the
seventh or eighth grade of school that are most in need of further
trade education to make them better craftsmen. There is cer-
tainly tremendous need for the establishment of real trades schools
with the best obtainable really practical instructors for this great
class of working people.

144. Suggestion System. — The suggestion system can ad-
vantageously be handled by the Personnel Dept. A suggestion
system can be made of benefit in any shop, even a small one, but
only if handled systematically and intelligently. The men need
to have the benefits of the suggestion scheme kept continually
before them. This can be done by handing out each month
individual slips to every employee announcing the prizes for the
coming month. Another means is the printing on the time-slips
that show the workman's gains or losses under a merit wage
system, of a few words, calling attention to the suggestion

PERSONNEL DEPARTMENT 129

scheme, as for instance, "We are always glad to have our men
make suggestions for changes in fixtures, appliances, and tools to
facilitate the work. If an idea occurs to you, write it out and put
it in the suggestion box. Prizes are offered for the best sugges-
tions." Suggestions should be acknowledged by a personal letter
to every one making a suggestion. Awards must be intelligently
made by competent judges. Suggestions adopted should be
put into effect promptly. Foremen should be made partici-
pants in the suggestion scheme on a different footing from the
men.

145. Recreational Division Including Social Betterment,
Welfare, Athletics, and Cafeteria. — This Division will have
control of the company club and in a company employing
several thousand people will have to include the services of a
cafeteria head, a business manager, a social secretary and athletic
director and a membership secretary. It is well to have the
club's policies and activities approved by a board of management
composed of employees known to have an interest in the activi-
ties of the Division. Many shop superintendents are apt to
look unfavorably upon so-called betterment or welfare work as
something which smacks of effeminacy and faddism. The
workmen themselves are apt to regard it in the same light;
especially is this true if the persons engaged in the work are not
sincere.

From a shop-owner's standpoint, the ideals to be realized are,
first, the producing of a marketable product which will command
the highest price of any similar product in its class; second, the
producing of the largest possible quantity of this article at the
lowest possible cost.

With the development of a better educated and more enlight-
ened purchasing class, it is coming to pass that the shop-owner
is beginning to feel that in order to realize the first-named ideal,
the quality of his product must be continually improving. The
most marketable steam-engine or machine tool of to-day is a
product of much higher quality than that which was the most
marketable but a few years ago. This realization has resulted
in better machinery, and in the employment of better designing
talent, and in the introduction of labor systems which seek to
attract and hold the better class of mechanics.

The second business ideal, namely, the producing of the largest
possible output at the lowest possible cost, involves not only
good equipment, good design, and careful mechanics, but the

130 FACTORY ORGANIZATION AND ADMINISTRATION

element of human activity. The need for pronounced emphasis
on this element is becoming more and more felt by manufactur-
ers. The standpoint of advantage to the shop-owner is usually
the only point of view from which the directors will consider wel-
fare and betterment propositions. A good works manager can
as a rule find abundant arguments in favor of rational welfare
work from this point of view.

The terms "Welfare" and "Betterment work" have been
rather loosely used to include practically all of the activities
heretofore mentioned in this chapter, such as proper selection of
employees, efficiency records, promotion system, apprenticeship
system, sanitation, fire prevention, and suggestion system. A
better designation would be to include all of the aforementioned
activities under the general functions of a labor bureau, as well
as the social, athletic, and similar features which contribute to
mutual confidence. The popular acceptance of the terms
" welfare" and "betterment" is to associate them immediately
with company contributions of a philanthropic nature to a great
annual picnic, Saturday afternoon baseball, benefit society funds,
and similar matters.

In regard to the workingman's home life and his habits, he
does not want these interfered with. However, time and again,
workingmen have expressed themselves to me in regard to their
wishes for better home surroundings. They complain to me in
the same way in various cities, that civic improvements are made
in those parts of a city occupied by the homes of the well-to-do.
There, they say, they. find paved streets, good sidewalks, shade
trees, water, sewer connections, electric lights, gas, and street
sprinkling, while the workingmen 's homes are on muddy streets,
no trees, nor sewers, no paving, poor sidewalks, poor lighting at
night. Workingmen complain to me that manufacturers are
willing to spend time and money to influence councils to secure
switches and to secure election to public office of men pledged to
grant their corporation special privileges, and that the working-
man would like to see these same influences at work to secure
public betterment of his home surroundings. This phase of the
question is one that can hardly be controlled by the engineer
within the walls of the shop, but it is well worth the thought of
the shop-owner.

The greatest successes in social betterment work in connec-
tion with factories have been accomplished in shops where work

PERSONNEL DEPARTMENT 131

is light, such as the manufacture of breakfast foods, chocolate,
cash registers, bed-springs, etc. The employees in these shops
are more easily reached than are the workers in the foundry, the
forge shop, and the heavy machine shop. I have attended enter-
tainments of a high order, given without charge by the owners
of one of the largest shops in Chicago, and under the auspices of
skilled social settlement workers. Yet they failed to reach the
men. I have in mind particularly one evening when the enter-
tainment was a lecture on the Klondike, preceded and followed
by music by the shop band. With many thousands to draw from,
there was but a half dozen men outside of the band present. The
lecture was intensely interesting to me; yet one after another
the men went to sleep. There were two reasons for this: first,
the men were physically exhausted; second, it was not the type
of entertainment that appealed. When the orchestra struck up
it was with vigor and abandon, and the men came to " attention"
at once. This same large shop, assisted by private donations
from large stockholders, instituted much betterment work, includ-
ing a manual training school for the children of the employees.
A minor feature that was a good one was the distribution, on a
truck, of bottles of pure sterilized milk sold at cost. But the
greatest difficulty encountered here, as in the heavy steel indus-
tries about Pittsburg, is the handling of the adult workman
engaged in heavy labor. The Pittsburg district abounds with
magnificent club buildings, provided with libraries, gymnasiums,
social features, etc., open to the laborer who wishes to avail him-
self of their opportunities, and yet these institutions fail to reach
those who most need uplifting. These clubs are taken advan-
tage of by the young college-educated apprentices, shop clerks,
and some few of the young men of the higher grade mechanic
class. There is great need of successful plans for reaching the
heavy labor class, plans which will result in continuous and per-
manent good.

146. Medical Division/ — This Division should be under the
direction of a competent physician assisted by capable trained
nurses. Its work will include the administration of first aid,
giving of medical and hygienic advice, the conduct of physical
examinations, the proper execution of major operations where
such are necessary, making of home visits; also the development
of such contacts as may be desirable by way of shop matrons.

147. Labor Turnover. — The labor turnover is a ratio in regard
to which there is some difference of opinion. Some employers
define it as the ratio of the number hired in a given period of time

132 FACTORY ORGANIZATION AND ADMINISTRATION

to the average number on the payroll during the same period of
time. Others express it as the ratio of the number leaving in a
given period of time to the average number on the payroll during
the same period of time.

It will be noticed that the value of the ratio and its reliability
will vary, depending on whether a company is working under an
increasing or diminishing labor program. Hence, some com-
panies use both ratios in their statistical reports. The majority,
however, use the ratio of the number leaving to the average
number employed, which would be a perfectly rational basis
under normal labor conditions.

The total turnover data are preferably broken down by de-
partments and shops within the departments. An example of a
turnover report broken down by shops is shown in Fig. 38A.

DMA
DM2B
DM3B
DM0
HM1D
DM2D
DAI3D
DM1E
DM2E
DMF
DMG
DM4K
DM5K
DM1P
DM2P
DMS
DMT
DMW
ADH
ADV
ADZ

— ^—

FIG. 38A. — Turnover report broken down into turnover for each shop in

a department.

148. Shop Rules. — Another matter frequently overlooked is
the providing of each employee with a full set of shop rules and
regulations. The posting of such notices at different places
through the works is not a satisfactory plan. Every new em-
ployee should be given a booklet on which is written his name
and his check number, so that he will consider it his individual
property and not throw it away. In the booklet are listed con-
cisely all of the shop rules and regulations. As an example
of what such rules and regulations may be, the following is quoted ;

PERSONNEL DEPARTMENT 133

1. On entering our employ the time-keeper will provide you with a
check number. Do not fail to notify the time-keeper of any change in
your address. The tool-room attendant will provide you with tool
checks which must be returned to him when you leave. In order to
place the responsibility for breakage and loss of small tools, the tool-
room will issue no files or hack-saw blades, unless regular order slip is
presented, signed by foreman, and bearing check number of man.
Checks will not be returned on broken taps, drills, or end mills, unless an
order bearing man's check number and signed by the foreman is returned
with the broken tool. A record of each man's breakage will be kept in
tool-room, and men will be held responsible for an unreasonable amount
of breakage.

2. Each employee must personally register at the time-clock at the
time he commences and ceases work. As the pay-roll is figured accord-
ing to registration on time-recorder, you will appreciate the importance
of registering correctly. Employees ringing in late will be paid from
the nearest quarter hour following time rung in, and must begin work at
once on entering shop. All employees will ring clock four times daily,
whether going home at noon or not. A record of punctuality is kept for
use in connection with record of general proficiency in establishing em-
ployees' standing.

NOTE. — Insobriety will not be tolerated. Employees must give
reason for absence, and should see that their foreman is notified by
phone or otherwise in case of sickness, so that work can be arranged for.

3. You are engaged at so much per hour, and will be paid by the hour.
Time over sixty hours per week is paid for at the rate of time and one-
quarter for the additional time over sixty hours.

4. Whistle will blow in the morning and after the noon recess two
minutes before time to begin work, so that all may have a chance to
reach their place before starting whistle, when every one is expected
to be at his post ready for work. Just entering the building at starting
time will not be satisfactory.

5. You must use the employees' entrance only, at front of building, in
entering and leaving premises.

6. Any one wishing permission to leave during working hours must get
permission from his foreman, and ring out on time-clock.

7. In case you expect to be absent a number of days, or wish to leave
the company's employ, you must obtain regular release card from your
foreman before you can receive your pay from cashier.

8. Every one must keep his machine tool or working place as clean
as possible. Paper, rags, scraps of food, and tobacco-spit must be kept
from shop and wash-room floors. Good air is required fo^ good health
and good work. It is the duty of men and foremen to see that the shop
is kept clean, properly ventilated, and to do everything else to keep the
sanitary conditions in good order.

134 FACTORY ORGANIZATION AND ADMINISTRATION

9. Receiving visitors, lunching or eating, or reading cannot be per-
mitted during working hours. Smoking and "lighting" of pipes, cigars,
etc., is absolutely prohibited at any time. This rule is imperative, owing
to the inflammable and explosive nature of materials used, and it will
be necessary to dismiss any employee disobeying same.

10. It is absolutely necessary to have all time on work going through
shop reported correctly. You are therefore requested to see that each
job you take hold of has a shop-order tag with it, and also see that the
shop-order tag leaves your place with the work. Where stock is drawn
from wareroom for first operation, foreman sends tag to wareroom for
material, the man in there attaches the tag to the stock and retains
warehouse coupon. Workmen must not work on stock of any kind
unless shop-order tag accompanies stock. Workmen should count the
number of pieces in each lot before commencing work, and, if full quan-
tity called for is not there, report to foreman immediately before begin-
ning on the job. No alterations of any kind are to be made on the
face of tag excepting by production department. Necessary changes
in quantity are to be made by production department only. In such
cases new tag must invariably be issued.

11. In all cases where men are to make more than one piece of a
kind, foreman must be called to inspect first piece and pass on it before
any others are made. Defective or spoiled pieces must be immediately
sent to finished storeroom by foreman.

12. All parts must be made according. to blue-prints, which are obtain-
able at tool-room. No deviation from blue-prints is allowable. This
applies to special as well as regular work. Blue-prints must not be
borrowed under any conditions. If a blue-print is out when called for,
it is the duty of the tool-room to hunt it up.

13. Should any work be spoiled or any castings prove defective, such
pieces must be shown immediately to foreman, who will see that they
are sent to finished storeroom, and that any necessary changes in tags
are made by production department.

14. An order signed by department foreman must be presented for
any material wanted from storerooms. All slips must give an order
number of either general or standing order series. Use a separate slip
for each separate order number. Positively no material will be issued
except in exchange for the order properly filled. No one except store-
keepers allowed to handle material. These instructions must be
enforced by storekeepers.

15. In all matters pertaining to orders, reports, or any company busi-
ness, men will consult with and receive orders from foremen of their own
departments only, and foremen from superintendent. Orders from office
will be given to superintendent and by him to foremen.

16. You are expected to be governed by the above rules, and your
compliance with same affects your standing and the permanency of
your employment.

PERSONNEL DEPARTMENT 135

REFERENCES

TAYLOR: "Shop Management," Paragraphs 221-234.

HARTNESS: "The Human Factor in Works Management."

REDFIELD: "The New Industrial Day." Chapters VII-IX.

MUNSTERBERG: "Psychology and Industrial Efficiency," Parts I and II.

GILBRETH: "Primer of Scientific Management," Chapter IV and V.

SCOTT: "Increasing Human Efficiency in Business."

RUGER: "The Psychology of Efficiency."

GODDARD: "The Binet-Simon Measuring Scale for Intelligence."

LODGE: "Rules of Management."

KELLY: "Hiring The Worker."

SLIGHTER: "The Turnover Of Factory Labor."

BLOOMFIELD: "Labor And Compensation."

U. S. ARMY, ADJUTANT GENERAL'S DEPARTMENT: "Trade Specifications
and Occupational Index of Professions and Trades in U. S. Army." Pre-
pared by Col. John J. Swan, Government Printing Office, 1918.

U. S. DEPARTMENT OF LABOR: 'Description of Occupations." Govern-
ment Printing Office, 1918. Boots and Shoes, Harness and Saddlery, Can
Sugar Refining, Flour Mills, Electrical Manufacturing, Distribution and
Maintenance, Logging Camps and Saw Mills, Medicinal Manufacturing,
Metal Working, Building and General Construction, Railroad Transporta-
tion, Shipbuilding, Mines, and Mining, Office Employees, Slaughtering
and Meat Packing, Street Railways, Textiles and Clothing, Water Trans-
portation.

CHAPTER X
OFFICE MANAGEMENT

149. Functions of the Office Manager. — The Office Manager
or Office Superintendent of a manufacturing establishment
usually has charge of the mail distribution and collection, central
filing of all mail to and from parties outside the establishment,
internal mail service, telephone system, telegrams, central typing,
multigraphing and mimeographing, and supervision so far as
regards discipline, promotion and transfer, over all office help.
It is his duty to see that standard methods are employed in all
offices. This is best secured by designating some one individual
as the chief clerk in each office or department and having this
chief clerk responsible to the Office Manager in all matters relat-
ing to the foregoing list of subjects

150. Handling Mail. — The delegation of the duty of opening
the mail depends very largely on the nature of the business. It

is always desirable to have
DECEIVED all maii Opene(i by one man,

BY if the mail feature of the

business is not too heavy to
permit of this arrangement.

FIG. 39.-Time-stamp showing date jn many establishments the
and hour of opening mail, by whom it M . , . , * i ,-,

, ..'. J , mail is opened either by the

is opened and to whom it is referred.

secretary of the company or

by the chief correspondent, the latter being usually the man in
direct charge of the general office.

It is sometimes desirable to use a time-stamp to designate
the hour and date of opening the mail, such stamp bearing a space
for the entering of the name of the person or department to which
the letter or document is referred. Fig. 39 shows such a stamp.
An additional stamp, showing ANSWERED
the hour and date and name

of person answering the letter, BY

is often used, as shown in Fig. FlG- 40.— Time-stamp showing date
4Q and hour of answering letter and by

, , . , whom it is answered.
If the man who does the

stamping of the time of receipt and the distributing of the in-
coming correspondence is the only one provided with a time-

136

OFFICE MANAGEMENT 137

stamp, his time-stamp should not be taken as evidence of laxity
of attention on the part of others, since the letter or document
may have been delayed in the original party's charge after having
been stamped. The question should be very carefully weighed as
to whether the advantages gained by the use of a time-stamp are
sufficient to overcome the disadvantages incidental to possible
internal frictions. Certainly every one likely to be held to ac-
count for delays in the handling of documents should be pro-
vided with a time-stamp if the system is to be a fair one.

151. Messenger Service. — A messenger service at fixed hours
will do much toward promoting promptness in all departments.
Where such a system is in use, the head of each department is
provided with a three-decked basket, one deck being marked "In,"
one "Out," and one "File." The messenger leaves the incoming
mail in the basket or deck marked "In," and removes the con-
tents of those marked "Out" and "File." Such a system must be
made prompt and accurate. Under these conditions it is possible
to request heads of departments to resort to a minimum of calling
on each other, and to avoid the carrying in person of papers from
department to department.

152. Filing System. — All correspondence with people outside
the office should be filed under the direction of one chief filing
clerk. This filing place should be centrally located so as to be
easily accessible to all departments, especially to those who need
to consult the files most frequently, such as the sales or purchasing
departments. The various departments will soon adapt them-
selves to this system of a central file, and will find that condensed
reference records are more convenient than a continual handling
of original letters and documents.

At first sight it might seem somewhat useless to burden the
general file with inter-departmental correspondence, but on
further reflection it will appear that it is very desirable that the
general manager see regularly or occasionally copies of all such
correspondence, before it is filed, in order that he may suggest,
where necessary, the avoidance of too much correspondence and
internal disputes.

In the matter of filing locally at the various departments
internal correspondence, it will generally be found that provi-
sions should be made for each head of department to file his inter-
departmental letters and instructions, an additional carbon copy
of all internal letters and instructions being made so that one
can be kept at the department and one sent in for the general
manager's scrutiny and the general file.

138 FACTORY ORGANIZATION AND ADMINISTRATION

The numerical filing system is the most satisfactory in an
establishment having a central filing department because it facil-
itates the file clerk's recording the withdrawal of the correspond-
ence between any firm or individual byv merely entering against
the party withdrawing the correspondence the number of the
file holder and the date.

Fig. 41 shows the file clerk's numerically arranged card
record. This card record gives the name of the firm or individual,
whose correspondence is in the folder of a certain number, to-
gether with the exact address of the party or firm and the dates of
all correspondence, as well as date and number of transfer when
the folder becomes too bulky or is so obsolete that it should be
transferred to a storage file.

The alphabetically arranged cross-index or finding card is
shown in Fig. 42. This enables one to find the number of the

NAME FILEN°-
ADDRESS

DATES OF
LETTERS

DATES OF
REPLIES

DATES OF
LETTERS

DATES OF
REPLIES

DATES OF
LETTERS

DATES OF
REPLIES

DATE AND NO.
OFTRANSFER

FIG. 41. — Numerically arranged card record showing contents which
should be in folder of a given number, together with dates of transfer to
storage. White card, 6 inches wide, 4 inches high.

folder in which the correspondence with any individual or firm
is filed. Fig. 43 shows the little slip which the file clerk writes
when he hands out any file folder. When the folder is returned,
he may either destroy the slip or hand it to the party who made
the withdrawal as a receipt for the return of the folder. The
folders are most generally kept in " vertical" filing cases, and their
contents are retired to transfer storage cases according to some
definite rule. For instance, it may be decided that at the begin-
ning of each month the correspondence of the corresponding
month of the previous year shall be retired from the current file.
As correspondence is apt to fall out of folders that are carried
about a good deal, it may be found desirable to use stout roomy
envelopes instead of the open folders. In order to keep down the

OFFICE MANAGEMENT

139

expense of preparing a folder and indexing letters from transient
correspondents the alphabetical system of filing may be applied
to all new names until at least three or more letters and replies
have been received.

In order to prevent correspondence becoming disarranged the

SN-SY

NAME

DATE OF
LETTER

SUBJECT

DISPOSITION

FILE NO.

FIG. 42. — Alphabetically arranged cross-index or finding card for finding
the number of the folder in which correspondence is located. White card,
6 inches wide, 4 inches high.

folder may be punched, and the letters also punched and fas-
tened to the folder by McGill fasteners. The letter bearing
latest date should always be filed on top. Different departments
or bureaus may advantageously be provided with file folders
of different distinctive colors.
Carbon copies of letters for
filing purposes should be
written on buff, lemon or
canary-colored paper, instead
of on the thin white sheets
usually used for this purpose.
The yellow color immediately
calls attention to the fact
that it is a copy of an out-

FILE FOLDER NO..
DELIVERED TO _
DATE

FIG. 43. — File clerk's record of with-
drawal of folders by various depart-
ments or individuals. When folder is
going letter. The thin sheets returned this slip may be handed out
of poor quality usually used as a receipt. White paper, 5 inches
have the disadvantage of not wide> 3 inches hish-
standing alone, of folding,

wrinkling or tearing easily, and not being as easily recognized
as copies of outgoing correspondence as those on yellow paper.
In certain lines of business it is important to have a copy of
the signature of the person signing letters. Where such is the
case the roller press copy will be preferable to carbons. As an

140 FACTORY ORGANIZATION AND ADMINISTRATION

additional precaution, the press copy bound book may be used
for a second copy besides the roller copy.

153. Relative Location of Offices. — Where a local telephone
exchange is in use, the telephone operator can be placed so as to
receive all persons making calls. One of the most serious defects
where this system is in force is the failure to provide suitable
waiting or reception rooms for callers. In many cases well-to-
do establishments provide a single bench in a very small place,
making it necessary for all sorts and conditions of callers to be
crowded into cramped quarters. A separate calling place should
be provided for all applicants for factory employment, and such
applicants should be promptly directed to that place by the
telephone operator or reception clerk. For other callers a neat
room provided with the company's publicity matter does much
to secure their good-will.

It is apparent that the general office, and especially the filing
department, must be centrally located. Those department
offices should be located nearest the reception room, whose man-
agers are most likely to receive a considerable number of business
callers. Such offices would be those of the purchasing agent,
the sales manager, and the cashier. The designing of a set of
offices or of an administration building deserves careful attention,
and a good plan to pursue in planning new offices is to cutout
templets representing each desk and piece of furniture and to
place these into trial positions, and then to cut out templets
representing the various offices, placing those offices together
which are likely to have the. greatest inter-communication.
Partitions between offices should be low for the sake of good
ventilation, with cathedral glass or similar translucent glass in
the upper portion, and with the name of the department plainly
lettered on the door. It is preferable to erect partitions in sec-
tions so that they may be easily removable.

154. Desks. — Some executives prefer to use flat-top desks
so that all papers are certain to be put into their proper files,
rather than getting into pigeon-holes. The putting of flat-top
desks in a position where the occupants must face each other,
or the using of double flat-top desks, is apt to be annoying to
the persons occupying them, as privacy and concentrated thought
are interfered with by having to look constantly at another per-
son, and perhaps being drawn into conversation that would best
be omitted.

OFFICE MANAGEMENT 141

However, it must be borne in mind that wall space can be as
a rule better utilized as a back to filing devices than as a back
to desks, and with some ingenuity desks can be placed in such
positions that they are not against walls, and also so that the
occupants of desks are not facing one another.

Of recent years types of desks have come into use in which
the old-style storage drawers have been replaced by vertical
files and card-index drawers All drawers containing company
business should be accessible at all times to department heads.
Personal storage drawers should be so marked on the outside,
and to these drawers the desk occupant may be given a private
key. It is desirable to keep the private offices of the more im-
portant officials and department heads free from files, the secretary
or stenographer bringing in and removing all papers required.
The table on which such papers are put during discussion or
dictation should be separate from the official's desk.

The sales department is not here considered a part of the
general office. Hence no mention is made here of follow-up
and other systems in connection with sales, since we are con-
fining ourselves to the functions of the general office in so far as
they affect the factory administration.

REFERENCES

CAHILL AND RUGGERI: "Office Practice."

PARRY: "Office Management."

DICKSEE AND SLAIN: "Office Organization and Management."

SCHULZE: "The Modern Office."

HUDDERSLY: "Indexing and Filing."

CHAPTER XI
THE ORDER DEPARTMENT

155. Functions of Order Department. — The order is the start-
ing point of activity in the factory. It is the basic authority
upon which is built the entire structure of cost statistics. There
must be a regular routine for the proper authorization, classifi-
cation, and record of all orders issued, and for the dissection of
such general orders as require it into the sub-orders or individual
operation instructions which form an essential part of an accurate
factory system. This dissection into elemental steps is, however,
beyond the immediate control of the order department, and is a
function of the production department, whose duties are distinct
from and additional to those of an order clerk or order depart-
ment. The order department's sphere is limited to the issuing
of general orders, and turning them over to such departments as
must execute the work, such as the production department, the
shipping department, etc. It is the duty of the order depart-
ment to properly classify all orders, and to determine from time to
time the progress of orders issued. This last process may in some
cases be well delegated to a distinct department known as the
order tracing department, whose duty it will be to consult with the
production department and such other departments as may be
necessary, and collect such data as are necessary to a definite
periodical report of the condition of every order in the factory.
In some cases the order clerk may act as tracer himself so far as
customers7 orders are concerned, provided this does not interfere
with his accounting or statistical duties, or the function may be
assigned to some particular individual. This man's duties are
distinct from those of the production department's tracer,
whose duty it is to follow up the progress of individual parts.
For instance, in an automobile factory the order department's
tracer would follow up John Smith's order for a car having a
special reduction gear, special springs, special battery box, and
special body, while it would be the particular function of the pro-
duction department's tracer to determine what parts need over-

142

THE ORDER DEPARTMENT 143

time work to get out the transmissions on time for Shop Order D.
5100 calling for twenty-five cars.

Naturally the owners of the business or their most direct repre-
sentatives will be the initiating authority in the issuing of general
orders, based either on customers' orders or on the providing of
a stock on hand of the manufactured product. The filing of all
orders received, and their proper classification, is a function by
itself, to be assigned to an order clerk or order department. The
departmental laying out of the working system of a factory must
not be construed as meaning a distinct office, or many clerks as
belonging to what is called a " department." A department may
consist of but one man, or one man may carry several depart-
ments. In small establishments it is just as important as in large
ones that the distinct departmental duties of every man be defi-
nitely laid down. The place and relations of the man and the
department in the staff organization, and of the records, statistics,
and accounts, must be made perfectly clear, preferably in a
graphically charted manner, as referred to elsewhere in this
work.

The order department will necessarily have more work in an
establishment receiving numerous small orders for a variety of
product than in one making a limited range of a standard product
sold in quantity.

156. Classification of Orders. — It is sometimes found advan-
tageous for the clerk or department receiving and recording cus-

' tomers' orders to have a strictly consecutive record of all cus-
tomers' orders arranged in order of seniority, irrespective of
classification, according to what the orders call for, giving the
orders a record number in addition to any class letters or numbers
which may be assigned them subsequently by the production
department.

The most satisfactory arrangement of orders is one in which
all work of the same general class is put together into a series by
itself.

The orders belonging to each series are best written on cards
or loose leaves to be filed in some modern binding device, per-
mitting of the easy insertion or taking out of any leaf, and pro-
vided with a lock so that only authorized persons may make such
removals or insertions.

157. Manifold Copies of Orders.— The book typewriter,
also known as the billing machine or flat-bed machine, is almost

144 FACTORY ORGANIZATION AND ADMINISTRATION

indispensable in the rapid duplication of cards or loose leaves
involving tabulation, with as many carbon copies as may be
needed. It will be necessary that a set of copies of orders be
provided the production department. A set of copies may also
be required respectively by the superintendent and the works
manager or such corporation officer as devotes his particular
attention to the internal working of the factory.

The cards or sheets representing live or uncompleted orders
are of course kept in a group by themselves, distinct from the
files of dead or completed orders.

It is advisable to have each distinct order series printed on
paper of a distinct color. The order department will index by
customers7 names, and, if desirable, by styles and sizes of product,
the orders in each series.

158. Example of Order Series. — As an illustration of the
grouping into series, "A" orders will call for complete product
items which have to be built to order; "B" orders for repair
parts which have to be built, and "C" orders for any apparatus
which can be shipped immediately out of stock. These three
classes of orders will generally be all that are needed to classify
customers' or agents' orders. The issuing, filing, and tracing of
these classes come properly under the head of an order depart-
ment, which should be distinct from the factory production
department. This order department issues all of its orders or
instructions to the production or planning department. The
latter department must be the point of centralization, or clearing-
house of all orders to do work in the factory proper.

As an example of the form of orders issued by an order depart-
ment, the following examples are given, representing a combined
invoice and shipping order with manifolds serving various pur-
poses, as used by a company manufacturing electrical dynamos
and motors. The set of forms shown are used only for complete
machines, a separate series being used for supply or repair orders.
One distinct order is used for each distinct machine. In this
way invoices are promptly mailed for partial shipments where a
customer orders more than one machine. Fig. 44 shows the form
which serves for original order, and also for invoice by the billing
department. There are two additional forms identical with this
original, excepting that they bear in the upper right-hand corner
in heavy type the notations, respectively, " Duplicate Invoice,"
and "For Shipping Department Duplicate File."

THE ORDER DEPARTMENT

145

ORIGINAL.

INVOICE NO.

SOLD TO
ADDRESS

DATED
DELIVERY, F.O.B.

ORDER RECD.

WANTED

SHIPPED TO

TERMS DAYS NET.

ROUTE

AT 1 VOUR~ ORDER

rf OFF FOR CASH IN DAYS.

MACHINE NO.

FRAME PULLEY X STYLE FEET

Payable ID Funds at Par in New York, Indianapolis or Chicago, without Expense to us.

FIG. 44. — Example of manifold order, one copy serving as original invoice,
one copy as duplicate invoice, and one copy as shipping record. Additional
manifolds with slightly different typesetting, and serving further purposes,
are shown in succeeding figures. Light blue bond paper, 9 inches wide,
6 inches high, ruled in red.

FOR ENGINEERING

DEPARTMENT

ONLY.

ORDER RECD.

WANTED

ROUTE

ADDRESS
SHIPPED TO

FOREMAN'S
SPECIAL INSTRUCTIONS.

CONSTRUCTION

DELIVERY

CREDIT

SHIPPING APPROVED BY

DATA SHEETSLARMATURE SHUNT SERIES RHEOSTAT

Return this Order to the Office with Following Data and All Necessary Information (on back hereof)Complete
when Shipment is Made. Get Completion Order for Any Missing Farts. Note Any Special Features

on Back Hereof.

FRAME PULLET

RUSHES TESTED

-REMARKS-

STYLE FEET.

_SPEED_

-COMPLETION ORDER

FIG. 45. — Fourth copy of manifold order. A number of similar mani-
folds go to various shop departments. White bond paper, 9 inches wide, 6
inches high.

146 FACTORY ORGANIZATION AND ADMINISTRATION

Fig. 45 shows the fourth copy, which is marked, "For Engineer-
ing Department Only," and contains same items as original,
omitting accounting department's financial memoranda, and
adding technical memoranda. The reverse of this copy is a
drawing list, and is shown in Fig. 46.

The fifth copy is the same as the fourth, excepting that it is
marked " For Shop Only." Its reverse is the same as the reverse
of the fourth copy.

While the particular company using the order form illustrated
preferred to use a separate sheet for every machine, such a pro-

Frame, . .

. TV. No.

Skids,

. Dr. No.

Field Cores,

Pr, NoT

Rock. Arm.,

Dr. No.

Pole Shoes, .

Pr, N«,

B. Holders,

Base, ,

Pr, No,

Studs,

Dr. No.

F. Bearing, * .

, TV No.

Rock. Ring,

Pr No,

B. Bearing, .

TV No.

R.R.Bracket,

TV. No.

Bear. Caps,

p,, No,

Hand Wheel,

Dr. No.

Pedestal*

, Pr No.

Dr. No.

Arm. Assembly, «

. Dr. No.

Con. Ring Dtls.,

Pr, Nor

Arm. Space Blks.,

. Dr. No.

Con.Ring Assy., .

Pr No.

Arm. Spider, •

- Pr, No

B.H.Cables,

Arm. Heads,

, Dr. No.

B.H.Cable Terms,

. No.

Shaft,

Con. Boards,

Dr. No.

Commutator •

. TV. No.

No.

Field Spool, -.

, Dr. No.

Equalizer Terms, .

No.

FIG. 46. — Reverse of No. 4 and succeeding copies of manifold order giving
data for engineering department and various shop departments. Light
blue bond paper, 9 inches wide, 6 inches high.

cedure is not at all necessary. Order and invoice may be simul-
taneously written on a flat-bed typewriter, there being two col-
umns, one column for items ordered, another column for items
shipped. When the first partial shipment is made, entries are
made into the column headed "Items Shipped," and one copy
of the several which are simultaneously written is used as an
invoice, and shows the exact status of the order to the customer.
The unshipped items are then transferred by being copied to a
new set of blanks upon which entries are made as soon as the
second partial shipment has been made. It is customary to have

THE ORDER DEPARTMENT 147

an invoice mailed at the time a shipment is made, even if such
shipment is but partial.

The order system of an establishment which makes up goods
in quantity for stock, of which it carries a considerable variety,
will be quite different from the order system that would' be best
for an engineering works.

A form in such a case would have spaces for the name of the
customer, his address, the railroad or express company by which
to ship. This sheet is filled out by the salesman when he takes
the order, with the foregoing items, and 'also the proper items
opposite salesman's name, date sold, terms, quantity, list num-
ber, article, and price. On its receipt at the company's office
the order is given a number, and is properly indexed or registered.
Proper acknowledgment of the order is then made; it next
goes to the credit department; thence to the warehouse de-
partment, where each item is signed by the individual put-
ting up that item; it is then inspected, and receives the inspec-
tor's check; the goods are next packed and the order is checked
by the shipper; it next goes to the billing department, and
the billing clerk puts his check after the words, "Billed by";
it is next examined and rechecked for corrections of prices, exten-
sions, etc., and signed opposite the words, "Examined by," and is
now ready to go to the bookkeeper, who fills in the ledger folio.

Mail orders, and orders brought in directly by customers,
are transcribed on to the regular order form as described.

In this type of business salesmen's records may be made up
from order copies.

In cases where it is desirable to keep a careful time-check on
each event in the handling of orders, a time-stamp may be used
to advantage, space being left on the order blank for all such
'time-stamps which should appear on any one copy.

Where the billing machine is used for writing out the order,
a large number of other forms may be made at the same writing,
the bunch or pad of forms being stitchecj at the left-hand margin,
and each form printed on a different color of paper. At one
writing, for instance, we may have order, original, and duplicate
invoice, statement, memorandum of draft, posting record, ship-
ping clerk's record, cost department's record, various shop depart-
ment copies, and acknowledgment to customer.

159. Instructions as to Order System.— Below is given a
sample of instructions regarding classification of shop orders,

148 FACTORY ORGANIZATION AND ADMINISTRATION

which it is desirable to issue at the time of inaugurating a classi-
fied order system :

All orders emanating from the office will pass through the production
department office before being distributed in the shop. The production
department is responsible for the proper distribution, tracing and follow-
ing up of all orders as to location and condition. Before distributing
orders, production department has shop superintendent note orders,
securing his initials or those of his assistant, cut with conductor's
punch, punched through all copies.

As regards the classification of orders inside the shop, these are
as follows:

General series, without letter prefix, covering new parts for standard
machines. Manila-colored tag.

"A" series, covering repair or other parts called for by shipping
orders and requiring work in the shop, bearing different serial numbers
from the general series and yellow tracing tag.

"B" series (tool-room series), covering new tools, jig, dies, and other
tools made in the shop. Record book kept by foreman of tool depart-
ment, bearing superintendent's " 0. K." after each order in book. Tool-
room foreman sends book daily to production department, to have proper
tags and orders written. Tool-room foreman keeps stub of tag on file
till work is completed, entering on stub list of material used, and sending
same, when work is completed, to production department. Salmon tag.

"C" series — patterns. Orders and tags issued by production depart-
ment on receipt of request for order from department foreman. Green
tag.

"D" series — plant additions, including fixtures. Blue tags issued
on authorization of works manager.

Standing non-productive orders. See separate sheet for detailed list
of these orders. Special tags headed Standing "Non-productive Order."

In many classes of business the furnishing of repair parts is
an important feature of the business, so that the order depart-*
ment may need to be divided into two sub-departments or two
distinct departments, such as the contract department and the
supply or repair department. The latter department will then
handle all correspondence in regard to supply orders, stamping
the original customer's order with a time-stamp indicating date
received, when and by whom approved for credit, supply order
number, when order written, by whom checked, and when and
by whom acknowledged.

The head of the supply department must be well enough
versed in the details of the business to edit the original orders,

THE ORDER DEPARTMENT 149

i.e., he must see that the items ordered by the customer are in-
serted in correct form for clear understanding by all in the factory
who are to handle the order. A single item asked for by the
customer may require the collection or manufacture of a numl
of component parts or items; in such cases a detailed list of
ponent items will be made out on the supply department
by the head of that department.

The supply order will have to be written in manifokjT similar
to a regular or contract order. As an instance of hAw many
copies will be required the following typical case will serve to
illustrate :

(1) One original copy. This goes to billing clerk as soon as
order is written.

(2) One yellow copy to be held in supply department until
goods are ready for shipment of either part or all. It is then
sent to shipping department, which sends it to billing clerk when
shipment of either part or all is made. In case of partial ship-
ment, billing department sends the yellow copy back to supply
department, where it goes through the same routine as before
until shipment is completed.

(3) One blue copy. This goes to stores record department.
Stores record department marks with small rubber stamp, "In
stock," all items regularly carried in stock, and "To be taken from

Stock Order No "all items which are regular stock, but of

which there is not a supply in the stock-room.

(4) One fawn copy for stock-room. Head storekeeper of
finished parts will get out all parts which are ready to ship,
checking same off his copy of the supply order, keeping the un-
filled copies on one file board, the partially filled ones on another,
and filing away the completely filled ones.

Head attendant in finished parts storeroom puts the items
for any one shipment into a bin by themselves. When he has
all items in the bin which he can get, he designates this by put-
ting a tag marked "Complete," or "Partial," into the bin, to-
gether with a tag bearing the order number. Some one regularly
delegated from the supply department calls several times a day
to see these bins, taking with him the supply department's file
board of all yellow copies of supply orders, and leaving with
shipping department the copies of orders for which goods are
ready for either entire or partial shipment. However, head
storeroom attendant will not depend on these personal calls

150 FACTORY ORGANIZATION AND ADMINISTRATION

from supply department as the only means of advising that
goods are ready for shipment, but will send a daily report to
supply department of all orders ready for complete and for partial
shipment.

Supply department decides whether or not partial shipment
is to be made at once, and attends to any correspondence with
customer which is necessitated by inability to ship entire order.

(5) One pink copy of order for a continuous numerical file
in supply department for reference.

(6) One white copy for continuous numerical file in contract
order department, which needs sometimes to know about cus-
tomers' supply orders. This can be included or omitted as the
conditions of the business may demand.

160. Special Orders. — For all items not regularly carried, the
stores record department writes a request on production depart-
ment to issue "Special Manufacturing Order," covering such
parts as have to be specially made.

SPECIAL MFG. ORDER

ISSUED BY STORES RECORD DEP'T. A/C SHIPPING ORDER No.

FOLLOWING ITEMS NOT REGULARLY IN STOCK ARE TO BE MANUFACTURED FOR ABOVE

SHIPPING ORDER IN ACCORDANCE WITH DETAILED SPECIFICATIONS

AND MATERIAL LIST AS BELOW:

ORDER No.

FIG. 47. — Form of "special manufacturing order" which selects from a
shipping or supply order only those items which have to be made in the shop
especially for this shipping order. It omits all items with which the shop
is not concerned and bears the same number as the complete shipping order.
Salmon colored bond paper, 81/2 inches wide, 7 inches high.

The stores record department will also issue requisitions on
the purchasing department for any items which have to be
purchased on the supply order. The castings record clerk of
the department will put in the requisition for any castings re-
quired, and the head of the stores record department will put in
the requisition for other purchased items.

Fig. 47 shows the general form for the "Special Manufac-
turing Order," which is a sub-order bearing same number as the

THE ORDER DEPARTMENT 151

supply order on whose account it is issued. One copy of each
"Special Manufacturing Order" is sent to stock-room.

A form is also used for notifying the production department
to hurry through stock orders covering any parts regularly stock
parts, for which there is a stock order in the shop, but no pieces
in the stock-room.

All the above details are attended to by the stores record
department.

161. Changes in Orders. — Changes in orders should be written
out on regular order forms, bearing same number as original order,
with the word "Change" printed diagonally across the form in
large, open-skeleton type of red color. They are then filed with
the original order by all departments receiving same.

The above outline covers the duties which should be assigned
to an order department or order clerk and a supply department.
The detailed issuing of the sub-orders which are necessitated by
the issuing of a general or main order for complete machines, and
the following up of such orders, are matters described in detail
in subsequent chapters.

REFERENCE
COOK: "Factory Management," Chapter VH.

CHAPTER XII
BILLS OF MATERIAL

162. Bill of Material Defined.— The bill of material for a
manufactured product, whether that product be a machine or a
piece of furniture, is a list of all the individual component pieces
which, when properly put together, constitute the finished article.

In an establishment which makes to order many different
machines or complex articles, the preparation of bills of material
is a far more extensive work than in factories making but few
different types of product and shipping from stock. In either
of the above-mentioned classes of product, however, the purchas-
ing of the necessary raw materials and manufactured purchased
parts, as well as all the manufacturing processes, are greatly
simplified and facilitated by the prompt preparation of accurate
and complete bills of material for the use of all departments which
need to know fully and exactly all the component parts of the
finished product.

163. Grouping of Parts. — The bill of material or list of parts,
in order to be most useful in various departments, needs some-
times to be arranged in various ways. For instance, for most
convenient use in the purchasing department the list is best
arranged according to classes of material, the steel castings being
listed in one group, the iron castings in another group, brass
castings in another, bar stock in another, etc. For the produc-
tion department, if it has its stock records arranged by mark
numbers of individual pieces, the list may more advantageously
be arranged according to mark numbers. For the various shop
departments, a bill arranged according to sequence of building
of the various assembly and sub-assembly groups will be most
satisfactory to work from. The last type of bill of material is
the arrangement most generally in use if but one arrangement is
to be followed.

The bill of material must be specific and complete in regard
to dimensions and materials if these points are not covered by a
drawing specified in the bill. It is necessary that the man in

152

BILLS OF MATERIAL

153

charge of making bills of material have a full knowledge of the
exact materials that are required in each case. He needs also
to know what materials are standard commercial articles, and
what sizes and dimensions, are most commonly in stock in the
general market. It is important that the head of the bill of
material department be a man whose opinion will be respected
by the drafting and designing departments, so that he may be
free to make requests for modifications of the items specified
by draftsmen and designers in order to secure conformity with
commercial practice or to the standards already in use in the par-
ticular establishment in which he is employed.

164. Special Parts. — It is very desirable that the stores
department furnish the engineering and drafting and bill of
material departments from time to time lists of unused special
castings, large shafts, large forgings, etc., which might possibly

L
D

->.

MATERIAL Lis

DRWG. NO.. N0..8HEE
T nunpR NO, SHFFT t

[

DCATIOf

rfO*.

APPARATUS

ncTA-n OATF

LINE

NAME OF PART

DRWQ.

3YMB.

FILE
NO.

DESCRIPTION

- ">^^

^ ^... - -, ~-

^-^ v

FIG. 48. — Simplest form lor material list. White bond paper, 81/2 inches
wide, 11 inches high, red and blue ruling.

be specified in bills of material as substitutes in place of new
purchases or new designs. In many an establishment there will
be found parts in stock which it is desirable to adapt for use for a
particular job, and which can be used without in any way inter-
fering with standardization. Card records covering any such
items will be found useful, and when the items are allotted they
are marked off the cards. In order to make this system of using
up special parts easily workable, it is advisable to mention on the
card the location of the item in the buildings or yards. A symbol
or number may also be painted on the piece and recorded on the
card. A sketch showing any special features may also be shown
on the card record, also any defects. It may be advisable to use a
separate card for each separate piece if the pieces are large and
special.

154 FACTORY ORGANIZATION AND ADMINISTRATION

Fig. 48 shows a typical form for bill of material. The first
column is merely a consecutive numbering of the lines and affords
a concise system of reference to any items in the bill.

165. Departmental Bills of Material. — Where a factory is
divided into departments whose work is quite independent of
each other, it may be found advisable to issue separate material
lists for each department, such departmental list covering only
such items as the department in question needs to be advised of.
For instance, there may be distinct and different bills prepared
respectively for the pattern department, the group assembly.

DRAWING NO.

PATTERN NO.

QUANTITY
REQUIRED

NAME OF PART

SHOP ORDER TAGS

NO. PIECES | DATE

3ATE WORK

DATE

WHEE~L GROUP

V-1321

B.N.F. 407

Front hubs, 4/1

V-1321

B.N.F. 408

Front flanges, 4/2

5-3/4' ' balls

Inner ball cups & ret . 4/3

V-1349

15-5/8" "

Outer ' ' " " " 4/4

1/2-24"

Oil caps, 4/5

V-1326

B.N.F. 409

Dust caps, 4/6

V-1317

B.N.F. 404

Rear hubs & brake drums 4/

V-1317

B.N.F. 405

' ' flanges, 4/8

3/16x3/16x

1-1/2

Keys, 4/9

-3/4" balls

Inner ball cups & ret .4/10

V-1340

15-5/8" "

Outer " 4/11

1/2-24 ' '

Oil caps, 4/12

V-1327

B.N.F. 410

Dust caps, 4/13

* •

Felt washersj^.^^ 4/15

FIG. 49. — Bill of material as used in automobile work, dividing the
machine into groups and designating each part by a symbol indicating the
group into which it belongs and the number of parts in each group. White
bond paper, 81/2 inches wide, 11 inches high.

department, and the erecting department, each of these separate
bills of material covering pnly such items as are needed for the
complete information of the department in question, in order that
the work in that department may be correctly done.

166. Assembly Groups. — Fig. 49 shows a bill of material in
which the parts are arranged by groups as used in automobile
manufacturing. In this list it will be noted that a further identi-
fication or mark number is mentioned immediately following the
name of the part. For instance, the front hubs, in addition to
being identified by the drawing number and the pattern number,
are known as 4/1, meaning Part No. 1 in Group 4 of this type of
car.

BILLS OF MATERIAL

155

A similar bill of material in which the parts are arranged by
assembly groups, as used in a dynamo and motor factory, is
shown in Fig. 50. In this bill an attempt was made to desig-
nate materials by different styles of type, the heavy block type
signifying cast iron, the heavy italics specifying cast brass, and
the light type signifying articles made of bar stock or purchased.
This plan is as a rule not satisfactory, however, as it may be
desirable in special instances to use steel castings instead of cast
iron, bronze or malleable iron in the place of brass, nickel steel

Account o/_
tn'a_

.Type.

H.P.K.W.

To be completed, •
Remarks:

R.p.m.

Size Armature

Net Weiaht

«™.«.« Weight

Size

Patten

No.

Weigh

Drawing
No.

Cost of

Time Time Coat of

Men Boja

SPIDER, SHAFT AND RINGS

Spider niid Sleeve

Flanged King

End Ring

Ventilating Ring

Steel Rinss(Discs)

Brass Strip

Steel for Shaft

Armature Keys

Commutator Keys

Pulley Keys

Hex. bd. Cap Screws

FIG. 50. — Bill of material as applied to dynamo and motor manufacture.
Components arranged by groups, tracing and cost record columns on same
sheet with list of parts. White bond paper, 81/2 inches wide, 11 inches
high.

in place of machinery steel, etc., and it is simpler to leave a col-
umn for material to be filled in in each particular bill of material.
167. Bill of Material as Tracing or Cost Record. — The last
two examples of bills of materials also contain columns for use
in tracing or following up purchases or manufacture of material
in the shop, and in the last example, columns for figuring costs
of the separate parts. As a general rule it is undesirable to make
the bill of material fill so many different purposes, as it crowds
too much into a small space and confuses departments who have
no interest in the following up or figuring of costs. It will gen-
erally be found desirable to have separate forms printed for use

156 FACTORY ORGANIZATION AND ADMINISTRATION

by the cost department, the tracing department, and any other
departments that might have to use the bill of material in con-
nection with their work, such forms being printed on sheets of
such size that they may be bound in with sheets of material, and
opposite the respective sheets listing the material items. (See
Figs. 92 and 152 as examples of such insert sheets.)

168. Changes in Bills of Material. — One of the most vexing
problems in manufacturing is that of changes or corrections in
bills of material. It is seldom that a machine or any apparatus
consisting of a considerable number of parts is completely and
correctly described in the first bill of material, because as a rule
it is necessary to get the apparatus started and some of the lead-
ing items ordered in the shop or outside before the entire bill
can be completely checked and crystallized. Changes in the
way of insertion of omissions do not usually cause much incon-
venience or loss provided they are not allowed to pass unnoticed
until the order is well under way. The type of alteration that
does cause loss almost invariably is a change in design inaugu-
rated after a bill of material has been sent out into the shop and
work started. This type of change should be most carefully
guarded against. It is easy for a designing department to get
into the bad habit of making changes after work has been started.
The persistence in this practice of making changes in this way
may be a matter of sufficient seriousness to ruin a manufacturing
establishment. Not only does this practice entail enormously
increased costs of manufacture, but it results in so many different
types of machines being sold that the supplying of repair parts
becomes a most complicated problem, necessitating the most
careful and complete records of each machine sold, and either the
carrying of an enormous variety of repair parts, or else making
the customer wait for a long time for a repair part when he has a
break-down, and making the part cost him so much on account
of its being made as a single piece that he becomes dissatisfied
with the delay and high price.

One way of recording alterations is to issue a separate sheet
of the bill of material for each set of alterations. A form for
use with this method is shown in Fig. 51.

In case this method is used, it is necessary to draw a line
through the changed item or inter-line for omitted items, and
make small notes referring to the alteration-sheet.

Another way of recording changes is by binding the bill of

BILLS OF MATERIAL

157

material in a cover of plain tough manila paper, and entering on
inside of cover a rubber stamp every time a change is made, such
rubber stamp bearing the date the change was made and any
other necessary data, and then entering a reference to the rubber
stamp impression covering the correction or omission in its
proper place on the original bill of material by inter-lining.

In case it is necessary to recall bills of material from various
departments for the purpose of entering changes, such recalling
must be done in a systematic manner with the full knowledge of
the departments from which the bills are recalled. A system of
receipts may be desirable for this purpose, and a department
should be permitted to finish any entries that may be in process

rr> rn

RREC.TIUN ORDER No. Drwg. NQ, Sheet No,
SERIAL LIST FILE No. App, ^Order No-

Locafioi
Written

! MA

hy Date

No. of
Pieces.

NAME OF PART.

File
No.

DESCRIPTION.

JOB.

Matl.
Reed,
or Deld.

Weight.

Iss.

btr.

___J-

1 1

=d±-Z -^~^~

This order to bear consecutive number (l,2,3,etc..) for Correction Orders, issued on any Shop Order. State definitely why it was
necessary to issue this Correction Order.

FIG. 51. — Correction sheet for bill of material. White bond paper, 10 inches
wide, 9 inches high, ruled in red and blue.

of being made at the time the bill is recalled before the bill is
taken away from that department.

169. Getting Work Started before Completion of Bill of
Material. — The preparation of a complete bill of material may be
a matter requiring several days, and perhaps several weeks. In
the latter case it may be desirable to get some of the work under
way before the bill of material can be completed as a whole. This
would be particularly likely in the case of purchased items, which
require prompt ordering so as to save every possible day of time.
For this reason it may be desirable to have the head of the bill of
material department initiate the ordering of such items by having
him make out a list of these items on a sheet which constitutes a
request for the immediate issuing of requisitions for same, proper
notations being made on the bill of material that such requests

158 FACTORY ORGANIZATION AND ADMINISTRATION

|
9

uj £

0 -~

o 5

1 1 I

£ If -

'El
1

Q
J

_©

WI ,,

LL
0

1
p.

t£

i tfl

W
U

li.

z 1

DC
U.

0 -

2
5 >,

o -°

u •£

DC o

o> _

ro 2

O/—S

w ^_

^ 3T

< *^

OQ
O

OL ^

s I

o o

« ^

0 "

_i OC u

*~^

^ z S

S b

i B

c^i

t w .=

o 5 IS

0 H-

Mil £

bo &*

S -

for requisitions were made.
This in order to prevent
the duplication of purchase
orders for these items. If
the head of the stores de-
partment is the person who
regularly orders all mater-
ials, then the procedure
takes the form of a request
on the head of the stores
department to make re-
quisitions on the purchas-
ing agent for the items in
question.

Fig. 52 shows a form
used in this manner in
order to expedite the order-
ing of necessary materials
before the completed bill
of material is issued.

The head of the stores
department should have a
system of annotating the
various items in the bill of
material so as to designate
what disposition he has
made of them, such as
ordering the necessary ma-
terial or withdrawing the
items from finished stock
on hand, etc. As before
stated, it is preferable to
provide separate sheets for
keeping these annotations
referring to stores and stock
records, production de-
partment records, tracing
records, etc., such sheets
being of dimensions easily
bound in with a copy of the
-bill of material.

CHAPTER XIII
THE DRAFTING DEPARTMENT

170. Functions of Drafting Department. — The drafting de-
partment usually includes the designing department in most
manufacturing establishments, excepting in a few large concerns
where the designing is done by a separate department which
furnishes sketches and the results of calculations to the drafting
department.

The work of the drafting department will usually be divided
into such work as designing, drawing, tracing, blue-printing,
indexing, and filing. The designing of tools or the making of
tool drawings in accordance with the sketches or instructions of
the head of the tool-making department may constitute another
subdivision of the drafting department.

171. Numbering Parts. — It is generally desirable to designate
all parts by "mark number" or "part number." This system
necessitates the keeping of a consecutive number record of parts,
in which is given a brief definition of the piece together with refer-
ence to the drawing number, and the pattern number if there is a
pattern. There should also be a consecutively numbered pattern
record in which is given also a definition of the piece, the drawing
number, and the mark or part number. In order to avoid dupli-
cation of drawings and of patterns, and also in order to avoid
giving different mark numbers to the same purchased finished
parts, such as bolts, screws, etc., there must be an alphabetically
arranged record of concrete names of parts in which may be found
the corresponding mark numbers and pattern numbers.

Most drawing rooms give no attention to indexing as above
suggested. The natural result of this neglect is that the same part
is drawn over and over again, and that separate patterns are made
for parts for which some existing pattern could have been used.

172. Standardization of Parts.— There is hardly a machine of
any kind in which there will not be found certain details which
recur again and again in similar forms on other machines. If a
draftsman follows the whim or inspiration of the moment he is

159

160 FACTORY ORGANIZATION AND ADMINISTRATION

PULLEYS.

WIDTH FACE STYLE FACE DIA. HUB BORE WEB ARMS STYLE

DRAW. NO.

BUSHING.

LENGTH BORE

THICK DIA.

DIA. LENGTH

FIGS. 53 and 54. — (Upper card): Record of pulley drawings, giving
style, pattern number, and dimensions; (Lower card): Similar record for
bushings. White cards 5 inches wide, 3 inches high.

PITCH GEAR. OUTSIDE DIA.

PITCH LINE
DIA.

NO
TEETH-

W.DTH HUB

•o»« ^H ZZS,

WEB

ARMS

PATT. NO. DRAW No. DATE

REMARKS:

FIG. 55. — Drafting department record for drawings of gears. White card,
5 inches wide, 3 inches high.

THE DRAFTING DEPARTMENT

161

likely to make a number of different designs of such details,
necessitating different patterns, different castings, and different
tools for machining, when by a little foresight and system a single
design of each detail, with but a single pattern, one variety of
casting, and one set of tools, would have answered for all purposes.
Among such parts might be mentioned gears, bushings, levers,
pulleys, bearing brackets, collars, bolts, nuts, and washers. If a
card index record is kept of the above-named parts, recording
briefly the dimensions adopted whenever such a part is designed,
and this index is referred to whenever it becomes necessary to
embody such parts in a design of any machine, considerable

BEARING BRACKET.

HIGH.*A.

^ J.T-

n <

I •

* i

Z^
«H

— o — j

D E

F 6 REMARKS.

PATT. N^

DRAW. N^

DATE

FIG. 56. — Drafting department record for drawings of bearing brackets.
White card, 5 inches wide, 3 inches high.

saving will result, due to the fact that the minimum variety of
such details is maintained.

The two forms herewith given are such as are used for this
purpose by a firm of leading printing-press builders, who take a
particular pride in the fact that although they build intricate
machines, these machines are composed of detail parts which
appear over and over again through their whole line of designs,
thus keeping down their expense for patterns, tools and store-
room space and records.

173. Recording Data for Standard Detail Parts.— Fig. 53 is a
record of pulley drawings which gives all the dimensions and

162 FACTORY ORGANIZATION AND ADMINISTRATION

details as to style. Other blank spaces show the file number
of the drawing and the pattern number. By reference to this
card, which is filed in an alphabetical index, it can be ascertained
at once whether the drawings on hand will fill the present need.

A similar file card for bushings is shown in Fig. 54. The
details for filing are the same as on the pattern card, and the
dimensions of the body, flange, and nose are given. These are
samples of but many varieties of index cards which can be used
in a convenient system of filing drawings.

Fig. 55 shows a form for recording data for gears, and Fig. 56
a form for recording bearing brackets.

Temporary drawings or sketches should never be used. It
will take but a short time longer to get out a tracing and blue-

COMPILED BY — -.. DATE
INSPECTED BV

DRAWING LIST No,__

SHEETS SHEET NO NOT COMPLETED

FIRST
MADE
FOR

NAME OF DRAWING

DRAWING OR LIST NO.

GROUP OR
PtftT NO.

NO. OF
PARTS

D»T[ '
AODCD

DATE
CHANGIO

•<^——^-^"

— - — '

^=^131

FIG. 57. — Form for drawing list covering all drawings pertaining to any
one machine or order, a briefer reference than the complete bill of material.
Pale green bond paper, 81/2 inches wide, 11 inches high. Thin paper.

print, and then there will be no risks run of losing the drawing
or of questioning its having been tampered with.

174. Drawing Lists. — While the bill of material for a complete
machine may give a list of all of the drawings, it is usually de-
sirable to prepare for any one machine a complete drawing list,
such list being confined only to the articles for which drawings
are made, and serving an entirely different purpose from the bill
of material, which lists minutely every item in the machine.

A form for drawing list is shown in Fig. 57.

175. Filing Tracings. — A fireproof storage vault needs to be
provided for the filing of tracings. The most convenient methods
of filing will be a matter for deciding in the especial manufactur-
ing establishment concerned. In some cases it might be ad-
vantageous to file tracings wholly by consecutive numbers,

THE DRAFTING DEPARTMENT 163

irrespective of dimensions. In other cases it will be desirable
to file by class or dimension of sheets, and in still further cases it
might possibly be desirable to have tracings for any one machine
filed together. The last-named method, however, will generally
conflict with the principle of using the same tracing and the same
part in a number of different machines, and the same purpose is
answered by the drawing list previously referred to. The most
common device for filing tracings is a shallow vertical drawer
with triangular metal corner pieces in the far inside corners, to
prevent the tracings from curling up, and a piece of bent wire
swinging in screw eyes inserted in the inside of the front of the
drawer to act as a light weight. Sometimes a sheet of galvan-
ized steel is used as a weight.

176. Stock of Blue-prints. — A stock of blue-prints is often
desirable in order that there need be no delay in furnishing a blue-
print when asked for. Such blue-print stock does not need to be
in any fire-proof location, and can be kept in drawers similar to
those described for tracings, in cabinets of a height such that the
top of the cabinet forms a handy place for laying out a blue-print
when consulting it.

177. Changes in Drawings or Patterns. — In changing drawings
and patterns it is best to use an entirely new number for the
changed drawing or pattern, and not to use any system of pre-
fixes or affixes. The latter method merely complicates matters.
When a drawing is changed a notation should be made referring
to the number of the new drawing, and on the new drawing a
notation should be made referring to the old one. In the case of
patterns, if the old pattern is to be altered in order to make
the new one, the pattern record must show such alteration. The
alteration should always be made, if possible, in such a manner
that the omission or addition of certain pieces will permit of the
making of the casting of the old style. The reason for these
policies in connection with changes is that it may be necessary
to replace pieces of the old style, and it is not desired to carry any
in stock, but. it may be desirable to make them on short notice in
accordance with the old style.

178. Blue-prints for Shop Use. — Blue-prints for shop use are
usually carried in stock in a blue-print issuing room adjacent
to the tool issuing room, and in many shops it is desirable that
such blue-prints be mounted. They may be mounted on tar-
board, and made washable and water-proof by giving them

164 FACTORY ORGANIZATION AND ADMINISTRATION

first a coat of white glue and then a coat of white Damar varnish.
Curling may be prevented by pasting a blank piece of paper on
the back of the mount. In place of tar-board galvanized steel
may be used. The necessary smoothing off of the burr
on the edge and the heavier weight of the steel make it dis-
advantageous in some respects, though it will outwear the tar-
board as a mount.

179. Titles of Drawings. — Titles of drawings should contain
sufficient information to tell all about the drawing without need
of referring to any index. The title should designate the name of
the complete machine or article which the drawing represents or
of which it is a part, and should state also the name of the indi-
vidual piece or pieces shown. It should designate the scale to
which the drawing is made, the date drawn, by whom drawn,
by whom traced, by whom checked.

BLANK MACHINE MFG. Co.. CHICAGO, ILL.

DRAWN BY TRACED BY SCALE DATE

FIG. 58. — Title printed on small piece of tracing cloth, 41/2 inches wide,

21/2 inches high.

A lot of time is wasted in many drawing rooms in making
titles and border lines by hand. If border lines are wanted, they
should be printed on all standard size tracing sheets. The title
plate should be printed in on the lower right-hand corner, in
order that it may be easily seen when the drawings are filed away
in drawers. If there is considerable occasion to use tracing
sheets of sizes other than standard, it may be found advantageous
to have title form printed on small pieces of tracing cloth or
tracing paper, and paste these on the lower right-hand corner
of the special sized sheet. Fig. 58 shows a title blank printed
on tracing cloth to serve this purpose.

180. Detail Drawings for Shop Use. — It has been found
advantageous in many establishments to prepare distinct draw-
ings for the shop, such drawings showing only the dimensions
which are absolutely necessary for the shop to know in order to
do the work that has to be done on the piece. Such shop draw-

THE DRAFTING DEPARTMENT

165

ings are most advantageously made to show but a single piece
on one tracing or blue-print, and should specify limits of accuracy,
gages to be used, etc. Some shops have found it to be a good
practice to send a blue-print from the production department
with each production tag, such blue-print and tag following the
work through the shop. In order to keep the print and tag
clean they may be put into an envelope of tough paper, such
envelope bearing on the outside merely the shop order number,
the mark number of the piece and the number of pieces. In
this way the tag and blue-print will not get nearly as oily and

Tap for %"Scr.

NAME OF PIECE

Back Gear Shifter Level [P. & C. Hd.l

QUANTITY 4 U>

1C. 1

SYMBOL Of MACHINES USED C

P 22, G 24, H 27

TR. B.S.3-21-10

CH. H.R.4-13.10

THE LODGE & SHIPLEY MACHINE TOOL CO

CINCINNATI, OHIO, U S.A.

UPERSEDES DBAWIN8

SUPERSEDES BY DWS

PIECE NO

117

10659

FIG. 59. — Shop blue-print gummed to inside cover of traveler. Approx-
imately 6X8 in.

dirty, nor are they as likely to become lost, as would be the case
without the use of the envelope.

Fig. 59 shows a shop detail blue-print as used by the Lodge
& Shipley Machine Tool Co., and pasted into each shop " traveler-
book" along a gummed edge on the inside of the cover. The
" traveler-book" contains a number of slips bound together in
proper consecutive order, each slip being a work order for a
specific operation, and serving when torn out and clock-stamped,
as a record of the workman's time on that operation. The size
of this blue-print is approximately 6 in. by 8 in., so that when

166 FACTORY ORGANIZATION AND ADMINISTRATION

the 8-in. length is folded in half it fits standard filing devices for
4-in. by 6-in. cards. The " follower-book " is 4 in. by 6 in.

181. Specifying Limits of Accuracy. — Each drafting room
should agree with the proper shop authorities on a standard

FERRACUTE MACHINE CO. PIECE NAME..CE_^T??i.^A'I?.:.i?9AL.?.:^....P.IECE SYMBOL AN I3ai3__.

CUSTOMER Fenwiok Freres

ATERIAL 1.0.

WEIGHT, ROUGH

WEIGHT, FINISHED

DESIGNER O.Bmith

rsMAN C.Tajlor

APPKOVED L.C.M.

12800-C

FIG. 60. — Shop blue print specifying limits of accuracy. Red cross-section
lines as well as black border and printed matter at bottom of sheet are printed
on the standard size tracing sheets.

table of ordinary clearances to be used in machine-tool work,
and all machinists should be furnished with a table specifying
these clearances. Standards should be agreed on for drive, press,
or shrink fits, running fits, and special fits peculiar to certain
products.

THE DRAFTING DEPARTMENT 167

In order that there may be no mistake as to clearances and
tolerances it is well to specify them not only on tables, but also
on shop blue-prints.

Fig. 60 shows a blue-print as used by Frederic A. Parkhurst
at the Ferracute Machine Co., showing proper fits.

182. Making and Issuing Blue-prints. — For printing purposes
the cylindrical arc light printing machine is the most dependable
process. It is well to provide sunlight printing facilities, how-
ever, for emergency use. An outdoor platform or balcony on
to which trucks containing the printing frames can be run, and
set so that the frame may be tilted in any direction, will be found
much more convenient than the usual method of running tracks
out of a window to hold the truck supporting the frame.

Facilities should be provided in every first-class drafting room
for photographic development and printing.

It is desirable to post all requisitions for blue-prints received
from various departments and individuals on to a permanent
record, in which a separate card is used for each tracing. On
this card will be recorded the date on which any print was issued,
and to whom it was issued. This record serves not only as a
check on what persons received blue-prints, but is also a guide
as to how large a stock of prints of each tracing should be carried
on hand ready for issuance.

It is important that the recording and clerical part of a draft-
ing department be kept in excellent order.

183. Checking Drawings. — The checking work should not
be delegated to the chief draftsmen, but should be the duty of
one man, whose first duty it must be. He should check not only
from the standpoint of dimensions, but from a standpoint of
ease of processing. The policy of standardization should always
be borne in mind. The drafting department must be supplied
with as many lists as may be necessary of the shop's standards
as to reamers, taps, etc. Designing should always be done in
such a way as to consider cheapest and most efficient methods
of machining, assembling, and processing in general.

There should be a system of collecting and recording all criti-
cisms of drawings made in machining, assembling, or erecting
departments. Where there is any discrepancy apparent in the
drawing the best rule is that work should be stopped and the
drawing taken at once to the drawing room for correction or
interpretation.

168 FACTORY ORGANIZATION AND ADMINISTRATION

184. Time-cards in Drafting Department. — Time-cards should
be turned in by draftsmen to show the relative cost of drawings.
A record of the results of these time-cards should be kept not
only in the cost department, but also in the drafting department,
so that the head of the drafting department may have some knowl-
edge of costs of drafting work based on actual records of perform-
ance. Not only the order number should be recorded on the time-
tickets, but also the nature of the drawing, its number, and
whether the work done was designing, sketching, tracing, etc.
Standing non-productive orders should be issued, to be closed
monthly, to determine the cost per month of filing, blue-printing,
and other maintenance expense of the drafting department.

185. Chief Draftsman. — The head of the drafting depart-
ment needs to be relieved of as much routine work as possible,
outside of that connected with the time at which drawings for
certain orders should be completed. In this respect he should be
as thoroughly posted as the head of the shop production depart-
ment. He should be provided with a list of all orders for which
drawings are required, and also a complete list of all draw-
ings which have to be made, together with the date at which they
are to be ready. He should hold department meetings and con-
sultations at stated times, in order to have the output of his
department correspond as nearly as possible to the requirements
of the business.

The head of the drafting department should be a man with
knowledge of machinery used in his line of work, and of the best
methods of foundry and machine-shop practice in general. He
should be constantly going over current product with a view of
having ready plans for redesigning, to be put into effect the mo-
ment the policy of the company as to adhering to standards once
established will permit of putting the improvement into effect.

REFERENCES

PERRIGO: "Modern Machine-shop Construction, Equipment and Man-
agement," Chapter XIX.

CARPENTER: "Profit Making Management," Chapter IV.
PARKHURST: "Applied Methods of Scientific Management," pp. 27-36.

CHAPTER XIV
THE PATTERN DEPARTMENT

186. Orders to Make Patterns. — Orders to make new patterns
usually come direct from the drafting department or the bill of
material department to the pattern-making department, in case
the factory has its own pattern-making department. If patterns
are not made in the factory, but are bought outside from a jobbing
pattern shop, then the shop order will be replaced by a requisition
on the purchasing department or a request on the stores depart-
ment to make a requisition on the purchasing department.

Fig. 61 is a form for an order to make a pattern in the shop.

PATTERN DEP'T. PATTERN NO,

/ NEW WORK.
Job Order for jQr Special Work>

Report all materials used on back hereof. On completion of

•work the Foreman will date, sign and return this Order to General
Office. Foreman will see that all Time Slips are marked for the above
Pattern No. only. If Pattern No. is not given then mark Time Slip
for Order No. below.

Drawing or Sketch Nc

-ORDER NO..

FIG. 61. — Form for pattern order. Manila card, 5 inches wide, 3 inches

high.

The pattern-making department is furnished one copy of this
order. Another copy is sent to the cost department. The
amount of material used is posted by the pattern-maker or the
foreman of the pattern-making department on the back of this
order card. Fig. 62 shows the back of the card as used for
reporting materials consumed in making the pattern. When the
pattern is completed, it is sent with the order card to the pattern
storage department, where the pattern storage clerk records it
in his record of patterns, and assigns it a place in the storage

169

170 FACTORY ORGANIZATION AND ADMINISTRATION

vault or building. The pattern storage clerk fills out a record
similar to Fig. 63, which describes the pattern, shows where it
is located in the pattern storage racks, and he then sends the order

MATERIALS USED.

State No. of feet of lumber of each grade for pattern, its loose
pieces, core boxes, etc., draw plates, letters, figures, etc., etc.

Lum

Patte
Draw

ber-ist grade, fret, h.m.

2nd « « «

Common it ft

of Plate

Plates; No. user! p?t \Tr>

FIG. 62. — Reverse of form shown in Fig. 37. Pattern-maker's report of
material used on an order. Manila card, 5 inches wide, 3 inches high.

on to the cost department, showing that he has received the com-
pleted new pattern.

187. Time-keeping System in Pattern Shop. — It is sometimes
desirable to have the time-keeping system in the pattern depart-
ment different from the general time-keeping system, as the

PATTERN NO.

DRAWING NO.

WHEN MADE

FIG. 63. — Pattern storage record. White card, 5 inches wide, 3 inches high.

department is apt to be a small one, and in an isolated location
some distance away from larger shop departments where a differ-
ent time-keeping system may.be preferable. There will always
be more or less repair work on patterns and flasks going on in the

THE PATTERN DEPARTMENT

171

pattern-making department, which fact will be a reason for the
over-head or operating expense rate of the pattern shop being
quite heavy. Fig. 64 shows a time-card to be filled out by each
pattern-maker, which provides spaces for filling in the pattern-
maker's non-productive time. The pattern-making foreman will

NAME

ri nr.K No.

TOTAL HOUR

FLASK A. PATTERN

No. OF
HOURS

DESCRIPTION OF WORK.

Making New Wooden Flasks.

Repairing or Replacing Old Flasks.

Handling Flask Lumber and Supplfes*..

H Pattern «< u

Pattern No.

« it

« «

n it

New Patterns for "Pipe fipeciate.

u it it a it

Repairing or Replacing Old Patterns

Carrying Patterns.

Cleaning Shop and General Labor.

General Helping at Flasks.

« « Patterns.

DROP IN

ro i

IME BOX EVERY DAY AT QUITTING TIME.

FIG. 64. — Time-card for pattern-maker. Manila card, 3 1/2 inches wide,

6 inches high.

have to spend some time in looking over these time-cards, to see
that the time is correctly distributed.

188. Recalling or Altering Patterns. — Where an establishment
gets its castings from a number of different foundries, as is very
often the case in a concern using many steel castings, the matter
of recalling or altering patterns is one which will involve con-
sideration of a number of questions affecting production. These

172 FACTORY ORGANIZATION AND ADMINISTRATION

considerations are fully set forth in the form shown in Fig. 65,
which is a request to recall or alter a pattern. This request
emanates from the drafting department, which states the nature
of the change or the reason for the recall, and also states whether
the change will affect interchangeability and how. The form next
goes to the purchasing department, which department, in the
establishment in which this particular form was used, had

REQUEST TO RECALL OR ALTER

PATTERN

Date

T.o Purchasing Dept.

Pattern NO. "Mark Nn_

Ah«vo Pattern is to be

Will change affect interchangeability
of castings as previously .made? If so how?

FOLLOWING TO BE FILLED BY PURCHASING DEPT.:
No. castings fiom present pattern now i> stock

For Drafting Department

No. finished parts from «« «« •« «» ««

No. castines due from present pattern

No. castings required for production orders

No. finished parts shipped in preceding 6 months

SUPERINTENDENT TO FILL FOLLOWING:

Shall current foundry orders be filled
before recalling pattern

For Purchasing Department

Shall any additional castings from present
pattern be ordered before recalling pattern-?

Pattern Recalled: Date

Superintendent

When completely disposed of Purchasing Department
will return this form to Drafting Department

Purchasing Agent

FIG. 65. — Authorization for pattern changes or recall,
inches wide, 11 inches high.

White paper, 9

charge of the pattern storage department. The purchasing de-
partment looks up the stores records, and fills out the blanks,
specifying the number of castings from present pattern now in
stock, the number of finished parts from present pattern now in
stock, the number of castings required for production orders, and
the number of finished parts shipped in preceding six months.
When the purchasing department has filled in this information,

THE PATTERN DEPARTMENT

173

the form is sent to the superintendent, who answers the questions,
"Shall current foundry orders be filled before recalling pattern?'*

RECEIVING DEPT. TO ATTACH ONE OFTHESE
TAGS TO EVERY PATTERN RECEIVED.

DATE PATTERN RECD.

FROM _

KIND OF PAT. NO. CORE BOXES

DATE OF NOTIFICATION _. „

BY _

TO BE FILLED BY DRAFTSMAN:
DATE AND HOUR CHECKED _,

IS PATTERN TO BE REPAIR!D?- —

CHECKED BY__.

TO BE FILLED BY PURCHASING DEPT.
SHIP TO

DATE

TO BE FILLED BYSHIPPING DEPT.
DATE AND HOUR RECVD __

DATE SHIPPED

DETACH AND HANDTO RECVG. DEPT. WHEN
PATTERN IS SHIPPED.

TO BE FILLED BY PATTERN STORE MAN!

DATE RECVD. _._

STORED IN BIN NO.

BY.

DETACH AND HANDTO PURCHASING DEPT.
WHEN PATTERN IS STORED.

FIG. 66. — Pattern tag attached by receiving department, giving record of
disposition and finally filed in purchasing department to show location of
pattern. Manila tag stock with reinforced eyelet, 3 1/8 inches wide, 6 1/2
inches high.

and " Shall any additional castings from present pattern be or-
dered before recalling pattern?"

This method puts the responsibility of tying up production

174 FACTORY ORGANIZATION AND ADMINISTRATION

on the shop superintendent, and relieves the drafting department
of any authority to hold up delivery of castings by reason of
changes in patterns.

189. Checking Patterns and Recording Their Travel and Loca-
tion.— Where patterns are continually coming in and going out
from and to various foundries, a pattern tag, similar to Fig. 66,
will be found very useful. This pattern tag is attached by the re-
ceiving department to every pattern received. The receiving
department fills in the first section of the tag, which designates
the pattern number, the date the pattern was received, from
whom it was received, the kind of pattern, the number of core-
boxes, and the date on which the receiving department notified the
drafting and purchasing departments of the receipt of the pattern.

As soon as the drafting department receives notice from the
receiving department that a pattern is in (such notice being on a
separate notification slip shown in Fig. 134), a representative of
the drafting department is sent to check the pattern. The drafts-
man fills in the result of his checking on the tag in the second
space, specifying whether the pattern needs to be changed or
repaired. The purchasing department next sends a representa-
tive to the pattern, or better, a representative from the purchasing
department makes daily visits to the receiving department and
fills in the third space on the tag designating where the pattern is
to be shipped. If it is to go to pattern storage, he so designates
in the space. The next space is for the shipping department to
fill in in case the pattern is to be shipped out. The shipping
department then sends the tag to the purchasing department.
If the pattern, instead of having to be shipped out, is to go to
pattern storage, the shipping department space is left blank,
and the pattern storage man fills in the last space, designating
when he received the pattern and where he has stored it.

The tags as returned to the purchasing department are there
filed, according to numbers, in two boxes, one box representing
patterns out at various foundries, the other box representing
patterns in the storage department at the shop. This enables
the purchasing department to state the location of any pattern
in current use at a moment's notice.

REFERENCE

PERRIGO: "Modern Machine-shop Construction, Equipment and Man-
agement," Chapter XXX.

CHAPTER XV
THE PURCHASING DEPARTMENT

190. Functions of Purchasing Department.— The functions of
the purchasing department in a manufacturing establishment may
be stated as follows:

First. — To secure the most satisfactory material, such material
including raw and finished material required in the manu-
facturing processes, equipment, and general supplies.

Second. — To secure the most desirable delivery of the material,
keeping complete and accurate record of all unfilled purchase
orders. Deliveries and mistakes must be kept account of.

Third. — To obtain the best terms of payment and the lowest
prices.

Fourth. — To record and classify all materials, equipment, and
supplies used by the establishment, list for easy reference the
names of all firms supplying these goods, and all purchases made.
The order in which the above functions have been mentioned is
usually the order of their relative importance.

191. Qualifications of Purchasing Agent— The successful
accomplishment of the first function demands that the pur-
chasing agent shall be a man who has a working knowledge of
the particular industry for which he is to buy material. If
he has in addition a knowledge of the fundamental principles of
the resistance of materials, of metallurgy, and of machinery, so
much the better, for he will be able to make practical application
of such knowledge.

That the purchasing agent be the possessor of practical manu-
facturing knowledge is just as essential in an establishment which
refers its tests of materials to a testing laboratory, or to its engi-
neering department or superintendent, as in a smaller establish-
ment which does not conduct such tests. If care is exercised
to obtain a man of the qualifications indicated to fill the position
of purchasing agent, there will be far less liability to the error,
frequently made, of buying material good enough in itself, but
not exactly adapted to the particular purpose for which it is
desired.

175

176 FACTORY ORGANIZATION AND ADMINISTRATION

It is assumed at the outset, that persons other than the pur-
chasing agent will have specified the exact physical or chemical
properties of the articles that are the most important constitu-
ents of the manufacturing product of the establishment. But
there is no manufacturing process so simple that it does not
require the purchase of a great variety of minor articles, the
examination of each one of which by the engineering department
would be a useless burden. And it is here, as well as in the pur-
chase of general supplies, that the purchasing agent's training and
experience come into active play.

To salesmen, the ignorant, affable young clerk who has been
promoted to the position of purchasing agent is a familiar type.
He is frequently the cause of a salesman's prolonging his stay in a
city several days, until finally he sees the man with whom he can
have an intelligent conversation. It is quite evident that, where
this is the case, the young man is a hindrance from an economic
standpoint, since the additional cost of sales departments on
account of prolonged stays is sufficient to increase materially the
unnecessary expense connected with the placing of an article on
the market.

The securing of the most desirable delivery involves a knowledge
of business methods and forms, in which, unfortunately, purely
technical or shop men have generally had but little training • and
this fact is the excuse for the common practice of appointing as
purchasing agents, clerks who have had but little technical or
shop knowledge.

A thoroughly systematic conduct of the purchasing office, such
as is absolutely essential to insure the proper attention to this
very important matter of delivery, is much facilitated by the use
of certain forms. Some examples will be cited of such forms,
which must, however, be modified to suit the requirements of any
particular case.

192. Requisitions on Purchasing Department. — It is very
customary for other departments to lay the blame for delays in
manufacture upon delays in receipt of material. Hence it is
important that a written record be kept showing the originating
dates of all calls for materials. In many establishments the first
step in connection with the making out of a bill of material is the
issuing of the requisitions for such material as it is known must be
purchased.

The purchasing department should be supplied by the general

THE PURCHASING DEPARTMENT

177

manager with a list of all departments authorized to make requi-
sitions direct on the purchasing agent, together with a statement
as to the nature of goods for which such department may make
requisition. For instance, it is usually desirable to confine the

ORDER ON STORE-ROOM

THIS REQUISITION WILL NOT BE ACCEPTED IF
CHARGED TO MORE THAN ONE ORDER OR IFORDER NO.
IS OMITTED, OR IF NOT SIGNED BY FOREMAN.

ORDER NO.

QUAN-
TITY

MARK NO.
OFT SIZE

NAME OF MATERIAL

WEIGHT

FOREMAN'S SIGNATURE

DATE

FIG. 67. — Order on storeroom used to authorize withdrawal of supplies
and components not issued with regular production tags. Yell6w bond
paper, 3 inches wide, 5 inches high.

making of requisitions for equipment to a certain department,
making of requisitions for materials to certain other departments,
the making of requisitions for general supplies to another depart-
ment, etc. Hence separate series of requisitions are useful, desig-

STORE-ROOM CREDIT

ORDER NUMBER

MADE OUT BY

DATE

ACCEPTED

FIG. 68. — Storeroom credit. Turned in to storeroom with unused sup-
plies, bulk material, bar or sheet stock of which only a portion has been used
on a given order. Pink bond paper, three inches wide, 5 inches high.

nated by different prefix letters and printed on different colors of
paper. It is not desirable to permit shop foremen to make requi-
sitions direct on the purchasing agent. They should make
requisitions on the storeroom for such materials or supplies as

178 FACTORY ORGANIZATION AND ADMINISTRATION

they need, such requisitions being usually called " Order on Store-
room," and bearing the order number of either productive or
non-productive series to which the items are to be charged.
Usually small tools are reported on a separate form or " Order
on Tool-room," to cover withdrawals of new tools, such as files,
drills, etc. Fig. 67 shows a form for " Order on Storeroom,"
and Fig. 68 a form for credit-slip to be used in returning excess
material, such as bar stock of steel or brass after having cut off
a piece. Where a production department exists, which sees that
the necessary material is provided for all production orders

ORIGINAL.

SPECIAL REQUISITION R...N..50355

TO pupc-«»«inr. nrp-r OATC ._ .. PURCHASING nnnrn Mr,

ORDER THE FOLLOWING MATCRIAl FROM

QUANTITY

DESCRIPTION

«PP«OVI

FIG. 69. — Form for requisition on purchasing agents. White bond paper,
8 inches wide, 5 5/8 inches high.

and delivered to the shop when the order is ready to have work
begin on it, the orders on stores will have a tendency to narrow
themselves down to factory supplies and tools. They may also
serve as requests for delayed material. When used for this pur-
pose they must be distinguished in some way from the other store-
room orders so as to avoid posting them by mistake as store-
room withdrawals.

Fig. 69 shows a form for requisition on purchasing agent.
This is usually best written in triplicate. In departments that
have to write a good many requisitions, the autographic register

THE PURCHASING DEPARTMENT 179

is frequently found useful in writing, viz., a machine in which
the paper is fed in rolls and the carbon is fed crosswise as it wears
out. The original is sent to the purchasing department, as is
also the duplicate, the triplicate being kept on file. When the
purchasing department has filled in the purchasing order number,
the duplicate is returned to the department in which the requisi-
tion originated.

In making requisitions and purchase orders for castings it will
be found most satisfactory to issue a separate requisition and
separate purchase order for each separate pattern number. At
first sight this would seem like a great many useless orders, but
experience has demonstrated that partial deliveries are far more
easily checked off on an order referring to castings from but a

•

OUTWARD ORDE

.R No

GENT

IN CAF
VIA.

PLEASE SHIPTO
IE OF THE FOLLOWING MATER

ALS, ALL DELIVERED
3F

(voyq QUOTATION <

F.O.B.

CAR!? . PRICE $

NOTE

ACKNOWLEDGE, GIVING PROBALE DATE OF SHIPMENT. \ r\\lf ORDTR NUMBER

NO ALLOWANCE FOR BOXING, PACKING OR CARTAGE. ^ ON ALL CORRESPONDENCE
WE DEDUCT FREIGHT ON DEFECTIVE MATERIAL. / AND INVOICES.

FIG. 70. — Form for purchase order. White bond paper, 81/2 inches wide,

11 inches high.

single pattern than if a given order carries partial deliveries on a
variety of patterns. It also enables one to remove at once all
orders for castings from a given pattern as soon as the deliveries
on that pattern are completed.

193. Purchasing Department Order Form. — As to the form
of the purchase order itself, there are still a good many houses
using the old-style bound book of orders with stubs, for the reason
that then there is one place where there is a bound set of all orders.
This method necessitates the writing of an index book. The
more general method is to typewrite all copies, there being usually
at least three, filing one set of carbon copies alphabetically, and
the other serially by numbers. A further reference file is a large
card index arranged alphabetically bp materials, and so ruled
as to allow the entering of all purchase orders for a given kind

180 FACTORY ORGANIZATION AND ADMINISTRATION

and size of material, and with spaces permitting of partial de-
liveries. Such a large card record serves as an entry record of
all invoices, and also for all prices paid for a given article, as well
as a guide to the time that was taken to make delivery after orders
were placed.

Fig. 70 is a form for purchase order. On the bottom of the
sheet are printed the terms on which the order is placed. From
a legal standpoint it is usually best to place these terms between
the name and address at the head of the order and the body of the
order itself, thus making the terms form an integral part of the
communication.

An additional carbon copy of the purchase order is usually
sent to the receiving department. Some firms prefer to send
a notice to the receiving department which does not specify the
quantity called for, so as to insure the actual counting of goods
delivered on the part of the receiving department.

194. Following up Deliveries.— The Shannon type of prong file
or a loose leaf binder is usually used for filing the copies of pur-
chase orders. If a firm has a great many purchase orders, extra
long prongs may be used on the files, and a number of different
sets of boards may be used, each file-board containing only a part
of the entire series. As soon as a purchase order has been com-
pleted, it is taken off the file-boards containing uncompleted
orders, and transferred to the file-boards of filled orders. Some
firms attach one of the copies of the completed purchase order,
together with the requisition, to the voucher. This system
involves some complications when invoices are approved which
cover only partial deliveries on a given purchase order. In such
cases extra copies may have to be typewritten of the purchase
order and the requisition, for the purpose of attaching to the
voucher, the originals remaining on file until the last delivery
on the order has been made.

Where a factory has a number of departments to which pur-
chased articles have to be delivered, the copy of the purchase
order which is sent to the receiving department should bear a
notation stating to which department the goods are to be deliv-
ered, also the requisition number which it fills.

A simple method of securing promises of delivery is to enclose
a printed post-card acknowledgment of order, with blank for
promise of delivery. Fig. 71 shows a form of such post-card
promise. To keep track of promises it is very convenient to have

THE PURCHASING DEPARTMENT

181

a set of thirty-one pigeon-holes, each pigeon-hole representing a
day of the month, and each hole containing the postal cards or
other memoranda of all shipments which should arrive on that
day. This file affords a systematic method of stirring up delin-
quent shippers, the additional promises being noted on the mem-
oranda as they are transferred from one pigeon-hole to another.
Where an establishment is located in a large city, and many
orders are local, it is best to separate the city orders from the
others, so that they can be followed up by telephone instead of
by mail. For this purpose it may be well to have a separate
series of purchase orders for local use, distinguishing them by
some convenient prefix letter.

GENTLEMEN:

WE CALL YOUR ATTENTION TO OUR ORDER No.

CALLING FOR-

PLEASE ADVISE WHEN SHIPMENT WILL BE MADE, ON THIS
CARD, RETURNING SAMETO US.

YOURS VERY TRULY,

FIG. 71. — Return post-card for promise date of shipment of purchase order,
51/2 inches wide, 31/4 inches high.

195. Securing Favorable Terms. — As to the third function
of the purchasing department which was mentioned, namely,
that of securing good terms and low prices, much depends on
the shrewdness 'and tact of the purchasing agent. Courteous
attention to salesmen is always desirable, and can be accorded
without loss of time, if nothing but strictly business conversation
is indulged in.

The mere request for a little more liberal cash discount than
is usually given will frequently result in its being allowed, and the
same is true of securing deferred payments, where they are de-
sired. The cash-discount system, if applied to all purchases,
however small, will result in a considerable annual saving. It is
well worth remembering that cash discounts are obtainable on
small amounts as well as large.

182 FACTORY ORGANIZATION AND ADMINISTRATION

196. Recording and Classifying Material, Equipment, and
Supplies^ — The fourth function, that of recording and classifying
all materials, equipment, and supplies used by the company, and
knowing who the suppliers are, and what are their prices, demands
the keeping up of several additional indexes and files. A card
index of quotations and prices, arranged alphabetically by
names of materials, with sub-cards for various sizes, will be found
desirable. Sometimes pocket editions, abridged, of this price-
list, made in alphabetical pocketbook form, will be desirable,
so that they may be carried about in the pocket, out of the office.

The large card record of invoices posted on material cards,
as already referred to, serves as a record of prices actually charged
for goods actually purchased, as a distinct record from the quo-

STORFS RrrOBn.

ARTICLE

SIZE

MATERIAL

DRAW. NO.

UNIT

MAXIMUM

MINIMUM

FLOOR

ROOM

RACK

CASE

SHELF

BIN

DATES VERIFIED BY INVENTORY

ORD

ERED

RECEIVED

DELIVERED

IN STOCK

ORDERED

NUMBER

ORDERED

INVOICE

RECEIVED

COST

ISSUED

ORDER

NUMBER

QUANTITY
ISSUED

DATE

QUANT
ON H

"ITY
^ND

VALUE

»^^_

_^— -

FIG. 72. — Combined purchase order record. Invoice record, and stores
record, serving also as material price catalogue, for use in small establish-
ments. White card, 6 inches wide, 4 inches high, red and blue ruling.

tation and price index just described. In a small establishment
this invoice record may also serve as a stores record. A form
for such combined record is shown in Fig. 72.

A catalogue cabinet will have to be provided with card indexes
by class of material, and by name of supplier. With a double
index of this sort it is immaterial in what order the catalogues
are arranged, an arrangement by size of catalogue being usually
the most satisfactory.

197. Returned Goods. — Wrong or unsatisfactory goods must
be promptly returned. For this purpose a notice should be sent
to the shipping department, and a copy sent to the billing de-
partment. Fig. 73 shows a convenient form for this purpose.

Where a considerable number of contracts are made for mate-

THE PURCHASING DEPARTMENT 183

rials and supplies, a separate contract file or safe will be found
desirable.

198. Freight, Express and Drayage.— Separate accounts are
usually kept by the purchasing department of such matters as
drayage, freight, express, insurance, and other special matters,
as the nature of the business may require. In the matter of dray-
age, freight, and express, it is very important that close scrutiny
be kept by the purchasing department, so as to avoid needlessly
large expenses in these directions. Requisitions must be made in
sufficient time to avoid express shipments. Also the pur-

GOODS RETURNED

SHIP TO-

VIA-

FOLLOWING GOODS FOR CREDIT

DATE CREDIT MEMO AMOUNT CREDIT MEMO..

WHY RETURNED P. D. No

DATE : PER — ,

FIG. 73. — Notice by purchasing department to accounting department of
goods returned for credit, 6 inches wide, 4 inches high. Thin white paper.

chasing department may find it desirable to lump orders with a
jobbing supply house occasionally, to reduce cost of freight and
drayage that would be entailed by placing a lot of small orders
with various manufacturers, thus getting in one package, and
with one charge for freight and hauling, a lot of items that might
make twenty or more packages if bought direct from the various
manufacturers, necessitating the paying of freight and haulage
on each of the twenty packages. Moreover, a jobbing-house is
often apt to make quicker delivery on small orders than the
manufacturer, who will fill his important orders first and let the
minor orders wait.

184 FACTORY ORGANIZATION AND ADMINISTRATION

199. Checking Invoices. — It is the duty of the purchasing de-
partment to check invoices as to correctness of quantity and price.
Invoices should not be sent to the receiving department to check,
but should be kept in the purchasing department. A record
book should be kept of all invoices received, showing date received,
and when and to whom they were sent.

In some establishments it is very desirable that the purchas-
ing department make a daily estimate of the value of all goods
ordered during that day, or rather during the previous day, with
estimated dates at which payments will become due.

REFERENCES

GOING: "Principles of Industrial Engineering," Chapter IX.
ENNIS: "Works Management," Chapter V.
BRISCO: "Economics of Business," Chapter X,
COOK: "Factory Management," Chapter III.
RINDSFOOS: "Purchasing."
TWYFORD: "Purchasing."

CHAPTER XVI
STORES AND STOCK DEPARTMENT

200. Classification of Materials. — After the bill of material
has been prepared, and the necessary drawings and patterns
have been provided for, the next steps in the manufacturing
process are those dealing with the getting in of the materials of
construction and the making of the finished parts in the shop.

Raw materials purchased outside, and which have to have
work done on them in the shop before they become finished parts,
are usually designated as "Stores," and the records dealing with
this class of material are called " Stores Records."

Parts which have all the work done on them necessary to
make them ready for assembling into machines or into assembly
groups of machines are usually designated by the name "Finished
Parts," and the records dealing with this class of parts are
frequently called "Finished Parts Records." The last-named
parts are sometimes designated by the word "Stock," and the
records called "Stock Records." The term "Stock" is most
generally used to designate finished product ready for shipment.
Perhaps the most definite way of designating all materials is as
follows :

(a) "Stores," consisting of raw material which must go
through or enter into some manufacturing process in the shop.
In this class would come pig iron, coal, castings, bar steel,
paint, etc.

(b) "Purchased Finished Parts," consisting of all parts ready
to use in assembling or as repair parts, which are purchased out-
side the shop in their finished state. In this class would come
standard bolts, screws, etc., or radiators, tires, etc., in an auto-
mobile factory.

(d) "Finished Product," . consisting of the stock of com-
pletely assembled machines or other manufactured article, and
sometimes of a stock of assembled groups in excess of such groups

185

186 FACTORY ORGANIZATION AND ADMINISTRATION

as are required for manufacturing and assembling machines,
such as extra armatures, etc.

(e) " Supplies," including all materials not entering directly
into manufactured product, but necessary in the conduct of the
business.

It is the custom in some establishments to designate the
articles in classes (b), (c), and (d) above as " Stock." It will be
found, however, that a differentiation of departmental records in
accordance with the classification given above will generally be
advantageous even though the accounting department's double-
entry books may carry only a single "Materials" account.

201. Perpetual Inventory of Castings. — Fig. 74 shows a form
for keeping record of castings. At the left-hand upper portion
of the record are spaces for the name of the part for which the
casting is used, and the name of the machine of which it is a part.
At the right are spaces for designating the pattern number, the
kind of material, the mark number, the drawing number, and
the average weight of the castings; also the minimum stock,
the purchasing quantity, the maximum stock in excess of orders,
the bin number in which the castings are located in the castings
warehouse, and the time usually required to get castings in from
the foundry.

There are five sets of columns in the accounting part of the
record. The first set deals with the number of castings ordered
through the purchasing department. The first column in this set
is headed "Requisition Number," and in it is entered the number
of the requisition which the castings clerk makes on the pur-
chasing department when he finds it necessary to order castings.
The second column is for the date of the requisition, the fourth
column for the quantity called for by the requisition, and the
third column for the purchase order number. This third column
is filled out when the castings clerk receives back from the
purchasing department an extra carbon of his requisition with the
purchase order number on it. So long as this third column is
vacant it shows that the purchasing department has not placed
the order for the castings. This may be due to negotiations
with foundries or to new pattern or change in pattern.

The second set of columns is a record of castings received.
Postings are made in this set of columns from the receiving de-
partment's reports of castings received. The third set of columns
is a record of castings reserved for production orders which make

STORES AND STOCK DEPARTMENT

187

a draft on the stock of castings.
Reservation entries are made in
these columns from the stores
department copy of each pro-
duction order. Whenever pro-
duction orders are finished, the
tags which accompanied the fin-
ished goods through the inspec-
tion department are sent to the
stores office. The clerks in the
stores department use these tags
bearing the inspector's stamp
as their authority for canceling
the numbers referring to live
production orders. In this way
only those numbers which do
not have lines drawn through
them represent production or-
ders which are still in process of
manufacture. The fourth set
of columns is a record of cast-
ings used, and is posted from the
castings warehouse-man's re-
ceipt forms for castings drawn
from his department. The fifth
set of columns is a record of
the actual balance on hand in the
warehouse, together with the
balance after deducting castings
in reserve for use on production
orders already issued, but for
which the castings have not yet
been taken from the castings
warehouse. The balance by ac-
tual count can conveniently be
reported for all castings of
which the stock on hand does
not exceed 10 or 15, every time
a withdrawal is made, such
balance by actual count be-
ing noted on castings ware-

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188 FACTORY ORGANIZATION AND ADMINISTRATION

house-man's receipts for castings issued when he turns them
in to the castings record clerk. For castings of which a consider-
able number in excess of 10 or 15 are carried, the castings ware-
house-man makes a systematic practice of making actual counts
and reports in the intervals which he has between issuing, receiv-
ing, and arranging castings in the warehouse. In this way
balances by actual count can be continuously turned in on a con-
siderable number of castings, so that there is a constant checking
and correcting of the castings clerk's records by actual inventory.
Such checking will be found almost indispensable, as the falli-
bility of stock clerks and castings warehouse attendants is far
more common than infallibility of records. When 'discrepancies
are discovered there is no need for internal dissension. It is
desirable, however, that some person in authority make a careful
and possibly secret investigation in case there appears to be a
continual shortage of the more valuable kind of castings, such
as those made of copper and brass.

The castings warehouse will usually have to be equipped with
hoists or cranes for handling heavy castings. Trolley tracks
for hoists running into the aisles between the bins will be found
convenient, and for extra heavy castings room may be provided
underneath a crane constructed of an I-beam with a circle

track, a hoist running radially along the I-beam. This arrange-
ment makes it possible to cover any point within the circle. If
the shelves and other storage places become crowded, it may
be policy to retire to outdoor storage such castings as appear
to be becoming obsolete. As a general rule, it is best, however,
to keep all castings under cover except where a special point
is to be made of accumulating a coating of rust for the purpose
of making the first machining easier.

The records for raw material other than castings and for
purchased finished parts may take practically the same form
as the castings record shown.

202. Perpetual Inventory of Manufactured Parts. — The record
covering manufactured finished parts will usually have to be
kept in a somewhat different form from the records covering the
castings as already described.

A form for keeping record of manufactured finished parts is
shown in Fig. 75. In the upper right-hand corner are stated the
part number and the material of which the part is made. In
addition to these data the sheet or card specifies the name of the

STORES AND STOCK DEPARTMENT 189

part, the drawing number, the pattern number if the piece is
made from a casting, the maximum and minimum stock, the
manufacturing quantity, also the location of the stock of finished
parts in the finished parts warehouse.

The accounting part of the finished manufactured parts record
is divided into five groups of columns.

The first group of columns is a record of stock orders entered,
giving the date of the production order, the number of pieces,
and the shop-order number. The second set of columns is a
record of the number of finished pieces received by the finished
parts warehouse-man from the shop (usually through the inspec-
tion department), giving the production order number, the
number of pieces received, and the date they were received. As
soon as a production order listed in the first set of columns is
completed, as shown by the finished parts having been received
by the finished parts warehouse-man, a line is drawn through
that stock order number in the first set of columns. In this
way the live unfinished orders for parts will always be those
through which no lines are drawn.

In any shop it is likely that the tag or other form of identi-
fication which accompanies the pieces through the shop may
become accidentally lost, or pieces may be taken from lots of
work in progress through ignorance or intentional violation of
the shop system by men in assembling, erecting, shipping, or
other departments, thus causing an apparent shortage or dis-
crepancy. Whenever an order in the first set of columns, there-
fore, looks suspiciously old, or when it is suspected that the
number of pieces turned into finished parts warehouse, though not
the entire lot, is likely to be all the pieces that will be turned
in on the order in question, it will be desirable for the head of the
manufactured finished parts records to start an investigation
through the proper channels with a view to striking off his records
any orders as dead or completed for which the material cannot
be found in the shop. This sort of condition should happen
very rarely in a well-managed shop, and it is important that
every case of this sort be most carefully traced with the end in
view of discovering who was responsible for the irregularity.

The third set of columns is a record of the reservations of
finished manufactured parts called for by bills of material and
supply shipment orders. Entries in this column are canceled
as soon as the parts are actually withdrawn, as shown by the ware-

190 FACTORY ORGANIZATION AND ADMINISTRATION

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STORES AND STOCK DEPARTMENT 191

house withdrawal's receipts, which are turned in daily to the fin-
ished parts clerk, who passes them on to the cost department.

The fourth set of columns is a record of parts withdrawn,
posted from the finished parts warehouse withdrawal receipts
already mentioned. The first column gives the order number,
which may be either a "Bill of Material" order, on which the
shop draws parts for assembling purposes, or a shipping order
for supply parts. If the former, the number delivered to shop
is entered in the second column in this group. If the pieces
were shipped, they are entered in the third column, headed
" Amount Shipped." The last column in this group states the
date the pieces were used.

The last group of columns is the final record of actual balance
in stock, the first column giving the balance, deducting those
in reserve, and the last column the actual count in the warehouse.
This actual count is checked up from time to time in precisely
the same manner as in the castings warehouse. Where the stock
is not too great to make it a hardship to make an actual count
every time a lot is received from the shop, such actual count is
made and the balance by actual count noted by the storekeeper
of the finished parts warehouse on his reports to the record clerk
of finished parts.

203. Bin Tickets. — A bin-ticket record system will also
facilitate the keeping up of an accurate record in the warehouse
itself. Another reason for using a bin ticket is that each stock-
man can be required to enter his initials on the bin record every
time he withdraws stock, and in this way he can be held to
accuracy and prevented from taking an excess of small parts and
letting the surplus lie around the packing-room. The bin ticket
cannot usually be made to serve as the record of stock on hand,
such as is kept by a regular stock-record clerk, because the records
for quick reference and entering must be in compact form.
However, the bin ticket has a salutary disciplinary effect, be-
sides being useful in posting new stockmen as to the correct
names of stock.

A form for bin ticket is shown in Fig. 76. This ticket bears
spaces for the number of the bin, the mark number of the piece,
the name of the piece, the machines on which the piece is used,
the drawing number, pattern number, and dimensions. Also a

statement of the minimum stock as follows: "When only

left, write out new ticket and send this to storekeeper." Below

192 FACTORY ORGANIZATION AND ADMINISTRATION

the above heading is the record part of the ticket, printed on
both sides, with a column for date, a column for stockman's
name or initials, and columns headed, "In," "Out," and "Left."

Fig. 77 shows a form for a
so-called "Temporary Bin
Ticket." In the system in
which this was used, the reg-
ular bin ticket was sent to
the head stock clerk as soon
as the stock reached the mini-
mum, and at the same time a
"Temporary Bin Ticket" was
fastened to the bin. This
temporary bin ticket bears
the same heading and record
form as the regular bin ticket,
with the following instruction
memorandum in addition :
"Stock Low— When stock
falls below minimum, fill out
and attach this ticket. Send
regular ticket to head stock
clerk. When regular ticket
is returned, this ticket to re-
main attached to back of reg-
ular ticket till stock reaches
required quantity." The color
of the "Temporary Bin
Ticket" is salmon, so that as
FIG. 76.— Form for bin ticket in store- any person jn authority goes

BIN TICKET

BIN No.

MARK No.

NAME-

MACHINES ON

WHICH i,i«srrv

PATTCBN

LEFT WRITE OUT NEW TICKET
S TO STORE-KEEPER.

AND SEND TH

DATE

STOCKMAN'S
NAME

OUT

LEFT

•

BALANCE ON OTHER SIDE

room recording actual receipts and
withdrawals. Manila tag with rein-

through the warehouse, he

forced eyelet, 3 1/8 inches' wide^ 61/2 can tell by the salmon-colored
inches high. tag being attached to a bin

that the stock is below the

minimum. If only the salmon-colored tag is attached, it shows
that the matter is being taken up by the head stock clerk. If
both the salmon-colored tag and the regular tag are attached,
it shows that the stock clerk has investigated the matter and has
arranged it to his evident satisfaction; but so long as the sal-
mon-colored tag remains at the bin it shows that the stock is not
yet up to the required minimum.

STORES AND STOCK DEPARTMENT

193

TEMPORARY BIN TICKET

STO C K LOW- When stock falls below minimum, fill out and
attach this ticket. Send regular ticket to head stock clerk.
When regular ticket is returned this ticket to remain attached to
back of regular ticket till stock reaches required quantity.

BIN No,

MACHINES ON

DIMENSIONS.

204. "Finding Lists." — It is very essential that finding lists
be provided in the finished parts and castings warehouses. Such
finding lists may be in the form of card records. For convenience
there should be one set arranged by consecutive mark numbers in
the case of finished parts, and

by consecutive pattern num-
bers in the case of castings,
together with the correspond-
ing bin number or other state-
ment of location; also another
record arranged alphabetically
by the name of the part. In
this way it is easy to find
promptly the location of any
items. Such finding lists
should be located near the en-
trance to the stock warehouse.
If there are several floors, it
may be found a saving of time
and labor to have more than
one finding list in the ware-
house.

205. Numbering Storeroom
Bins. — The best way to num-
ber bins in stock warehouses
is to divide the whole cubic
volume of the house into
spaces, and allot a certain
number of spaces to each vol-
ume, whether the volume is
to contain large or small bins.
In this way, no matter what
changes or rearrangements in
the sizes of the bins there may
be, the same number will al-
ways designate the same space

in the warehouse. For instance, all bins in the 10,000 series
would represent bins in aisle 10, those beginning with 10,500
representing the bins on one side of the aisle, and those begin-
ning with 10,000 the bins on the opposite side of the aisle. If
the bins are large, of course a good many numbers will not be

BALANCE ON OTHER SIDE

FIG. 77. — Form for temporary bin
ticket printed on salmon-colored or
other distinguishing tag stock to call
attention to the fact that quantity is
under the low limit. Salmon-colored
tag with reinforced eyelet, 31/8 inches
wide, 61/2 inches high.

194 FACTORY ORGANIZATION AND ADMINISTRATION

used. This is practically the same principle that has been finally
adopted as the most satisfactory method of numbering houses. in
city streets, and will be found equally satisfactory in storage
warehouses.

REQUEST FOR PRODUCTION ORDER

Date

TO PRODUCT/ON DEPARTMENT:

Please enter production order as follows:

Wantedfor{lh?pping Order No.

No. pieces wanted

Part No. , Name of Part

Drawing No. Pattern No Material A.V. Weight,

Max. Stock Minimum Stock Mfg. QnanMty

Actually in stock now Deducting .Reserve

Incomplete Production Orders as follows:.
Order No. : Date

Cost:

Labor per

Labor Load

Material

Material Load.
Total Cost

PRODUCTION DEPARTMENT'S RECOMMENDATION AS TO PRODUCTION ORDER TO BE ENTERED:

DRAWING DEPARTMENT'S COMMENTS AS TO PROPOSED CHANGES, ETC.:

SHOP SUPERINTENDENT'S COMMENTS AS TO ENTERING ABOVE PRODUCTION ORDER:

PRODUCTION ORDER NO. DATE FOR NO. PCS..

FIG. 78. — Stores record clerk's request for production order. This request
may emanate also from other sources. White bond paper, 81/2 inches wide,
10 1/2 inches high.

206. Replenishment of Stores. — Reference has been made to
minimum stock and manufacturing quantities in connection
with the records of finished parts and of castings. It is not

STORES AND STOCK DEPARTMENT

195

usually wise to have these figures serve any other purpose than
as guide to the stock record clerks, to notify them that they
must send in the notice of the low condition of stock to the
person or department in charge of production. One method
of sending in such notice might be to send in the stock sheet or
card direct to the person or department in charge of production.
However, this method results in the stopping of posting work
on the stock sheets or cards, and is likely to be an unsatisfactory
method in the long run. A better scheme is one of sending a
notice to the production manager or production department,
giving all the information contained on the heading of the stock
sheet, and also complete information as to the unfinished orders,

STORE-ROOM SUPPLY.

Please Order-

No. Size

Date.

(Only one Item on this Card)
By

Amount on hand-
Remarks

FIG. 79. — Storeroom request to head storekeeper for replenishment of
parts or supplies. Orange-colored bond paper, 5 inches wide, 3 inches
high.

the balance in stock, number in reserve, etc. Fig. 78 is a form
of such notice or request.

A form to be used by stores department in making requisition
on the head of that department in replenishing stores is shown
in Fig. 79. On receipt of this requisition or notice, the head
of the department issues requisition on purchasing department
similar to Fig. 69.

This request for replenishment coming from the storeroom
may at first sight appear like a superfluity in view of the fact
that the stores record clerks have records which indicate when the
low limit is reached. However, it is a double precaution to
have the storeroom send in such a request for replenishment
and in practice it will be found desirable, as an error or oversight
on the part of the stores record clerks in allowing stores of a cer-

196 FACTORY ORGANIZATION AND ADMINISTRATION

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STORES AND STOCK DEPARTMENT

197

tain item to get too low are in this manner caught by the store-
room help.

207. Monthly Balances Showing Money Value as well as
Quantity of Stores. — The stores and stock record sheets described
heretofore afford means for knowing at any time the balance on
hand of all materials. Should it be desired to express the value of
this material in dollars and cents, as will be the case at inventory
time, or as is the case in companies making quarterly or monthly
statements, it will be found necessary to specify cost data on
the stock record sheets or cards. In any event the stock records
form a very convenient place for having these costs, because
then the costs are available and ready for use, and found in the

MONTHLY COMPARISON OF STOCK MATERIAL BALANCES.

MONTH OF September, 1909

CLASS OF MATERIAL

Month of
Sept. 1909

Compared
with Month
of Aug. 1909

Increase

Decrease

Axles
Bearings
Bolts and Nuts
(etc.)

820.49

620.35

200.14

615.26

600.15

15.11

2126.15

2237.26

111.11

FIG. 81. — Monthly comparison of money value of leading material balances.
White bond paper, 81/2 inches wide, 10 1/2 inches high.

same place as the balances on hand. Fig. 80 is a typical card
used in a system in which monthly statements are made. The
upper right-hand corner of the record gives full data as to
manufacturing costs.

It may be found desirable to collect various material items
into groups and compare the money value of the monthly bal-
ances, showing increase or decrease in each class. Fig. 81 shows
a form used for this purpose.

208. Use of Tabulating Machine in Obtaining Money Value
of Daily Material Receipts and Disbursements. — Fig. 82 shows
a tabulating machine punch card for transcription of storeroom

198 FACTORY ORGANIZATION AND ADMINISTRATION

MATE

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?IQ. 82. — Tabulating machine punch card for transcription of store-room records of rec
Dimensions approximately 3 1/4X7 1/2 inches.

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STORES AND STOCK DEPARTMENT 199

records of receipts and disbursements of materials. In order to
use a working card in the tabulating machine it is necessary to
designate everything numerically, the record being formed by
punching the digits in columns of figures printed on a card, such
punching being done on a special machine made by the Hol-
lerith Tabulating Machine Co. The punching may be done
as a transference of records written originally in pencil on other
slips.

The punched tickets are put first into an assorting machine
which classifies them by the same numbers in any one column,
for instance, material-tickets may be assorted by departments, by
piece number, by quantity, by order numbers, etc., depending upon
which column is being used for the purpose of assorting. After
the assorting process is accomplished at a very rapid rate by the
machine the cards are transferred to the accumulating or adding
machine, which adds up the hours and minutes or dollars and
cents for any package of cards.

209. Withdrawing Materials from Stores. — In connection
with the drawing of needed material from stores, there will be
necessary some form of requisition on the storekeeper. Usually
the tag which accompanies a stock order of individual parts
through the shop is provided with a coupon which serves as an
order and receipt for the necessary material, so that no requisi-
tion is needed to get the material for this class of order.

In general, a well-organized planning or production depart-
ment provides ready-written in advance, all necessary material
withdrawal slips, these being considered as essential a feature of
planning as the blue-prints.

There will, however, be repair orders, assembling and erecting
orders, etc., which necessitate the getting of material from the
stores warehouse. For this purpose a requisition on stores
similar to Fig. 67 must be used. Fig. 83 shows an additional
form used for this purpose. This form, after passing through the
hands of the head storekeeper, is sent to the cost department,
which prices it in some companies. In other companies the
stores record clerks insert the prices from their records. The
cost department refers back to the department making the
requisition any calls for material which seem to be in excess of
requirements or in error. Systems have been tried whereby
only one issuance of material for a given order will be made to
the shop, and only such material issued as is called for by the bill

200 FACTORY ORGANIZATION AND ADMINISTRATION

of material. As a general rule it is better policy to issue material
when called for by a responsible department foreman, and
adjust later any discrepancies between bills of material or other
specifications and foreman's statement as to his requirements.

Return to Office each day those Cards filled the previous day

DEPARTMENT REQUISITION ON STORES.

Data 1Qf)

/)*j

Deliuer to bearer the following materials

Quantity

DESCRIPTION Price

Amou

Priced ty

• C^sA fcy TW,f

And chai
Infi
Do n
Dor

Filled by

ge same to account of

lling note weight when neccessary.
ot put any writing in price or amount columns,
ot order material to be used for more than one account on same

[J5

card.

uing
reman
Clerk

lor

r>Ant.

Fia. 83. — Another form for requisition on storeroom. (See also Fig. 67.)
Manila card, 4 inches wide, 6 inches high.

Under no circumstances should production be stopped pending
adjustment of technicalities as to quantity of material.

REFERENCES

GOING: "Methods of the Santa Fe," Chapter II.

GOING: "Principles of Industrial Engineering," Chapter IX.

ENNIS: "Works Management," Chapter V.

COOK: "Factory Management," Chapters VII and VIII.

PARKHUBST: "Applied Methods of Scientific Management," Chapter V.

KIMBALL: "Principles of Industrial Organization," Chapter XII.

CHAPTER XVII
PLANNING AND SUPERVISING PRODUCTION

210. Title of Department Controlling Production. — In Mr.

Taylor's original functional organization he separated planning
from production. Under the planning group he listed four
principal divisions in the office and four principal divisions in the
shop. In the office the divisions were as follows:

1. The Route and Order of Work Division.

2. The Timestudy and Instruction Card Division.

3. The Time and Cost Division.

4. The Disciplinary Division.

In the shop the divisions were :

1. The gang boss or shop foreman.

2. The speed boss or demonstrator.

3. The repair boss or maintenance man.

4. The inspector.

In explaining division of production activities along functional
lines that would be natural, it has been suggested that the func-
tional divisions' duties could best be denned by answering the
following questions:

1. What shall we make?

2. Where shall we make it?

3. When shall we make it?

4. How much will we have to pay to have it made right?

5. How much will it cost?

6. How must we handle our labor to get the best results?

In the earliest concerns adopting the Taylor organization, we
find all of the functional divisions designated as divisions of the
planning department. If the writer were to make a choice
between " planning or "production" as the name of the de-
partment including functional control, he would prefer the latter
as all of the functions have to do with production even though
the individual functional division may deal with planning, prepa-
ration, scheduling, or inspection, and there might be a fifth
division dealing with production records.

201

202 FACTORY ORGANIZATION AND ADMINISTRATION

With the evolution of the principle of functional control we find
these functions apply today not only to the manufacturing group
but also to the sales, financial, and personnel groups. In order
to appreciate the modern organization, it is necessary, however,
ti survey its development from Mr. Taylor's original outline.
Mr. Taylor outlines the functions of the planning department as
follows :

A. The complete analysis of all orders for machine or work taken by the
company.

B. Time study for all work done by hand throughout the works, in-
cluding that done in setting the work in machines, and all bench, vice work
and transportation, etc.

C. T me study for all operation done by the var.ous machines.

D. The balance of all materials, raw materials, stores and finished parts,
and the balance of the work ahead for each class of machines and workmen.

E. The analysis of all inquiries for new work received in the sales depart-
ment and promises for time of delivery.

F. The cost of all items manufactured with complete expense analysis
and complete monthly comparative cost and expense exhibits.

G. The pay department.

H. The symbol system for identification of parts and of charges.

/. Information Bureau.

J. Standards.

K. Maintenance of system and plant, and use of the tickler.

L. Messenger system and post office delivery.

M. Employment bureau.

N. The shop disciplinarian.

0. A mutual accident :nsurance association.

P. Rush order department.

Q. Improvement of system or plant.

Mr. Parkhurst employed at the Ferracute Machine Company
an organization slightly different from that indicated by Taylor.
His organization for the planning department is as follows:

A. Production Clerk. J. Time Clerk.

B. Shop Engineer. K. Schedule Clerk.

C. Stores Clerk. L. Factory Mail Clerk.

D. Cost Clerk. M. Time Clerk.

E. Route Clerk. N. Inspector.

F. Order-of-work Clerk. O. Stores Keeper.

G. Shipping Clerk. P. Move Material Boss.
H. Receiving Clerk.

211. Reasons for Functional Control. — Functional control
came in answer to a call for help from the business owners and

PLANNING AND SUPERVISING PRODUCTION 203

managers of industrial establishments who were becoming
nervous wrecks because of the need of constant running from
one department to another for information which could not be
half given. They began to realize that the cost of their own
time and energy, and the lost time of the army of emissaries
they were constantly sending to the shop, amounted to a large
financial aggregate.

The absolute knowledge of the condition of the manufac-
turing department — its percentage of uncompleted work, the
condition of this work, and the factory's capacity for further
orders — -has a financial value. The cost of production has been
shown to be lowered after shops have instituted a well-managed
production department. More than this ; after some months' run-
ning of the production department, the work of the office, sales
department, time-keepers, correspondents, shipping department,
and cost clerks has been known to become so much simpler that
not only was the operation of these departments much more
efficient, but it could be done with less help.

What are the functions and duties of this department? In "")
general, its task is to lay out in detail all work to be done in the I
factory, to keep perfect record of progress of work on all orders, /
and to see that foremen and other executive officers are kept /
closely advised of all conditions requiring their special attention. /
It will readily be seen that by centering all of the record and statis-
tical routine into a distinct department, foremen and superin-
tendents are left far more free to do real executive work than
under the old-fashioned systems in which they carried the entire
burden of recording and following up all work in a shop.

In the majority of shops to-day the production record follows
the actual production. There is no systematic issuing of detail
jobs in advance. An effective shop production system always
involves the writing out in detail of all jobs and the specifying of
all operations or " routing" necessary to complete every item,
together with instructions as to the details of each operation.

The providing of such an advance stock of job order tickets,
and furnishing them to the shop, with definite instructions as
to the sequence in which the jobs are to be worked on, enables
foremen to plan and lay out their work, providing they have
the ability to do this — an essential quality to a good shop fore-
man. A well-managed production department is of great assist-
ance to a foreman in making such plans.

204 FACTORY ORGANIZATION AND ADMINISTRATION

Without such a department it is next to impossible for depart-
ment foremen to keep their orders and work in systematic shape.
From this results delay in getting out orders; failure to discover
shortages or incompleteness until a piece of work is ready for
shipment; inaccurate time and cost returns, and general loose-
ness of methods.

212. Carrying the Functional Organization into the Shop. —
This is accomplished by having in each shop a functional staff
of overseers. These overseers are responsible as to policies and
methods to the heads of their respective functional departments.
They are responsible as to results in their particular shop to the
shop foremen. If the shop is small one overseer may represent
more than one function. Some of the typical duties of these
functional representatives in the individual shop are as follows:

The planning overseer receives the particular shop's copies of
all work orders, sees that all necessary paper work for operating
all of this work in the shop is prepared, covering time tickets,
stores issues, etc. He will maintain record of employees and
their efficiency, look after assignment of piece rates or day rates,
and all matters pertaining to payroll. He must check all time
and material tickets.

The preparation overseer must see to it that all materials,
tools, and machinery maintenance of the shop are taken care of.

The scheduling overseer will maintain such schedule boards,
trays, or other devices as are used in maintaining and recording
all operations and their relation to schedules. He will also keep
a complete record of the balance of work in process. He will
report any interferences with the schedule.

The production overseer must be capable of doing the things
which Taylor assigned to his speed boss. He must be able to set
up the work, adjust tools, regulate feeds and speeds, and make
demonstrations to show that the work can be done in accordance
with instructions developed by the time study department.

The inspection overseer's duties are self-evident.

213. Qualifications of Head of Production or Planning De-
partment.— The production superintendent must be a man of
considerable capacity. He must be able to make the best use
of recording sj^stems, and at the same time be a man who can
see things with his own eyes in the shop. He confers daily with
the works manager and brings up all matters in connection with
condition of orders, getting out of work, and capacity of the

PLANNING AND SUPERVISING PRODUCTION

205

shop, at foremen's meetings held regularly. The importance of
such foremen's meetings cannot be over-estimated. .

The man in charge of the production department needs to
be given such intelligent assistance as may be required, to make
every job ticket or tag that goes into the shop as clear a guide
as possible to foremen, workmen, and time-keepers, and to pre-
vent inaccurate returns to the cost department or other depart-
ments. With a well-managed production department there is
no need of any clerical work by shop foremen. The production

FIG. 84. — Classification of the functions of the production department
under five heads. Some organizations include time-keeping, time-study,
and rate-fixing with these duties.

department does away with the necessity for shop clerks and
foremen's clerks; neither must the foremen do any clerical work.
The head of the production department should have no other
duties than those connected with that department, the special
functions of which are the tracing of work in progress, the pre-
paring of detailed individual job orders, or routing, preparing
instruction cards, fixing time standards, determining the order
of precedence of each job (sometimes called scheduling), and
the keeping of a record of all work in progress.

206 FACTORY ORGANIZATION AND ADMINISTRATION

214. Relation of Production or Planning Department to Other
Departments. — The chart shown in Fig. 84 indicates the functions
usually assigned to the production department — although other
functions have been added in some establishments, some com-
panies preferring to include time-keeping and time-study, to-

Order
Dept.

One Copy of Order

Drafting
Dept.

<O^Sy Production or Planning >/^ *°
* >v Dept< ^4$*
otorcs ^ 1 Route 1

Purchasing

1 CP ' I Checked M

,tl. withdr'l Slips1 Cltjrk ' Pur<**se B^
Material withdrawal Slips
Route Sheet
Bill of Material
Drawi ig List
Drawings

uisltions Dept.

Instruction Card Clerk 1

All Previous Papers
and Instruction Cards

Rate Fixing Clerk

All Previous Papers
and Tim'e Cards
Y

Order of Work Clerk |

All Papers

| Production Clerk or Order Tracer

Orders and Papers as Required

FIG. 85. — Relation of production or planning department to other depart-
ments, and path of an order through the production department.

gether with rate-fixing, as also parts of the work of a production
department.

The production department is not intended in any way to
lessen the power of the shop superintendent. It is intended to
relieve the superintendent, and to assist him by constituting a
certain place of responsibility for accurate knowledge as to all

PLANNING AND SUPERVISING PRODUCTION 207

matters of production. When thus fully posted, the superin-
tendent is free to use his executive authority, and to be often
about the shop. The responsibility of tracing and keeping before
the superintendent and foremen all matters of precedence and
urgency rests wholly with the production department. Many
shops throw this responsibility on a variety of persons connected
with the sales, correspondence, and general office management,
resulting in a multiplicity of bosses and considerable useless
running around.

That it may work to best advantage, it has been found desir-
able to take the shop production department from under juris-
diction of the shop superintendent. By this arrangement the
department has no hesitancy or timidity about keeping strongly
after any delays or failures to realize promises or estimates.

Fig. 85 shows in detail the relation of the Production De-
partment to other departments. It shows how the Order De-
partment sends one copy of the order to the Drafting Department,
and one copy of the order to the Production Department. The
Drafting Department sends the drawing list, drawings and bills
of material to the Production Department. The particular
individual in the Production Department who receives the orders
from the Order Department and the papers designated from the
Drafting Department is the Route Clerk.

215. Routing. — The route clerk makes up a route chart for
every order. In case the order is for a machine, he lays out the
chart so as to show what groups must be completed before general
assembly or erecting can take place. He also indicates what
pieces must be completed before any one group can be assembled.
He must be familiar with the equipment and processes of the
shop, and should have at hand general process maps and models
of the shop showing departmental lay-outs and equipment.
The drawings, drawing lists and bills of material which he receives
from the drafting department aid him in preparing his route
chart.

The route clerk, on receipt of the bill of material from the
drafting department writes out or has an assistant write out the
withdrawal slips or orders on storeroom for any needed materials.
These he forwards to the stores department where the stores
record clerk or balance of stores clerk, as he is sometimes called,
checks the requirements up against his perpetual inventory
and designates what production orders need to be entered for

208 FACTORY ORGANIZATION AND ADMINISTRATION

The Penn. State College. Industrial Engineering Dept.

Instruction Card for Students. Sheet No. 1.

Description of Operation, Laying out Centers and Turning Eccentric.
Name of Exercise. Eccentric. Drawing No. 503

Item

Detailed instructions

Time

Change cards.

Learn what is to be done.

Chip fins or gate from casting.

Grind scale from end of piece.

Get V blocks and place on surface plate.

Put piece in V blocks.

Chalk ends of piece.

Find approximate center with surface gage.

Scribe line across both ends with surface gage.
(Say line A).

Use the square and draw line intersecting the
scribed one (Say B).

Pass the piece through 180°, square line B with
square.

Scribe second line on one end lightly (Say line C).

Reset surface gage midway between A and C.

Scribe a sharp line across both ends (Say line E).

Turn piece through 180°.

Make line A come straight with square.

Scribe line across both ends of piece.

FIG. 86.— First page of a "typical Instruction Card." 8 1/2X10 1/2 white
mimeograph paper.

PLANNING AND SUPERVISING PRODUCTION

209

quantity manufacture of small parts, together with the manu-
facturing quantity. The balance of stores clerk also indicates
what requisitions for purchased material should be issued, and
sends the material order slips, with the information indicated,
back to the Route Clerk. In this way all orders on storeroom
are written out in correct form beforehand, and mechanics do
not lose any time in writing out such orders or waiting for them
to be written. These orders and all other papers referred to as

The Penn. State Collage Industrial Engineering Dept.

Tool List Drawing No. 503

Description of Operation. Laying Out Centers and Turning Eccentric

Pieces

Name

Size

Tool Symbol

Note: This exercise must be drilled and countersunk on
speed lathe equipped for this purpose.

•

Surface gauge

12"

M.G.U.S.

Square

M.L.T.

V Blocks

C.S.V.

Dividers

M.C.D.S.

Scale

M.S.S.

Carrier

194"

C.C.S.N.

Turning Tool

P.R.S.C.

Side >?

P.U.S.G.

Finishing »

5/8"

P.S.F.

FIG. 87. — Typical "tool list" to accompany "instruction card." 81/2X
10 1/2 white mimeograph paper.

having come from the drafting department and referred to here-
after as being written out in the production department are
stored in a portfolio of fiber-board paper in which pockets of
proper size are prepared to hold every type of paper necessary
for the order.

216. Instruction Cards. — The route clerk passes all papers
connected with the order over to the next individual in the
Production Department who has to deal with them — namely,

210 FACTORY.ORGANIZATION AND ADMINISTRATION

the Instruction Card Clerk. This man must be able to specify
in minute detail each step to be taken to perform every opera-
tion. He writes out these instruction cards for each piece and
every operation, as well as a tool list to accompany each instruc-
tion card. He also fills out a work order or time-card for each
part of the process that is to be done by a separate workman,
and for each work order or time-card he prepares a detailed
instruction card as heretofore indicated. He turns the time-cards
over to the rate-fixing clerk, together with all other papers in the
order portfolio.

Fig. 86 shows an example of the instruction card as used at the
Pennsylvania State College Department of Industrial Engineer-
ing. Fig. 87 is an example of the tool list that accompanies the
instruction card.

217. Rate -fixing or Time Clerk. — This clerk affixes the standard
times in which the elementary steps indicated are to be performed,
also any premiums, bonuses or piece rates. The non-clerical or
research work of rate fixing is described in a later chapter on this
subject.

218. Order-of-work Clerk. — The order-of-work clerk receives
from the rate-fixing clerk the order portfolio containing all the
papers heretofore indicated. He must designate the order of
precedence of the various work orders. He has charge of the
Main Bulletin Board in the Planning Department office, and
the local departmental bulletin boards in the shops, each board
bearing hooks on which are cards designating the work for each
man and each machine in advance. He sends all papers on to
the Production or Tracing Clerk.

219. Production or Tracing Clerk. — This clerk writes out or
has assistants write out any tracing tags or follower-books which
are to accompany material through the shop. He sees that all
the papers he has received go to the proper persons in the shop.

The tracing function of the production department involves
the following up of a number of distinct sets of activity by means
of records and processes that have to be adapted to each set.

220. Tracing Individual Parts. — A record on which track may
be kept of the individual part production orders is shown in Fig.
88. This record is arranged by part numbers and covers only
live orders in the shop, a separate tracing record sheet for each
separate production order for a given mark number. For in-
stance, there may be three live production orders in the shop

PLANNING AND SUPERVISING PRODUCTION

211

issued at various times for stock lots of a given mark number.
Then there will be three of these tracing sheets filed back of that
mark number.

The tracing sheet bears a heading giving the necessary infor-
mation as to name of part, drawing number, pattern number,

TRACING AND ROUTE SHEET FOR INDIVIDUAL PART

Part f
Production Or
Date of Productior

Nam*» of P^rt

PRODUCTION ORDERS:

Jup-|hfir

Jftr Nn,

i Ordfir

Drawing Number Pattp

rn Number

Matflrlal NO Wanted

Drawincr Finished

c
o

ctf

<D
Q.

Inspection

Pattern

Material

DETAILED OPERATIONS AS FOLLOWS:
Inspection in Castings Wamhnnsfi

Plane

Lay Out

Drill

•

(etc.-)

FIG. 88. — Form used for keeping record in production department office
of progress of each part or lot of components. White bond paper, 81/2
inches wide, 11 inches high.

material, and number wanted. It then bears a number of data
common to all tracing sheets, concerning the drawing, pattern,
and material, after which follows a list of departmental opera-
tions or routing which will be different for each piece. Opposite
these lists of steps and operations involved in getting out the lot
of parts are three columns, headed respectively, "Move," "Op-

212 FACTORY ORGANIZATION AND ADMINISTRATION

I have this day finished
following operations on

the

Mark No. .
Production Order No.

and sent

No. Pieces Received.
No. Pieces sent on

Pieces
. Dept.

eration," and " Inspection." A vertical pencil mark is drawn
down through the column headed "Move," as soon as the item
has reached the department indicated. As soon as the depart-
ment has performed its operation, a similar vertical pencil mark
is drawn in the " Operation" column, and as soon as the work
of that department has been inspected, a similar vertical pencil
mark is inserted in the "Inspection" column.

The keeping up of the tracing record involves the standardiz-
ing of the routing where possible, though this is not indispensable,
and a system of prompt re-
ports of all work finished in
each department, which re-
ports can be arranged for by
means of perforated coupons
on the tracing tag accom-
panying each lot; or a sepa-
rate slip may be used notifying
the production department or
head tracer of each inter-de-
partmental movement of a lot
of parts. A form for this pur-
pose is shown in Fig. 89.

Another method is to have FIQ 89>_Foreman>s message to
every workman's change of tracer in production department,
job approved or clock stamped Light green paper, 4 inches wide, 6
at the window of an office in inches high,
which the man in charge of

the tracing records receives these time slips every time a man
changes jobs.

221. Moving Work in Process.— The jurisdiction over the mov-
ing of parts in process from one department to another may be
made a function of the production department, such transfer
of parts being dependent on separate instruction memoranda,
issued to a head stock-mover by means of a form similar to that
shown in Fig. 90. This slip tells the head stock-mover from
which department he is to take a lot, and to which department
he is to deliver it. When he has executed the order given him
in this slip, he signs it at the lower right-hand corner after the
words, "I have moved the material checked above," and returns
the slip to the production department's head tracer or transfer
clerk.

For shortage see Shortage

Report No.

Date—

(Signed)

Foreman

Dept.

PLANNING AND SUPERVISING PRODUCTION

213

Similarly, separate inspection slips may be used for tracing
inspection, in case inspection of processes before final completion
is the method of inspection employed.

A further refinement of the tracing of the individual production
orders which is possible in some shops consists of the securing of
a promise date for completion of each operation and awarding
a bonus for the highest percentages of living up to estimated
dates of completion. The record of total estimated time in any
given department, and various deferred promises, may be kept

ORDER NUMBER

DATE

MOVE THE FOLLOWING MATERIALS AS DIRECTED

DESCRIPTION OR SYMBOL

FROM

FLOOR

woman

N'S NAME

lAN'S NO

ROUTE
SHEETS

PAY
SHEETS

COST
SHEET

1 HAVE MOVED THE MATERIALS CHECKED ABOVE

RlfiNFD

FIG. 90. — Instructions from production department to move stock
from department to department. Manila card, 4 inches wide, 4 inches
high.

on the bottom of the tracing and route sheet for individual part
production orders (Fig. 88), the form being modified so as to
carry the additional data. Columns must be provided for the
estimates of total hours of labor to do the jobs in any one depart-
ment, also a column for first promise date of completion and
further columns for deferred promises.

222. Rush Orders. — In case it is desired to give especial pref-
erence to certain pieces, a "Rush Order" slip similar to Fig. 91
may be used. Such "Rush Order" may be written in duplicate,

214 FACTORY ORGANIZATION AND ADMINISTRATION

one set being kept on file in the production department, the other
copies going to the shop.

223. Tracing Groups of Parts or Complete Machines.— Thus
far the methods described for tracing have referred only to the

RUSH ORDER

NEEDED FOR ORDER NO.

Following parts covered by orders now in shop are needed
at once.

If this order is stamped "Rush" in red, it is especially
important that extra preference be given.

Regular "split" or "detachment" tag must be made out to
cover any work advanced ahead of the full amount by reason of
this rush slip. Foreman's copy of this slip must go from one
foreman to next with the parts rushed.

NO. PCS. NEEDED AT ONCE

TO BE ADVANCED FROM FOLLOWING ORDER-
DATE TAG WRITTEN ORDER NO.

No. PCS. STARTED

(S«t Back of Tag lor Detachments)

ARTICLE

DELIVK.R TO

Ready

Drawing No.

Mat'l Del'd to Shop

To be Finished.

Shop Depts. Involved

Promise Dates of Completioft

FIG. 91. — Rush order slip sent to shop to hasten one or more pieces
being made on a stock order for components. Thin white paper for easy
carbon manifolding, 4 inches wide, 6 inches high.

class of shop orders which call for a quantity of a single piece.
The tracing through of an order for one or more completely
assembled groups of parts constituting a complete machine
or several machines, or other articles consisting of a consider-
able number of parts, can be taken care of by binding in with

PLANNING AND SUPERVISING PRODUCTION

215

CL, W
O <J

s£

II!

ill*

TRACING SHEET.

III

iVj

RECEIVING DEPT. ENTRIES

CASTINGS

Pates and
Amounts del'd
from Foundries

Sfl

«l »
*£«

CASTINGS AND

PATTERNS

ii4

STORES RECORD DEPT, ENTRIES

Purchased Material except" Castings

i?"H

«rt 5(2

ft I

^ 0

d I o

A O55

Parts made on
Stock Orders to be
applied to this 13. M.

isii

«*?
H^

Jtiaiaidraoo 01 tn9>i S*
uoos SB nmnioo stq»
uj ami q»«3 jpsqo

I §

.-2

•4-3

C *H

0 O

1 1

® bC
73 T3

fc£

^3
d
IS

the bill of material a
"Tracing Sheet" form.
Fig. 92 is an example
of this kind of a form.
The first column in
this form is headed
"Tracer only" and is
to be checked when
the item on the cor-
responding line in the
bill of material has
been completely dis-
posed of. The next
group of columns re-
fers to finished parts,
the first three referring
to parts made in the
shop, and the remain-
der of the group to
parts purchased out-
side, excepting cast-
ings. The headings in
the columns referring
to manufactured parts
made on stock orders
give data of stock or-
der, its number, and
the number of pieces.
The columns referring
to purchased parts
other than castings
cover date of requisi-
tion on purchasing de-
partment, the requisi-
tion number, the pur-
chase department
number, its date, and
date of receipt of ma-
terial.

The next group of
columns refers to cast-

216 FACTORY ORGANIZATION AND ADMINISTRATION

ings. The left-hand group under this heading gives dates of req-
uisitions for making patterns (the shop in question having its
patterns made outside by a pattern job shop), the number of
the pattern requisition, the purchase department order number,
its date, and date pattern was delivered to foundry. If the pat-
tern is already made a horizontal line is drawn through all col-
umns excepting the one headed " Pattern delivered to foundry."

The next group of columns gives the date and number of the
purchase order for castings; and the dates and amounts delivered
from the foundries. The next columns headed, "Tags," refer
to the tags accompanying material belonging to shop production
orders in the shop. Entries are made in these columns from each
day's tags, as they are written, indicating the date that the tags
to go with the material have been written, also the date that
the material is ready. In case material is not ready by reason
of castings or other raw material not being in, the tags are kept
in waiting boxes, either in the production or the receiving depart-
ment, and proper date entries put into the column headed "Date
material ready" as soon as the tags are ready to be lifted from
the waiting boxes and sent to the shop by reason of the arrival
of the needed material.

The last two columns refer to drawings and to manufactured
parts. As soon as drawings are known to be ready, that column
is dated, and as soon as parts manufactured on shop production
orders are known to be finished a date is entered in the last
column.

224. Hastening Purchased Items. — Fig. 93 shows a form used
in urging the purchasing department to hasten material urgently
needed. The form is self-explanatory. Carbon copies are filed
in the production department, back of guide cards, designating
order numbers.

Weekly meetings for the discussion of production problems
are an absolutely essential accompaniment to systematic control
of production. At such meetings there should be present not
only shop foremen, but heads of all departments whose work
deals with matters related to production, such as head of stores
record department, head of purchasing department, and in some
cases heads of sales department or some representative of the
department. At these meetings summaries are presented detail-
ing items on which promises of delivery have not been realized.
Such lists may be advantageously made in manifold, a copy being

PLANNING AND SUPERVISING PRODUCTION 217

given to each person concerned at some time previous to the
holding of the meeting at which these questions are discussed.

A further refinement possible in some factories is the making
of graphical curves, showing the hours work to be accomplished
in a given department during the next four, eight, or more weeks
plotted as one curve ; also the number of available working hours
in that department during the same period, based on the product
of the number of employees multiplied by the number of hours
per week that each man works.

MATERIAL URGENTLY NEEDED FOR PRODUCTION ORDER No.

DAXE Of. THIS NOTICE PURCHASE ORDER NO. PURCHASE ORDER DATE PATTERN NO.

NAME OF PART'

QUANTITY TO BE RUSHED!

PURCHASED FROM

REMARKS:BY TRACING DEFT.': ABOVEIWANTED BY EXPRESS-FREIGHT

IS_TELEGRAPHIC INFORMATION REQUIRED AS TO DELIVERY?

(SIGNED).

PURCHASING DEPT'S REPLY: (TRACING DEPT. TO COPY THIS ON THEIR copy AND THEN RETURN

ORIGINAL TO PURCHASING DEPT. WHO WILL KEEP. IT ON FILE AND FOLLOWED UP UNTIL FINAL DELIVERY)

FIG. 93. — Form used by production department in urging purchasing
department to hasten delivery of most badly needed items. Medium weight
manila paper, 6 inches wide, 4 inches high.

225. Weekly Report for Foremen's Meeting.— A form for
weekly report at foremen's meeting is shown in Fig. 94. Such
report is useful only when it is made the basis of systematic
and determined united action on the part of all concerned.
The mere rendering of a weekly report to a superintendent or
works manager soon becomes a perfunctory matter of but little
value.

It will be readily seen that the production department as
outlined requires for its head a man of firmness as well as amia-
bility, and that each of his record clerks must be decidedly high-
grade men from a standpoint of accuracy and knowledge of shop
routine.

218 FACTORY ORGANIZATION AND ADMINISTRATION

226. Shop Tags.— Reference has been made several times to
the shop tag or tracing tag which accompanies a lot of goods
through the shop. This tag is written as soon as the shop pro-

APPARATUS
ORDER RECEIVED CONTRACT

TO BE DELIVERED

PRELIM. INFO

1 i DRAV

INGS

BILLS OF MAT

ERIAL

COMPLETE IN

-ORM.

ADDITIONAL 1

FORM.

M DRAWINGS

SPECIFICATIONS

REVISED INFORM.

n BILLS' OF MAT.

ti DRAWINGS

PATTERNS ORDERED

PATTERNS FIN.

it NO8. CHANGED

IRON CASTINGS REC'D

STEEL i )

OR'D

STEEL «

REC'D

BRASS i I

TEST PIECES

NO OR YES

M ., PF

OMISED

it M R

C'D

SUPPLIES OR'

tl PR<
• ' RE<

MI8ED
'D

FIRST SHIP'G

PROMISE

DELAYED BY

SECOND SHIP'

G PROMISE

DELAYED BY

SHIPPED

ERECTED

SPECIAL CONTRACT

FIG. 94. — Form for weekly report at foremen's meeting,
inches wide, 11 inches high.

White paper, 8 1/2

duction order is written, and is issued to the shop only when the
material is ready. A form for such tracing tag is shown in
Fig. 95.

PLANNING AND SUPERVISING PRODUCTION

219

The reverse of the tag is shown in Fig. 96. It is usually advis-
able to use different colored tags for different classes or series of
orders; for instance, a buff-colored tag may be used for bill of
material items, such as special castings, etc., which would not
be made in stock-order lots. A yellow tag might be used for
stock orders, a salmon tag for tool department orders, a manila
tag for items to be charged to standing non-productive orders,

a blue tag for plant addition
orders, etc. The form shown
contains spaces for insertion
of the following: number of
pieces started, the material,
the name of the article, to
what department it is to be
delivered, the mark number,
drawing number, pattern
number, when material was
ready, when it was delivered
to shop, when it is to be fin-
ished, and a list of the opera-
tions to be done, such list
being written in advance on
the tag, together with depart-
ment which is to do each
operation, and the time al-
lowed for each of the opera-
tions. Where detailed in-
struction cards are supplied,
the tag need contain only the
general routing, and refer-
ence to instruction card and
tool lists by number.

At the bottom of the tag
is the "Warehouse Coupon/'

or receipt, containing the same heading items as the main tag, and
bearing on its reverse following instructions: "This coupon must
be signed by party receiving material and proper date entries
made in spaces headed 'Material delivered to shop,' on both
main tag and coupon. Coupon must then be immediately de-
tached and returned to department which issued material."
227. Detachments or Split Lots. — On the reverse of the tag

/FOR STOCK /•""X ORDER \
DATE TAG WRITTEN ( O ) ORDER No. \

NO. PCS. STARTED MATERIAL

( SEE SACK OF TAS FOR DETACHMENTS)

DELIVER TO

MARK NO. DRAWING NO.

PATTERN NO.

MATERIAL READY MAT'L DEL'D TO S

HOP TO BE FINISHED

OPERATIONS DE

PT. HOURS T MEMINUTES

. , ,

— •

1 [ 1

AFTER ABOVE OPERATIONS COMPLETED 01

LIVEH TO INSPECTOR

WAREHOUSE COUPON

DATE TAG WRITTEN ORDER NO.

NO. PCS. STARTED MATERIAL

ARTICLE

MARK NO. DRAWING NO.

PATTERN NO.

MATERIAL READY MAT'L DEL'D TO S

HOP TO BE FINISHED

WEIGHT

(blgi

ature of Party Receiving )

Fro. 95.

NO. PCS. DETACHED

BALANCE REMAIH

Partial Deliveries to i

DATE PART'L DEL'Y

NO. PCS. DELIVERED

BALANCE TO FOLLOW

PARTIAL DELIVERIES TO CASTINGS WAREHOUSE AS FOLLOWS

NO.DELIVERED

220 FACTORY ORGANIZATION AND ADMINISTRATION

there are provisions made for splitting the lot or making detach-
ments in the shop. For such detachments exact copies are made
of the original tag, excepting as to number of pieces, on a " Detach-
ment or Partial Delivery Tag." This tag is just like the regular
tag, excepting that instead of being printed in black type it is
printed in red type, which immediately calls attention to the fact
that the lot is a "Split lot"
or "Detachment."

The tag shown provides
for the possibility of five dis-
tinct detachments being made
by the shop, owing to the
rushing of individual lots on
a stock order, giving the date
of the detachment, the num-
ber of pieces detached and
advanced, and the balance re-
maining with the original tag.

Next follows a record of
partial deliveries to the shop
in case only part of the cast-
ings or other raw material
have arrived, and it is decided
to send this partial supply
out into the shop. In this
case the receiving department
furnishes the production de-
partment the information of
receipt of only part of the
material, and the production,
department decides whether
or not to have the partial de-
livery tags written, and retain
the main tag in the receiving
department office until the

NO.TO FOLLOW

INSPECTOR'S REPORT

DATE INSPECTED

NO. REJECTED

NO. ACCEPTED

FINISHED STORE ROOM RECEIPT

DATE RECEIVED

AMOUNT RECEIVED

BALANCE IN STOCK

FINISHED STORES 8.

THIS COUPON MUST BE SIGNED BY PARTY
RECEIVING MATERIAL, AND PROPER DATE
ENTRIES MADE IN SPACES HEADED "MAT'L
DEL'D TO SHOP" ON BOTH, MA|N TAG AND
COUPON, MUST THEN BE IMMEDIATELY DE-
TACHED AND RETURNED TO DEPARTMENT
WHICH ISSUED MATERIAL.

FIG. 96. — Reverse of form shown
in Fig. 60, showing "splits" or "detach-
ments," also inspector's and storeroom
reports.

last lot is received by them and delivered to the shop.

In case the receiving department is accumulating raw material
by sending it to stores until the full supply is in, which would
be the normal condition, it being preferred to send out the regular
manufacturing quantity, the next set of spaces is used, which
is headed, "Partial deliveries to castings warehouse as follows,

PLANNING AND SUPERVISING PRODUCTION 221

for which no partial delivery tags issued." This set of mem-
oranda keep the receiving department posted as to the number
of castings they have received and must expect before they
may let the tag go out.

Next follows a space for inspector's report which is filled
in after all the operations have been done, and the pieces come
to the inspection department for approval before being turned
into stores.

Then follows an indorsement by the storeroom, giving date
and amount received with the tag, also the balance in stock,
including this lot and by whom counted, furnishing a balance
by actual count. The tag is sent from the storeroom to the
stores record clerk, who posts it in his stores record of manu-
factured finished parts.

228. Transfer Clerk. — In several successful manufacturing
establishments, the head tracer of the production department has
his headquarters in the very center of the shop. He has charge
of all of the "stock-movers," or truckers, who haul work in
process from one department to another, and whenever such
interdepartmental transfer takes place the stock-mover passes
with his truck and its load of work in process and the accompany-
ing shop tags past this head tracer's or " transfer clerk's" post,
stopping there so that the transfer clerk may get the record. In
this way the head tracer or transfer clerk actually sees the pieces
themselves as they go from department to department, and
can shift cards in index boxes or in grooves, or hang tags or
checks on hooks in a manner indicating the travel of each lot of
pieces of work in process, from department to department, so
that he has positive and instant information as to the exact
location of each lot. From these card indexes or grooved trays
or check-boards, the tracing department can then accumulate
for collective groups or complete machines the record of progress,
posting same on a bill of material or other record form.

229. Estimate of Times of Completion. — After a tracing
system is in thorough working order, and it is possible to tell the
exact location of any piece or group of pieces, it is but a step
further to inaugurate a system of estimated times of completion
of each lot in each department. One of the large electric manu-
facturing companies has brought this system of promised dates
of completion to a state of high efficiency, by keeping a monthly
record of each foreman's percentage of correctness in estimating

222 FACTORY ORGANIZATION AND ADMINISTRATION

the time of completion. Prizes and promotions are accorded
for the highest percentages, and whereas at the beginning of the
system the highest percentage was below 60, after six months'
operation a number of foremen were able to bring their percent-
ages over 90, a state of affairs which seems almost incredible to
the ordinary factory superintendent.

229a. Efficient Scheduling. — It must always be borne in mind
that our whole production system fails of its purpose if, instead
of actual centralized control, we instal merely a paper history or
duplication of uncontrolled or erratic production. It is only a
useless expense to have order of work boards and assignment
boards and another record somewhere else following up the
ticket changes on these boards with beautiful graphs if the work
done and its sequence is not based on intelligent predetermina-
tion. This predetermination is absolutely dependent on a
knowledge of (1) all operations necessary to do on each com-
ponent; (2) the machinery equipment, small tools and fixtures
necessary and available for each operation; (3) the time it takes
to do each operation including inspection and moves; (4) the
remoteness from assembly if there is assembly, at which each
component must be started in order to secure availability of all
components at assembly time; (5) a graphical lay-out of all
available equipment and men each day with a uniform dis-
tribution of the work so as to secureuni form employment of the
proper number of men and machines necessary to carry out the
predetermined manufacturing schedule; (6) a tie-in of this manu-
facturing schedule with financial scheduling so as to avoid
paying out more money for wages, tools and materials than can
be afforded, and thus avoid piling up a high inventory of work
in process at seasons when there is difficulty in raising cash.
f The segregation of scheduling and planning into distinct
V divisions, while it may possess some advantages in a large
) organization, is always fraught with dangers of duplication of
/ such records as balance of stores and balance of work in process
\ and times required for various operations, which duplication of
' records is a needless over-head burden that could be avoided
by merging scheduling and planning into a single division.

Finally the entire production system will fail unless actual
work done in the shop is controlled by the head of the production
department. There are three choices as to who shall control

PLANNING AND SUPERVISING PRODUCTION 223

the actual shop production: (1) the old-time ruthless driver type
of superintendent who is apt to look on the production system as
a plaything of the boss, to be tolerated with apparent enthusiasm
but with plenty of internal contemptuous mental reservations;
(2) the system man with no human leadership; (3) a real human
engineer, technically and economically educated who is alert
but not a driver. I have seen each of the three types. The
first actually has the confidence of the management until he
steers the business into financial reefs; then they veer towards
the second type, and finally the choice will fall on a man of the
third type. A man of the second type will often work for and
under a man of type (1). A man of the third type cannot work
under type (1).

REFERENCES

TAYLOR: "Shop Management," Pars. 258-311.
GILBRETH: "Primer of Scientific Management," Chapter III.
PARKHURST: "Applied Methods of Scientific Management," Chapter III.
DUNCAN: " Industrial Management," Chapters VII to IX.
THOMPSON: "Scientific Management," Pages 313 to 380.

CHAPTER XVIII
FOUNDRY SYSTEMS

230. Castings Requisitions. — Inasmuch as the foundry is in
many establishments an integral part of the factory, the follow-
ing outline of foundry systems is given, more with a view of the
foundry as a shop department than of the foundry as a job shop.

The requisition for castings emanates from a stores record
clerk who initiates such requisition for one of the following rea-
sons: 1. As he enters reservations for production orders or ship-
ping orders, he finds that his balance on hand, deducting reserve,
falls below the minimum stock as specified on his stock sheet.
He thereupon writes out a castings requisition. Where the estab-
lishment has no foundry of its own, this castings requisition goes
to the purchasing department. Where the foundry is a shop
department, this requisition is sent to the foundry foreman.

CASTINGS

REQUISITION. n.TF IM «

HOP ORDER

CLASS

NO. OF
PIECES

DESCRIPTION.

PATTERN No.

DATE
DUE

FOUNDRY JOB
NO.

, -^

FIG. 97. — Requisition to make castings. White bond paper, 81/2 inches
wide, 11 inches high, ruled in red and blue.

Fig. 97 shows a form for such castings requisition. This requisi-
tion bears columns headed as follows: " Class," "Number of
Pieces," " Description," "Pattern Number," "Date Due,"
"Foundry Job Number." The foundry foreman's clerk assigns
the foundry job numbers consecutively as they are received,
beginning with number one as the first order of 'the year. One
copy of the castings requisition is sent to the pattern shop, and
two to the foundry. One of these foundry copies is returned to
the stores record clerk with the foundry job numbers inserted.

231. Moulders' and Coremakers' Order Copies. — On receipt
of the castings requisition the foundry clerk makes out two

224

FOUNDRY SYSTEMS

225

similar job cards, viz., Fig. 98, " Moulder's Duplicate." and Fig.
99, " Coremaker's Duplicate." Both of these cards are attached

MOULDER'S DUPLICATE.

Name

JOB Nc

No. of

PCS. -

Date
of Issue

Pat.
Nos.

Da1

Due

.e.

No. Pieces Moulded.
Include Helpers Number on Job.

m
0.

FIG. 98. — Moulder's card, copy of order to make castings with tracing
record on same. Manila card, 5 inches wide, 3 inches high.

to the pattern shop's copy of the castings requisition, and are
sent to the foreman of the pattern shop. The foreman of the
pattern shop hands them to the pattern carrier with instructions

COREMAKER'S DUPLICATE. JOB NO.

Oae Piece means one full set of Cores required to make one casting
Name

No. Of
PCS.

Date Pat.
of Issue Nos.

Due

te.

;s.

No. of Sets of Cores Made.

z
o

FIG. 99. — Coremaker s card, copy of c
record covering cores made. Manila

to get the patterns that these cards call for. He tacks the
Moulder's Duplicate to the pattern itself, and sends the pattern

226 FACTORY ORGANIZATION AND ADMINISTRATION

^ d

3 8

re re
o n

•5

QJ
JH

• f-i

T-H

•S

•3 o

sanojj

-J

CO ^

^^, t£
DC Q

1 s

1 5

\ *®

o
>%

fa £

I 1

| s

•9

£5

J3<

|x^

to the foundry. In
case the pattern has to
be made, the moulder's
duplicate card is kept
on file in the pattern
shop, remaining at-
tached to the pattern
shop's copy of castings
requisition until the
pattern is made.

The core-maker's du-
plicate is handed to the
foreman of the core-
room.

232. Daily Record of
Work Done.— As the
foundry work is com-
pleted the foundry
time-keeper collects the
card orders and turns
them back to the foun-
dry clerk. The foundry
clerk makes up, for his
own guidance from
these returning cards,
a daily record of work
done (Fig. 100), such
record bearing columns
with the following head-
ings: "Help" (this col-
umn containing check
number and time of
moulder and helpers),
"Shop Order No.,"
"Foundry Job No.,"
"Number of Pieces,"
"Time," "Weight"
(scrap, if any, being
specified), "Pattern
Number, " " Descrip-
tion." The foundry

UNDRY SYSTEMS 227

2 .

*J 0

j i

£ j

/ ^
\ ^

^bjD

i—i

1-H

cT
T3

•p

f^"

E
&

DC
0
0
LU
DC

•

|RY DELIVERY

O 0)

FOUND

General Office.

f a
2

0
\ 1

i^j

S^'

!"s

/ ®

k %

J
o

111

•«.g

Ipllll

, i-H

T-H

sjiii

-/ £

228 FACTORY ORGANIZATION AND ADMINISTRATION

clerk takes this record sheet into the castings cleaning-room and
uses it as a help in finding the castings.

233. Daily Delivery Record. — He then makes out a delivery
record similar to Fig. 101 making it in triplicate, one copy going

FOUNDRY CONSECUTIVE JOB LIST.

Date

JOB NO.
D

CASTINGS REQUIRED.

SHOP

MADE MADE MADE MADE

No.

DESCRIPTION.

Symbo

. 1

Uau

Hrs

Dnti

;;•;

--..

ft"

>.-,t<-

bate

Irs.

31.

11.

II.

11.

I'.

0 -

31.

II.

11.

Jl.

(J.

o«

31.

~^-

31.

FIG. 102. — Foundry clerk's consecutive job list. White bond paper, 81/2
inches wide, 11 inches high, ruled in red and blue.

to the production department, one copy going to the machine
shop, and one copy being retained in the foundry. The general
headings on this foundry delivery record are "Date" and "Page."

JOB No.

NANLE_

DATE

KIND_

.SIZE.

No. Pieces Made

No. Pieces Del'd

No. Pieces Lost

Pattern No.

Drw'g or Sketch

Shop or Stock

Date Completed

Shop Clerks O.K.

Time must be checked every day by Foreman, and O.K'd
upon completion, and completion notice returned to office
without delay.

FIG. 103. — Foundry clerk's tracing card. Gray card, 5 inches wide, 3

inches high.

The vertical columns are headed "Shop Order Number," and a
column for checking, "Foundry Job Number," and a column for
checking, "Number of Pieces," and a column for checking,
"Weight," "Description" and "Pattern Number." There

FOUNDRY SYSTEMS

229

is also a blank column at the extreme left which is used for enter-
ing a reference to subsequent deliveries on the same order number.
After filling out the foundry delivery sheet, the foundry clerk
returns again to the castings requisition sheet, and posts in the
column headed "Description" the date of completion and num-
ber of pieces completed. As soon as any one castings requisition
sheet is filled out showing that all items have been delivered,
this sheet is retired to a file of completed castings requisitions.

234. Consecutive Job List. — The foundry clerk also writes
out daily a Finding List or index sheet, using for that purpose a
sheet entitled "Foundry Consecutive Job List," shown in Fig. 102.

MATERIAL SCRAPPED

FPUNDRY DEP'T.

jOn

PIECES

DESCRIPTION SYMBOL Shop Order No. ON ACCOUNT

DEFECTIVE
CASTINGS

MISTAKE IN

PF.P'T

MADE BY KEY No.

NAME

Time Lost on Scrapped Castings.

State Below Why Castings Were Lost.

Key No.

Moulders
Houra

Help

Core MW
Hours

Foreman Will Stamp and Send to Office.

FIG. 104. — Record of defective castings, filed back of cards shown in
Fig. 68, a duplicate going to superintendent and another copy to production
department. Yellow bond paper, 5 inches wide, 3 inches high.

The columns in this list bear headings as follows: "Date," "Job
Number," "Number of Pieces." "Description," "Shop Order
Number," "Class of Labor" and "Time."

235. Foundry Tracing Card. — The foundry clerk prepares
also each day a number of cards (Fig. 103) for the purpose of
answering any questions as to the date of delivery of castings,
number of castings scrapped, and state of completion of any job.
These cards are filed back of guide cards showing job number,
and are written up at the same time as the writing up of the cards
entitled, "Core-makers' Duplicate," and "Moulders' Duplicate."

230 FACTORY ORGANIZATION AND ADMINISTRATION

Entries are posted on these cards from the " Foundry Delivery
Record" (Fig. 101).

236. Scrapped Material. — To the back of each of these cards
are attached by "clips" notices of defective castings, where such
have occurred; these notices (headed " Material Scrapped") are

NAME CIOCK

TOTAL HOURS

Moulders
Md

Helper!

Cor.
Makers &
Helper*

JOB No.

Description

Hourg

Pieces
Mould-
ed

*%£

Made

HOURS

DESCRIPTION HOURS

DESCRIPTION

1 Blast Time.

Gaggerg Clampg,
) Flasks and Bars.

Cupola Repairs
2 and Attending.

J Cleaning Castings

3 Unloading Material

Repairs and Attend-
ing Boiler, Engines,
[ Blower.

Handling Supplies
4 General Labor

3 Watching.

DROP INTO TIME BOX EVERY DAY AT QUITTING TIME.

FIG. 105. — Foundry workman's time card. Manila card, 31/2 inches
wide, 6 inches high.

made out on a form similar to Fig. 104, a copy of this form being
sent to the production department. On receipt of scrap
notices a new order is entered on a foundry requisition to cover
the loss.

237. Clerical Help Required.— In a foundry employing thirty
or forty moulders, six to ten core-makers, eight to ten men in the
cleaning-room, and six to eight men in the yard, a foundry clerk

FOUNDRY SYSTEMS

231

TOTAL

CM
CM

0)
CO

CO
CO

N
CO

CO
CO

in
o

o
o

CM
CO

1C
00

LU
O

0
CO

X
0

05
CM

<
_l

v
0)

CO
CM

3
o

N
CM

•^

CD
CM

CO
CM

c/5

cc
o"

ca
£

&
J

or
ul

< o
oz

232 FACTORY ORGANIZATION AND ADMINISTRATION

assisted by one time-taker can keep records of sufficient accuracy
for all ordinary cost-finding purposes, provided, of course, that
the time-taker has no other duties than those connected with the
time-taking.

DAILY CUPOLA REPORT

191

Kind and Grade of Pig Iron Used.

Pile No.

No. of Pounds.

Total Pig Iro

New Scrap,

M.irhine Shop Srrap,

Total IV

[elt

Coke n<wH in Cupola, only,

Total

Stone Flux used, .....

Manganese used,

No. Ibs. of Iron melted per Ib. Coke,

RECORD OF FUEL OTHER THAN

CUPOL/

V USE.

No. Cubic feet of C.as,

c. ft.

Coal used for Heating Roiler, et<-.,

Ibs.

Coke or "serl for Heating Ovens,

Pile No.

ih*

Water Meter Reading . 7 A-M-

P.M

FIG. 107. — Daily cupola report. Manila card, 5 1/2 inches wide, 8 1/2

inches high.

238. Indirect Foundry Labor. — The time of men working in
the cleaning-room is usually charged wholly to a standing order
covering "Cleaning Castings." The yard work, such as unload-
ing and handling pig iron, coke, etc., may sometimes be put
with considerable advantage on a piece work or premium basis.

FOUNDRY SYSTEMS

233

Time of moulders spent in pouring is charged to a standing
order under the head of "Blast Time."

239. Foundry Time Ticket. — A form for Foundry Workman's
Time Ticket is shown in Fig. 105.

240. Daily Cupola Reports. — In the matter of cupola reports,
it is desirable that these be filled out by a careful and responsible
person who remains on the charging platform during the blast
and, while there, enters the weight of each charge as it is made,
recording the amount of iron and the number of the car from
which it was taken. This serves as a check on the weight of the
cars, and secures greater accuracy as to the kind of iron. The
entries made on the "Daily Record of Work Done" and the

RECORD OF CASTINGS MADE.

To M.S. Per deli

'pry Sheet,

No. Pound. TOTAL.

To S Dept. Per delivery Sheet.

Foundry Stock (C

ore Plates.Anchors.etc.),

Defective castings returned from M. Shorj,

Defective castines returned from Foundry,

Total scrapped,

N>t good castings made

REMARKS:

FIG. 108. — Reverse of Fig. 79.

charge sheet, a form for which is shown in Fig. 106, are summarized
into a daily cupola report; shown in Fig. 107 and a "Record of
Castings Made," shown in Fig. 108 which are simply a condensa-
tion of the separate items entered on the previous forms.

In cases where there is a possibility of the weight of castings
fluctuating from a desired standard to which it is intended that
the foundry shall adhere strictly, it is desirable that the standard
weight be entered on orders and job tickets so that these weights
are noted by the foundry employees.

241. Weekly Cupola Reports. — A summary is made of the
daily cupola reports once a week, such weekly summary being
made in triplicate, one copy remaining on file in the foundry,

234 FACTORY ORGANIZATION AND ADMINISTRATION

CUPOLA RFPORT WEEK ENDING

191

Kind and Grade of Pig Iron Used.

No. of Pounds.

Per Cent.

No. Pig Iron

New Scrap

Foundry Scrap

TVT -1 r - NEW

M. Shop Sciap OLD

Total.

Remelt Scrap

Total iron to Cupola*

No. pounds Coke used in Cupola-

No. pounds Manganese used in Cupola

Castings made but not delivered

Good Castings delivered

Foundry Scrap

M. Shop Scrap

Gager and Clamps

Flasks and Bars

Total Castings made

Loss in Cupola [Excluding Remelt.]

REMARKS:
NOTE:

Per cent\ o
Per cent, o
Castings d

'. iron based on total charge.
Castings based on Castings made.

FIG. 109. — Weekly cupola report. White bond paper, 5 1/2 inches wide,

8 1/2 inches high.

FOUNDRY SYSTEMS 235

one being sent to the shop superintendent, and one to the works
manager. Fig. 109 shows a form for such weekly cupola report.

REFERENCES

KNOEPPEL: " Maximum Production." Chapters IV to XIV.
PERRIGO: "Modern Machine-shop Construction, Equipment and Manage-
ment," Chapter XXI.

CHAPTER XIX
THE MACHINE SHOP AND TOOL DEPARTMENT

242. Arrangement of Machines. — The arrangement of the
various machines in the machine shop will depend somewhat
upon the general tendency of the sequence of operations. Such
a general tendency cannot be established from a few parts of the
product, but can be ascertained only by a careful study of the
processing and most advantageous routing of all of the compo-
nent items involved in the output.

In addition to leaving room enough for working and storing
a considerable supply of work in process, room should be left
for the installing of additional machines with each group of the
same kind of machines.

243. Foremen and Gang Bosses. — Most machine shops are
insufficiently officered. The foreman of the machine shop is
compelled in many well-equipped and otherwise well-organized
shops to do all of the following up of orders in his department,
to act as an expert in processing, to design new tools, and to hire
labor. Under such conditions anything like reasonably high effi-
ciency is unthinkable. The general foreman of the machine
shop should be assisted by an assistant foreman, who has charge
of the strictly machine work processes, another assistant foreman
to act in charge of the strictly bench and vise work and group-
assembling part of the machine shop, and still another assistant
foreman in charge of erecting work. In addition to these as-
sistant foremen, there should be a sub-foreman or gang boss for
each group of machine tools, and for each specialty in assembling
and erection work. These gang bosses, who are the expert
mechanics in each group, spend most of their time in direct
productive work themselves, and about one-fourth or one-fifth
of their time in indirect work in instructing and helping others
in their group.

244. Tool Room Independent of Machine Shop. — The tool-
room should be either a department independent of the machine
shop, or, if under the supervision of the general foreman of the
machine shop, there should be a separate foreman of the tool

236

MACHINE SHOP AND TOOL DEPARTMENT 237

department. The foreman of the tool department in turn
should be relieved of all duties pertaining to storage of tools and
blue-prints. This work should be in the hands of a competent
assistant in the tool department so that the foreman of the tool-
room may devote practically his entire energies to questions
having to do with the making and purchase of tools.

245. Relieving Foremen of Clerical Work. — If the general
machine-shop foreman is provided with a competent staff of
assistants, as above outlined, he will be able to confer intelli-
gently with the head of the production department and tracers,
and may be expected to make reasonably accurate statements
as to time of completion of work in process. He can never have
his orders well in mind or well in hand, however, if he is over-
worked, as most machine-shop foremen are, with a multitude of
various responsibilities beyond the mental capacity of one man.

The issuing of shop orders and following them up are duties
which in the best shop organization are delegated to the produc-
tion department, a department entirely independent of the ma-
chine shop. Similarly, workingmen's time records belong to the
time-keeping department. Records of employees are kept in
the employment department. The fact that these last-named
records are kept in a separate department does not in any way
lessen the authority of the department foremen in approving
or disapproving of the men in their charge or sent them for final
decision as to employment.

The data for filling in efficiency records must, of course, be
obtained from the department foreman. The keeping of records
is work of a nature, however, that is so different from the regular
routine of a department foreman that the necessary records will
almost certainly fail to be kept up unless the labor of recording
is centered under separate supervision. When all of the above
duties have been removed from the machine shop, the general
foreman will have opportunity to look around the shop.

While it is sometimes impracticable to have the desk of the
general foreman so located that he can have a clear view of all
of the shop territory under his control, it is almost always pos-
sible, and certainly desirable, to locate sub-foremen in such a
way that they can at all times have a full view of all of the men
working under them.

246. Moving Work in Process. — It will usually be found
advisable to have one or more laborers assigned to the work of

238 FACTORY ORGANIZATION AND ADMINISTRATION

stock-moving. It is the stock-mover's business to see that a
piece of work, finished in any one department, is quickly taken
to .the place where the next operation is to be performed, and to
its proper destination as soon as the last operation has been per-
formed. It is the stock-mover's duty to assist the inspection
department in seeing that all articles requiring inspection are
promptly brought to the attention of the proper person delegated
to do such inspection after each set of operations involving
inspection.

247. Call Bells. — It has been found useful in many shops where
the yard gang or casting cleanings force constituted the main
supply of laborers, to have an annunciator located at those places
in charge of some one man, this annunciator being connected to
push buttons located at various parts of the shop where they are
pressed when a laborer is wanted.

A similar call-bell system is used in many shops for calling
boys from the tool-room to get tools, drawings, requisitions,
etc., the men pressing their push buttons some little time before
the article is needed, and in that way avoiding any loss of time.
One push button will answer for a considerable floor area. When
the boy arrives at the area corresponding to the number of his
call, he simply calls out, " tool-room boy," so as to attract the
attention of the man who wanted him. A better plan is to have
the tool room prepare boxes or portable stands supplied with
tools as per tool lists for each day's jobs in accordance with the
bulletin board showing order of work such tools being furnished
to each man prior to his beginning his next job.

It must be borne in mind that the mere running of machine
tools at their best feeds and speeds is not in itself any guarantee
of most efficient production, since delays between operations
constitute the greatest loss of time. It is these delays which are
cut out by the use of well-managed premium or gain-sharing
wage systems, good methods of routing, scheduling, and stock
moving, and orderly arrangements.

248. Issuing Blue-prints. — The head of the tool storage and
blue-prints issuing room should be constantly following all blue-
prints and tools so that, unless they are in current use, they are
promptly returned to storage. Blue-prints drawn by foremen
should not be given out by them to the men. There should be an
office set of blue-prints bound together in sets, each set represent-
ing all of the drawings required for" a certain product. These

MACHINE SHOP AND TOOL DEPARTMENT 239

sets should be kept for reference in the machine-shop office only,
and not be taken away from that office. Blue-prints for use by
workingmen should be kept in the tool storage room and drawn
on checks or issued with tool lists the same as shop tools. This
practice results in the prints which are in the shop office always
representing complete sets. The systematic arrangement of the
record sets is thus not interfered with.

It is desirable to enclose separately by a grating, and keep
under lock and key such part of the tool-room as is wholly
devoted to storage and issuing on checks of tools and blue-
prints. This separate grating is in addition to the general
grating or partition which encloses the machinery engaged in
tool-making work.

249. Repairs to Machinery and Transmission Apparatus.—
In most small or medium-size shops, it will be found conven-
ient to have the repair and maintenance work of the machine
shop on transmission equipment and machinery as one of the
duties of the foreman of the tool-room. He in turn may have
one employee in his department whose specialty is such repairing
and maintenance work, and he may have to call a considerable
number of machinists and laborers to his assistance at times.
At such times he should, of course, confer with the foreman of
the machine tool department and the man who has general charge
of the laborers. In a small establishment a single standing
order will suffice, to which all labor and material for repairs and
maintenance of shafting, belting, etc., may be charged. In larger
factories it will be found desirable to have separate standing
orders covering the repairs and maintenance of transmission
apparatus in each department, so that this expense may be
properly localized in determining the operating expense of each
department.

Orders covering repairs or alterations to machinery are best
taken care of by letting each order bear the number which is on
the number-plate fastened to each machine, and which number
appears on the card inventory of machinery. The orders of
this series should emanate from the tool-room, where a brief
description of the nature of the repair or alteration is stated in
the wording of the order, so that this brief statement may be
transcribed on to the inventory card, after the cost department
has turned in a record of the cost of time and material. The
actual doing of repair work on machines need not wait for the

240 FACTORY ORGANIZATION AND ADMINISTRATION

TOOL ORDER

Date.

No. " T "

NAME OF TOOL AND NATURE OF WORK

formal typewriting of the order by the order department, since
such repair work on machines is usually an urgent matter. The
only object in having the order department typewrite the order
is for the purpose of having the record of the nature of the repair.
250. Orders for Making Tools. — In the chapter on the Order

/« • v Department, it has already
^ \ been stated that it is advisable

to have a separate series of
orders for the tool-room. The
foreman of the tool-room
should be provided with a
form on which he may write
a request for the issuance of
an order. Prompt attention
must be given to these re-
quests by the head of the plan-
ning department, who should
give instructions to the opera-
tor of the billing machine on
which shop orders and accom-
panying shop tags are written,
that such tool-room orders
and tags be promptly type-
written and delivered to the
messenger without delay. In
a small establishment, the
tool-room foreman may him-
self write out the tags which
accompany tool-room jobs, in-
stead of having a separate
order form. Fig. 110 shows
a form for such tool-rcom or-
der tag. He may keep a book

TOOL ORDER- (STUB)

Date

QUANTITY

Date
Completed

LIST OF MATERIAL

STOCK

As soon ae Tool Is oompleted.send this Stub to Shop-Office

FIG. 110. — Form for tool order tag.
Stub kept in tool department till order
is completed. Salmon tag stock, rein-
forced eyelets, 41/8 inches wide, upper
portion 5 inches high, lower portion
(stub) 6 inches high.

in which he writes a descrip-
tion of the consecutive orders.
He should have the general foreman or superintendent enter his
initials opposite each of the items in this book, designating that
it has been duly authorized. It is also very advisable to have a
column in this book in which is entered the tool-room foreman's
estimate of cost as he makes it at the time of asking the approval
of the general foreman or superintendent, and an adjacent column

MACHINE SHOP AND TOOL DEPARTMENT 241

in which is posted the cost department's report of the actual
cost of the tool or fixture after it has been finished. These
columns will serve as a very good basis for improving the efficiency
of the head of the tool-room as an estimator of probable costs of
tooling equipment. Where the tool-room foreman writes out
the tag which accompanies the tool or fixture in process of manu-
facture, it is advisable that he keep a stub of this tag on file,
on which he enters material issued with the order or subsequently
drawn for it. If it is drawn from his own stock, shop tags accom-
panying tool-room work will, of course, be of a separate color
from tags on other order series, and when a tool-room job is sent
into the regular machine shop, the shop tag should of itself be
sufficient authorization for the doing of the work. The tag
accompanying such work should bear the signature or rubber
stamp authorization of the general machine-shop foreman, show-
ing that he has approved the order for work outside of the
tool-room to be done on it.

251. Record of Small Tools. — The record of files, small tools,
etc., that are drawn from a tool-room ought to be localized to
individual workmen and summarized for monthly comparison.
The reason should be written on each requisition on the tool
storage room for the issuing of new tools or tool replacement.
A proper system of standing non-productive orders will provide
data for comparison of these accounts from month to month with
a view to encouraging economy.

252. Repetition Work by Tool -makers. — In a tool-room of
considerable size there is apt to be a good deal of duplicate
work, such as the making of hardened bushings for the holes in
drilling jigs, etc., which can be put on a premium, bonus, or
gain-sharing wage basis. The same is true of similar jobs
occurring often, and so nearly alike that they are practically
the same. The head of the tool-room should compile the cost
data of recurring jobs in just the same manner that the works
manager is considering the manufactured product.

253. Tool Steel Tests. — The head of the tool department
should compile the results of tests of tool steel with a view to
determining what kinds of tool steel are best for the various
kinds of work in the shop. If there are men in the shop em-
ployed to do time-study work for the purpose of establishing
premium, bonus, or piece rates, such men's observations may be
made to cooperate in securing the necessary data wanted in

242 FACTORY ORGANIZATION AND ADMINISTRATION

connection with tool steel tests. Fig. Ill is a form used for
recording the data of an individual test of tool steel. Fig. 112
is a form used for summarizing the results of a number of indi-
vidual tests. Some authorities argue that it is totally incorret
to base any conclusions on the amount of work that can be
done with one tool without regrinding. Mr. F. W. Taylor
bases his speeds and feeds on the maximum to be gotten out of
a tool in an hour and a half without regrinding. If replace-
ment of cutters requires a long, slow-grinding process, and occa-

TOOL STEEL TEST

NAME OF STEEL DEPARTMENT

KIND OF TOOL PART FINISHED.

KIND OFMETAL.FINISHED DATE

CONDITION OF METAL

NO. PIECES FIN. WITH ONE GRINDING .

NO. P.IECE8 FIN. WITH ONE TOOL

CUTTING SPEED PER MINUTE

FEED PER REVOLUTION

LENGTH OF PIECE FINISHED

SIZE OF TOOL

PRICE OF TOOL.
OPERATION

TIME TAKEN FOR OPERATION .

WORKMAN'S NAME.

FIG. 111. — Form for recording tool steel test. White bond paper, 81/2
inches wide, 51/2 inches high.

sional reforging, then a relatively slower speed must be chosen
than where facilities are at hand for quick replacement and
regrinding of cutters.

254. Scheduling Machine-shop Work. — The Production or
Planning Department must have planned long before a man is
through with a job what that man is to do next, so that there is
no such thing as a workman standing around and waiting for a
job or being given something merely to keep him from being idle,
and then being compelled to change his job as soon as the foreman
finds something that is more urgent. The practice is becoming
more and more general of having a sub-foreman in charge of only
a limited number of men or machines, and giving him a board on
which there is a hook or peg to represent each machine or work-

MACHINE SHOP AND TOOL DEPARTMENT

243

ing man in his department. On this peg he must have hanging,
every evening, a sufficient number of duplicate shop order tags
to provide the working man whom the peg or hook represents,
with a full day's work on the following day. To be sure, when
the next day comes the order of work may have to be slightly
modified, but where this system is put into practice it will be

No. of test

No. of part finished

Workman's number

Department number

Operation

Time taken for operation

Kind of metal finished

Condition of metal

Size of piece finished

Name of tool steel used

No. of pieces fin. with one grinding

Speed in feet per minute

Feed in inches per revolution

Price of steel per Ibs.

Cost of Steel used per 100 pieces

Price of operation per 100 pieces

Wages this man averages per day

Years production

Saving per 100 pieces

Net saving per 1 yrs. production

^^__ — .^ ^ —^ .

^=====^====^^::^=^==^^

^===^=^=^:==:=^=z=^:^

FIG. 112. — Form for summarizing tool steel tests. White bond paper, 81/2
inches wide, 11 inches high.

found that there will be less need of dropping a job and changing
to another than without such systematic planning.

255. Tool Lists for Manufactured Parts.— The head of the
tool-room should have a card index arranged by names, and
mark numbers of product. On this card he should record all
tools necessary for the complete tooling of the part in question.
A form for such record is shown in Fig. 113. (See also Fig.

244 FACTORY ORGANIZATION AND ADMINISTRATION

87.) It will also be found convenient for the tool-room fore-
man to have a cross index of the machinery inventory, ar-
ranged by kind of tool, so that he may know where the
machines of any one kind are located, and the total number of
each kind of machine in the entire plant. A form for such
record is shown in Fig. 114.

DOLING RECORD F^R PART No.

OPERATIONS

TOOLS REQUIRED

FIG. 113. — Record of tools, jigs, etc., required to machine a given part.
White card, 6 inches wide, 4 inches high.

256. Identifying Different Brands of Tool Steel.— The dif-
ferent brands of tool steel are best identified when the steel is
still in the bar stock by running narrow strips of paint length-
wise along the bar and having a board hung up in the tool-room

KIND OF M

RI7F

ACHINE

DEPT.

INVENTORY No.

MAKE

FIG. 114. — Record showing location of all machines of any one kind and size.
White card, 6 inches wide, 4 inches high.

on which is listed the name of the brand of steel, corresponding
to each colored line or combination of colored lines. After the
bar stock has been formed into cutting tools, it is desirable to
have the brand of steel and the shape of the tool stamped on
the tool itself, using certain symbols or numbers to designate

MACHINE SHOP AND TOOL DEPARTMENT^ 245

the various brands and shapes. These stamped symbols^ num-
bers or letters, must be placed on some part of the tool where
they will not be obliterated by grinding on re-forging.

Detailed instructions as to the heating and quenching of each
brand should be permanently posted in that part of the shop
where this work is done, and strict adherence to these instruc-
tions should be enforced.

257. Check System. — In keeping track of withdrawals of
tools by employees, the double brass check system as suggested
by Mr. Perrigo will be found better than the single check system.
In the double check system, there are two hooks provided for
each employee; next to these two hooks is a label holder in which
can be slipped a small strip of paper or card bearing the name of
the employee, corresponding to a certain tool-check number.
When an employee first reports for work, he is given a supply of,
say, 10 round brass tool checks, and 10 square checks bearing
the same number are hung on one of the hooks opposite his name.
As soon as he calls for a tool, he presents one of his round checks.
This is hung on the vacant hook. At the same time one of the
square checks is taken off and placed in the tool rack, case, or
drawer from which the tool is taken. When he returns the tool,
he is given back his round check, and the square check is taken
from the rack, case, or drawer into which it had been placed as
a substitute for the tool. This system enables the tool-room
foreman to tell by the number of round checks hanging on any
man's hook just how many tools he has out. In the single check
system, only a single check is used, and is substituted for the
tool. In this 'system the foreman cannot tell how many tools a
man has out without 'looking practically through the whole tool-
room or keeping an additional written record.

258. Bolts, Clamps, Washers and Nuts for " Setting Up."—
It is desirable to keep the floor and benches in the machine shop
clear of bolts, washers, nuts, and clamps used in setting up pieces
in the machine tools. A good method of identifying all such
bolts, clamps, etc., is to have them painted a bright color, such
as red, blue, or green, which immediately designates them as
tool equipments. Many shops allow these bolts, washers, and
clamps to be thrown indiscriminately into drawers of benches
or shelves. A much better plan is to provide specially designed
storage places for them. Fig. 115 shows a tool-room section so
designed, as used by the Tabor Manufacturing Company of

246^ ^FACTORY ORGANIZATION AND ADMINISTRATION

FIG. 115. — Tool-room section made up of tiers of racks, and each com-
partment subdivided with boxes labeled with brass plates, giving the size
and symbol of the bolts contained therein. Particular attention is called to
the method of stocking the bolts; the sizes and lengths of the bolts regulate
the sizes of the boxes. Pegs are provided on the front of the bottom beveled
edge for the workman's checks.

MACHINE SHOP AND TOOL DEPARTMENT , ,,.247

FIG. 116. — Tool Room section made up of racks of Standard Shelving
with Standard attachment to care for the widely varying stock found in
Store Rooms. Note the check hook and label holder provided for each
compartment. Particular attention is called to the sloping shelving used
in the upper portion of the rack which takes care of such tools as drills,
reamers and taps of which only a small working quantity are carried in
stock. Note how the sloping shelf keeps the tool at the front part of the
compartment where it is in plain sight and can be quickly reached. Each
compartment is provided with a check hook and label holder. Arrangement
of the shelving with the less used material at the top of the rack, small and
more used parts at a height where they can be quickly reached and the
heavier parts near the floor where they can be handled with a minimum
amount of effort, makes it very efficient.

248 ' FACTORY ORGANIZATION AND ADMINISTRATION

FIG. 117. — Tool Room Section made up of Standard Shelving with
sliding panels for snap gauges, lathe dogs, milling cutters and similar equip-
ment. Panels are equipped with hooks and with label giving the number
of the various tools. Check hooks are provided for carrying the workman's
check. These sliding panels give a much more compact arrangement for
carrying snap gauges, milling cutters, and the like, than the usual method
of hanging these on boards along the wall. Another feature of this rack
is the special section for plug gauges as shown at the end of the rack.

MACHINE SHOP AND TOOL DEPARTMENT 249

Philadelphia. This company keeps all of these parts in the
tool-room.

259. Storing Tools. — The problem of storing a large number
of tools into a small space, at the same time making it possible to
get a rapid and comprehensive view of all of the tools, is one
which can be met by the designing of special fixtures for holding
the tools. This problem is also well met by the Lyon Metal-
lic Mfg. Co. in the construction of racks of standard shelving
with check hooks and label holders as shown in Figs. 116 and
117.

In general, the principle of concealing as little as possible
from sight in a' tool-room is one which should be observed in
designing fixtures for tool storage, hence it will be advisable to
avoid closed drawers for storage purposes, and to utilize open
shelves as much as possible. Shallow shelves with partition
strips separating the tool compartments, and a slope toward the
front, facilitate the removal and return of the tools. Space
should always be provided for the workmen's checks as sub-
stituted for tools withdrawn.

260. Selection of Machines. — In the matter of machine tool
equipment there needs to be constant study in the shop as to
when it is best to use a general purpose non-automatic machine,
when to use a semi-automatic general purpose machine, and when
to use single purpose non-automatic or single purpose automatic
machines. The question of when to use one or the other types
of machines can only be settled after a careful investigation of
cost of machines of various types that will answer, and the cost
of tools required with each type, as well as the time in which each
type of machine will do the work.

As regards the use of special machines, there is no doubt
but what their adoption enables manufacturers in the United
States, producing articles made of iron and steel, not only to com-
pete with foreign makers but to export. The high price of labor
in America, as compared with wages abroad, forms a constant
incentive to American manufacturers to look for appliances that
will reduce their cost of production. The result is that fre-
quently machines that are first introduced as special finally in
some cases become standard, as a result of modifications in various
ways.

Within recent years, machines used. in connection with press

250 FACTORY ORGANIZATION AND ADMINISTRATION

working of metals and the working of hot metals have undergone
a development fully equal to that which has taken place in
machinery of the strictly machine-tool class. Presses of various
types are now found in all improved shops, and are indispensable
if the output is a standard article and produced in large quanti-
ties, such as sewing-machines, typewriters, agricultural imple-

PROPOSITION FOR NEW MACHINERY.

Proposition No. __ — - Date
Name of machine to be

To be used in _ _ _ Department
In the manufacture of _ , _ _ -

Part and operation to be performed

Present method

Present piece work price .
Proposed " " " —
Expected saving per year.
Based on a production of_

Correct

Cost of machine estimate - bid

To be designed by

To be built by

Time required to complete - deliver.
Suggestion by

Estimated reduction of cost, on above basis is correct

Cost Department.
Required - desirable1- for production

Production Department.

Inspection Department.

FIG. 118. — Page 1 of proposition to introduce new machinery. White bond
paper. Four-page folder, each page 81/2 inches wide, 11 inches high.

ments, parts of automobiles, etc. A few years ago the use of
presses was confined to the manufacture of sheet metal goods,
and while most of the presses now in use are still cutting or form-
ing articles from the sheet or strip, the scope is broadening, espe-
cially in the direction of forming bar metals, thereby simplifying
and cheapening operation of special presses.

MACHINE SHOP AND TOOL DEPARTMENT 251

261. Proposals for New Machinery Equipment. — Figs. 118 to
120 inclusive illustrate a form used in a large manufacturing
establishment in considering proposals for introducing new ma-
chine tools or special machinery.

Figs. 118 and 119 are printed on the inside of a four-page folder
of about the proportions and shape of a foolscap sheet, and are

Page 2.
PROPOSITION FOR NEW MACHINERY.

TOOL DESIGNING DEPARTMENT Remarks:

GENERAL FOREMAN Remarks:.

FOREMAN Remarks:.

.ASSISTANT FOREMAN Remarks:.

WORKMAN Re,marks:_

NOTE: Please return this sheet without delay to the Tool Designing
Department.

FIG. 119. — Page 2 of proposition to introduce new machinery (see Figs. 118

and 120).

a record of the anticipated advantages which would accrue from
introducing the new machine. It will be noticed that opinions
are asked for from a number of individuals and departments,
including cost department, production department, inspection de-
partment, tool-designing department, general foreman, assistant
foreman, and the workman. After these complete expression?

252 FACTORY ORGANIZATION AND ADMINISTRATION

of opinions, some of which may, of course, be prejudiced and must
be taken for what they are worth, the report is submitted to a
committee which selects from the various proposals those which
seem to be most advantageous.

Fig. 120 is printed on the outside front page of the folder.

SUMMARY AND DISPOSITION OF PROPOSITION FOR NEW MACHINERY.

Proposition No.
Machine

Proposition approved
Special Order Issued -

Special Order No

Requisition issued

Drawings approved —
Patterns ordered

Patterns completed

Castings and materials ordered
Machine installed

Experiments completed

New Piece Work ticket issued

Former earnings

Present earnings

Inspection Dept. Report.
Filed

File No._
Approved.

FIG. 120. — Summary and results of proposition to introduce new machinery.
(Outside cover to Figs. 118 and 119.) (See Figs. 118 and 119.)

REFERENCES

Tuck School Conference on Scientific Management, pp. 155-175.
EVANS: "Cost keeping and Scientific Management," Chapter XIII.
PARKHURST: "Applied Methods of Scientific Management," Chapter VI.
CARPENTER: "Profit-making Management," Chapters V, VI and VII.
PERRIGO: "Modern Machine-shop Construction, Equipment and Man-
agement," Chapter XXIX.

CHAPTER XX
SHIPPING AND RECEIVING DEPARTMENTS

262. Relation of Shipping and Receiving to Other Depart-
ments.— In most establishments shipping and receiving are
under the same general head. In others purchasing and receiv-
ing are under the same department, while in still others the re-
ceiving department is an independent department reporting
direct to the factory manager.

263. Copies of Orders to be Sent to Shipping Department. —
The shipping department should receive a copy of every order
which the department is expected to ship, such copy containing
all the information necessary to get out and pack all items belong-
ing to that order.- The shipping department's files of unfilled
orders will be classified according to the order classification scheme
of the company. Thus there may be contract orders on one
file, supply orders on another, etc. Usually the shipping depart-
ment will want to put express orders on a separate file board
from freight shipments. All reference orders or changes or addi-
tional information should be written on blanks bearing the same
order number as the original order.

264. Notice of Items Ready for Shipment. — The shipping
department should be furnished a weekly list of large orders
or contract orders which it is expected to ship the following
week if the business is one involving the shipment of large
contracts, so that proper arrangements can be made for ordering
in cars.

265. Stores and Inspection Records Prior to Shipment. —
In order to keep complete stock records it is necessary that
all parts should pass into stock and be recorded as having been
received from the shop before they are shipped out. When items
on any order sufficient for a shipment are ready, the stock depart-
ment sends its order copy to the shipping department, with a
check opposite the items that are ready for shipment, together
with date. If the parts are not inspected parts sent in quantity
into the stock-room, but represent large machines or groups of

253

254 FACTORY ORGANIZATION AND ADMINISTRATION

parts which do not actually go into the stock-room but are shipped
direct from the shop floor, then the stock-room copy of the order
should be stamped by the floor inspector. The shipping depart-
ment must see that for all articles shipped direct from the shop
floor there is an inspection record. In some factories the inspec-
tor's report is sent to the shipping department as a notice that
goods are ready for shipment. Orders for small supplies and
repair parts coming direct from stock warehouse are not usually
marked "Inspected," as these parts are usually inspected in
quantity by an inspection department which examines all lots
of small parts just before they are turned into stock.

266. Packing Rooms. — It is well to provide a room or space
with a number of bins of various sizes closely adjacent to the
packing and loading space. The stock department puts into
these bins the items which they have ready for shipment for
various orders, hanging a tag on each bin, with the order number
marked on these tags, and a large tag marked "Ready" on
such bins as contain goods ready for shipment.

When the shipping department receives the' stock-room's copy
of an order, indicating that the goods are ready to ship, the ship-
ping department order copy is removed from the regular file and
put into a temporary file, the stock department's copy is stamped
by the shipping department and is then returned to the stock-
room. The shipping department's stamp does not necessarily
mean that they have shipped the goods that day, but indicates
that they have noted that the goods are ready and are proceeding
to the best of their ability to get them shipped. When shipping
department is ready to begin packing, a shipping department
clerk takes the shipping department order temporary file, goes to
the bins in the storeroom and to the shop floor if necessary,
and checks off by items all material called for. He then has the
packers bring the material to the loading-room or platform and
endorses on the order how it is packed, viz., the number of boxes,
barrels, or crates. If the order is complete, he so marks it and
turns it over to the clerk who writes out the railroad receipts and
packing lists, or, in a smaller establishment, does this himself.
Packing lists are usually written out in manifold as are also
railroad receipts, there being usually three copies.

267. Packing Cards and Lists. — In each package there is
inserted a packing card similar to Fig. 121. This contains
customer's order number, shipper's order number, date packed

SHIPPING AND RECEIVING DEPARTMENTS

255

and by whom packed, and give full information as to what to
do in case of shortage or breakage or claims covering defects.

Fig. 122 shows a form for packing list, one of which is placed
in the package, and one sent by mail to the consignee; another
copy goes to the production department, which vise's same, and
then sends it to the stores department.

Fig. 123 shows a form for freight receipt which is signed at the

THESE GOODS WERE

GHEGEED BT PACKER

AND THEREFORE KNOWN TO CONTAIN
ALL THAT THE BILL CALLS FOR.

Please see that each bale, box or 'package is delivered to you in good
condition by transportation company before receipting for goods. If short-
age is shown, require the freight agent to note same on expense bilL

IF YOU ACCEPT SHIPMENT SHORT OF MATERIALS SHOWN
ON PACKING LIST AND BILL OF LADING, YOU SHOULD NOT EX-
PECT US TO ASSUME THE RISK

Attention to above will work to our mutual protection.

UNPACK WITH CARE

Many shortages arise from goods being left in packages, or thrown out
"with packing. Your own experience will confirm this. RETURN THIS
CLAIM CARD with letter advising particulars in case of disagreement with
invoice, or other complaint, as packer must be held responsible.

These articles have been checked by inspector, and shipped in perfect
condition. If not as ordered, return this packing card.

RETURNED GOODS

When returning goods for any reason, please be careful to mark package
plainly with your name and address, and consign goods to

Enclose IN PACKAGE complete list of articles, and state why returned,
even though this has been previously explained in correspondence.

Customers' Order No. Date

Our Order No.. Packed by

FIG. 121. — Packing card. Yellow card, 7 inches wide, 9 inches high

railroad receiving depot, and is followed by the railroad com-
pany's regular bill of lading.

268. Shipping Records. — As soon as packing lists have been
written, entries are made into a shipping record book of form,
similar to that shown in Fig. 124. This book contains columns
showing date of shipment, number of sheets to the order, how
shipped, car number, whether freight was prepaid, date paid,

256 FACTORY ORGANIZATION AND ADMINISTRATION

PACKING LIST

NO.

DATE

SHIPPED To.

ORDER NO._
CAR No.

VIA.

SHIPPING DEPARTMENT

RECEIPT No.

NO. PKG.

CONTENTS

WEIGHT

PACKED BY

PLEASE CHECK THIS LIST IMMEDIATELY
ON RECEIPT OF SHIPMENT AND NOTIFY US
_PROMPTLY OF ANY ITEMS NOT RECEIVED.

FIG. 122. — Packing list. One copy goes to consignee by mail, one copy
is placed in package, and another copy goes to production and stores depart-
ments. White paper, 61/2 inches wide, 81/2 inches high.

No.
F
Gonsignt

FREIGHT RECEIPT.

SHOP NO...

B. L. NO_. DATE-

teceived from

>d to

By the—

7?.;?.

in apparent good order, the following goods, as marked and described below, which are to be
delivered in like order, without delay. Subject to all the Conditions of Company's Bill Lading.

No. Pkgs.

DESCRIPTION OF ARTICLES

WEIGHT

OWNER'S RISK. ORIGINAL.

FIG. 123.— Freight receipt. Buff paper, 6 1/2 inches wide, 8 1/2 inches

high.

SHIPPING AND RECEIVING DEPARTMENTS

257

name of consignee, whether a test
column for completed shipments
and one for partial shipments,
and a column showing the date
on which the packing list and
order copy were received by the
billing department, and by whom
they were received.

The packing lists, as pre-
viously mentioned, are made out
in triplicate. One copy is at-
tached to the shipping depart-
ment's order copy, and, if a
freight shipment, is retained in
the shipping office until railroad
receipt comes back. Packing
lists for express shipments are
sent to billing department the
same day as the shipping de-
partment order copies. Those
for freight shipments are not
sent to billing department until
railroad receipt is returned to
shipping department.

If part of a company's sales
are filled by direct shipments
from some other party to the
consignee, the following routine
will serve to keep the shipping
records complete: All shipping
memoranda and bills of lading
covering direct shipments to
customers from outside suppliers
are sent by the general office to
the shipping department as soon
as received. A packing list form
is then filled out in the usual
manner, excepting that it is en-
dorsed, "Direct Shipment," to-
gether with date of shipment
and from where shipped. The

record was written or not, a

fei

•s

i«g

O
0

s
•S

.s-

<1>

£ c

'> K

«:
u

'a
ex

£<

S«SfnN

rj<
(M

T— I

258 FACTORY ORGANIZATION AND ADMINISTRATION

order copies are then handled in exactly the same manner as
for shipments made from the shop.

269. Shipping Program for Carload Shipments. — Mention has
already been made of the fact that the shipping department
should receive a weekly advance shipping program covering
carload shipments, such programs being prepared by the order
department as a result of consultation with the production

CAR LOAD SHIPMENTS

MACHINES

CAR

DATE

ROUTF.

CAR

INITIAL

NO.

FIG. 125.— Record of car-load shipments. White bond paper, 8 inches
wide, 10 1/2 inches high, ruled in red and blue.

department. As soon as the shipping department has ordered a
car an entry is made in a book entitled "Carload Shipments."
This book may conveniently be of the form shown in Fig. 125.
It has a column covering "Shipped to," "Machines," "Car Ini-
tials and No.," "Date Ordered," and "Date Left." The first
date in the date column indicates the date the car was ordered.

CAR RECORD

CAR

DELIVERED
ON OUR
SWITCH

SET

LOADED
OR
UNLOADED

TAKEN
OUT

SHIPPED TO
OR
RECEIVED FROV

REMARKS

INITIAL

NO.

. ^_

FIG. 126. — Record for all incoming and outgoing cars. White bond paper,
8 inches wide, 10 1/2 inches high, ruled in red and blue.

This item is important as it usually takes some days to get a
car in. As soon as the car is "set," entries are made showing the
car initials and number. The date on which the car comes in
is not provided in the form shown, but may be a desirable record.
A second entry is made in the date column, indicating the date
the car left. A column is also provided for the route, and one
for the kind of car.

SHIPPING AND RECEIVING DEPARTMENTS

259

270. Car Records. — A separate record is kept in another book
entitled "Car Record," covering all cars coming in and going out.
This record is useful for reference in matters of demurrage, etc.
A form for this record is shown in Fig. 126. It has columns for
car initials, car number, date 'delivered on switch, date "set,"
date loaded or unloaded, date taken out, party shipped to or
received from, and a column for remarks. Cars going out may be
distinguished from those coming in by entering the name in the
column headed "Shipped to or Received From," in red for out-
going cars and in black for incoming ones. In some cases the
same car that has come in is used for an outgoing shipment.
In such cases two entries — one in red and one in black — are made
in the column headed "Shipped to or Received From." One set

FREIGHT PAYMENTS. "INCOMING."

DATE
OK

NOTICE

MONET
BANDED
TO
DBIVEH

DATE
PAID

WEIGHT

EATE

AMOUNT/

B.B.

ORDERED
TBOlf
OB
SHIPPED BY

BHOP'P.D
OB
MATB'L.

PLACE
SHIPPED
FROU

BEC'DIN
OFFICE

Date

Whom

FIG. 127. — Record of freight payments on incoming goods. White bond
paper, 8 inches wide, 10 1/2 inches high, ruled in red and blue.

of entries in all the other columns will serve for both shipments.
The "Remarks" column is used for entering the purchase order
numbers on any carload items coming in on a purchase order,
and for other memoranda.

271. Freight Payments. — Freight bills are entered in a book
called "Freight Payment Book." This has the opposite pages
headed respectively "Incoming" and "Outgoing" (see Figs.
127 and 128). On the "Incoming" page there is a column for
date of notice, one for date the money was handed to driver
(where such is the case), one for date paid, one for weight, one
for rates, one for amount, name of railroad, ordered from or
shipped by, shop or purchase order number to which material
applies, also column covering date received in office and by whom.

On the "Outgoing" page there are columns covering way-

260 FACTORY ORGANIZATION AND ADMINISTRATION

bill, date, date money handed to driver, date paid, weight, rate,
amount, shipped via, shipped to, order number, destination, and
a column headed "Date Received in Office and by Whom." This
book serves to keep track of all bills in drivers' hands, and also
serves shipping department as a receipt from the office for freight
bills. Items covering material shipped direct by other companies
are entered in the same manner as shipments from the factory,
with some designating mark to show that the shipment was not
from the factory, but was a direct shipment from an outside
company. As soon as shipping data are received covering such
direct shipments, memoranda of such information as shippers'
order number, route, and amount of freight paid, are entered on
the shipping department's office copy of packing list.

FREIGHT PAYMENTS. "OUTGOING"

W/B

DATE

MONEY
HANDED
TO
DRIVES

DATE
PAID

WEIGHT

EATE

AMOUNT

SHIPPED
VIA

SHIPPED
TO

SHOP
NO.

DESTINATION

EEC' DIN
OFFICE

Date

Whom

FIG. 128. — Record of freight payments on outgoing goods. White bond
paper, 8 inches wide, 10 1/2 inches high, ruled in red and blue.

272. Record by Serial Numbers of Machines Shipped.—

The shipping department usually keeps a record also by serial
numbers of machines of various types, showing to whom the
machine of a certain serial number was shipped, when shipped,
reference to test record, etc. Another record usually kept in the
shipping department is a record of shipping weights of machines
or other products of various types.

273. Routing, Classification and Rates. — The head of the
shipping department should be sufficiently relieved of clerical
routine to enable him to devote some time daily to the matter
of classification and routing of shipments, matters which most
establishments are inclined to leave to the railroads. Proper
files for taking care of railroad tariffs, and a careful study of
them by the head of the shipping department, are likely to result
in saving of freight charges and avoidance of delays in shipment.

A follow-up system should be used in connection with any
freight claims, so that a claim is never neglected for any consid-

SHIPPING AND RECEIVING DEPARTMENTS

261

erable period by the company, even though the railroad may be
inclined to pigeon-hole it.

274. Receiving Department. — As before stated, in most manu-
facturing establishments the receiving of incoming goods is
handled by a man or a group of men who come under the super-
vision of the shipping department. Some factories make the
receiving department a part of the purchasing department.
Some others make an independent department of the receiving
department. The last-named method is perhaps preferable to
making receiving subordinate to purchasing. Where receiving
and purchasing are one department, there is a tendency to be
somewhat lax in checking up incoming goods by reason of the
easy access on the part of the receiving clerks to purchase records
and invoices.

The receiving department is usually provided with a carbon

MATERIALS RECEIVED*

PAGE ,

DATE

Consignor.
Date of Shipment and
No. of Outward Order

No. of
Parts

Weight in
Pounds

DESCRIPTION

For Shop
Order No.

FIG. 129. — Receiving department's report of form in which receipts from
various sources are listed on one sheet. White bond paper, 8 1/2 inches wide
11 inches high.

copy of all purchase orders. For convenience in checking in
items such as castings, etc., of which a large number and variety
are purchased from one source of supply, it is usually desirable
to have the purchasing department write separate orders cover-
ing each pattern number rather than to specify a number of differ-
ent patterns on the same order. This makes it easier to endorse
partial deliveries on the receiving department's copies of the pur-
chase orders, and makes it simpler to remove completed orders
from the receiving department's file of orders representing goods
still to be received.

275. Reports of Material Received. — Fig. 129 shows a form
of receiving department report covering materials received,
which is the form such report usually takes when the items re-
ceived are all listed on a single report. A better plan is to write
out a separate receipt slip covering each consignment. Fig. 130

262 FACTORY ORGANIZATION AND ADMINISTRATION

shows such a form as prepared for use with an autographic register
machine. The form shown is written in quadruple, one copy
being sent to the purchasing department, one copy to the stores
department, one to the production department, and one remaining
on file in the receiving room. It will be noted that in this form
there are spaces printed for the date, the name and address of the
shipper, the purchase order number, the production order num-
ber, two columns for checks, the first being headed " Partial
Delivery," the second headed " Completed Order/' and a wide
space for listing the items, weights, etc.

276. Reports of Castings Received. — Fig. 131 shows a similar
form as used in recording castings received. This form provides

TRIPLICATE.

MATERIAL RECEIVED. ^O 291

The following goods have been received: Dat*

From

PURCHASE
ORDER No.

PRODUCTION
ORDER No.

Partial
Delivery

Complet'
Order

• —

\3\

FIG. 130. — Receiving departments report of form in which a separate
report is made of each vender's shipment or delivery. White bond paper,
8 inches wide, 5 3/4 inches high.

space for date, and columns headed respectively, "Number of
Pieces," "Pattern Number," "Material," "Purchase Order
Number," "Foundry," "Production Order Number," two col-
umns for checks, the first being headed "To Shop," the second
"To Warehouse " ; and two columns headed "Warehouse Report, "
the first of these being headed "Bin Number, " the second headed
"Balance on hand, including this lot." The receiving clerk puts
a check in the column designating whether he has sent castings
to the shop or to the castings warehouse. The receiving depart-
ment sends one copy to the purchasing department, one copy to
the production department, retains one copy for itself, and sends
one copy to the stores record clerk; this last copy going first to

SHIPPING AND RECEIVING DEPARTMENTS

263

the castings warehouse where the warehouse-man enters the
number of the bin into which he has put the castings, and the
balance on hand, including this lot He is instructed to make
an actual count on such castings as he receives a new supply of.
In this manner the stores records are checked by actual count.

277. Express Charges. — Fig. 132 shows a form used in report-
ing express charges to the accounting department by the receiv-
ing department. This form gives the name of the shipper, the
nature of the package, the date, the route, charges, purchase
order number, and by whom received.

In manufacturing establishments where many of the produc-

[

j ORIGINAL

CASTINGS RECEIVED. NO g2

r>At*

No.
fee.

Pattern No.

Mat'l

P.O.
Order No.

Foundry

For
Production
Order No.

Check Which

Warehouse Report

Shop

To
Ware-
House

Bin No.

Balance on

FIG. 131. — Receiving department's report of castings record,
paper, 8 inches wide, 5 3/4 inches high.

White bond

tion orders cover work on castings which come to the receiving
department in small lots at a time, it is convenient to make the
receiving department the storage place for the tag production
orders which are awaiting arrival of castings before work can be
done on them. The receiving department will arrange these
tags in filing boxes according to the name of the foundry from
whom the castings are to come, and under the foundries will
arrange the tags by pattern numbers. As soon as a lot of castings
arrives, the- first thing the receiving clerk does is to look
over the tags under the guide card bearing the name of
foundry in question to see whether he has shop production
tags on file covering any of the castings received. In case he
has tags on file and sufficient castings as called for by the tags,

264 FACTORY ORGANIZATION AND ADMINISTRATION

he will send the castings into the shop instead of into the storage
at the castings warehouse. In case there are not enough castings
to fill the order the normal procedure would be to send the cast-
ings to the warehouse, noting on the production tag in the space
provided for that purpose how many castings have been received,
and when sent to the warehouse. In case there is a rush slip
attached to the production tag, the production department is
notified at once, and that department will decide whether a par-
tial delivery is to be made to the shop, such partial delivery being
accompanied by a detachment tag, the writing out of which is

EXPRESS CHARGES
NOTICE FROM RECEIVING OEPT. TO AC(

RECEIVED FROM

BBL.

REEL

DATE

CHGS.

»»• O. NO RCO. BY.

PROD. ORD. No

FIG. 132. — Receiving department's notice to accounting department of
express charges. White bond paper, 6 inches wide, 4 inches high.

noted on the regular tag on the place provided therefor. De-
tailed illustrations will be found in the chapter on " Production
or Planning Department."

278. Returned Goods. — In many establishments an important
phase of the business is that which has to do with goods returned
for repairs or for exchange or for credit. The following system
was devised to take care of such cases:

The receiving department tags all returned goods with iden-
tifying tags (which show name of shipper), and writes out a re-
turned goods ticket, shown in Fig. 133 in triplicate, entering on
this ticket the following information: the date, the party return-

SHIPPING AND RECEIVING DEPARTMENTS

265

ing the goods, what the goods consist of and quantity, whether
transportation was paid by shipper or by consignee, and if by the
latter, the amount of payment. The original ticket is then sent
with the goods to the inspection department, who will state the
condition of the goods on the ticket. In making this statement
the inspection department will specify, first, whether goods are
equal to new stock in their present condition; second, whether
by doing work on them they may be made equal to new; third,
whether, if neither of the above conditions exist, they have any
value as second-hand goods; fourth, whether- they should be
scrapped. The inspection department then sends original ticket

RETURNED GOODS.

RECEIVED FROM , . . , • 1*0

iMPEcrori
ncpoir

CONDUCT DEMI
OISPOSITIOH

«"» - .... . .

FIG. 133. — Returned goods ticket. White bond paper, 8 1/2 inches wide,

5 inches high.

to the general office, and places the goods into a space provided
for that purpose, such space being under the supervision of the
stores department. A duplicate ticket follows the same course
as the original, except that it is sent finally to the head of the
supply department instead of to the general office. The trip-
licate copy remains in the book in the receiving department, and
all endorsements as to disposition, which appear on the original,
are copied on to the triplicate in the receiving department as
soon as the original is returned to the receiving department.
Disposition of these goods may involve either the rendering of
a credit memorandum, the issuing of a shop order, or the con-

266 FACTORY ORGANIZATION AND ADMINISTRATION

duction of further correspondence by either the general office
or the supply department. As soon as the general office deter-
mine on disposition, such disposition is entered on the original
copy which is sent to receiving department, who, after making
triplicate agree with original, return original to general office for
file. Whenever the disposition of the returned goods involves
work on the part of the shop, regular production tags are to be
written out by the production department. On presentation of
such tags, the goods will be delivered by the stores keeper.
When the goods have been put into condition to put in stock,
the inspector makes proper indorsement on tags accompanying
the goods; this tag going with the goods into the stock-room,
and thence to the stock entry clerks. Such parts as are rejected
by the inspector, or such parts as are marked to be scrapped, are
put through the regular routine of rejected parts.

RECEIVE
PATTERN

PATTERNS RECEIVED

•> FROM

DATE

As FOLLOWS VIA RECEIVED BY

PATTERN
NO.

MATERIAL

NO. OF

DRAFTING DEPT. REPORT

PURCHASING DEPT.
DISPOSITION

FIG. 134. — Receiving department's report of patterns received. Blue bond
paper, 8 1/2 inches wide, 4 1/2 inches high, ruled in red and blue.

The returned goods ticket, it will be noted, has a space at the
extreme right hand, on which is noted the word "Disposition."
This column is filled in the general office, and the ticket is then
returned to the receiving department. Such goods as are marked
"Repair" on the receiving tag are held in the storeroom space
provided for returned goods until regular shop-production tags
are sent there.

For such goods as are marked "Put in Stock," the stock-
keeper will write out a regular production tag, having the in-
spector endorse it on the back just as though it were a part
received from the shop. The tag will then be sent to the stock
entry clerks for record.

279. Patterns Received. — Patterns received are reported to
drafting department, purchasing department, and production
department, on carbon copies of a form shown in Fig. 134, the

SHIPPING AND RECEIVING DEPARTMENTS 267

original of which is kept on file with entries as to checking by
drafting department, and disposition as designated by purchas-
ing department. See also Fig. 66, and accompanying text in
Chapter XIV.

REFERENCES

SCHULTZE: "The American Office," Chapter XXII.

BRISCO: "Economics of Business," Chapter VIII.

LASALLE EXTENSION UNIVERSITY: "Course in Traffic Management."

CHAPTER XXI
TIME-TAKING

280. Time-clocks and Numbering Men. — Practically every
factory uses a time-clock for the purpose of registering the
time of arrival and departure of employees. There is a con-
siderable variety of time-clocks, some using cards and some
using strips. There, are clocks on the market which have auto-
matic shifts which designate lateness or irregular time by prints
of different color or similar designation. Where cards are used
in a clock, it is very desirable to use an addressing machine
for printing the date, check number, and name of the em-
ployee on the cards. Such addressing machines may be used
also for printing the same information in the upper right-
hand corner of the time-sheets covering observational data
taken by shop time-takers where this system of recording men's
labor is in vogue. The same addressing machine may be used,
omitting the date stamp, to make up a pay-roll list, such pay-roll
list being arranged by departments. This necessitates the allot-
ting of a certain excess quantity of men's clock numbers to each
department, in order to allow for an increased number of em-
ployees in any one department. It is desirable to have consid-
erably more numbers available than theje are employees. This
may necessitate the use of one or more additional time-clocks in
order to provide for all the numbers. There are many advan-
tages in the system, however, which will usually compensate for
the additional cost of clocks. One advantage which will be
apparent at once is the ease with which the total pay-roll, number
of employees, and average wage rate, can be calculated for each
department where the check numbers for one department are all
close together; for instance, numbers from one to fifty may be
lathe hands, fifty to seventy-five, boring-mill hands, etc.

281. Clock Card used as Job Ticket. — The clock cards are
used in some factories for recording the nature of the work done
by the men. A system for this purpose is as follows: Each
workman has a tin box in which he keeps his time-tickets.

268

TIME-TAKING

269

The same ticket is used for time-stamp by the time-clock, and
for entries describing the work made by the workman him-
self. One side of the ticket
is used for clock stamps, the
other side is used for postings
by the man. On this latter-
named side there are rulings
for three days with spaces for
a number of entries on each
day.

A yellow time-ticket is used
on Monday, Wednesday, and
Friday, and a red ticket on
Tuesday, Thursday, and Sat-
urday. On alternate days the
time-tickets are turned in to
time-posting clerks, who keep
all time-postings up to date.
In such a system it is difficult
to expect workmen to observe
their time more carefully than
to the nearest half-hour. An
office boy collects the men's
time-tickets the first thing in
the morning before starting
time. At the time of collect-
ing the yellow tickets, say on
Tuesday morning, this boy
puts into each workman's box
his red ticket, these red tickets
having been delivered to the
same office boy after posting
on the evening of the day on
which they were posted.

Fig. 135 shows the front of a
form of time-card as used with
this system. The back (not
shown) is ruled for three days'
work entries.

In most shops each workman
changes jobs a number of times

Week endin

No.

Name

DAY

LOST OR

OVERTIME

OUT

A.M.

P.M.

A.M.

P.M.

A.M.

P.M.

A.M.

P.M.

A.M.

P.M.

A.M.

P.M.

A.M.

P.M.

Total i

Rntpj

im.fi, . hrs.

Total wages for week, #_

FIG. 135.— Clock time-card with work-
man's record of orders worked on listed
on back of card. Two sets of cards, one
yellow and one red, are used, the same
card being used on alternate days in the
shop and kept in the office for posting
on the other alternate days. Brick red
card, 2 5/8 inches wide, 7 inches high.

270 FACTORY ORGANIZATION AND ADMINISTRATION

a day, and the clock card will hardly allow sufficient room for
the record in such cases, where a single card is used for entries
covering an entire week, or even a half-week with the system
where cards are changed every other day. The manufacturers
of time-clocks have suggested as a way to get around this diffi-
culty the use of job cards in addition to the clock card for attend-
ance. In this system the production or planning department
or the foreman or department clerk or time-keeper writes
out individual operation or job cards for each workman's labor
on each component order, the starting time of one operation
being the stopping time of the operation next preceding it. A
form of clock card used with this system is shown in Fig. 136.

ORC
DAT
EMF
ART
STY
NO.
OPE

ER N

ORDER N

DATF .

•>

ORDER N

DATE

LOYE

F NO,

EMPLOYE
ARTICLED

• NO

EMF
ART
8TV

LOYE
ICLE

: MO

STVIF

1 P

OF P
RATI

NO. OF P
OPERATIC

FPES

NO. OF P
OPERATIC

ECER

Th.

XL.

TOTAL HOURS M
RATE

TOTAL HOURS M

RATF

TOT
RAT
AMO

AL HOURS M,

AMOUNT

INT

o c

FIG. 136. — Individual operation clock card used as a job record. In this
case the ticket shown in Fig. 107 serves only as a pay-roll basis. Manila
cards, each 3 inches wide, 5 inches high.

In this system, as in all systems using time-stamps, it is necessary
that the time-taker or the foreman be on the spot to stamp the
clock card at the instant of changing jobs, in order that the time
record may be accurate; otherwise the clock-stamping will have to
be left to the workman himself, which is impracticable in cases
of piece-work where a check on the workman's record is necessary.
282. Time-stamps. — Recently several kinds of secondary
time-stamps, operated from a central Master Clock, have been
put on the market, which provide for the workman stamping a
job ticket near his tool or pressing a button making a record at a
distance. These devices have been suggested as means for doing
away with the delay necessitated by the man's hunting up the

TIME-TAKING

271

clock operator and wait-
ing to get his job ticket
stamped — a source of
delay in most time-
stamp systems.

As a general thing it is
expensive and unreliable
to have workmen post
their own time for the
purpose of making a rec-
ord of the time spent on
various jobs or orders.
A mechanic will spend
at least ten minutes a
day on such time-post-
ing, which will amount
to one hour's time for
each employee in a shop
every week. For the
same cost, a number of
time-takers can be em-
ployed, one time-taker
for every forty or fifty
men, whose business it
will be to take a record
of all time on shop opera-
tions. A good Produc-
tion or Planning Depart-
ment will provide job
cards already written out
on which the only thing
necessary to be inserted
is the workman's num-
ber and the clock stamp.

283. Weekly Time-
Sheet.— Fig. 137 shows
a form of weekly time-
sheet as used with a
system where the time-
taker records operations.
This sheet is ruled up
into columns headed as
follows: "Shop Order
Nu mber, " " Quantity, ' '

CHECK NO.
DEPARTMENT

WEEKLY TIME SHEET

REMARKS

x ^

;RS
ARTMENT ONLY
5ENERAL (NO SPECIFIC DEPT

£ g £

0 0.

»-'

-J UJ

2§

. .2 £ .5.

^
3

§< <

6S
|g

P o >

- £ g£

£ p I

§ U

= ^r

:°?

5a«

•

£ ^

•

*•

5 =

•

J5j

0) * LJ > H

t
I

i
s

1-
1
1

03H \
-Mid
•ON

s* 3!sl
H§ - 1 *

03
(

||S ^

<
o

OPERATION

TIME CHECKED

c 6
1 z

[

NAME OF PART

^=H

OT ON MACHINE TOOLS:

u i

272 FACTORY ORGANIZATION AND ADMINISTRATION

"Name of Part," " Mark Number," " Operation," " Machine Tool
Number," " Number Started," "Number Finished," "Time
Started," "Time Spent on Operation." Then follow a number
of columns which apply when a premium or bonus system is
in vogue. These columns are headed as follows:. "Total Time
Not on Standard" (the word "Standard" in this case having
the same meaning as premium or bonus system), "Total Time
on Standard," " Standard Time," "Success," "Gain," "Failure,"
"Loss," and "Remarks."

The column headed "Time Started" is used to enter the time
by the clock at which each operation is begun, the finishing time
of one operation being the beginning time of the next. The next
column, namely, the one headed "Time Spent on Operation," is
sub-divided into seven sub-columns, one for each day of the week,
provision being made for Sunday in case of emergency work. In
these columns is entered the total time required for the operation.
If an operation extends over more than one day, a horizontal
addition along the line on which that operation is entered will
give the total hours and minutes spent on that operation. This
total is entered in the column headed "Total Not on Standard,"
if it is a job for which no standard time has been established.
If it is a job on which there is an established time standard, the
total is entered into the next column, namely, the one headed
"Total on Standard." The following column gives the time
allowance for the specified number of pieces. If the time in
which the work was done was within the time standard, it is
entered into the column headed "Success." If it was done in
less time than the time standard, the amount by which it was
less than the time standard is entered in the column headed
"Gain." If the operation exceeded the time standard, it is
entered in the column headed "Failure." The* amount by which
the time exceeded the time standard is entered in the column
headed "Loss."

284. Instructions to Time-takers. — The following copy of
instructions to time-takers will indicate how they are to do their
work:

1. Do not take more of workman's time than is actually
necessary to get the necessary information.

2. If workman is engaged in handling or setting up heavy
work in his machine, do not call him away from same. See him
at some later time.

TIME-TAKING 273

3. The following questions should suffice to secure all informa-
tion needed for time-taking:

" When did you start this job?"

"How many pieces did you finish on the previous job?'7

"Where is the tag for your present job?"

"Name of operation on job engaged on?"

4. Always bear in mind that the starting time on one job
is the stopping time of the previous job. Make no allowance
for time spent in setting up machine.

5. In cases where workmen have no tag for job worked on,
notify department foreman, and in case he does not provide a
tag, notify shop tracer.

6. Instruct workman to hang tag for job on which he is work-
ing in some convenient place for you to see same. In passing
about, look at both his tag and his work, so as to make sure he
has not changed jobs. Familiarize yourself with the work going
on through the department to which you are assigned, as that
is a great aid to accurate time-taking.

7. The following information must be correctly given as
called for on the time-sheet, i.e., shop order, amount of pieces
in lot called for by tag, name and number of part, name of
operation or operations, number of pieces started, number of
pieces finished, time started, time finished. Insist upon men
reporting correctly the number of pieces finished whenever a
break in a lot occurs.

8. You can be of some aid to the foreman in your department
by informing him in advance that a man is likely to be out of a
job at a certain time. It will be well to notify foreman about
thirty minutes previous to the time a man will finish the job he
is working on. This will give him a chance to look up the man's
next job.

9. All time for jobs on which there is no regular shop order
is covered by a list of standing orders. You must govern yourself
according to this list in charging such time. Be sure to specify
fully the nature of any such work; when there is any doubt as
to what standing order number to charge this work to, consult
head of cost department.

The weekly time-sheet as described possesses the advantage
of easy checking against time totals independently taken from
the clock cards. It also facilitates the posting by weeks on to
cost sheets, and makes it possible to add up the entries for a giver*

274 FACTORY ORGANIZATION AND ADMINISTRATION

week against all of the shop orders, and making a sum total of
these entries to check them against the week's pay-roll. In the
lower left-hand corner of the time-sheet, as shown, is a summary
of time on machine tools with the total hours done on each
separate machine tool separately reported. This summary
makes it easy to total up the total working hours of each
machine tool, information which is needed where it is desired
to establish an hourly machine rate for each machine. In the
center of the sheet, at the bottom, is a summary covering attend-
ances and overtime work, in which summary are listed for each

ORIGINAL.

S.O..

A nit.

Namt
Oper.

FIG. 138. — Individual operation slip filled by time-taker. t White paper,
6 inches wide, 31/2 inches high, perforated at lower edge, where it is attached
to duplicate filled at same writing by inserting piece of carbon paper and
folding back.

day: "Time Late or Off Duty/' "Absent," "Overtime," "Addi-
tional time paid for on account of overtime, v a check mark show-
ing that the time was checked with the clock record, and the
total time to be paid for for each day. In the extreme right-
hand lower corner is a distribution showing the relative time spent
on productive orders and on non-productive orders, the non-
productive time being again subdivided so as to show whether
non-productive time was put in in the department in which the
man was listed, how much non-productive time was on account
of other departments, such departments being specified, and how
much non-productive time was for account of the shop in gen-

TIME-TAKING

275

eral. This summary is for the purpose of facilitating the estab-
lishment of a local hourly expense rate of operating, being inde-
pendent of a further rate based on fixed charges; these fixed
charges including such items as interest, insurance, etc.

285. Individual Operation Time-slips. — Another method of
time report in which a separate time slip or card is written out
every time a man changes operations is shown in Fig. 138. The
example shown is written in duplicate by the time-taker, who
hands one copy to the workman; the latter being in this way
provided with a means for checking his gains under the premium
system. In the example shown the time-takers write in the time.

TIME EMPLOYED COMMENCED

Date

Job No.

MACHINE SHOP

Workman No.

Boring

Drilling

Grinding

Planing

Time Allowed
Tapping

Chipping

Facing

Milling

Roughing

Premium Credit
Threading

Cutting Off

Filing

Mounting

Shaping

Foreman
Turning

Quantity Total Timp Rate f^ost

FIG. 139. — Calculagraph individual operation ticket. White card, 5 inches
wide, 3 inches high.

These slips are sometimes bound in booklets of fifty or more,
the booklet being intended to last a week. The front cover of
the booklet serves as a time-card for registering starting and
stopping time. The individual pages represent job tickets, and
are torn out daily as filled and filed by job or order numbers.
The back cover serves as a distribution of labor into productive,
non-productive work on machines, work not on machines, etc.
286. Time -slips for Clock Stamping. — Fig. 139 shows a some-
what similar form in which the time-taker uses a calculagraph
for stamping the time begun and time consumed. When the
man is assigned a job, the time-card is written out and the first
calculagraph impression is stamped on the card. As soon as the

276 FACTORY ORGANIZATION AND ADMINISTRATION

TICKET NO.

PART NO. PAT. NO.

8 t

NAME OF PART

1 g

OPERATION NO.

NAME OF OPERATION

MADE ON MACHINE NO.

NO. PIECES STARTED

No. PIECES COMPLETED

KIND OF MATERIAL

MISHAP REMARKS

MATERIAL WAS BOUGHT OF

REGULAR TIME

OVER TIME

ORDER NO.

FIG. 140, — Time-card for use with time-stamp. Yellow card, 6 inches wide,

4 inches high.

COST DEPT.

Order Nn. MAPHINF HFPT A//0 1 Drawing Nn.

PAnr.k Nn. Rate Amount Name

111 2s 3s 4s 51 6s 7s 8s 9s 10s 11s 12s

13il4!l5*16il73M8i19i20!21i22i23*24i

Armature
" Coil Support

Nut
Oil Guard

START.

UNUSUAL OPERATIONS.

OPERATION

" End HeadF.,R.
Belt Tighteners

Pawl
Pedestal F.,R.

Assembling

Bolt, Stud

Pins

Babbitting

Brush Wobbler

Rail

Bell-Boy

•• -foke

Res'tance Cages

Boring

Bushing

Pipes

Centering

CaporCov'rP.,R.
Collars

Ring
Rocker Arm

Chipping
Clerk

Coupling

Roller

Cutting

Clevis

•• Bushing

Drilling

" Block

" "(Eccentric)

Facing

" Screw
Coil Former
Collector Ring

Screw Adjusting
" Cap-Fil.Hei.
" Jacks

FINISH.

Filing & Fitting
Finishing
Helping

Commutator

Shafts

Nut

Spacing Pieces

Laborer

Ring

Spider

Laying out

Sleeve

« Wing

Milling

Cont oiler Drum

Starwheel

Planing

frame

Sub- Base

Repairing

Handle

Swivel

Shaping

Handwheel

Yoke, Upper

Slotting

Housing F..R.

•• Lower

Tapping

•• Beadplate

Threading/

Turning,!/

FIG. 141. — Time slip having principal parts and principal operations in
any department printed. (For use with clock stamp.) Blue paper, 6
inches wide, 4 inches high.

TIME-TAKING

277

man has completed the job the time-taker stamps the second
impression on the card, the second impression showing the time
consumed. In order to use a calculagraph or clock stamp, it is
necessary that the time-taker be on the spot all the time. This
system always requires some of the workman's time to be spent
in taking his card to the time-clock. Fig. 140 shows a similar
form for use with a time-stamp.

287. Time-slip with Ordinary Operations Printed On. —
Fig. 141 shows a time-slip in which the ordinary operations are
printed in the extreme right-
hand margin, with the name

of the commoner parts on
which work is done, in the ex-
treme left-hand columns, a
blank column being provided
for entering in writing unusual
operations, and further blanks
being provided for clock stamps
showing time of starting and
time of finishing.

A still further form for use
with the clock stamp or calcu-
lagraph is shown in Fig. 142.

288. Tabulating Machine
Systems. — Within the last few
years the tabulating machine
has come into use to some ex-
tent in connection with keep-
ing account of workmen's time.
In order to use a working card

in the tabulating machine it is necessary to designate every-
thing numerically, the record being formed by punching the
digits in columns of figures printed on the card, such punch-
ing being done by a special machine. The punching may be
done as a transference of records taken originally in pencil.
The parts are designated by numbers, operations are desig-
nated by numbers; departments, machines, order number,
the time, and the amount in dollars and cents to which the time
is equivalent are all punched in the ticket. The tickets for a
given day are put into a sorting machine which will classify them
according to the same numbers in any column; for instance, all

Operation OrHpr Nln.

Hours y Ra+g = 4-_ Quantity^ Cnst Each

BEGAN ENDED

- V

FINISHED CONTINUED (SCRATCH OUT ONE WORD) CA

RIED

FIG. 142. — Another
form. White card, 4
51/2 inches high.

calculagraph
inches wide,

278 FACTORY ORGANIZATION AND ADMINISTRATION

tickets may be assorted by departments, by operations, by men,
by order numbers, etc., depending upon which column is being
used for the purpose of assorting. After the assorting process

<n o <£

BOR

Its

Q. \-

T- CM CO
i- CM CO

•^- 10 to

Tt- lO to

Is- co en
r- oo en

T- CM CO
T- CM CO

•<f to to

Tj- 10 tD

r^ co en

t^ co en

T- CM CO

T- CM CO
T- CM

•<*• to to

r- co en

o
o
o

T- CM CO
T- CM CO
T- CM CO

Tf 1O tO

••t 10 to
•*• 10 to

r^- co cr>
^ co en
h- 00 en

o
o

i- CM CO
i- CM CO
T- CM CO

•* 10 to

•<f IO to
•^ 10 to

r- oo en
r^ co en
t-~ oo en

T- CM CO
i- CM CO

•^ 10 to

•*• 10 to

i^ oo en
r-- co en

Piece No.

o
o

T- CM CO
r- CM CO
T- CM CO

•*• 10 to

Tf 10 tD

•<*• 10 to

h- co en
r-- co en
r-~ co en

i- CM CO
T- CM CO

•*• 10 to
^*- 10 to

r- oo en

h- CO O

0
0
0

T- CM CO

T- CM CO
r- CM CO

t 10 CO
if 10 to

•<*• 10 to

t*- oo en
Is- oo en
r^ cc en

o
o

i- CM CO
r- CM CO

**• 10 to

Tj- 10 to

r^- co cr>
i*- co en

§ I P

C £ *

s 2 1

o
o

*- CM CO
T- CM CO
i- CM CO

rt- lO to

^t- 10 to

'I- 10 to

Is- eo en
f- co en
r- oo en

o
o

T- CM CO
T- CM CO

rj- 10 to
•«J- 10 to

h- co en
r-- co en

CO •*
T- CM

5°

T- CM CO
T- CM CO

rf 10 to

h- oo en

O •r-

•<- CM CO

•* to -+-

CM r-

T- CM CO "fr 10 CO

Z88V

r- oo en

has been finished, which is done at a very rapid rate by the
machine, the cards are put into the accumulating or adding
machine, which adds up the hours and minutes and dollars and
cents total for any package of tickets.

TIME-TAKING

279

Fig. 143 shows a card as used with
a tabulating machine system as above
described. The tabulating machine
method makes it possible to post time
and wages much more rapidly than
any other method.

289. Pay-roll Distribution and Lo-
calization of Departmental Expenses.
— In order to localize operating ex-
penses by departments and to indi-
vidual workmen, it is necessary to
have some form of pay-roll distribu-
tion. A form for recording such dis-
tribution is shown in Fig. 144. A
sheet of this sort is written out for
each shop department. Opposite
each employee, designated by his
check number, is given his rate of
pay, his time on each class of produc-
tive orders or direct labor. Then fol-
lows a summation of his total produc-
tive hours and the money value of his
productive time. After this follow
thirteen columns for non-productive
standing orders. Although a factory
may have about a hundred different
standing orders to which non-pro-
ductive work, operating expense, in-
direct labor, etc., may be charged, it
is likely that thirteen columns will
suffice for the different orders in
any one department to which time
will be charged in any one pay-roll
period. After the detailed distribu-
tion of non-productive time follows
a summation of the entire non-
productive time of each employee
and its cost in dollars and cents.
The last column represents the
total pay envelope of each em-
ployee.

S ,

O s

280 FACTORY ORGANIZATION AND ADMINISTRATION

This sheet, made out for each department, serves as the basis
for departmental summaries, showing local departmental ex-
penses, affording at the same time complete data for analysis of
the causes of these expenses.

CHAPTER XXII
COST DEPARTMENT

290. Competition and Costs. — The natural basis of selling
prices is the shop cost. Competitors' prices must be considered,
it is true ; but no matter what these prices are, the shop cost must
always be a positively known quantity.

The competitive system, by the necessity of meeting the prices
set by rivals, has brought about pronounced economic advan-
tages, when reductions in selling prices have followed similar
reductions in cost through the introduction of labor-saving ma-
chinery or greater simplicity in design. On the other hand,
many failures have resulted from blindly meeting prices set by
others before actually reducing the shop costs of machines. This
has been notably the case in the manufacture of electrical machin-
ery. Some years ago the establishments manufacturing machines
of large capacity for street railway power and municipal lighting
plants demanded high prices for machines of low capacity. This
opened the way for numerous small factories, which for some
years were able to sell the small machines at prices considerably
lower than the large corporations, and were able to prosper not-
withstanding the admitted fact that the large corporations could
not meet their prices on small machines without loss. In some
cases, it is true, inferior machines were put on the market, by
the smaller establishments, but in many cases the lower-priced
machines were efficient and well designed. The result was that
the large corporations beset themselves to redesign their smaller
machines, spending large sums in experiments for the purpose
of obtaining cheaper insulating materials, for reducing the weight
of the more expensive metals employed, and for winding and
insulating coils by machine. The result was that some years
later the large corporations were able to put on the market ma-
chines of lighter weight and more compactness than they had
originally built, and, with improved methods of manufacture,
were able to undersell the smaller manufacturers. Several of
the small factories endeavered to meet the reduced prices, fur-
nishing their heavy machines with expensive insulation and hand-

281

282 FACTORY ORGANIZATION AND ADMINISTRATION

windings, and were unable to stand the pressure. On the other
hand, other small shops gradually worked up new designs and
new methods until they were again in the field with machines
practically identical with those of the large corporations, which
they could afford to sell without loss, at competitive prices.

291. Importance of Cost Department. — It is apparent that
during such transitional periods a well-conducted cost-keeping
system is indispensable. No progressive shop can allow the
figuring of costs to drag for months behind actual operations.
It is necessary to know costs accurately and immediately. If
the work of cost-keeping is turned over to an underpaid and over-
worked clerk, who has to expend all of his vitality and energy in
calculations of multiplication and addition, and has no time left
for. comprehensive comparisons, accurate and valuable cost
statistics cannot be obtained. The cost department work is of
such importance in a factory that it should receive the attention
of the very best intellect obtainable. This fact has been recog-
nized by one of the largest American electrical corporations the
present general manager of which is a man who some years ago
had charge of the cost department. And here it will be well to
consider the advantage of departmental organization of clerical
and accounting work, as well as of the factory proper. The
head of the cost department and the purchasing agent will be
hampered in many ways if they are made subordinate to a book-
keeper or superintendent, as is the case in many shops. A depart-
mental separation has been found to be productive of far more
accuracy, since the heads of the various departments will feel
perfectly free to present matters just as they appear to them.

292. Duties and Qualifications of Head of Cost Department—
It is extremely important that the chief cost clerk or manager
of cost department have time to think and to compare. In a
small establishment he may be able to do a considerable amount
of calculation work, such as extension of costs of material, but
there are few machine-manufacturing establishments of any
magnitude which would not find it a decided advantage to have
available the comparative data that are obtainable if the whole
time and energies of a man can be devoted to the work of intel-
ligent arrangement and comparison of costs of individual pieces
and entire machines.

293. Cost System Must be Adapted to Product.— Costs may
be figured on the basis of cost per pound or unit of bulk, this cost

COST DEPARTMENT 283

being subdivided either by cost per department, cost per class of
material, or cost per process. For continuous processes such as
steel mills, rolling mills, cement mills, flour mills, linseed oil mills,
etc., the aboye methods of calculating costs are the ones to use.
On the other hand, in shops making an assembled product com-
posed of many pieces, such as furniture or machinery, the cost
system must seek to secure costs per individual order and per
component part.

294. Development of a Cost System. — Generally the first
cost system installed in a shop does not seek to secure costs of
individual pieces nor to locate expenses by departments; the
object is usually only to figure out the cost of labor and material
spent on any given order. The next step toward individual
costs is usually the obtaining of costs on groups of work — as, for
instance, in an electrical machine, the next natural step will
be to secure separately the cost of the armature and of the
fields. Then the armature costs will want to be divided again
into the cost of commutator, cost of core, and cost of coils. As
the cost department develops it will usually be considered desirous
to obtain the cost of the labor on each separate heading in the
various shop departments. Thus we might have under the
heading of Armature Core, the labor items, "D — $3.49," and
"A — $2.20," meaning that the work of section D, or the punching
department, amounted to $3.49, and the labor of section A, or the
machine shop, amounted to $2.20.

Naturally the final development of a cost system is the figur-
ing of the cost of each individual piece as well as of each operation
on that piece. Most of the individual pieces will be built on
separate stock orders, the manufacturing quantity being regulated
so as to be not too small a number of pieces on the one hand,
thus making the cost of getting ready, getting tools, blue-prints,
setting up machine tools, etc., a relatively small item compared
with the total cost of the lot. On the other hand, the number
of pieces put through on any one stock order must not be so large
as to interfere with the uniform flow of all component parts
through the machine tools to the assembling and erecting
departments. When a suitable number of individual parts costs
have been secured, the cost columns in a bill of material are easily
filled out by inserting the latest or most accurate individual piece
cost opposite the various parts and listing the labor spent
in assembling, erecting, testing, cleaning, boxing, etc. These

284 FACTORY ORGANIZATION AND ADMINISTRATION

items are usually listed in a summary at the close of the bill of
material.

295. Merging Cost Records into Regular Double Entry Ac-
counts of Accounting Department. — This subject. is treated in
Chapter V on Factory Accounts, in which the fundamental
underlying philosophy of the subject is given. The following
brief summary is here again given:

For the purpose of merging all cost records into the financial
accounts, proceed in the following manner: Let A represent the
value of all labor, material, and total of all expense percentages
spent on work in process up to the beginning of the period. Let
B represent the value of all material, labor, and expense per-
centages spent on work in process during the period. Let C
represent the value of all material, labor, and percentages spent
on orders completed during the period. Then A+B — C repre-
sents the value of the work in process at the beginning of the
next period.

"Work in Process" is Debtor to "Material," "Labor," and
"Expense," respectively, to the extent of the totals charged to
incompleted orders during the period on the individual cost
sheets. These amounts can be collected from the cost sheets by
means of an adding machine.

"Finished Product" or "Stock" is debtor to "Work in Proc-
ess," to the extent of the sum total of all orders completed during
the period.

The unclosed balance of the "Work in Process" account,
represents the inventory value of the work in process.

"Finished Product" or "Stock" is credited with the cost of
all orders shipped during the period. The unclosed balance of
the "Finished Product" account represents the inventory value
of the finished product.

The unclosed balance of the "Material" account represents
the inventory value of material, and if proper records of store-
room receipts and withdrawals are kept, the balance of this
account should not vary by any wide percentage from the value
obtained as the result of an actual inventory.

In case the general accounts carry the entire pay-roll in the
"Labor" account, it may be necessary to have intercharges be-
tween "Labor" and "Expense."

The solution of the problem of merging the cost records into
the general accounts is, however, not nearly as hard as is gen-

COST DEPARTMENT

285

erally supposed. Using the above-suggested scheme as the basis
for a working-plan, the problem can be worked out without any
great difficulties, provided the head of the cost department and
the head of the general bookkeeping department work with a
determination to co-operate and appreciate each other's points
of view.

296. Material Costs. — The basis for entries of material costs
consists of the " orders on storeroom" or " withdrawal slips" or
stubs on the tags accompanying the raw material into the shop,
such stubs being receipted by the party getting the raw material,
torn off by the man delivering the material, and by him turned
into the stores department. The stores department, after mak-
ing entries on the stores records, turns withdrawal slip or the
stub over to the cost department.

RAW MATERIAL COSTS

ARTICLE

DATE
OF
INVOICE

PURCHASED FROM

SIZE

QUANTITY

WEIGHT

PRIC

: PEK ;

RICE
ACH

FIG. 145. — Record of raw material costs. White bond paper, 9 1/2 inches
wide, 12 inches high, ruled in red and blue.

Each of these withdrawal slips or order on stores or stubs of
shop tag must bear the proper order number to which the ma-
terial is to be charged, and all of them are preferably written
out in advance of work being done, such writing out in advance
being done in the Planning or Production Department.

These orders on stock are turned in daily to the stores clerks,
and go from them to the cost department. The cost department
files all these orders on stock and stubs of tags by order number,
and when the order is completed they are taken out and com-
pared with the bill of material if there was such a bill of material
written for the order in question, and the cost of material figured.

297. Raw Material Costs. — Fig. 145 shows a form for keeping
record of raw material costs. It is very important that the cost
department keep an up-to-date record of raw material costs. A
simple way of doing this is for the purchasing department to let

286 FACTORY ORGANIZATION AND ADMINISTRATION

the cost department have for a short time every day all invoices
for materials. The cost department makes entries from these
invoices in the form shown. This form, it will be noted, has
vertical columns headed "Date of Invoice," " Purchased from,"
"Size," "Quantity," "Weight," "Price per," and "Price Each."

298. Costs of Manufactured Component Parts Made in Quan-
tity on Stock Orders and Drawn from Storeroom. — In most
shops the majority of the individual component parts are made
up separately on stock production orders, and as a result, when
a machine or contract order for which a bill of material has had
to be made, is finished, the majority of component part costs can
be taken as the cost per piece of the latest lot of components
made in the shop. Component parts not made on stock order,
but made on the bill-of-material order number, should have
labor and material posted on individual component cards or
sheets filed back of the guide card bearing the bill of material
order number, thus providing individual component costs for
the larger parts. Care must be taken in entering costs of parts
manufactured in quantity and drawn from stores to see that the
Burden or Expense Percentage or Rate is not added twice.

299. Current Value of Actual Invoice Price as Basis for Mate-
rial Costs. — The question has sometimes been raised as to
whether the material cost should be applied at the original pur-
chase price of the material, at the prevailing market price, or at
the average prices. If the chief object of the cost is to establish
a selling price, then prevailing market price of material should
be used. If the chief object of the cost is to balance all manu-
facturing accounts, then the original purchase prices of the ma-
terial should be used.

300. "Material Burden." — Some cost accountants prefer to
segregate from General Expense all items connected with cost of
purchasing, receiving, handling stores and stores accounting,
lumping these items together with Freight and Express and
Drayage on incoming goods, to make a total Material Burden
or Percentage on Material to be added to flat material costs in
figuring total costs.

301. Labor or Time Postings on Cost Records.— Postings are
usually made from the workmen's time-tickets or the weekly
time-sheet on to labor sheets, similar to Fig. 146. In the upper
right-hand corner of this form are spaces for entering the sheet
number, order number, and mark number. There should be a

COST DEPARTMENT

separate labor sheet for each piece
bearing a different mark number.
The sheet bears vertical columns
headed : " Check Number," " Opera-
tion," "Machine Number,"
"Hours," "Minutes," "Labor
Cost," and "Machine Cost." As
soon as all the labor done during
any one week has been posted on
the labor sheets, the total labor
cost for each week is added and
inserted on each sheet. The total
on each sheet is then listed on an
adding machine and checked
against the total pay-roll. This
necessitates the adding of all indi-
rect labor charged to standing or-
ders to the direct labor charged to
specific production orders.

Where individual job or opera-
tion slips are used they may be
conveniently filed in envelopes of
standard card-index size, which
are kept in card-index drawers.
The envelopes may have a sum-
mary of cost printed on the face.

Where a weekly time-sheet is
used the extension in dollars and
cents of the time spent on the
various operations and various or-
ders can be adjusted so that the
total dollars and cents are the same
as the men's weekly pay envelope.
Such an adjustment must be pro-
vided for where separate slips or
cards are used for each change of
job, or where costs are extended in-
to dollars and cents from daily time-
cards. In the latter cases, owing
to the difference of extensions on
account of figuring and carrying

LABOR SHEET SHEET N°
ORDER No.

MARK No.

<°

OPERATION

2t-

LABOR
COST

288 FACTORY ORGANIZATION AND ADMINISTRATION

fractional cents, there is always some discrepancy between the
payroll total of dollars and cents, and the cost clerk's distribu-
tion of dollars and cents which will have to be adjusted.

The time-posting clerks should be provided with a card-
index record of employees' names, arranged numerically in con-
secutive order of check numbers. On each card is given the
man's name, the date of starting, and his hourly rate. When the
man quits, this is noted on the card, and if another man is
assigned this check-number, entry is made on the same card of
the new man's name, his rate, and the date of starting.
J 302. Checking Labor Postings against Pay-roll. — It is en-
tirely feasible to check the labor cost postings as made against
Carious orders, against the . weekly pay-roll, thus assuring
(that all labor paid for is posted against orders. Where a weekly
/time-sheet is used this process is facilitated.
I 303. " Non-productive " or " Indirect " Labor. — "Productive "
(of better, "Direct" labor is usually such labor as is directly
I spent in making a given article. All other labor which is of
I a general character, no matter how essential to production, but
I which cannot be definitely assigned to a given tangible piece, or
I the making of inventoriable tangible assets, is designated as
I "Non-productive" or "Indirect" labor. There are also many
I supply materials which are designated as ' ' Indirect " or " Expense"
I materials.

/ 304. "Standing Orders."— "Non-productive" or "Indirect"
/ work is usually taken care of by a series of "standing" orders,
' which are closed monthly. A man assigned to so-called "non-
productive" or "indirect" work is told to charge his time to
Standing Order Number so and so. In addition to the regular
standing orders which are closed monthly, it may be found
desirable to issue special specific orders for non-productive
work whose cost it is desirable to segregate. It is desirable to
have a distinct series for this class of orders, so that they can be
easily distinguished from the productive shop orders and included
in the monthly total of non-productive work.

305. Plant Additions, New Equipment and Fixtures. — Items
which instead of being maintenance expenses are manifestly im-
provements, should be built on a special order series so that they
will be duly listed as assets instead of as manufacturing expense.

306. Typical List of "Standing Orders."— The following is a
typical list of "Standing Orders":

COST DEPARTMENT 289

Standing Order No. 1 — Repairs to Tools.

Standing Order No. 2 — Repairs to Shafting and Belting.

Standing Order No. 3 — Repairs to Lighting Equipment.

Standing Order No. 4 — Repairs to Patterns.

Standing Order No. 5 — Cleaning Shop or Tools.

Standing Order No. 6 — Weighing or Handling Material.

Standing Order No. 7 — Overseeing.

Fig. 147 is the reverse of a time-card as used in the shops of the
Pennsylvania State College, showing the standing orders in use
at that institution:

A uselessly detailed and complicated system of standing orders
is frequently installed by consulting cost accountants. The best

^f There is an order number for every job. You should be given
same by Foreman when he gives you the work. Standing orders
are as follows:

1 — Carpenter Shop maintenance and repairs.

2 — Wood Machine Room maintenance and repairs.

3 — Forge Shop maintenance and repairs.

4 — Foundary maintenance and repairs.

5 — Machine Shop maintenance and repairs.

7 — Clerical and drafting.

9 — Clipping, Filing and Pipe Fitting Shop maintainance

and repairs.

10 — Wood Turning Room maintenance and repairs.
11 — Extra Janitor work.
12 — Extra Teaching.
13 — Thesis work.

14 — Office maintenance and repairs.
15 — Apprentices' time learning trades.
16 — Plumbing Shop maintenance and repairs.

FIG. 147. — List of standing non-productive orders printed on back of
time slip. Yellow paper, 3 inches by 5 inches.

way to stop leaks is to prevent them by good management. De-
tailed cost accounting with hundreds of standing expense orders
will not stop wastes.

307. Items Constituting Expense Burden. — Manufacturing
expense properly includes such items as expense of supervision,
namely, salaries of foremen, salaries of draftsmen, salaries
of men in time and cost departments, salaries of men in pur-
chasing department, salaries of men in stores department, salaries
of men in shipping department, salaries of all men in tool-
making and repairing department, salaries for engineers, firemen,
truckers, elevator men, and packers. Wages of such help as car-
penters and painters ought to be applied to specific shop orders,

290 FACTORY ORGANIZATION AND ADMINISTRATION

such shop orders being of the productive series or of the non-
productive series. Manufacturing expense will include such
items as rent, taxes, insurance, water, light, fuel, pattern material,
and wages, packing material, patent costs, law costs, mem-
bership in societies, experimental work, and miscellaneous
factory expense.

A committee on uniform cost accounting of the National
Machine Tool Builders' Association made the following recom-
mendations as to the placing of certain manufacturing expenses:

In the matter of freight, express, and drayage they recommend
including these items in the manufacturing expense rather than
adding them to material costs, preferring the plan of diffusing
such costs. In the matter of factory supplies the question was
raised about the purchase of supplies for each month. These
should be charged directly to the expense for the month or on
stores account. The committee recommended the adoption of
an average for each month high enough and based on past expe-
rience. Under this plan such purchases could be charged to
suspense, and each month an equitable amount could be credited
off to expense. The safe plan is to charge the purchases direct
to expense — except in certain cases where a large stock is pur-
chased ahead.

In the matter of Factor of Safety, the committee recom-
mended as follows: With the greatest possible care in details
there will always be contingencies of one kind or another arising,
and to insure against such unforeseen yet possible differences
a Reserve Account is suggested. Each period a proper charge,
possibly 2 per cent, should be made to manufacturing expense,
based on the total of such manufacturing expense as it appears
before the element of safety is applied. This is intended to take
care of general wastage throughout the shop, material leakage,
breakage of material in warehouses, obsolete castings, etc. This
does not refer to castings spoiled in the shop. These are charged
direct to shop order as an extra material item.

Under the heading of Interest, the committee considers it
incumbent that an amount should be charged into the burden
element of the cost of each month equal to a fair interest of the
value of ground, buildings, and plant equipment, viz., 1/12 of
say 5 per cent. We cannot commence to figure profit until this
interest charge is first added to the cost. The manufacturer who
does not own his buildings and ground will charge rent instead of

COST DEPARTMENT 291

interest on these values into his costs. As to the plant equip-
ment, the mere fact that a manufacturer has this paid for does
not relieve him of charging an interest on it into his costs, any
more than if he had out interest-bearing notes given in payment
for it, or an issue of interest-bearing stock to cover this plant
equipment. If he never earns more than a fair interest on his
total investment, then he is practically earning no profit by his
business transactions, since he could get this interest on his money
without going into business. Therefore this interest should be
added into the cost before we put on the profit which should
establish the selling price.

308. "Fixed Charges." — Those items of manufacturing expense
which can be predetermined with accuracy for the ensuing year,
and which do not change from month to month are frequently
designated as "fixed charges." These charges include such
expenses as interest on capital invested, depreciation, taxes,
rentals, and insurance. The other items of manufacturing
expense are sometimes designated as the variable charges.

309. "Percentage on Labor" Method of Apportioning Expense
Burden. — This method is by far the most prevalent method of
apportioning the expense burden. If the output and wages are
practically the same year in and year out this method will not be
far from right. If such is not the case, however, the results as to
total costs should be compared with results given by other methods
of apportioning expenses.

In determining the expense percentage to be added to the
cost of labor as shown by the time records, the simplest process,
and the one most generally used, is that of adding a uniform per-
centage to the cost of labor on all classes of work. Thus, if the
entire expense account of a factory, including the cost of unpro-
ductive labor, interest, insurance, depreciation, etc., is to the cost
of productive labor as 150 is to 100, then one and one-half times
the cost of labor on any article built in the shops will be added
to its cost as shown by the bill of material and time records,
in order to obtain the total cost.

310. Use of Separate Expense Percentages for Different Depart-
ments.— The foregoing.method, while simple, is objectionable be-
cause it does not differentiate articles in the manufacture of which
the more inexpensive machines of a plant are employed, from
articles involving the use of very expensive machinery. On the
other hand, it adds a very great amount to the necessary clerical

292 FACTORY ORGANIZATION AND ADMINISTRATION

work if a definite percentage is determined for each tool, and
added daily to the operator's time.

311. Expense Percentage Different for Different Kinds of Prod-
uct.— A compromise between these two extremes will be found
in the differentiating of the output of a shop into several groups,
and, by carefully examining the purchase cost and expense of
operation of the tools employed in the manufacture of each group,
similarly differentiating the expense percentage, so that a different
per cent, will be added to the flat cost of machines involving
greater expense in their manufacture than to the group in which
less expense is involved. Thus, let us suppose that the total
annual cost of productive labor in a shop is $100,000, and that
the total expense, including unproductive labor, interest, insurance,
depreciation, etc., amounts to $150,000. We might determine
the actual total cost of each machine now by adding one and one-
half times the cost of labor as shown by the time records. But
suppose we draw a line- between the kinds of machines manufac-
tured, putting all the larger and special machines in a group by
themselves, and all ordinary small stock machines into another
group, and find now that the labor on the large machines amounted
to $50,000, and the expense item on the same machines amounted
to $100,000, while in the case of the smaller machines the labor
cost amounted to $50,000, and the expense item for this group
was $50,000. It is evident that we would cover our total annual
expense item if we added twice the cost of labor as shown by the
time records in the case of the larger machines, and once the cost
of labor for the smaller machines. It is evident that the addition
of one and one-half times the cost of labor to all machines would
have been misleading, inasmuch as it would have represented the
costs of the smaller machines as being higher than they actually
were, and would have shown the costs of the larger machines at
too low a figure. The addition of the single percentage would be
quite likely to lead the management to the fallacious conclusion
that they were unable to build small machines at as low a cost
as some of their competitors, who confined their efforts altogether
to the smaller type, and might cause them to allow their efforts
toward selling the smaller machines to flag, and thus lose a line
of business which would be in reality profitable.

312. Hourly Expense Rates. — The progressive tendency now-
adays is to charge, in the form of hourly rates, all factory operat-
ing expenses outside of productive labor. The following example

COST DEPARTMENT 293

will show why it is more accurate to charge operating expenses
by the hour than as a flat percentage of the productive labor
cost :

Suppose a piece of work takes a man 30 hours, and that this
man is receiving 20 cents on hour; the flat labor cost of the work
is $6. Suppose our operating expenses are 100 per cent, of our
productive pay-roll expense, then we must add 100 per cent, of
flat labor to cover expense, or $6, making the total actual cost
of the work $12.

Suppose now we employ a more skilful man who does the work
in 20 hours at 30 cents an hour; the flat labor cost will be $6 as
before, and the 100 per cent, added would make the total manu-
facturer's cost $12.

If, however, we had divided out total annual expense by the
total number of productive hours put in during the year, and
had found that the hourly expense rate was 20 cents an hour,
we would figure the above work as follows :

1. In the case of a man getting 20 cents an hour we would
have:

Flat labor cost, 30 hours, at $0.20 or $6.00

Operating expense, 30 hours, at $0.20 or 6.00

Total manufacturer's cost $12 . 00

2. With the more skilful man we would have :

Flat labor cost, 20 hours, at $0.30 or $6 . 00

Operating expense, 20 hours, at $0.20 or 4.00

Total manufacturer's cost $10. 00

It is evident that by using the hourly operating expense we
show, that the higher priced mechanic, who did the work in less
time than the poorer mechanic, made the job cost $10, whereas
the poorer mechanic, to whom we paid the same wage amount,
made the job cost us $12, because he occupied the shop floor
space and used the machinery, power, and tools a longer amount
of time than the skilled man.

A great step toward accuracy is taken when a shop once
establishes an hourly operating expense, such operating expense
being based on a grand total of all items in the expense account,
divided by the total productive hours taken from all the pay-
rolls during the year.

294 FACTORY ORGANIZATION AND ADMINISTRATION

313. Departmental Hourly Expense Rates or Local Burden
Rates. — Naturally the next step toward more accurate cost-
finding will be to establish a general hourly operating rate which
applies to all departments in the factory, keeping out of this rate
all expense items which are strictly local departmental expenses,
and making out of these local departmental expenses distinct
hourly rates, applying to certain departments only.

The establishment in this way of local burdens, as well as a
general burden rate, will go far toward putting the expense of
operating high-priced and heavy-power machinery where it
belongs, instead of diffusing it on bench work and other work
which ought not to carry the expense of the machinery at all.

314. Hourly Machine Rates. — This brings us to the next
point in development of accurate cost-finding ; namely, the estab-
lishing of an hourly rate for each separate machine, such rate
being distinct from and in addition to the wage rate of the man.

A number of different considerations enter into the estab-
lishment of the hourly machine rate. Among these are the fol-
lowing: (1) the interest and depreciation on the purchase price
of the machine; (2) the annual cost of repairing the machine and
keeping it supplied with belts, lubricants, and cutting tools;
(3) the floor space occupied by the machine and the stock lying
about it; (4) the power consumed by the machine; (5) the number
of men required to operate the machine.

With the previous year's expense accounts as a basis, an
estimate is made of the total amount to be charged to the owner-
ship, operation, and maintenance of all machines. Out of this
grand total or budget each machine tool is given a certain definite
allowance or allotment for the coming year. A card is then writ-
ten out for each separate machine tool, and after determining ap-
proximately the number of hours that the machine will run during
the year, its hourly operating rate is established by dividing the
total budget by the estimated total hours that the machine will
run. Every time that the machine is used it is credited .with
its hourly rate, the amounts being posted on the card record
for that machine tool from the cost department's records, show-
ing amount of time machine has been used. If at the end of a
quarterly or semi-annual period it is found likely that the post-
ings on any card will over-run or fall short of the amount allotted
the given machine, such changes in various machine rates as are
manifestly equitable and necessary should be made.

COST DEPARTMENT 295

A good deal of confusing and unnecessary detail has been gone
into by several writers on cost accounting in describing hypo-
thetical methods of incorrectly figuring machine rates on the
basis that the machine rate included all of the factory expenses
and was the only expense burden added. The machine rate has
been in use many years before these writers were born, and has
been pretty accurately worked out independently of the other
expense charges in such establishments as planing mills or job
machine shops.

315. Machine Rate should always be Separate and Inde-
pendent of Other Expenses not Connected with Ownership and
Operation of Machines. — When the machine rate is used, it
is always desirable to use a separate local departmental burden
rate for all charges of a strictly local departmental nature and
not connected with machine operation. In addition to the local
departmental rate, there should be a general expense burden rate
which includes all expenses non-local or general in their nature
and not connected with either machine operation or depart-
mental expenses.

316. Wide Variation in Costs in same Establishment shown
by Applying the above Different Methods of Apportioning
Expense Burden. — Popular fiction has fascinated the average
reader by the statement that modern cost accounting is so re-
fined that a fluctuation in the third decimal point marks the divid-
ing line between profit and loss. How absurd such statements
are can easily be demonstrated by applying the above-described
various methods of computing the expense burden to the same
flat labor and flat material costs.

317. Importance of Manufacturers in Same Industry using
Same Methods of Apportioning Expenses in their Cost Systems.
— The machine tool builders, realizing the senseless competition
that arises from ignorance of real costs, agreed to use a uniform
system of apportioning expense burden. It would be well if
other industries were to follow this example.

318. Co-operation between Accounting and Cost Departments.
— In the matter of establishing the various burden rates or
expense percentages, it is vitally essential that there be har-
monious co-operation and mutual understanding between the
chief accountant and the head of the cost department, a result
which may require the exercise of great diplomacy for its accom-
plishment. It is necessary that the chief accountant recognize

296 FACTORY ORGANIZATION AND ADMINISTRATION

the desirability of local departmental expenses, and the segre-
gation in the cost system of the portion of each department's
pay-roll, which is indirect labor, as well as the material items
chargeable to local departmental up-keep. He will also have
to come to an understanding with the head of the cost depart-
ment as to each month's shop production that constitute new
assets in the way of standard drawings, standard patterns,
standard machine tools, standard and special portable tools,
office and shop fixtures, line shafting, and other plant additions.

The above matters are the most difficult to adjust and agree
on, but if the chief accountant will approach the matter with
a desire to understand and co-operate with the chief cost-keeper,
and the chief cost-keeper will approach the matter in the same
spirit, neither scoffing at the other's ignorance or stupidity,
satisfactory agreement can and must be reached.

Having settled the portion of pay-roll and material which
will have to go to local departmental indirect accounts, the next
step is the agreement on what shall be the monthly factory bur-
den. This burden consists of the indirect charges not chargeable
to any one department, but chargeable to the shop as a whole,
and includes such items as interest and deterioration, super-
visional salaries, rent, machine depreciation, and power not
included in hourly machine rates if the hourly machine rate pre-
vails, and if it does not prevail, all rents, power charges, and
machine depreciation; also light and heat, shop supplies, perish-
able and semi-perishable tools, defective workmanship, drayage
and freight, boxing and crating, and other miscellaneous factory
expenses already referred to.

In order to see whether the burden rate charged is sufficient
to meet all the expense items, it is only necessary for the cost
department to keep a large card on which are recorded the
amounts of burden assigned to each order as completed, these
amounts being totaled each month. If the totals fall below the
accounting department's record to date since the beginning of the
fiscal year, an advance in the rate will be necessary to secure a
balance at the end of the year, and vice versa. Right here is
where experienced cost accountants are likely to disagree with
men whose experience has been confined to commercial book-
keeping as the latter are apt to call this burden rate adjustment
"juggling" or "doctoring" of accounts. However, it appearsto
be the only way of securing a balancing of cost and stores records

COST DEPARTMENT

297

h
z

S
<

E
|

rtRHER NO.

_l
<t

RAW MATERIAL

TOTAL

TOTAL MAN' F'O ITEMS fa) " M' F> R* S COST"

>•

I
I

D
0)

•
J

;

0
O

-i

i
o

S
z

i
cc

«i

_i
o

TOTAL

0
b.

TOTAL ON MACHINE TOO

TOTAL NOT ON MACHINE

"Burden" t> M M

RAW MATERIAL

M ,i PERCENT

MAN'FD ITEMS

TOTAL "M-F-R'S COS

c
o

-a

208 FACTORY ORGANIZATION AND ADMINISTRATION

with the commercial accounts that is consistent with a rational
cost of conducting stores and cost records.

319. Notification of Completion of Orders. — The cost depart-
ment should receive some systematic and prompt notice of
the finishing of every shop order and every shipping order.
The cost department is usually the final destination of the
tracing tag which accompanies a lot of goods through the shop
to the inspection department and storeroom, the tag going
first to the stores record clerks, and from them to the cost depart-
ment. Similarly, a copy of the packing list covering every ship-
ping order, such list designating whether the shipment is partial
or complete, goes first to the stores record clerks, and from
them to the cost department.

320. Cost Summaries. — Whenever an order is closed in
the cost department, the labor sheets covering such order
are removed from the files and turned over to a cost-figuring
clerk. He makes out a cost summary similar to Fig. 148.

Drawing1

Part No.

Order No.

Date

Quantity

Labor

Material

Expense

Cost Ex

Average
Cost

Selling
Price

FIG. 149. — Comparative total cost record of individual parts. White card,
8 inches wide, 4 inches high.

This cost summary gives the name of the article and the order
number. The labor, listed by operations, is divided into two
classes, the first being labor on machine tools, the second labor
not on machines. The labor report is listed on the left-hand
side of the summary sheet, the right-hand side being reserved for
a report of cost of raw materials and manufactured items. In
the lower left-hand side there is a recapitulation giving the total
labor on machine tools, total not on machine tools, and total
burden or operating rate, also a summary of material, giving
total of raw material, total per cent, added to actual cost of raw
material, total cost of manufactured items, and total manufac-
turer's cost.

These summaries are briefly transcribed on to card records,
one card for the billing department and one card for the cost
department; such card records being filed by the number of the
part. A form for this card is shown in Fig. 149. It bears col-

COST DEPARTMENT

299

umns headed "Order Number," "Date," "Quantity," "Labor,"
"Material," "Expense," "Cost Each," and "Average Cost."
321. Comparative Individual Part Costs. — The foregoing card
serves as a comparative cost record as well as a catalogue or price
list of individual parts, and is useful in billing orders for supply
parts or in inserting prices of individual parts when figuring cost
of a total machine, as per individual items listed on the bill of

Comparative Labor Costs
Description

Piece Number

Opera tioD
No.

OPERATION

Dept.

No.

P W

D W

Vrstiur
No.

OPERATION

Dept.
No.

D W

FIG. 150. — Comparative individual operation cost record.
7 3/8 inches wide, 5 inches high.

White card

material. An individual operation comparative cost card is
shown in Fig. 150. Fig. 151 is arranged to contain a compara-
tive cost of individual operations localized still further in that it
reports the man doing the operation as well as his regular and
premium wages on the operation.

For all shipping orders the shipping department's order copy

Dwg. No. Pat. No, Part

Order
No.

Sub-order

No.

OPERATION

No.
PCS.

No. of
Man

TIME

Premium

Date

Est'ed

Saued

~—~ -~

-——

=^v^

—^

— — —

FIG. 151. — Comparative individual operation cost record giving data
contained in form shown in Fig. 120, and specifying in addition the number of
pieces made, the man performing the operation, his rate and premium.
White card, 6 inches wide, 4 inches high.

is sent to the billing department with the book previously referred
to, in which book each order is receipted for. The billing clerk
inserts on this order copy all selling prices which he has on record
in the card index referred to. If there are any items on which
he has not as yet costs, and consequently probably no selling
prices, he confers with the cost department, who give especial
attention to getting; these prices figured immediately.

300 FACTORY ORGANIZATION AND ADMINISTRATION

322. Use of Bill of Material as Cost Record. — As previously
stated, it is advisable to provide for bills of material separate
insert cost sheets, so that the bill of material proper is not
burdened with cost columns, which will be used in only one
copy of the bill of material, whereas a number of copies of the
bill will go to various shop departments to serve as a list of parts

MAT'L LIST RE
RECORD COM

C'D
pLETFn

COST

ORDER No.

SHEET

SHEET
TOTAL
CHECK

No.

File No._

-n RY

Fp BY

MATERIAL
ORDERED

MATERIAL
RECEIVED

WEIGHT

MATERIAL
COST

LABOR
MRS.

LABOR
COST

TOTAL

SHIPPED
DATE OR
OR B^L.

ISS.

NUMBER

P,0™

FIG. 152. — Insert cost sheet for bill of material covering contracts or
complete machine orders. White bond paper, 8 1/2 inches wide, 11 inches
high, ruled in red and blue.

and assembling and erecting guide. Fig. 152 shows an example
of insert cost sheet as used for reporting the individual com-
ponent part costs on a bill of material. At the end of the bill
will be reported the assembling, erecting, testing, painting,
packing, etc., not chargeable to any individual component.
After all extensions of costs of material and of labor have

COST DEPARTMENT

301

been entered on the bill of material, it is turned over to the mana-
ger of the cost department. If the bill of material system has
been carefully followed out, and all discrepancies in material
attended to at once, as soon as they were made evident by the
storeroom entries, there need be no delay in arriving at the total
costs, the only operations necessary being the entering of labor
costs and extensions of costs of material, so that complete cost
bills can be had within a day, or at most two or three days, after
completion of an order.

The complete bills of material with cost entries are conven-
iently filed in "document file cases," or in tariff files, a separate
case being used for each order series, viz., the bills of material
for "A" orders being filed in numerical succession by themselves;
similarly the "B" orders, etc.

323. Comparative Complete Machine or Assembly Group
Costs. — For quick reference to all machines of similar type
and size, a card index should be kept, each card representing

Order
No.

Complete

From
Production
Oept.

To Time
Clerks

From Time
Clerks

Manager

Returned

Filed

FIG. 153. — Cost department's record of location of bill of material cost
records. White paper, 71/2 inches wide, 10 inches high.

one certain type and size of machine, the order numbers being
entered as machines of that particular size are completed. As
there will be room on the cards for more than simply the order
number, other brief entries may be made, which will frequently
save reference to the complete bill. For instance, total weight,
total cost capacity, and speed, might be entered on the same
lino after the order number.

On receiving the complete cost bill, the cost clerk looks up
several similar machines on his card index, and gets the bills
covering these from the document files. A careful comparison,
item by item, is now made with the new bill just turned in. Any
discrepancies are investigated and accounted for, and a note
giving the result of the investigation is attached to the bill of
material, which is now sent to the general manager, being noted
by him and returned again to the cost department to be filed
away.

In order to prevent delays, and to enable any bill of material

302 FACTORY ORGANIZATION AND ADMINISTRATION

to be located at any time, little record books may be kept by
the cost clerk— one book for each order series— in which are
noted the dates on which the bills of material are received and
turned over to the various departments or clerks, the books being
ruled in accordance with Fig. 153.

324. Cost Service Division.— In a large industrial establish-
ment, it will be found desirable to establish a Cost Service Divi-
sion, whose duties will consist of the furnishing to each depart-
ment or shop a complete analysis and distribution of all cost
factors affecting that shop, presented in the manner best adapted
to that particular shop or department. In some cases this will
involve the use of graphic presentations and graphs in addition
to tabulations. In some cases it will mean comparative data
by operations; in others by pieces, and in others by orders. This
information should be furnished to the various departments or
shops at the end of each four weeks or monthly period. Facilities
should be provided whereby if a department or shop head wants
a further break-down or analysis of the reports which the Cost
Service Division furnishes, such break-down can be promptly
furnished. One of the functional overseers in each shop should
be designated as the connecting link between the Cost Service
Division and the shop in question.

325. Competitors' Prices. — Careful comparisons need to be
made between the cost records of a shop and competitors' prices
on complete machines and individual parts. The sales depart-
ment should constantly be accumulating such data of competitors7
prices from their bids. In all cases where it has been quite posi-
tively determined that prices have not been "cuts," and it is
found that they are below what the shop can afford to quote, it is
proper to investigate and see if some means cannot be found of
meeting the competitors' prices. It is not a general rule that the
members of a sales department are in position to ferret out for
themselves the methods of meeting such competition. It is per-
fectly proper that the sales department should not confide its
own selling prices nor those of its competitors to any other depart-
ment of the shop. It is, however, of extreme importance that
absolute truthfulness be observed in report-ng to the technical
departments the percentage by which a competitor has underbid
the shop. A collection of competitors' prices may demonstrate
that certain machines or lines of machines are costing the shop
more than they ought to. It then becomes necessary to use

COST DEPARTMENT 303

every proper effort available to bring down the cost of the machine,
and if the cost is cut down by legitimate means, an economic
advantage has been gained not only for the shop, but, in a small
way, for the trade at large. The constant reduction of prices
of all manufactured commodities is by no means a sign of a demoral-
ized condition of trade, but is a necessary essential to the world's
progress. If this condition is met in a spirit of ill temper and
haste, it is likely to result in business failure; but if it is taken
hold of with intelligence and caution, it means success and pros-
perity to the manufacturer.

REFERENCES

BRISCO: " Economics of Business," Chapter VI.

GUNN: "Costs" in Humphreys "Lecture Notes on Business Engineering."

ENNIS: "Works Management," Chapter II.

REDFIELD: "The New Industrial Day," Chapters II, IV and V.

EVANS: "Cost-keeping and Scientific Management," Chapters I- VII in-
clusive.

EMERSON: "Efficiency," Chapter VII.

GOING: "Principles of Industrial Engineering," Chapters V and VI.

CHURCH: "The Proper Distribution of Expense Burden."

CHURCH: "Production Factors in Cost Accounting and Works Manage-
ment."

DAY: "Accounting Practice," Part II.

WEBNER: "Factory Costs," Chapters X-XXVII inclusive.

NICHOLSON: "Factory Organization and Costs," Chapters III and IV.

BUNNELL: "Cost-keeping for Manufacturing Plants."

BAUGH: "Cost Accounting," Pages 135 to 158.

WILDMAN: "Cost Accounting," Chapters XI to XIV.

FACTORY TRADE COMMISSION: "Fundamentals of A cost System for
Manufacturers. ' '

CHAPTER XXIII
AIDS IN TAKING INVENTORY

326. Advantages of "Perpetual" Inventories. — In an estab-
lishment of sufficient magnitude to justify the employment of a
full and capable clerical force to handle the records of the cost
and stores department, stock-taking is not as formidable a matter
as in smaller concerns. But in many large and prosperous manu-
facturing establishments the taking of an inventory is looked
forward to as the most onerous task of the year. It is frequently
months after the date on which the work of inventorying is
begun before the final results are announced.

In factories where labor cost postings are balanced against
the pay-roll, where stores withdrawals are expressed in money
value as made, and where Raw Material, Work in Process, and
Finished Product accounts are charged and credited as described
in Chapters V and XXII, it is feasible to have the books closed
and inventories taken as often as monthly. The question as to
how extensive a factory must be in order to justify the employ-
ment of such a full clerical force is naturally one which depends
upon the complexity of the manufacturing processes, and also
upon the margin of profit. It is, however, true that the com-
plete cost analysis revealed by a full clerical force may be in
itself the very means of increasing the margin of profit. I had
occasion to be shown the cost and stores system of a factory
whose output amounted to about $250,000 of annual sales. The
number of persons doing the clerical work in the establishment
amounted to about 10 per cent., numerically, of the entire work-
ing force of the company, and it is fair to assume that their sala-
ries represented at least an equal percentage of the total wages ex-
penditure. At first I said this clerical force seemed dispropor-
tionately large, and yet I was assured by officials of the company
that since the introduction of this system they were able to adjust
their prices with a feeling of confidence that they had never
before possessed. The books are closed, and a complete report
of the company's business is rendered to the directors on the
tenth of each month for all business done during the preceding

304

AIDS IN TAKING INVENTORY 305

month. The company has been able to meet the prices of all
competitors and to maintain a high degree of mechanical excel-
lence, and to declare exceptionally good dividends. The success-
ful application of the complete cost and stores system to an estab-
lishment of this size, employing only about 100 men, has strength-
ened my conviction that the more general adoption of these
methods in smaller factories will surely come, and will be accom-
panied by more general confidence and satisfaction on the part
of both employers and employees.

There are, however, many factories that are not quite pre-
pared to go so fully, or — as they would put it — plunge so deeply
into shop-accounting systems, but with even an office force of
minimum size the matter of inventory taking may be simplified
by the use of properly arranged systems.

327. Classification of Items to be Inventoried. — In general
the inventory may be divided into the following classes: (1)
Plant; (2) Equipment; (3) Supplies; (4) Raw Materials; (5)
Work in Process; (6) Finished Stock; (7) Obsolete Stock; (8)
Defective, Second-hand, or Returned Goods.

The items coming under the head of "Plant," if properly
recorded, can be inventoried in a very short time. Under this
heading will be included real estate and buildings.

Under Equipment will be included such items as power-plant
apparatus, transmission apparatus, piping, wiring, fixtures,
machinery, patterns, drawings, special jigs, and special tools.

Under the heading of Supplies will come all such articles as
do not enter into the product or if they do enter into it, cannot
be definitely measured for a given part of the product, but which
are incidental to the processes of manufacturing, such as files,
sand-paper, emery cloth, machine oil, soda, belt dressing, etc.

Under Raw Materials will be listed all materials that enter
into the manufactured product.

Work in Process includes all manufactured or partially manu-
factured parts which are found on shop floors or benches at the
time of taking inventory.

Finished Stock includes all finished parts found in a finished
parts warehouse. Also all finished groups of parts or complete
articles ready for shipment found in the stock warehouse.

The other items are self-explanatory.

It is usually desirable to shut down the works at the close of

306 FACTORY ORGANIZATION AND ADMINISTRATION

business on a fixed date for the purpose of taking inventory, the
works to remain shut down for as many days as experience has
shown to be the minimum time to take inventory satisfactorily.
It is always best to take the work in process first, so that in the
event that the number of days provided for in advance may not
prove sufficient, the checking of the completed stock and raw
material will be left to the last, to be gotten hold of after the
works have resumed operations, as this plan has caused the least
inconvenience.

328. Tag System of Taking Annual Inventory. — It is desirable
to provide a large number of consecutively numbered tags, these
tags to be given out in bunches of 100 to 500 tags, in such numbers
as may be required, to the parties in charge of the stock-taking on
each floor or in each department of the works, and it will be the
duty of these parties, after weighing or counting the stock, to
securely fix these tags to every bin, box, or rack, or piece of
material. These tags will be provided in different colors cor-
responding to the classes above outlined.

When all the stocks, after counting or weighing, will have
been tagged in this way, checkers will collect the tags.

A record must be kept of all tags given out and to whom,
and all tags, whether spoiled or used or not, must eventually be
returned to the checkers.

329. Checking Inventory. — The manner of taking the inventory
must be most thorough in every respect, so that reliable results
will be obtained; actual weight, quantity, or measure must be
applied in every instance possible. The foreman of each depart-
ment and a checker should superintend the weighing and counting
of all material in that department, and will see that same is correctly
entered on the inventory tag. Where weighing or counting is
not practicable and estimates only can be obtained, the foreman
and checker should agree upon the proper figure, and they should
both put their initials on the tag, which should be marked
"Estimate."

It rests with the foreman and checker to determine what mate-
rials can or cannot be estimated according to the existing conditions,
and no set rule can be laid down. The purpose and intention
should be to count or weigh everything possible.

As far as possible all material should be collected and piled
up before taking inventory, with a view to facilitating a correct
and expeditious count.

AIDS IN TAKING INVENTORY

307

While the inventory is in progress no stock may be moved
from one department to another.

330. Material in Transit. — If it is found after taking inventory
that material was in transit for which invoices were rendered
bearing date of shipment previous to date of inventory, such
material will be included in the inventory. On the other hand,

INVENTORY TAG.

Dept..
Bldg.

-Tag No.

Jloor

Cat. .No.

Job No.

No. of Pieces-
Weight

Description of. Article: —
Class

Sub-Class-

No, of Hrs. Labor
Counted by

-Checked by_

FIG. 154. — Form for inventory tag. Colored tag. Stock, 41/8 inches
wide, 7 inches high.

care must be taken that no goods are booked or billed as " Shipped
Out" from the factory which are all ready to ship and then included
as stock on hand. Iff may be necessary to ship goods on an order
during the course of the inventory, but a note will be made
of same and the item included in the final inventory properly
annotated.

308 FACTORY ORGANIZATION AND ADMINISTRATION

331. Classification of Work in Process and Finished Product—
A further differentiation of work in process of manufacture and
finished stock is usually desirable by classes of product. For
instance, a concern manufacturing electrical mining machinery
might have the following classifications: Class A, Chain Mining
Machines; Class B, Locomotives; Class C, Generators; Class D,
Long Wall Machines; Class E, Drills; Class F, Standard Motors;
Class G, Switch Boards; Class H, Hoists, etc., etc.

The designation of the material according as it comes under
one of these classes must be clearly designated on the tag. A
form for such inventory tag is shown in Fig. 154.

332. Units of Measurement. — In recording raw material and
supplies, care must be taken to see that the proper unit of
measure is entered on the tag, in stating the quantities on hand,
that is, the unit of measure by which the article is usually priced
and sold, whether pounds, feet, dozen, etc.

333. Shop Order Numbers for Work in Process. — In reporting
the work in process, it is important to give the shop order number
as well as catalogue or part number, and to state clearly the con-
dition of the order as to the value of labor and amount of material
expended to date, such information being obtained usually from
the cost department records. All parts found on the shop floor
or benches must be considered as orders representing work in
process, whether there appears to be any labor performed or not on
the job.

Where the number of parts by actual count, found on an
order in process, is different from the number called for by the
order itself, the inventory should give the actual weight or unit
of measure, and an estimate must be made as to the value of labor
and material, such estimate possibly differing from the records
in the cost department.

334. Depreciation on Obsolete Goods. — A percentage of de-
preciation must be agreed upon for obsolete or unsalable stock.

335. Collecting Inventory Tags. — The inventory having been
taken, the tags will be collected by checkers and sorted in nu-
merical order, to determine that none are missing, the last tag
being clearly marked "Last Tag, Number "

The shop must be carefully divided into divisions, and men
definitely assigned with checkers to each division.

336. Sold Goods. — Completed machinery, etc., that has been
billed to customers, and that is being held subject to their orders,

AIDS IN TAKING INVENTORY

309

must be specially designated by a notation in red pencil or in some
similar manner on the tag.

337. Classifying Materials. — For convenience in cataloging, it
may be found desirable to classify all tags by class of material,
the material when thus grouped or lumped being copied from the
tags on to large sheets, the number of the tag being referred to in

EQUIPMENT INVENTORY CARD.

NAME OF INSTRUMENT, MACHINE OR FIXTURE

NAME OF MAKER

FROM WHOM PURCHASED

MAKER'S NUMBER

)UR NUMBER

DATE INSTALLED

FIG. 155. — Equipment inventory card. (Front.) White card, 6 inches
wide, 4 inches high.

each entry on these sheets, and all tags after all entries are made
being again rearranged in numerical order, each tag having been
marked with some sign or stamp to designate that it had been en-
tered on the inventory record.

338. Equipment Inventory. — It is usually desirable to preserve

DATE w
PURCHASE

PURCHASE
VALUE

COST
FREIGHT

COST
NSTALLING

COST
FIXTURES

COST
REPAIRS

DATE
REPAIRS

TOTAL
COST

CHARGE (
DEPREC

AMOUNT

)FF FOR
ATION
DATE

VALUE

DATE

FIG. 156.— Equipment inventory card, reverse. (See Fig. 126.) White
card, 6 inches wide, 4 inches high, ruled in red and blue.

a permanent card record covering equipment items, a distinct
card being kept for each equipment item on which is recorded
such description as "Symbol," "Maker," "From whom bought,"
"Date put in use," "Improvements or Repairs," as may be
advisable. A form for such record is shown in Fig. 155, and the
reverse of the form is shown in Fig. 156.

310 FACTORY ORGANIZATION AND ADMINISTRATION

339. Depreciation and Repairs on Equipment. — On the reverse
as shown are recorded cost of repairs or amount of annual de-
preciation, and the balance showing latest inventory value.

ORIGINAL

INVENTORY TAG

DEPT. No..
B'L'D'G _

JTAG No,_

.FLOOFL

_SEC'N_

CAT. No..

_SIZE_

NAME.

No. P'C'S.

.MUL'PJ

MATERIAL

OPERATIONS PERFORMED.

ARE PARTS
ASSEMBLED!

ASSEMBLING
.OPERATION

WEIGHT (LBS.)

AVERAGE.

CROSS

PC'S

TARE

POUNDS

NFT

Wt. per 100 Pr_'s

COUNTED BY-

ENTERED IN RECORD BY-

N.B.-AII Tags Must be Accounted for.

FIG. 157. — "Original" or upper sheet of inventory tag. Fastened to
"duplicate" tag shown in Fig. 158 by reinforced eyelet and perforated
along line A-B. Original buff bond paper ,4 1/2 inches wide, 7 3/4 inches
high.

340. Duplicate Inventory Tags. — Some appraisal companies
use a tag with a perforated, removable, duplicate strip attached,

AIDS IN TAKING INVENTORY

311

writing the tags in duplicate with a piece of carbon, and remov-
ing the perforated strip immediately after writing out the tag.

DUPLICATE.

INVENTORY TAG

DEP'T No.
B'L'D'G

JTAG No.

_FLOOR_

.SEC'N.

CAT. No.

.SIZE.

NAM!

No. P'C'S.

JVIUL'EJ

MATERIAL

OPERATIONS PERFORMED.

ARE PARTS
ASSEMBLED?-

ASSEMBLING
-OPERATION-

WEIGHT (LI

GROSS
TARE.
NET-

PC 'S-

-Wt. Per 100 PC'S

COUNTED BY.

_A.PP'D BY_

_F'MAN

ENTERED IN RECORD BY_

IM.B.-This Duplicate Must Not be Detached from Stock.

FIG. 158. — "Duplicate" inventory tag. Fastened together with "orig-
inal" by reinforced eyelet. (See Fig. 157.) Manila tag stock, 4 1/2 inches
wide, 7 3/4 inches high.

This lessens the liability of errors due to lost tags. A form for
such a tag is shown in Figs. 157 and 158.

341. Proper Percentage of Depreciation. — The proper per-
centage of depreciation to be used for various classes of equip-

312 FACTORY ORGANIZATION AND ADMINISTRATION

ment is a matter which has been discussed at length by various
writers. Experiments have been made to determine the average
life of various tools. It is evident, however, that the length
of life and rapidity of deterioration of machinery and trans-
mission parts will vary widely. Where trustworthy data
based upon a number of years of observation are not at hand, it
has been customary to allow a general depreciation of 10 per
cent, per annum on all machines. On belting and transmission
apparatus in general, a slightly larger depreciation is sometimes
charged, varying according to the service. Buildings kept in
good repair are often charged with a very low percentage of
depreciation.

342. Inventorying Patterns and Drawings. — The real value
of patterns and drawings as an asset is a matter over which
there is considerable difference of opinion. Special patterns
and drawings are charged to the particular order for which
they are made, and then can be of no value except as scrap.
On the other hand, standard patterns and drawings have a real
value which should be subject to considerable depreciation.
Where the value of standard drawings and patterns is not kept
for each piece, but all work on such patterns and drawings is
charged on a standing order number, the total cost of all new
standard patterns and drawings for the year is given by a stand-
ing order, and this total added to the properly depreciated value
of the standard patterns on hand at the close of the previous
year will give the current value. This method, of course, does
not assign a definite price to each individual pattern and drawing.

The valuing of goods is facilitated by the cost department
having on hand lists of all standard materials with the prevalent
net price reduced to a price per unit of measure or weight.

343. Perpetual Inventories to be Verified by Actual Count.—
At the beginning of this discussion it was stated that the tak-
ing of an inventory is greatly facilitated by the keeping up
of accurate stores records. It must not be assumed that the
stores records may be taken as inventory values. All systems
of mathematical record need to be checked annually by an actual
count. Such actual count may be made the basis of just as
thorough an inventory as could be taken by an outside appraisal
company. In fact, where it is customary for the sake of furnish-
ing what would appear to be absolutely unprejudiced and un-
biased values by employing an outside appraisal company, the

AIDS IN TAKING INVENTORY 313

work of such appraisal company is made much easier and more
accurate in establishments where inventories taken by the regular
force of the company have been thorough and systematic.

344. "Replacement" Values. — In attaching values to factory
fixtures, special tools and other items which are essential parts
of the plant, it is customary to value them at what it would
cost to replace them in their present condition, and to consider
their worth on a basis of what value they would have to a com-
pany engaging in the same line of business on the same premises,
and not the figures that articles would bring if sold at a forced
sale.

345. Cost System as an Aid to Inventorying. — The accuracy
of the inventory prices attached to finished and unfinished parts
depends upon the cost-calculating system employed. If a
company's cost records are known to be correctly kept, then the
rational way to obtain the cost of unfinished parts would be to
close up to inventory date all time and material records on all
unfinished orders. With a cost system in which the costs of
individual parts have been built up, recorded, and compared,
these costs serve as the basis of accurate inventory valuation.

346. Congested and Disorderly Stock-rooms. — One of the
greatest disadvantages from which inventory taking usually
suffers is that due to extremely congested stock-rooms and
stock floor. Another great disadvantage will be found in
lack of promptness in identifying items on the shop floor and
leaving them without identifying tags.

The mere issuing of instructions to foremen to see that floors
and benches are cleaned up and stock neatly arranged is not
sufficient ; it may be necessary to hire special help to see that this
work is actually carried out. Previous to inventory time as
much useless material as possible should be scrapped.

The person in charge of each department and the checker
for that department must, under no circumstances, let a piece
pass by without tagging it, with the idea that they will look it
up afterward.

347. Precautions Regarding Inventory Taking. — The following
list of precautions will be found serviceable in connection with
inventory taking:

At a period of time not later than two months previous to
the date of the inventory, every bin and every class of article
in every warehouse and stock-room must be labeled with its

314 FACTORY ORGANIZATION AND ADMINISTRATION

proper name and mark number, if there is any; pattern number,
if there is any; also, where two units of measurement are required,
such as number of feet and pounds, the label or tag must bear
the weight per foot, or whatever the conditions require.

(1) The head stock-keeper will, at the time above indicated,
check up each bin and item, and see that these labels are pro-
vided, so that the stock-taking can be done by any clerk copying
the information on the bin labels or tags.

(2) A complete finding list must be provided by the head
stock-keeper at this time. This finding list must catalogue all
material, whether it is purchased finished stock, or whether it
is stock manufactured by the company, such finding list giving,
after each item, the number of the bin in which it is located.
The preparation of such a finding list will prevent articles of the
same class being stored in different bins.

(3) The shop foremen must get under benches and into pigeon-
holes and get out all unlabeled and unidentified material. The
shop floor must be cleared of everything, except work in process.
The personal co-operation of the shop disciplinary heads must
be used to see that this is done. Unless vigorous steps are taken
to enforce this clearing up, it will be extremely difficult to take
stock accurately.

(4) Method o] Taking. — The method of taking the inventory"
shall be as follows:

(Use copying pencils in making all records.)

Squads. — Each overseer shall appoint a number "of squads
(as many as necessary) to each portion of the factory under his
charge. Each squad shall consist of a " Counter, " a "Recorder"
and a " Checker, " together with as many laborers as shall be
deemed necessary for trucking, weighing, etc.

Duties. — The duties of these men shall be as follows:

Counter. — The Counter shall do or shall supervise all of the
counting and weighing necessary for the inventory, and shall
call off all figures, descriptions, and other data to the Recording
Clerk.

Recorder. — The Recorder shall do all of the recording, making
his entries on the Inventory Card as the Counter calls off to him.
As each item is completely recorded he shall leave the Inventory
Card with the article which has been inventoried. Where
possible he should verify as he records.

Checker.— It shall be the duty of the Checker to follow the

AIDS IN TAKING INVENTORY 315

squad collecting the Inventory Cards that have been placed with
the items inventoried by the Counting and Recording Clerks.
He shall inspect each card and shall check each notation specified
with the article it records. If in checking Location, Article,
Description, Quantity, etc. any errors are discovered these
shall be carefully corrected. As he removes the Inventory Card
he shall leave in its place an Inventory Taken Slip on which he
shall place the number of the Inventory Card which he has re-
moved. He shall check the cards which he has taken up to see
that none have been overlooked] and shall take immediate
steps to recover any which he shall find missing. He shall not
work immediately with the squad but shall remain behind and
work independently.

(5) The head of the cost department will receive the num-
bered inventory tags, and put them under lock and key. When
he issues these tags he will take a written receipt from each
person to whom he issues them. He will issue these in lots not
to exceed 500 at one time.

(6) These inventory tags will have carbonized slips with the
same printing on them as is on the face of the tag, stitched to
the tag. These carbonized tags will be torn off as the tags are
written up and kept on file by the person detaching the tags.
This will secure a duplicate of the tag being on file, so that, in
case any tag is lost, it will be known what was written thereon.

(7) At a period not later than one month previous to the
figuring of the inventory, a complete price catalogue should be
in readiness, such price catalogue containing the very latest
prices of all raw material. This catalogue should list every item
appearing in the last preceding inventory.

(8) The shop costs must be figured up to date on all completed
and uncompleted orders, so that it will not be necessary to esti-
mate the time spent on work in process.

(9) At a period not later than thirty days before stock-taking,
every order which the records show to be a "live order" must be
checked in the shop so that there is a certainty of its being in
actual existence in the shop.

(10) In order to distribute the work of stock-taking in such
a manner as not to over-burden any one department, the work
should be allotted as follows : The head cost clerk will be in gen-
eral charge of the inventory; the receiving department will
take stock of all raw material; the stores department will take

316 FACTORY ORGANIZATION AND ADMINISTRATION

stock of all supplies and finished stock; and the cost department
will take stock of all work in process.

(11) The men who wrote certain inventory tags will accompany
the checkers who collect these tags; they will have their dupli-
cates to assist them in accounting for any missing tags.

(12) Work in process should be figured from the cost depart-
ment records. Articles on the shop floor nevertheless should be
tagged and the tags collected just as soon as all items have been
tagged and checked. This will permit of a check of the work
in process, as shown by the tags, against the same as shown by
the cost department records of uncompleted orders.

(13) All figuring of prices, weights, etc., should be done on
the tags themselves. Also all arrangements of lists of stores, by
sizes, etc., previous to any copying on the sheets, are to be the
result of sorting of tags.

(14) The transcribing should be done very carefully in ink
on the permanent record sheets, to be placed in a substantial
binder. This will constitute the permanent inventory, and may
be copied on the typewriter in manifold.

REFERENCES

PARKHTJRST: "Applied Methods of Scientific Management," Chapter V.
BRISCO: "Economics of Business," Chapter VIII.
WEBNER: "Factory Costs," §235.

CHAPTER XXIV

INSPECTION METHODS IN MODERN MACHINE
SHOPS

348. General Classification of Inspection. — The work of
inspection naturally divides itself into two groups :

(a) That having to do with raw materials and purchased parts.

(b) Inspection having to do with manufactured .product.

349. Inspection of Raw Materials and Purchased Items.—
In order that raw material and purchased parts may be satis-
factorily inspected, it is necessary that the purchaser's require-
ments be specifically set forth. This consideration demands the
preparation of specifications. The preparation of such speci-
fications for a given shop is a matter which requires a careful
investigation of past experiences. The person writing such speci-
fications should consult all possible sources of information as to
what has been past experience with respect to troubles and diffi-
culties in connection with any given material or part. This is
necessary in order that the specifications may be not only correct
from a theoretical standpoint, but in order that they may be
practical as well. A draftsman, foreman, or a salesman may be
able to give useful information in connection with the preparation
of specifications for purchased material.

If the establishment is large enough to have a testing labora-
tory of its own, such a laboratory will prepare these specifications
in conjunction with the various engineers of the company.

In the inspection of raw material we have to cover two general
features :

(1) Quality as depending on composition.

(2) Quality as to dimensions.

Inspection as to composition may come under four classes of
requirements :

(1) Physical.

(2) Chemical.

(3) Magnetic or electric.

(4) Metallurgical.

317

318 FACTORY ORGANIZATION AND ADMINISTRATION

Inspection as to dimensions and form would apply more par-
ticularly to castings or finished parts which must coincide with
drawings or other specifications.

Raw material purchased in large quantities may sometimes
be best inspected, as to composition and manufacture, at the
plant of the maker, so far as physical qualities are concerned.

Chemical, magnetic, or electric qualities are best tested in a
laboratory which may be part of the organization of the company
making the specifications, or it may be done in a commercial
laboratory conducting testing for outside clients.

Such articles as bar, sheet, and other stock may be inspected
in the receiving department as to quality, size, shape, and
general appearance of material. This class of inspection,
although usually conducted by non-technical help, is about all
that can be done with regard to materials received in small
quantity, as the cost of technical inspection would be too high.

350. Inspection of Manufactured Product. — The inspection
of manufactured product divides itself up into :

(1) Dimensional inspection during the course of manufacture.

(2) Inspection of groups of parts.

(3) Erection inspection.

(4) Electric or magnetic inspection and testing.

(5) Final inspection and testing of complete machines.

351. Dimensional Inspection. — Some few American shops
make a dimensional inspection after every machine-shop opera-
tion. Where this is the practice it is necessary to have a repre-
sentative of the inspection department visit every leading factory
department at regular intervals. The record of the inspection is
made by having the. inspector write his name or initials after the
operation which the inspection covers, as listed on the routing
tag accompanying the pieces during their process of manufacture.
In some shops the inspector accompanies the "move material
men," motor trucks being used.

In many shops, however, it is not necessary to conduct a dimen-
sional inspection after every operation, nor, indeed, is it necessary
to inspect all parts. In many cases it will be satisfactory if
only such parts as are subject to renewal are inspected when all
machine-shop operations are finished. Such parts may be desig-
nated by the engineering department on the bill of material.
As the routing or tracing tag is usually copied from the bill of
material the tag will call attention to the required inspection.

INSPECTION METHODS IN MODERN MACHINE SHOPS 319

352. Floor Inspection. — In addition to the floor inspection of
such pieces as require inspection during process of manufacture,
this requirement being designated on the bill of material and shop
routing tag, as indicated, it is advisable that all manufactured
parts, before going into a permanent stock-room of finished parts,
or into a temporary stock, from which they may be drawn for
assembling or erecting purposes, should pass through an inspec-
tion department which will check the parts with the blue-
prints with such degree of accuracy as the judgment of the head
inspector will dictate.

353. Verification of Inspection. — Small articles made in quan-
tity and going into the stock-room may have the inspection of the
lot verified on the routing tag. In case of larger pieces these
should be stamped individually with a steel stamp bearing the
inspector's distinct symbol.

Stock-keepers and assemblers must not accept pieces on which
inspection is required, without proof of inspection. The with-
drawal of a part from a stock-room naturally assumes that such
piece has been inspected before it was accepted in the stock-
room. It is important that such pieces as go direct to assem-
bling or erection, without first going to a stock-room, have the
inspector's symbol stamped upon them, or upon the tag accom-
panying them.

354. Altering Inspected Parts. — Assemblers and erectors
must be prohibited from using files or other tools to alter parts
already finished and supposed to- be correct. If parts will not
assemble, the inspection department must be notified.

355. Inspection of Assembled Groups. — As regards the in-
spection of groups of parts it may be necessary in many cases
to have an inspector inspect all the component parts of a group
previous to assembling into groups. Such groups and speci-
fied component parts should be designated on the bill of material
by the engineering department.

Such parts of groups as must be accurate in order to make
assembling possible without alteration by assemblers must
be designated as to the required inspection on the bill of
material.

356. Erection Inspection. — In regard to erection inspection it
is necessary that an inspector exercise close scrutiny over machines
while in process of erection. He must report defects to the de-
partment foreman, and the department foreman and workman

320 FACTORY ORGANIZATION AND ADMINISTRATION

must lend any assistance necessary for the proper performance of
the inspector's duty.

357. Electrical Inspection. — As regards electrical inspection,
all parts having electrical functions are best tested as independent
parts before assembling. This applies to such parts as windings,
coils, resistances, etc. In order to be doubly sure, and in order to
prevent dissatisfaction on the part of customers ordering repair
parts, it is often advisable also to apply alternating current, high
voltage to all electric current carrying parts, prior to their ship-
ment as renewals, and also to make a magneto test of armatures
and commutators prior to shipment, so as to locate any possible
short-circuits. The same precautions as to an additional test at
the time of issuing of electrical parts from a stock-room to shop
for assembling may be considered advisable.

As regards the inspection of assembled groups of electrical
parts as to accuracy of connections, where such inspection is
advisable, inspectors should be furnished with diagrams showing
the connections, such diagrams to be made by the engineering
department.

358. Metallurgical Inspection. — In all manufacturing in-
volving heat treatment, punching or drawing of steel or brass or
other alloys, it is customary to have a metallurgical division of the
inspection department, which carries on metallographic tests
with the aid of microphotography. The organization of the
metallurgical division and its records will have to be planned so
that the complete test record or history of each unit such as an
ingot, forging, etc. can be studied. This history would involve a
comparison of chemical, metallurgical, and physical test data.
In addition to the micro-photographic data, it is desirable to
have on file the charts of recording pyrometers in the various
heat treatment furnaces, so that the resultant strength and elas-
ticity of materials can be compared with the speed and intensity
of heating and cooling, as well as crystalline structure indicated
by the micro-photograph.

In the steel industry the history usually begins with the heat
of the furnace, which is assigned a number; also a record of the
ingots which are assigned numbers, all subsequent forgings or
rolled bars being stamped so as to identify them back to the
ingot and heat from which they originated.

359. Final Inspection and Test of Complete Machines.— The
final inspection and test of complete machines should be con-

INSPECTION METHODS IN MODERN MACHINE SHOPS 321

ducted in accordance with instructions furnished by the engi-
neering department, who should also prepare complete data
sheets and log sheets covering the final inspection and test.

360. Organization of Inspection Department. — As regards the
organization of the inspection department, it is pretty generally
agreed that this department must be independent of any shop
control. If the inspection department must be either under the
shop superintendent or the chief engineer, it is far better to have
it under the chief engineer, because if the inspectors were part
of the shop organization, the tendency would be to conform to
the ideas of the various department foremen rather than to the
letter of the specifications.

In inspection work all specifications must be so worded that
there can be no difference between the letter and the spirit of
the law. This means that drawings and bills of material must
specify very carefully the degree of accuracy required so far as
relates to dimensions which require special care, and also that a
general written code of requirements be prepared by agreement
between the engineering department, the shops, and the inspec-
tion department, and all parties involved co-operate to live up to
the letter of this code.

361. Qualifications of Inspectors. — The class of labor em-
ployed in the inspection department will depend altogether on
the duties of the individual inspector.

The inspection of such an article as steel balls, made in
quantity, may be satisfactorily conducted by a mere apprentice.

Dimensional inspection of machined pieces will require a man
of the capacity of a good vise-hand machinist.

Electrical inspection of parts may in many cases be done
satisfactorily by an apprentice electrician. On the other hand,
a final electrical test may demand the services of a technically
educated man. In a large shop the personnel of the inspection
and testing department would include men of various degrees of
experience and education.

It will evidently take a man of executive ability and tact
as well as a good engineer to fill the position of chief inspector.
He will be able to do his duty most satisfactorily if his department
is responsible only to the works manager, and neither to the
shop superintendent nor to the chief engineer.

362. Errors and Defects. — As an example of how to take care
of defective workmanship and material developing in course of

322 FACTORY ORGANIZATION AND ADMINISTRATION

manufacture, the following instructions as used in a machinery
manufacturing establishment will serve:

"Standing orders have been established as follows, covering

V
ERRORS OR

rtATF

DEFECTS.

PART Nn

Nn pns DFFFCTIVE

MATFRIAI

Order NO. on which Material originated

Time lost as per list on other side and Material lost, (if any) to be charged as
follows; time taker check which.

If Omissions involving no Extra work,

Regular Order as above

If Shop Error involving Extra work,

Standina Order No. 18

If Drafting Dept. Error involving Extra work, Standing Order No. 19
If Additions or Alterations involving Extra work, _ Standing Order No. 20
If Due to Defective Material Standina Order No. 21

DFFFCTS OR FRRORS |N PFTAII

DISPOSITION

MATERIAL TO BF RFPl AHFD

ORDER TO BE CLOSED WITH SHORTAGE AS

(CheckWh.cn)

INSPECTOR

(OVER)

FIG. 159. — Error or defect tag. (Front.) Manila tag stock, 4 1/8 inches
wide, 7 inches high.

defective castings or material oi any kind which is defective, also
all extra work on account of errors or defects :

Standing Order No. 18. — All labor and material lost on ac-
count of defective workmanship in shop.

INSPECTION METHODS IN MODERN MACHINE SHOPS 323

Standing Order No. 19. — All labor and material lost on account
of errors in drawings or designs.

Standing Order No. 20. — All labor and material lost on ac-

v_^/

TIME TAKER TO FILL FOLLOWING ONLY IN CASE OF
DEFECTIVE OR SPOILED MATERIAL.

Emp. Tool TIME COST
No. No. Mrs. Min. $ C

ORDER ON WHICH MATERIAL ORIGINATED {NOT^TO^E} CREDITED
WITH THIS AMOUNT.

TIME TAKER.

RECEIVING DEPT. TO FILL OUT FOLLOWING IN
CASES OF DEFECTIVE MATERIAL:

PATTPPN No. .. WEIGHT

TRANSPORTATION EXPENSE

RECVG CLERK.

WHEN MATERIAL DISPOSED OF AND ANY
NECESSARY ENTRIES MADE IN STORES
RECORDS, SEND THIS TAG TO COST DEPT.

FIG. 160.— Error or defect tag. (Back.) (See Fig. 159.)

count of additions or alterations due to changes in instructions
from purchaser, or improvements in design, conceived during
building.

Standing Order No. 21. — All labor and material lost on account
of defective material delivered on purchase orders. Proper credit

324 FACTORY ORGANIZATION AND ADMINISTRATION

to be made to this order, of such amounts as may be secured
in credits from companies responsible for this loss."

"Errors and Defects" tags (Figs. 159 and 160) are to be used
in the following manner:

Where material is to be scrapped or returned, this point to be
decided by chief floor inspector, the tag will be used in the
following manner:

If ordered scrapped on account of some shop error, no defect
being in casting, chief floor inspector will write " scrap" on error
tag, and will have department time-taker enter time on back of
error tag in place provided for same. He then sends a laborer
to the receipt window of the storeroom with the part or parts.
The storeroom clerk removes the tag and sends same to stores
record clerk at the same time that he sends in regular production

Week 1

INSPECTOR'S REPORT SHEET.

Ending- ]

190

Shop Order.

Spoiled.

Name of Part.

Operation, or
Reason for Rejecting.

— — ^-— —

_^^

FIG. 161. — Inspection department weekly report. White paper, 8 1/2
inches wide, 11 inches high, ruled in red and blue.

tags covering the day's receipts of finished parts from the shop,
and sends the rejected material to the proper scrap bin.

In case of defective material, the above procedure is followed,
except that parts, instead of going to stores department, are sent
to receiving department, where necessary entries are made in
spaces provided for same on back of tag, and proper shipping tag
is attached for return of material to party furnishing same, the
error tag being then removed and sent to stores record clerk.

Errors not involving scrapping or returning of material are
handled as follows:

Floor inspector will decide to which standing order extra time
is to be charged, time-takers making such entries on current
time records. In all cases where it is a matter of putting into
acceptable condition parts which can be put in such condition,
the time to be charged to the standing order will be only that

INSPECTION METHODS IN MODERN MACHINE SHOPS 325

required to make the part acceptable. If extra work by reason
of errors or defects is not discovered until extra time beyond
what it should have taken has already been posted to a productive

MOTOR TESTING RECORD.

Motor Class HP_
Machine No Am
Starting Box or Contrail

Shunt Series Comp._
tature No. Spei

er No Type.

Standard Special Volts Amp.
rf

Rptiifnnrp

ARMATURE || FIELD

SHUNT SERIES

REMARKS

No. Sections UVb. Coils

No. Coils Twrws per Coil

Turns per Coil Gauge Wire

Gauge Wire Wires Multiple

Wires Multiple VI Weight of Coil

Layers Wide Deep C.C. ofCoiKinsulated

No. of Com. Bars .Res. per Coil

Resistance \\Total Resistance

COLD TEST.

Time 1 Amp.

Volts

Speed

r:ik.-

Brake

E.H.P.

M.H.P.

Eft.

REMARKS

No load normal voltage

Full load normal voltage

RUNNING TEST

•»

j»

HOT TEST

No load normal voltage

Full load normal voltage

Armnhire Riirfwe- End Connt

ictiom
.<j

;rzea Cot
rmature

JDot

I He

emulator. — , Field

Co4l»

Resistance of Shunt Coil

fTnf

Field

^nils

ested I

Vote

4ppro

vp.rt.

ORDER No.

RECC

RD N

FIG. 162. — Form for reporting motor test. White bond paper, 8 1/2
inches wide, 11 inches high, ruled in red and blue.

order, the production order will be credited with the amount,
which is to be posted to the standing order. Provision for this is
made on the back of the form.

326 FACTORY ORGANIZATION AND ADMINISTRATION

GASOLINE CAR INSPECTION

Order No . Date

No. of Car Engine case filled clean oil .

Model - Spark plugs good

No. of Engine ; . Oil caps on

Size of Engine Wheels true, spokes tight_

Size of wheels. Grease cups on

Make of tire . Front wheels set properly.

Size of tires Tires pumped up

Size of front springs Finish good

Size of rear springs Trimming good

Size of inner rear axle_ Cotter pins in bolts

Size of rear beariags '. Oil in axle gear case _

Size of front inner bearings Hood right

Size of front outer bearings Tool box

Make of spark plugs '. Oil in transmission case and bearings.

Radiator . Shafts and wheels oiled

Oiling system Parts plated and polished

Steering wheel Canopy top irons on

Lamps Fan pulleys and belt right

Generator . Storm apron buttons on body

Horn All felt washers in

Batteries and box Dynamo _

Odometer Reading No. Storage Battery Charged.

Inner rear axles fit properly All adjustments good

Swivel joint properly adjusted Springs "gh»

Cones in perfect condition

INSPECTED BY

Engine runs properly Steering right

Gears shift properly Wiring right

Commutator set properly Piping good

Carburetor set properly Clutch spring right

Gears perfect Clutch adjustment right -

Levers right Throttle lever right

Hub brakes right Pump right.

Auxiliary brake right Spark levers right

Ballbearings adjusted perfectly All adjustments perfect.

TESTED BY

Shipped to

Date shipped. 100

STUB:-

Order No. . Water and gasoline drained

Car No Ready for shipment A.M..

Signed.

(Tear off this stub and hand to shipping department.)

FIG. 163. — Form for combined inspection and test of gasoline-driven auto-
mobile. Buff bond paper, 8 1/2 inches wide, 11 inches high.

INSPECTION METHODS IN MODERN MACHINE SHOPS 327

It is exceedingly important that whenever it is determined that
time or material are to be charged to these standing orders, the
corresponding error tags be written out immediately by floor
inspector and the goods with the tag sent promptly to the depart-

ORDER No.

Name

Volts Amp.

Rps.

) TE*

As per Record No.
Sianed

5TED

WIVJIIV/M

Approved

One of these Tags must be attached to ev

ery piece of Apparatus leaving the Factory

FIG. 164. — Test tag attached to finished product by testing department.
Red tag stock, 4 3/4 inches wide, 2 1/2 inches high.

ment that should receive same. Every department receiving
goods with error tags should do everything possible to hasten the
arrival of the material at its proper destination, and of the tag
at its final destination, namely, the cost department.

Whenever parts are returned to shop for further work from

ORDER No.
Name

No.

Volts

Amp. Res.

' Cause

DEFECTIVE

Signed

FIG. 165. — Defective tag attached to finished product by testing depart-
ment. Blue tag stock, 4 3/4 inches wide, 2 1/2 inches high.

general inspection department at storeroom receiving gate to
the shop, inspection department attaches an error tag, properly
filled out. When inspector has a number of pieces in one lot, of
which part are defective and have to go back to the shop, and

328 FACTORY ORGANIZATION AND ADMINISTRATION

part are good, he sends the good portion with the regular shop
production tag to storeroom, noting on the shop tag the number
which he has returned to the shop. In such cases the error tag
takes the place of the regular production tag on the pieces having
extra work done on them in the shop.

Inspectors should keep a record of all errors and defects, and
these records of all inspectors should be assembled into a weekly
report sheet, similar to Fig. 161.

363. Testing Distinct from Inspection. — Testing of assembled
machines is usually carried on by a department distinct from the
inspection department, the testing being usually under the super-
vision of the chief engineer or the engineering department.

364. Test Reports and Records. — Fig. 162 shows a form for
reporting motor test. Fig. 163 shows a form for combined inspec-
tion and test record of a gasoline -driven automobile.

Figs. 164 and 165 are "Tested," and "Defective" tags as used
by testing department employees in electrical work.

365. The Inspection Function Outside of the Manufacturing
Department. — The inspection function can be developed in such
departments as the general office, the sales department, or the
personnel department, by assigning to an inspecting supervisor
the duty of checking up the accomplishments as carried out on
various assignments and also in regard to routine work. The
inspection supervisor would be required to make reports on the
execution of assignments and also periodic reports on the accom-
plishments of various divisions.

REFERENCE

PARKHURST: "Applied Methods of Scientific Management," Chapter III.

CHAPTER XXV
RATE FIXING AND TIME STUDIES

366. Real and Wrong Time Study. — Real time study consists
of determining the basic elementary unit times in each major
process in each industry, checking these up by repeated tests and
determining the variations that may be expected under varying
pieces or parts. Real time study enables us to accumulate data
which give us the power to predict the time required to make any
piece. The accumulation of times on individual pieces gives
us no such available data or power.

367. Former Time Standards not a Reliable Basis for Rate
Fixing. — The simplest method of rate-fixing which is apt to sug-
gest itself to the novice, and especially to a man whose duties have
been clerical rather than mechanical, is to average past time
records as listed in the cost record, as a basis for time standards.
This method is perhaps safe in estimating selling prices, but is
seldom safe to use as a basis for piece-work, premium, bonus, or
efficiency wage systems. The reason for the foregoing statement
is that accurate time and motion study almost invariably reveals
useless motions and suggests improvements which will lead to
determining the best method, which usually involves far less time
than former methods.

368. Analysis of Work into Preparatory and Supplementary
Steps and Active Work. — The correct basis for time standards
is the least possible time required to do the operations involved
and turn out a product that will pass the inspecting department as
satisfactory, allowing such frequency and length of rest periods
as will prevent fatigue0 In the machine shop this time is made
up of two parts: first, that spent in preparatory and supple-
mentary work, such as jigging, chucking, taking out, gaging,
etc.; second, that spent in active work while the machine is in
operation.

The time that should be spent in active machine work is a
matter that can easily be determined. In machine tool work
where one workman operates a single spindle it will be limited
only by the highest speed that the tools and machinery will stand.

329

330 FACTORY ORGANIZATION AND ADMINISTRATION

In multiple spindle work there is no advantage in the cutting
operation being done more rapidly than the shortest time that
will permit of continuous active work on the part of both operator
and machine. The handling time is less easily determined than
machine time as it involves motion study together with assign-
ment of proper rest intervals, where such are needed.

369. Rate Fixing on Non-repetitive or "Job" Work.— It is
evident that in a purely manufacturing establishment the
variable factors involved in the handling steps can be determined
with a far greater amount of certainty than in jobbing work,
since in the former case the operation is being done on the same
piece in the same manner day after day. A jobbing shop may,
with advantage, go so far as to prepare a routing tag for every
piece, and specify the maximum feed and speed attainable in
machining, and also the minimum time that it is estimated should
be taken in the chucking, handling, etc. But in the jobbing
stop the average workman is not expected to accomplish the
work in the minimum time thus set, since he does not repeat the
work often enough to get into a fast gait. Hence the premium
wage system with its fixed day rate is gaining in favor in jobbing
shops. In fact, there are instances of the premium system being
combined successfully with a bonus of a fixed daily amount for
the accomplishment of all tasks undertaken and completed in a
specific time. In fixing the time it should take a man working
continuously on the same operation to accomplish his work, it is
only fair to expect him to turn out the work far more rapidly than
would be expected in a jobbing shop. Most modern machine-
shop work is so much relieved of heavy labor that lively move-
ment on the part of the worker is no hardship. Where the
work is heavy, time allowances will have to be made for pauses
and intervals of rest.

Rate-fixing intelligently undertaken will make the rate right
at the outset and hence there will never be any thought of chang-
ing it. Piece rates can be made correct at the outset if the work
of rate-fixing is correctly done, and based upon scientific re-
search rather than upon the guessing which is often misnamed
"judging."

370. Foreman's Time Standards Usually Guess Work.—
The usual method of fixing piece rates has been for the foremen
to decide what the rates should be. In many cases it is quite
customary for a foreman to have his time-keeper jot down the

RATE FIXING AND TIME STUDIES 331

names or symbols of pieces on which work is being done, and on
which no piece rates have been set. These memoranda are
allowed to accumulate until a few hours before it is necessary to
advise the pay-roll department of new piece rates, with the re-
sult that the work of rate-fixing is done very hastily. The
foundations on which foremen are generally accustomed to
base piece rates are previous prices paid for similar pieces and
what foremen choose to call their " judgment." Notes based
on actual observations of the work are seldom taken, and very
rarely are observations recorded on the distinct elements or
s^eps in operations.

The general tendencies and attitudes of one foreman will be
very different from those of another. The natural result is that
similar work is differently compensated in different departments
of a factory where the foremen are wholly responsible for piece-
work rates.

I do not believe it at all wise to attempt to take away from
foremen certain rights with regard to the establishment of
piece rates. On the one hand, the foreman has no right to con-
sider himself the supreme authority in his department. The
owners of a business certainly have rights in the important ques-
tion of wages. On the other hand, the foreman feels that he is
responsible for the output of his department, and it is not only
fair but absolutely essential that his concurrence be secured at
every step taken. The ability to secure such concurrence, and
the good-will of foremen in general, is an indispensable qualifica-
tion of the man who is to take charge of a rate-fixing bureau.

371. Analysis of Machine Speeds and Feeds to be Undertaken
Prior to Rate Fixing. — A careful investigation of speeds of all
machine tools is a prerequisite to the institution of a rate-fixing
bureau. This investigation will consist in recording the speeds of
line shafts, countershafts, and all spindles, together with all steps
of cone pulleys, and all variations in speed to be obtained by
change gears or any other device. A card record should be .estab-
lished, indexed by departments, and cross-indexed to show all
like tools, the individual cards bearing numbers coincident with
the serial permanent inventory number attached to each machine
tool. On these cards will be recorded the make, style, and age of
the machine, together with the speed data above referred to. The
proper pulley or gear combination for various diameters of stock at
various cutting speeds can also be tabulated on these record cards.

332 FACTORY ORGANIZATION AND ADMINISTRATION

The preparation of the speed record will take considerable
time, probably some months. During this time the workmen
will have become accustomed to the unconcealed use of the stop-
watch by one or more observers. The extreme delicacy with
which the stop-watch question is here treated may be surprising
to some readers. However, in centers of constant labor agita-
tions every possible agency that may be the spark to ignite the
strike-fire is necessarily dealt with cautiously.

After several months' use of the stop-watch in the collection
of data necessary for the speed record, it is not likely that any
trouble will be created by the use of the watch in recording the
time required in the various handling operations.

The preliminary work in connection with the preparation of
the speed and machine record may advantageously be accom-
panied by an investigation of the merits of various makes of
tool steel as adapted to the special work in hand.

To one who is not familiar with the possibilities of machine
tools when correctly operated it is recommended that he read
A. S. M. E., paper No. 1010, Vol. XXV, by Carl G. Earth on " Slide
Rules for the Machine Shop," and also A. S. M. E., paper No.
1119, Vol. XXVIII, by F. W. Taylor on "The Art of Cutting
Metals."

While Earth's slide rules are instruments which usually
require the personal attention of the inventor to introduce
successfully, a careful study of Mr. Earth's paper as well as Mr.
Taylor's monumental treatise above referred to will disclose to a
painstaking, educated and skilful machine-shop manager all
the data that are required to predetermine for any piece requir-
ing metal removal, the "one best way" of doing it, together
with the means for determining the time required to do the work
in that way.

372. Instruments and Devices Needed for Time Study. — In
taking observational data which are to be used as a basis for
piece .rates, certain simple tools and instruments are indis-
pensable, namely, surface speed indicator, revolution counter,
calipers, scales, and, unfortunately, the stop-watch. Various
expedients have been tried and suggested for the concealing of
the stop-watch, but I have yet to learn of any such ruse which
will not be discovered and word of it spread all over a shop in a
very limited time.

Within recent years Frank Gilbreth has made use of the motion

RATE FIXING AND TIME STUDIES 333

picture camera to analyze motions. In range of the camera he
sets up a large clock mechanism with a pointer revolving once a
minute, the circle being divided into hundredths or even thou-
sandths. The time is of course recorded on the films by the
photograph of this large stop-clock. The films are afterward
carefully analyzed for the purpose of determining the best methods
and eliminating wrong ones. This method Mr. Gilbreth has
designated as micro-motion study.

373. Idle Time of Machines. — Any one who has been engaged
for some time in shop-time study work will soon discover that the
largest losses are as a rule not due nearly as much to running
machines too slowly as to absolute stoppage of the machine while
the operator is away. It would be unfair to say that the operator
is killing time; certainly the machine is. Mr. George F. Card has
devised a machine for recording the working and stopping time of
machine tools, so that all running time of the machine is shown
on a dial by a mark. When the machine is at rest a space appears.
This machine will tell the exact time when tools are started and
stopped. It does this by means of a contact piece on the belt
shifter or elsewhere on the machine tool, so that an electro-
magnet operating a pen holds the pen against the paper when the
tool is running, and when the tool is at rest the pen is held away.
The paper dial on which the pen makes its record is operated by
clockwork. A separate clock located directly above the one
which operates the dial is stopped whenever the pen is lifted,
and it is started as soon as the pen comes into contact with the
paper. This clock then, which is set at 12 as the starting time,
records the total running hours and minutes of the machine in a
day.

A number of machines may be wired up to a board containing
snap-switches, the snap-switches being so arranged that each
circuit leading to them may be thrown on or off of the clock
recorder. In this way observations may be taken for a day on
any one of a group of machines without the men in the shop
knowing which one of the machines is being recorded. Of course,
the record does not show when the machine is " cutting wind,"
that is, when the machine is moving but not cutting metal.

When observational data are being taken attention must be
given to this last possibility. Such a device will not, by any
manners of means, take the place of observational time study,
but it may be made a supplement to it by recording the time

334 FACTORY ORGANIZATION AND ADMINISTRATION

between stops taken by the machine operator when he is not being
observed; also the length of the stops.

374. Taylor's Description of Correct Time Study.— Taylor
classifies time study into two broad divisions: first, analytical
work; second, constructive work.

The analytical work of time study is as follows:

a. Divide the work of a man performing any job into simple elemen-
tary movements.

b. Pick out all useless movements and discard them.

c. Study, one after another, just how each of several skilled workmen
makes each elementary movement, and with the aid of a stop-watch
select the quickest and best method of making each elementary move-
ment known in the trade.

d. Describe, record and index each elementary movement, with its
proper time, so that it can be quickly found.

e. Study and record the percentage which must be added to the
actual working time of a good workman to cover unavoidable delays,
interruptions, and minor accidents, etc.

f. Study'and record the percentage which must be added to cover the
newness of a good workman to a job, the first few times that he does it.
(This percentage is quite large on jobs made up of a large number of
different elements composing a long sequence infrequently repeated.
This factor grows smaller, however, as the work consists of a smaller
number of different elements in a sequence that is more frequently
repeated.)

g. Study and record the percentage of time that must be allowed for
rest, and the intervals at which the rest must be taken, in order to offset
physical fatigue.

The constructive work of time study is as follows:

h. Add together into various groups such combinations of elementary
movements as are frequently used in the same sequence in the trade,
and record and index these groups so that they can be readily found.

i. From these several records, it is comparatively easy to select the
proper series of motions which should be used by a workman in making
any particular article, and by summing the times of these movements,
and adding proper percentage allowances, to find the proper time for
doing almost any class of work.

j. The analysis of a piece of work into its elements almost always
reveals the fact that many of the conditions surrounding and accompany-
ing the work are defective; for instance, that improper tools are used,
that the machines used in connection with it need perfecting, and that
the sanitary conditions are bad, etc. And knowledge so obtained leads
frequently to constructive work of a high order, to the standardization
of tools and conditions, to the invention of superior method and
machines.

RATE FIXING AND TIME STUDIES 335

375. Confining Rates to New Operations and New Pieces.—

After completion of the preliminary work, the real work of
rate fixing may begin by taking observations and establishing
rates on all new pieces, with the foremen's co-operation, at the
same time beginning observations on some single machine, taking
piece by piece and operation by operation.

If a prior time-standard or rate is of such a nature that it allows
too long a time or too high a pay, it must not under any circum-
stances be changed. The only way to get rid of such an error is
to redesign the piece or change the process. Even this recourse is
to be avoided if at all possible.

376. Form for taking Observations for Time Studies. — A
form used by the writer for an observation memorandum is shown
in Fig. 166. In many cases not all of the data called for will be
obtainable or necessary. Individual tastes will determine the
exact size and shape of such a form. A book has always the dis-
advantage that the original data sheets cannot be easily classified
and filed away, as is the case with a loose-leaf system. Referring
to the form, the items calling for time spent in grinding tools,
time spent in adjusting machine, and justifiable time per day not
accounted for, will constitute difficult observational data. They
would be best estimated by a whole day's observation on some
typical piece of work which could be used as a basis to cover
a group of similar jobs. In an establishment where special tool-
grinding departments are maintained, the item covering time
spent in grinding tools will, of course, drop out. There are few
factories in which it would not be advantageous to maintain a
tool-grinding and storage department. The claim has been made
that each man likes his tool ground in his own way, and becomes
attached to some particular tool which he might not get back
from a general grinding room. These points are offset by the
fact that some men are much harder on tools than others, and
that a skilled grinder will be able often with a few words to tell
them where their trouble lies. One of the best arranged tool
storage and grinding rooms the writer has seen is provided with
standard removable bin units, two wide and four high, each bin
containing an easily removable interchangeable filler. The
numbered spaces containing the tools are plainly visible. This
method of storing tools saves a great deal of time over any storage
method employing drawers or boxes.

In securing the observational data, the personality of the

336 FACTORY ORGANIZATION AND ADMINISTRATION

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RATE FIXING AND TIME STUDIES

337

observers is a matter of great importance. A carefully selected
man can go into the works and take all the observations neces-
sary, and at the same time have the good-will and friendship of
both men and foremen. Another man doing exactly the same
routine work might easily, and unconsciously to himself, be con-
sidered offensive by the shop hands. The qualifications essential
for such observers are, first, a sound and discriminating judgment
based on an inherent sense of justice; second, ability to take and
appreciate the value of precise observations, such as is developed
in laboratory training; third, an unassumed spirit of democracy

AUTHORIZATIO
OR.GINAL NEW °R OHANGE° RATES

To Rate Fixing Dept. From Dept.

THE FOLLOWING CHANGES

N SHEET
AND OPERATIONS.

»<«, n-tt lftft

ARE RECOMMENDED

PIECE
NUMBER

CHANGES IN OPERATIONS

PRICE PER

100 PCS.

NEW OPERATIONS

Enter only New Operation*
in this column

IN PLACE OF
If New Operation replace. Old
Operation Enter Name of
Old Operation here

OLD OPERATIONS
Enter only Old Operation!
on which rate is to be changed

DISCONTINUED
OPERATIONS

Pw.

f-w.

uw.

_ - ^=^
— — — — — —

, • —

.
'

_
— __— ^— —

—

— *

Remarks:

Foreman

Note: Send original and duplicate to RATE FIXING DEPT:
Duplicate must be receipted and returned.

FIG. 167. — Sheet for changed rates and operations. The sheet is 71/4
inches wide and 11 inches high, white paper. A duplicate, pale buff in color,
is attached directly behind the original.

and modesty; fourth, ability to stand one's ground without creat-
ing antagonism. In short, character and tact will be the chief
requisites.

377. Computations and Statistics as an Aid to Observations. —
In addition to taking observational data, a rate-fixing depart-
ment should prepare such statistical data and charts as will be
valuable in predetermining and checking time standards. After
taking such field notes as may be desirable, the observer goes to
the department office and "works up" his notes; i.e., he deter-
mines on what he considers a fair time standard for each opera-
22

338 FACTORY ORGANIZATION AND ADMINISTRATION

tion observed, and investigates also the statistics on file, using
the statistical information as secondary and not primary refer-
ence. After he has thoroughly worked up the results of his
study, the observer visits the foremen of the departments in
which he took observations, with a view to co-operating with
the foremen in establishing new standards.

378. Notice of New Rates. — The foreman's interest and
co-operation is always essential. Hence the authorization sheet
should be signed by the foreman, and its arrival in the office of
the rate-fixing department should be evidence that the rates have
been sanctioned by both foreman and observer. A form sug-
gested for this authorization sheet is shown in Fig. 167.

A card index of all piece rates is kept in the rate-fixing de-
partment office by postings from the observation and authoriza-
tion sheets. The general form and arrangement of this card
index will depend upon the nature of the business and product.

The regular routine of the work of the department would
consist of a methodical review of all existing rates, accom-
panied by a continuous system of notices of all new work under-
taken. Notices are sent by the head time clerk to the rate-fix-
ing department of any new pieces on which work is begun, and
on which new rates are desired, and an observer from the rate-
fixing department responds at once to this call.

379. Time Study and Rate Fixing to be Permanent Rather than
Temporary. — A regular routine system as above laid out will be
far preferable to an occasional and more or less disconnected
series of observations used merely as a stimulus to greater accu-
racy on the part of foremen. There is danger of the foremen
regarding the work as less authoritative, and considering that it
is being done in a half-hearted way, unless it has the impetus and
swing of a regular routine system.

The number of men to be employed in instituting a work of
this kind will depend wholly upon the number of pieces to be
investigated, and their similarity. The qualifications of the men
are such that they are likely to be as high salaried as the best
foreman. While the employment of additional so-called non-
productive labor is not in line with any policy of retrenchment,
it is evident that present conditions in many large factories are
such that the right kind of men working on time standards
and rate fixing could save their salaries many times in a year.

RATE FIXING AND TIME STUDIES

339

380. Abridged Time Studies for Transient Work. — The form
presented in the preceding discussion for recording observational
data (Fig. 168) presumes that a great many pieces will be made
identical with the one upon which the observation data are taken.
Herein lies the only justification for going into such minute detail
It is frequently desirable to secure time-study data for the pur-
pose of establishing premium or bonus times where the num-
ber of pieces of one kind is not large enough to justify the ex-
pense of going into such minute detail. Under these circum-

NAME OF PART

TIME STUDY DATA
MARK NO.

MATERIAL

DRAWING NO.

OPERATION

MACHINE NO.

FEED, SPEED OR OTHER \
CONDITIONS AFFECTING WORK t

STEPS
1

IN OPERATION AS FOLLOWS

TIME OBSERVATIONS

CONTI.

TIME

INDI.
TIME

CONTI.
TIME

INDI.
TIME

AVERAGE
TIME

ORDER NO.

NO. PIECES

COST DEPT. RECORD ON ABOVE OPERATION
TIME FOR THIS OPERATION

Machine
No.

Employe

Mo.

Date Work
Done

FIG. 168. — Short form for time-study data. Yellow bond paper, 6 inches
wide, 4 inches high.

stances an abridgment, which need be none the less accurate,
is suggested in Fig. 168. Whenever the time study is to be the
basis of an instruction card, however, the motion analysis should
be worked out in complete detail.

381. Overcoming Objections to Time Study. — Among those
who are inclined to criticize the taking and use of time study,
one of the most prevalent misconceptions is that one of the
paramount aims is the accelerating of muscular movements on
the part of the worker. As a matter of fact, this feature is the
least frequent, and least profitable of all improvements resulting
from time study.

340 'FACTORY ORGANIZATION AND ADMINISTRATION

REFERENCES

GILBRETH: "Primer of Scientific Management," Chapters I and II.
EARTH: "Slide Rules for the Machine Shop," A. S. M. E., paper No. 1010.
TAYLOR: "The Art of Cutting Metals," A. S. M. E., paper No. 1119.
GILBRETH: " Motion Study."

GANTT: "Work, Wages and Profit," Chapters I and II.
KNOEPELL: "Installing Efficiency Methods," Chapter XI.
GILBRETH: Psychology of Management," Chapter IV.
GANTT: "A Bonus System of Rewarding Labor," A. S. M. E. paper,
928, Vol. XXIII.

CHAPTER XXVI
WAGE SYSTEMS

382. Wage System Must be Adapted to Conditions. — The

object of this discussion is to present briefly the various
methods of remuneration for labor that are currently in use. It
will be the endeavor to demonstrate to what conditions each
method is best applicable, and to suggest for each method an
outline for a system of management and statistics which will
produce the highest efficiency in each method.

Although there is a great variety of methods of compensation,
all of these methods may be grouped clearly under three heads,
namely, day work, piece work, and gain-sharing methods.

383. Fixed Hourly or Day Rate. — Remuneration by a fixed
daily wage assumes that there is a current market rate for com-
petent services in any certain craft. The day rate <p re vailing in
any particular establishment will be governed by such factors as
the degree of expertness in craftsmanship or trade necessary for
satisfactory results in the particular industry; secondly, by the
geographical location of the establishment, which in turn will
determine the allowable manufacturing cost of product as it is
influenced by cost of transportation to the sales market. Shops
whose sales market does not cover a very large area will not have
a very heavy transportational or selling expense. However, this
condition usually exists only in areas of dense population where
the cost of living is high; hence the wage rate is higher in such
shops for the same grade of work in any particular trade than is
the case in shops located away from the centers of greatest popu-
lation density.

There are many classes of work where the human labor element
is wholly controlled by the output of certain machines, the opera-
tor having no opportunity for initiative in making his services of
greater value. This is the only class of labor in which day work
pure and simple is the best, and in fact the only method from an
economic standpoint. On the other hand, in shops small
enough that the manager may keep in close touch with the indi-
vidual personnel, which means shops of not over one hundred

342

WAGE SYSTEMS 343

employees, it is possible to attain high efficiency under a day-rate
system, provided the wage rate is high and careful statistics of
labor efficiency are kept. In still smaller shops, say of forty or
fifty men, where each man and his work are under the direct
scrutiny of a boss or foreman thoroughly familiar with a high-
grade standard of quality and quantity of output, good results
are obtained under the day-rate system even without the keeping
of any statistical records of labor efficiency. It should ever be
borne in mind, however, and considered, that there is constantly
a possibility that, if an inducement is offered, men will make some
improvement in machinery and methods of work. Many shops
having a complex output dependent in quality and quantity upon
individual initiative and skill adhere to day-rate compensation.
Some shop-owners claim that their management is so good that
they know intuitively how long every job ought to take, and that
simply by observation they can tell when certain men are not
giving them a fair day's work, and let such men go. Close scru-
tiny into these shops will inevitably result in disclosing conditions
of variable efficiency. A wide-spread impression prevails that the
day wage is the only practicable one in work which requires great
care, which cannot be hurried, which cannot be slighted. This
assumes that if only given sufficient time to do work, the man
doing the work will be conscientious enough to do it thoroughly,
an assumption which is not always proven to be correct by
actual experience. A successful daywork as well as a successful
piece system or merit system must be prepared with careful
reference to quality. When a considerable number of men is
employed on work in which quality or accuracy is vital, an inspec-
tion system must go hand in hand with any system of remunera-
tion. Well-known companies who had at first some difficulty
with merit systems, owing to slighting of work, frankly state that
since proper inspection has been provided for, they have far less
trouble on account of quality than they used to have under the
day-wage system, since the men know that they dare not slight
quality if they hope to gain the benefits of the merit wage.

The principal danger with the day-rate system lies in the tend-
ency toward establishing a dead level of production which is
low. It is possible to remunerate in a day-pay system the best
workingman at a higher hourly rate than the average. However,
times are bound to occur when, for instance, a man who has been
promoted on account of exceptionally good services to a rate of,

344 FACTORY ORGANIZATION AND ADMINISTRATION

say, 32 1/2 cents an hour will be assigned the identical work which
another man is doing who may be receiving but 25 or 27 1/2 cents
an hour. This occurrence is always taken advantage of by the
lower priced man, who asks for a raise in wages, and it is pretty
hard to keep him from becoming dissatisfied. Day pay does not
furnish the stimulus for development of initiative or creative
ability which is presented by the gain-sharing methods.

So far as pay-roll systems are concerned in connection with
the day-rate method, the only thing necessary is a recording time-
clock. Pay-roll will be made up from the time-clock strips or
cards.

384. Efficiency Records under Day-rate. — In order to
determine workmen's efficiency as craftsmen, it is necessary to
have some system whereby comparative records are made of time
required to do individual operations. Such systems are abso-
lutely essential in order to bring a day-rate system to a state of
higher efficiency. When these systems are once installed it
requires but very little additional labor to take care of the pay-roll
and statistics of a gain-sharing system, which will always be more
efficient than the day system, excepting as before stated, where
the workman is a mere attendant to a machine and has no oppor-
tunity to make his labor more valuable than a certain fixed
amount. The comparative time record will involve the prepara-
tion of an order or instruction sheet or slip or tag specifying the
distinct operations which must be done. For the sake of uniform-
ity these instructions must be made beforehand, and the workman
must not be relied upon to enter them himself, as various working-
men will call the same operation by different names, and will
merge certain operations which should be separate into one, or
expand one operation into a number. In addition to the definite
providing for routing instructions, provision must be made for
keeping time on the individual operations. This time-keeping
should not be done by the workmen or foremen, but by specially
delegated time-keepers, with or without the use of machines
designating the time of changing job or the total time elapsed.

385. Comparative Time Records.— To build up a comparative
time record, the time-postings will have to be selected and posted
on to cards or other form of record, representing the piece worked
on, and recording the times required for the same operations
by different men.

WAGE SYSTEMS

345

Figs. 169 and 170 are front and back respectively of an example
of a comparative time record.

It is quite apparent that with the accumulation of such data
covering performances under a day-work system, covering a
period of six months to a year, we have good statistical data to
use in connection with time and motion studies to aid in pro-
ceeding to the installation of systems resulting in greater economy
and higher financial returns to both employer and employee.

COMPARATIVE TIME & COST RECORD

TYPE OF MACHINE.
DRAWING NO.

ATIONS OR "ROUTING"

TIME COST COST

TIME COS1

COMPARATIVE TIME & COST RECORD

ORDER NO. MONTH FIRST SECOND THIRD FOURTH FIFTH SIXTH TOTALS

FIGS. 169 and 170. — (Fig. 169, top card) : Comparative time and cost record,
giving the order and time of each operation on a given job. White card,
6 inches wide, 4 inches high. (Fig. 170, bottom, reverse of Fig. 169) : The
first number (above the diagonal) is the workman's check number, the number
below the diagonal is the time. White card, 6 inches wide, 4 inches high.

386. Piece-rate System. — The second class of remuneration,
namely, piece rate, will always be found most satisfactory where
muscular effort predominates, or in work where a low grade of
intellect exists. There has been a tendency in many shops to
abuse the piece rate with a guaranteed date rate. Under these
conditions it might just as well not be used at all, because its very
efficacy lies in the penalty to idlers of a low amount of day's earn-
ings for a poor day's work. This is the only remedy for automat-
ically taking care of the time-killer and inefficient workman. A
man with a low grade of intellect will, if he has a guaranteed day
rate, invariably tend to a very low productive standard. Piece
rate is by far the best method of compensating such labor as the
simpler classes of molding and foundry work, shoveling coal or

346 FACTORY ORGANIZATION AND ADMINISTRATION

dirt, unloading or wheeling pig iron, ore, bricks, etc. In work
of this nature there is no danger of the overhead operating
expense being unduly increased as the man's productive work
increases. Moreover, the man is responsible by the exercise of
his own muscles for any increase in his output, and has not' to
thank any machine for helping him, as is the case with a skilled
machinist, who can increase his output by the exercise of a little
ingenuity.

Any successful piece-work system will always provide a guar-
antee to the workman that he will be insured against loss from
causes beyond control. This is easily accomplished by the trans-
ferring of the worker to a day rate when circumstances warrant
it. Such transfer should always be recorded by a transfer ticket,
stating the date and time of day the transfer is made, together
with the reason for the transfer to day rate. These tickets are
collected by the time-keepers and turned over by them to the
pay-roll department, where they should not only be kept on file,
but should be noted and compared by some person of authority,
so as to avoid too free an indulgence in the transfer to day rate.

387. Piece Rates Must Not be Cut. — Piece rates must be care-
fully and correctly fixed at the outset on a basis of time and
motion studies and even if they cause high earnings must not be
cut. Cutting piece rates inevitably causes disloyalty and hos-
tility'of employees.

388. Differential Piece-rate System. — It is eminently fair that
the laborer should be paid not only a straight piece rate, but an
increasing piece rate as his output increases. This method of
compensation has been designated as the differential piece rate,
and has been found very satisfactory. As an example of its
operation, a piece rate of 20 cents may be fixed on a certain pro-
duct, provided the day's output is ten or less. For a day's output
of from ten to fifteen pieces, the rate may be made 22 1/2 cents
per piece, and for more than fifteen pieces the rate would be 25
cents per piece. At first sight it would appear that the business
owner would lose money by paying a higher rate as a man's
output increases. This would be the case in such classes of work
where general operating expense increases with increase of
output. Where the mechanical operating expense does not so
increase, it must be remembered that as a man's day's product
increases he reduces the ratio between the general overhead of
taxes, insurance, officers' salaries, etc., to productive labor cost,

WAGE SYSTEMS

347

and it may be very profitable to use the " differential" piece
rate in such cases.

389. Records of Piece-rate Earnings. — The systems required
for keeping track of a piece-work pay-roll will involve the regis-
tering by means of a time-clock, and a record of pieces of work
units accomplished, involving statistical methods practically the
same as for time-keeping as indicated in connection with day-work
methods. However, it will not be necessary to keep an efficiency
record other than the record of piece-rate earnings for this sort
of employees, excepting possibly some kind of character record, so
as to avoid the attaining of a foothold by an undesirable element.

MOLDER'S TIME CARD

DESCRIPTION OF WORK

PATTERN
NO.

DAYS AND AMOUNTS
Upper Fig. Total pcs. 1 day
Lower Fig. Total to date

TOTAL
PCS.

RATE
PER
PIECE

AMOUNT

Cts.

DEPARTMENT NO. WEEK ENDING NAME TOTAL NO.

FIG. 171. — Record of molder's piece work, totals for a week,
colored card, 71/8 inches wide, 5 inches high.

Salmon-

Fig. 171 is a Molder's Piece Rate Time-card, covering half a
month.

390. Gain-sharing Methods,. — The third general division is
that of gain-sharing methods. Gain-sharing, it must be borne in
mind, is distinct from a system of dividing indiscriminately
among all employees a part of the net profits. The simplest
gain-sharing system is one in which a standard of output is estab-
lished for certain departments, and an amount of money propor-
tionate to the bettering of this standard by any one department is
distributed proportionally to each man's wages among all employ-
ees in that department. This method is applicable to certain

348 FACTORY ORGANIZATION AND ADMINISTRATION

kinds of work where a number of men work jointly in accomplish-
ing a given result and where it is difficult to draw the line as to
any one particular employee's accomplishment. A satisfactory
application of this system must necessarily involve a considera-
tion of non-productive labor and operating expense as well as
increase of output.

391. Premium Wage System. — The best known and most
widely used gain-sharing system is the one usually called the
"Premium System." Its chief features are the allowing of a
definite number of hours to do a certain job, and of any time the
workman saves over that, he gets one-half or one-third the
benefit.

The name"Premium System " is frequently a bugaboo, and work-
men who will refuse to work under it when called "The Premium
System " will be successful and content when the same principles
are applied and called by such names as " Bonus," "Gain-sharing/7
" Merit," " Standard Operation Plan," etc. Most manufacturers
use the 50 per cent, gain-sharing basis in all cases. It has been
objected that under the 50 per cent, scheme the workman gets an
inordinately high increase if he reduces the time very largely. For
instance, if a man does a ten-hour job in five hours he receives
two and a half hours' extra pay, or 50 per cent, increase in wages.
If he does the ten-hour job in four hours, he receives one-half of
the six-hours' saving, or three hours extra pay or 75 per cent,
increase in wages. Conditions in operating of machinery are
such that if time standards have been intelligently fixed by
observations made by a specialist so as to represent the possible
accomplishment of an average workman, the reduction of the
time standard by one-half on the part of the average workman is
not likely to be possible. Such observational data are not always
at hand, however. The term "time standard" or "standard
time" is generally used to designate the time in which work
should actually be done by a skilled man working as he ought
regularly to work, with the correct frequency and length of rest
periods so as to avoid fatigue. The term "time limit" is gene-
rally used to designate the time allowed in which work must be
performed in order to earn premium. It is equal to the
standard time" plus an additional amount called an
"incentive."

392. Modifications of Premium System. — Modifications of
the premium system have been devised which provide for a higher

WAGE SYSTEMS 349

percentage of bonus or premium wage for small time reductions
and a smaller increase of wages for large time reductions. One
of these systems pays 10 per cent, increase of wages for a 10 per
cent, reduction in time, 15 per cent, increase of wages for 20 per
cent, reduction in time, 20 per cent, increase of wages for 30 per
cent, reduction in time, etc. The objection to this kind of system
is the complication involved in the figuring of the premium pay-
roll. It is easy to find clerks who can figure intelligently on a
50 per cent, basis, but it is hard to get either clerks or workmen
to understand more complicated schemes. On the other hand, if
the management feels that it is best to introduce as a starter some
kind of a premium wage system without the certain knowledge of
shortest attainable times which the author recommends as a
prerequisite, and which can only be attained by careful observa-
tional time-study, then it will be advisable to use some sliding-
scale system rather than the so-called straight 50 per cent,
gain-sharing method known as the Towne-Halsey system.
Where a sliding scale is decided on, it is advisable to tabulate a
schedule covering examples of work taking from ten minutes to
ten hours with various degrees of time savings and the corre-
sponding premium and total earnings listed which would corre-
spond to various wage rates. This printed schedule should be
distributed to all workmen, clerks, and others involved in the
system.

The Rowan system is an example of this sliding-scale premium
plan. In this system the workman receives as a premium
addition to his regular rate the same percentage of his regular rate
as the time saved bears to the time allowed, until his hourly rate
is doubled, which is the maximum he can earn. To illustrate
the Rowan system let L represent the time limit and T the time

taken. Then ( ^ ) is the percentage of the time taken for

which the worker is given extra or premium pay.

393. Notices to Employees describing Premium Wage System.
—It is desirable to print on the reverse of the report which is to
accompany each employee's premium pay an outline of the
system. The following is an example of such description:

In order to properly compensate those employees showing the
greatest proficiency in turning out good work at the least cost,
this Company will hereafter pay in this department, in addition
to the regular day rates/ amounts as herein specified for all work

350 FACTORY ORGANIZATION AND ADMINISTRATION

done in a satisfactory manner within certain time limits. These
time limits have been obtained by making careful time and motion
studies as well as investigations of the average time in which the
work has been done in the past. The time limit in each case
is considerably higher than the shortest time in which the work
can be well done. As there have been numerous cases in the past
in which the work has been done in less time than the time limit,
it will not be difficult for proficient men to add to their earnings;
the amount of increase depending solely upon individual effort.
There is no risk of loss, but every opportunity for gain.

The standard time limit will not be reduced under any cir-
cumstances, excepting through the introduction of entirely dif-
ferent methods of doing work, hence there need be no fear of earn-
ing too much money. Those who earn the most will be worth the
most. The rates per hour at which gains will be figured vary
according to the hourly rates of each workman in accordance
with the schedule given below:

Hourly rate, cents per hour Gain-sharing rate, cents per hour

$0.06-10.07 SO. 03

0.08- 0.09 0.04

0.10-0.11 0.05

0.12-0.13 0.06

0.14-0.15 0.07

0.16-0.17 0.08

0.18-0.19 0.09

0.20-0.21 0.10

0.22-0.23 0.11

0.24-0.25 0.12

0.26-0.27 0.13

0.28-0.29 0.14

0.30-0.31 0.15

0.32-0.33 0.16

The conditions governing the payment of gains are as follows:

Gains will not be paid on any work that is not completed to the
entire satisfaction of the foreman.

No allowance will be made for bad material or defective
workmanship in any previous part of the work, unless the same
is pointed out to and endorsed by the foreman as soon as dis-
covered.

All gains will be paid for on the first regular pay day following
the completion of the work upon which they are earned.

On account of its being impossible to test certain completed

WAGE SYSTEMS 351

parts immediately, the Company reserves the right to deduct from
future pay such gain-sharing pay as may have been advanced on
any work that proves defective at final test.

394. Combined Bonus and Premium System. — The danger of
workmen's doing the work in too low a time is, however, not the
most prevalent difficulty in connection with merit wage systems.
The more frequent condition is one of general apathy or indiffer-
ence to avail themselves of the advantages offered, and to have
the time linger within the 10 and 20 per cent, reduction area.
In order to overcome this difficulty, some shops where the owners
were convinced that the output of certain machine tools could be
very much increased found it necessary to put their time limits
decidedly below the records of previous accomplishment. A
knowledge of the average time of doing work which is the custom
in any particular shop is far more prevalent among workingmen
than is generally supposed. In some shops, unless a very strong
inducement is made, it will be very hard to secure the decided time
reductions which are necessary to keep up with modern practice.
In such cases it has been found advisable to offer a liberal in-
crease in wages for all work done in less time than the time limit.
While engaged in a shop using a method of compensation which
paid 10 per cent, for reduction below past average and 20 per
cent, for turning work out in the time limit, I found that the
method was good only to a certain limit. It did result in a con-
siderable proportion of the men doing the work within the time
limits. However, there were no time reductions below these
limits even on jobs that covered a period of a number of weeks.
This was natural as no further inducement was offered for re-
duction of time below the time limit, hence I combined with this
20 per cent, bonus scheme the 50 per cent, premium method,
offering the men not only a 20 per cent, increase in wages for
all jobs successfully completed within the time limit, but an
additional gain-sharing premium of 50 per cent, of the time
saved below the time limit. For instance, if a man employed at
20 cents an hour brings out successfully in ten hours a job on
which the standard time was fixed at 12 hours, he receives 50
per cent, of the saving or 20 cents extra pay, in addition to
receiving an increased wage rate of 24 cents an hour for all work
successfully done. The offering of this extra inducement could
not possibly lead to " fatigue or nervous strain by over-ambi-
tious workers," since the time limits were from 40 to 60 per

352 FACTORY ORGANIZATION AND ADMINISTRATION

cent, higher than standard times which in themselves included
due additions for correct frequency and length of rest periods.

395. Notices to Employees, Describing Combined Bonus and
Premium System. — In order that all employees might fully
understand the foregoing plan, a folder containing the following
information was printed and distributed:

In order that all employees may
be thoroughly familiar with the con-
ditions and rulings in connection
with the Standard Operation Plan,
the followingout line has been pre-
pared:

1. The 20 Per Cent. Increase for

Success

For all jobs successfully completed
within the time limit, the Com-
pany will pay in addition to the
regular hourly wages at which a man
is employed, an increase of 20 per
cent, over his regular hourly rate.
For instance, a man employed at
20 cents an hour will be paid 24
cents an hour for all work success-
fully done under Standard Operation
Plan.

2. The 50 Per Cent. Bonus for Gain

For all jobs successfully com-
pleted within less than the time
limit, the Company will pay in ad-
dition to the 20 per cent, increase as
explained in Section 1, a gain-sharing
bonus of 50 per cent, of the man's
base rate for all time gained. For
instance, if a man employed at 20
cents an hour brings out success-
fully in 10 hours a job on which the
time limit is fixed at 12 hours, he
receives 50 per cent, of the saving
or 20 cents extra pay in addition to
receiving 24 cents an hour for all
work successfully done under Stand-
ard Operation Plan. All those that
desire to take advantage of the 50

per cent, or gain-sharing feature of
the plan can do so by notification to
their foreman.

3. Quality of Work

Work must be completed to entire
satisfaction of foreman and inspector.
Time is counted for good work only.
For instance, if a man has 10 pieces
to do and spoils one, the time is
counted as applying on 9 pieces
finished.

4. Extra Work on Account of Bad

Castings

In case a casting shows flaws after
machine work is begun, foreman's
attention must be called to same at
once. If casting is then thrown out,
foreman will determine allowance for
time spent on same, and will enter
allowance on a credit slip, which he
gives workman who will hand credit
slip to timetaker at his next round.
Timetaker will enter credit in "Re-
marks" column of time sheet. The
above applies to any defective
material.

5. Extra Time on Account of Break-
downs or Other Unavoidable

Causes

Foreman's attention must be
called to such time at once and he
will determine allowance if any, and
hand workman credit slip. Work-
man will hand timetaker credit slip
at his next round, and timetaker will

WAGE SYSTEMS

353

enter credit if any, same to be
verified by foreman. Workmen are
not permitted to work on machinery
repairs . excepting those regularly
engaged on this work.

6. Several Men Working on Same
Standard Operation

Where Standard time work is of
such nature that it requires to be par-
ticipated in by a group of several
men, each man's share of the bonus,
if any, will be in proportion to the
number of hours he has put in on
the job.

7. Time Within Which Work Must
be Done

Time limits as fixed constitute
the limits allowed and work must be
done within these time limits if
credit is desired for the bonus for
success.

8. Unfinished Work

Any man working on a Standard
Operation job and not finishing
same, will be paid bonus if any, on
only the actual number of pieces in
the lot on which complete operation
has been performed. If operation
has been partly completed and the
work is finished by some one else,

workman starting the job forfeits
his bonus, and workman finishing
the job will be paid a bonus on same
only if job is finished within a reason-
able time limit. It will be left to
the foreman to determine if this has
been done.

9. Difficulties Preventing Success

It is the Company's desire to
take every step possible to remove
any obstacles standing in the way of
accomplishing any job in the time
limit. They wish and expect the
men to make money out of the
Standard Operation Plan. They
also wish men and foremen to feel
free to make suggestions for improve-
ments which may remove any diffi-
culties in the way of making the
stints regularly. Suggestions will
be acted upon as promptly as condi-
tions will permit,.

10. Permanence of Time Limit

Time Limits once fixed will not
be changed excepting on account of
changes in design, introduction of
new tools, or entirely different
methods of doing the work.

11. Payment of Bonus

The payment of bonus is made
every week.

396. Bonus System or "Task Work with a Bonus." — Another
merit scheme is one known as the daily task bonus system, whose
object is to secure the performance of all tasks in any one day
within the standards prescribed. It sometimes happens that
conditions are such that men will do one job in very good time,
and then lose out more on the next job than they gained on the
first. This bonus scheme, which was devised to overcome this
difficulty, is to pay a fixed amount of money, say 25 or 50 cents
every day, as an incentive to a man to do all of his tasks within
the standard times set.

354 FACTORY ORGANIZATION AND ADMINISTRATION

397. Individual Job Bonus System. — Some shops have pre-
ferred to fix a money price for the accomplishment of certain work
rather than a time value. Their reason for this is to prevent cer-
tain classes of work costing them too much money, when this work
is undertaken by a high-priced man. For instance, if under the
premium system a time limit of ten hours were put on a job, and
a 30-cent man did the job in six hours, the cost of the work to the
company would be six hours at 30 cents plus four hours at 15
cents, or $2.40. On the other hand, if a 25 cents an hour man had
accomplished the work in the same time, the cost of the job would
have been six hours at 25 cents plus four hours at 12 1/2 cents, or
$2. Now the company might find that it could not afford to have
this piece of work cost in flat labor more than $2.25. The gain-
sharing would be one of money saved the company. This is
really a more equitable basis than the hourly plan, inasmuch as
the high-priced man has his higher hourly going rate which guar-
antees his day pay, and he should necessarily have to exert him-
self more by the use of either his ingenuity or muscles if he expects
to get a higher bonus or premium than his fellow craftsman
working at a lower hourly rate.

The following tabulation as used by Frederick Parkhurst is
an example of a sliding bonus scale.

PRESS 243. ERECT COMPLETE PER MATERIAL LIST L3284. THIS CHART
INCLUDES ALL HAND WORK ON ALL THE INDIVIDUAL PIECES

Time each

Bonus each

6.0 hours

$0.40

5 . 8 hours

0.42

5 . 6 hours

0.44

5.4 hours

0.46

5.2 hours

0.48

5 . 0 hours

0.50

4 . 8 hours

0.52

4.6 hours

0.54

4.4 hours

0.56

4 . 2 hours

0.58

4 . 0 hours

0.60

398. Incentives to Securing Continuous Efficiency. — It is

quite possible to avoid the troubles of men's doing some jobs in a
day quickly, and taking inordinately long times on others, by
keeping record of individual workmen's efficiency and by offering
rewards for the greatest percentage of individual success to indi-
vidual workmen. A further inducement will be a prize for great-

WAGE SYSTEMS

355

est collective success by the men in certain departments. Prizes
to foremen should be based not only on time reduction, but on
ratio of non-productive operating expense to productive, percent-
age of time and of department pay-roll lost on account of defec-
tive workmanship and similar considerations.

Fig. 172 shows a form for Workman's Efficiency and Premium
Record under the combined Premium and Bonus system de-
scribed in paragraphs 384 and 385. This record affords the
basis for calculating each man's percentage of success as well

WORKMAN'S EFFICIENCY AND PREMIUM RECORD

EMPLOYE EMPLOYE
NAME G.I.Stevens NUMBER C 26 DEPT. Murs KATE 18

FORM B 616-5-25-05-2M

WEEK ENDING

TOTAL
ON 50

SUCCESS

GAIN

FAILURE

LOSS

BONUS

REMARKS

June 14 /05

^£Zr = 83.7%

Gain = 7.8 %

Loss = 16.0 %

July 5

Total

TOTAL FOR PERIOD

139

116

July 15/05

July 12

Su££,s = 76.8%

Gain = 8.5%

Aug 2

Total Loss = 11.2%

TOTAL FOR PERIOD

142

709

lotal

Aug 9

TOTAL FOR PERIOD

FIG. 172.

as loss and gain percentages. Promotion and extra prizes are
awarded to those men showing the greatest continuous efficiency.
The employee of highest standing under this system would be
the man whose percentage would be highest based on the calcula-
tion of

Success Gain Loss
Total ~l~Total~~Total

Inserting in this formula the figures given in the example in
Fig. 172 we have efficiency of G. I. Stevens for period of June 14
to July 5 = 83.7 per cent. + 7.8 per cent. — 16.0 per cent. = 75.5
per cent. ; for period Julv 12 to Aug. 2 = 76.8 per cent. + 8.5
per cent. —11.2 per cent. = 74.1 per cent.

356 FACTORY ORGANIZATION AND ADMINISTRATION

The ten employees showing the highest averages through a
period of six months receive an increase of wages of 2 1/2 cents
per hour. In addition the highest three men receive cash prizes.

399. Figuring Premium or Bonus Pay Rolls. — The system and
statistical methods for a premium or gain-sharing wage scheme
involve the same methods as for the day rate, namely, clock
record of attendance, time-keeping covering time taken and
amount of work done on every operation unit on which a time or
money standard is fixed. In addition to the regular pay-roll,
there will have to be a system of postings for the premium or
bonus pay-roll. The cost-accounting system must also be modi-
fied to permit of proper allotment of the bonus money so as to
show true cost.

DUPLICATE
WEEKLY GAIN REPORT FOB WEEK FNDINR

NAM.E ruee>u u<\ DFP-T wiriF B/^JE

: GAIN SHARING RATE

ORDER
NO.

NO.
PIECES

NAME OF PART

OPERATION

TIME
LIMIT

TIME

TAKEN

GAOR(+

LO&(-:

GAIN

CTS-

TOTAL TIME W'K'B -pup W'K'n y/iTnf>^T LIMIT TIMF 1 OST

TOTAL
GAIN

Fm. 173. — A report of the week's gain or loss in time. White card, 6 inches
wide, 4 inches high.

The simplest way to take care of a premium or bonus pay-roll
is to keep it entirely distinct from the regular pay-roll.

Fig. 172 shows a card form used for collecting the time and
figuring the premium pay-roll.

400. Notifications to Workmen of Gains or Losses under
Premium or Bonus System.— Fig. 173 shows a form used for
collecting these same data on to a weekly slip. The weekly
slip is written out in duplicate, one copy going to the man with
his envelope of premium money, the other being filed in a loose
leaf binder under the man's name, thus forming a record of the
man's performances under the system.

WAGE SYSTEMS 357

With either of the above forms a separate slip, as shown
in Fig. 174, is used. This slip serves as a notification and record
to the workman which he uses in checking his pay. One or more
carbon copies can be made out at the same writing, and can be
used as a comparative time record when filed under guides repre-
senting parts. This form also serves a useful purpose in filing
with regular cost-posting cards, in which time has been figured on
the straight wage basis, to show the amount that must be added
to individual part costs on account of premium pay. The

NOTIFICATION TO WORKMAN
OF GAINS ON STANDARD OPERATION WORK

Employe No. Date

Employe's Name Depx.

Shop Order No. of Pieces Finished

Name of Part

Operation S.O.Time

Actual Time on Job Mrs. Min.

Time Gained Mrs. Mins.

NOTICE : We are always glad to have our men make suggestions for changes in

fixtures, appliances or tools to facilitate the work.

If an idea occurs to you, write it out and put it in suggestion box.

Prizes are offered for best suggestions.

FIG. 174. — Workman's notice of gains under premium wage system.
Pink bond paper, 6 inches wide, 4 inches high. For failure a similar blue
slip is used with the words "Time Lost" instead of "Time Gained."

carbon copies filed by parts are looked over by the time-study
and rate-fixing department. If there is a tendency to fail to
do the work in the time limit, the workman is helped by dem-
onstration and instruction to do the work in accordance with
the instruction card built up from the time study on which the
time limit was based.

401. Foreman's Participation in Bonus. — The foreman's bonus

has been one of the least considered and most hastily installed.

incentives. If the foreman's bonus is based on the total bonus

of all of the employees, without any modifying factor based on

his departmental overhead expense, it is quite likely that the

358 FACTORY ORGANIZATION AND ADMINISTRATION

wear and tear and general expense account of his department
will be very high. If the foreman's bonus is based on the piece
rate value of the production in his department and there is no
factor modifying his bonus by reducing it if the labor turnover in
his department is high, then he could keep his workers on day
work, realize a good bonus, and lose money for his employers
by a heavy labor turnover. During the war many a foreman's
bonus based on the gross production turned out in his department
resulted in ridiculously high figures, compensating foremen in
amounts of money so large that they made higher salaried
employees gasp in astonishment and disgust. It will be seen,
therefore, that the foreman's share in efficiency reward must be
limited by such factors as overhead expense and labor turnover
in particular and that he be not rewarded for mere quantities of
increases in production due to added men and added equipment,
causing an increase in production for which the foreman is not
in any way responsible. The foreman must help the poorer
workers. This is secured by giving him an extra bonus if all
his workers earn bonus.

REFERENCES

GOING: "Principles of Industrial Engineering," Chapter VIII.

GANTT: "Work, Wages and Profit," Chapters III to VI inclusive.

CARPENTER: "Profit Making Management," Chapters VIII to XI
inclusive.

EMERSON: "Efficiency," Chapters VI, IX, and X.

Taylor: "Shop Management," Parts 93-201 inclusive.

GILBRETH: Primer of Scientific Management," Pages 20-30 inclusive.

ENNIS: "Works Management," Chapter IV.

TOLMAN: "Social Engineering."

SCHLOSS: "Methods of Industrial Remuneration."

TAYLOR: "A Piece Rate System," A. S. M. E. paper, DCXLVII, Vol.
XVI.

HALSEY: "The Premium Plan," A. S. M. E. paper, CCCCXLIX, Vol.
XII.

TOWNE: "Gain Sharing," A. S. M. E. paper CCCXLI, Vol. X.

GANTT: "A Bonus System of Rewarding Labor," A. S. M. E. paper,
928, Vol. XXIII .

PARKHURST: "Applied Methods of Scientific Management," pages
166 to 180.

EMERSON: "The Twelve Principles of Efficiency," Chapter XIV.

EMERSON: Efficiency," Chapter X.

TAYLOR: "Shop Management," Paragraphs 45 to 191.

KNOEPELL: "Installing Efficiency Methods," Chapter XVII.

CHAPTER XXVII
PRINCIPLES UNDERLYING GOOD MANAGEMENT

402. Clear-cut Organization. — The advantages of clear-cut
departmental organization have already been set forth. Where
each department head and each individual knows his exact
duties and the limits of his authority, there will be no trouble due
to misunderstanding of these matters. Purely mechanical con-
trol through charts and written rules and regulations does
not constitute good management. Strength of character, high
ethical standards, human sympathy and sound psychologic
insight are essential qualities of successful officials.

403. Mutual Confidence and Co-operation. — Mutual confidence
is absolutely essential to good management. This requires that
officers and department heads must be honest with each other
and with their men. One of the results of many years of industrial
mismanagement is the attitude of suspicion of many workingmen
toward employers and their representatives, whenever there is
any change in department heads, methods of manufacture, or
system, suspecting that something is going to happen that is
detrimental to their interests, and ready to oppose in every con-
cealed manner possible the new official, method, or system.
There is only one way to get rid of these difficulties, and that is
by actually making the best interests of the men identical with
the best interests of the company. To men and managements
embittered by long years of hostility engendered by mismanage-
ment such a statement will seem puerile. It needs but a little
investigation of the discussions and publications of employers'
organizations as carried on to-day, and a comparison of these
with similar discussions some ten or fifteen years ago, however,
to prove that co-operation is taking the place of warfare to a won-
derful extent.

The co-operation must be honest. There must be no wishy-
washy namby-pambyism. A lot of rah-rahing at a company
baseball game is no sign that employees don't laugh up their
sleeves at insincere patronizing.

359

360 FACTORY ORGANIZATION AND ADMINISTRATION

Frequent changes tend to break down mutual confidence,
hence the problem of employment should be handled in a most
deliberate and capable manner so as to lessen the need of dis-
charge to a minimum. On the other hand, while the establish-
ment of a permanent .force of employees will carry with itself
some of the spirit which results in the establishment of mutual
confidence, it is necessary, where there is a working force in which
there are many old employees, constantly to guard against accept-
ing as correct and unchangeable any long-existing conditions of
affairs. Records of what was the best performance in the past
must not serve as a guide to what future performances will be,
since materials and processes are always changing.

Mutual confidence and co-operation cannot exist where the
policy prevails of pitting departments against each other and
encouraging hostile competition. A good executive will never
employ the objectionable practice of asking men their opinions
about each other and each other's work. Neither will he employ
a scheme which was necessary during the war but which in peace
time is wholly out of place; namely, a detective or intelligence
service. A guard should be a guard pure and simple and not a
carrier of gossip. If encouraged in the latter, there is always the
possibility that he will make every effort to be delivering the
goods, whether based on facts or not.

404. Officials to be Relieved of Petty Duties.— There should be
some officer in every manufacturing establishment who is free
enough from routine duties to permit of his keeping constantly
on the alert in the matter of improving the manufactured product,
so that the company may always be prepared to make changes at
the proper time and keep the product up to date. Manifestly
the proper time is not when the shop is crowded with a heavy de-
mand for a current design which is serving its purpose without
any complaints from customers and without serious competition.
It is always good policy to adhere to established standards as
long as the market will permit, unless new standards mean a
most decided advantage to the manufacturer. This officer should
have charge of the record of all criticisms of product, and should
arrange such matters for discussion by salesmen and factory
officials who would be affected by changes in design.

In most manufacturing establishments this matter of changes
is not handled systematically. On the one hand, slight alterations
of no decided selling advantage may mean loss of stock on hand,

PRINCIPLES UNDERLYING GOOD MANAGEMENT 361

delays in manufacture, and increased costs. On the other hand,
a lack of foresight in anticipating needed changes may result
in heavy business losses.

405. Internal Harmony Essential. — In the matter of dealing
with men, managing officers should assume always that the
best interests of all of the men are identical with those of
the management. There should be no attention paid to talks
of intrigue or inter-departmental knocking. At the same time
the managing officials can easily locate jealousies and unwar-
ranted ambitions on their own initiative if they are capable
managers. It may be necessary to have plain talks with de-
partment heads who are over-ambitious, and to explain to them
wherein their course is in error, or why their ambitions can-
not be realized. In some cases it may be best for all concerned
if the management can find a better position elsewhere for some
department head who is deserving of promotion, but for whom the
management can find no promotion in its own organization.

406. A Successful Business the Accumulation of Many Men's
Ideas. — It must always be remembered that any successful busi-
ness represents an accumulation of the ideas of many men.
Hence, the endeavor should be to encourage the expressing of
ideas for betterment of product, of methods, and of systems, by
the rank and file and by the line and staff as well. There is no
question but that the committee method tends toward bringing
out good ideas. The same is true of good suggestion system with
prizes or promotions for men making the best suggestions.

407. Suggestion Systems. — In operating a suggestion system,
care should be taken that the committee on awards are thoroughly
capable of judging of the merits and demerits of the suggestions
they consider. Suggestion systems are usually operated on the
basis of an award each month consisting of three or five cash prizes,
and mention of the names of others 'making good suggestions which
did not win prizes. Much of the force of a suggestion system is
lost if the suggestions for which prizes are given are not put into
practice. Annual awards for those suggestions which have re-
sulted in the greatest good during the year, in addition to the
monthly awards, will tend to round out the suggestion system to
still greater efficiency.

408. Shop Committees and Industrial Democracy. — The com-
mittee method and anything else connected with the shop
management should be free of anything savoring of patronizing,

362 FACTORY ORGANIZATION AND ADMINISTRATION

hence it is well to avoid calling the committees by fancy names,
such as "Council," " Junior Council," etc. A condition of
mutual confidence must be established, otherwise the committee
meetings will contain men who are silent, being afraid to make
criticisms, fearing to incur ill-will or displeasure, or unwilling
to make suggestions for improvement for fear of their suggestions
being ignored or having their ideas claimed by others.

In recent years there has been a development of the committee
system especially in shops not having any clear, good organization
or functional control. In these shops there has been a tendency
to let shop committees take the initiative in developing company
policies and methods. In a well organized industry, men cap-
able of developing policies and methods would have been recog-
nized, selected and appointed to positions wherein they could
direct such matters. The general adoption of the direct action
type of industrial democracy whereby elected rather than selected
workers direct methods, policies and management, is in the
writer's opinion, in the majority of cases, apt to result in mis-
government by the unfit. It is not conceivable that such a
type of control can result in industrial efficiency in competition
with plans of organization which carefully find and develop
those whose physical, mental, and temperamental traits fit
them for each specialty or function.

Shop, committees have, however, a perfectly proper place in
industry; namely, as advisory committees to let the manage-
ment know what the employees think, to bring to light certain
abuses, and to afford an opportunity for the management to
explain its policies to the employees. Shop committees carried
on in this way are quite different from management of a business
through the industrial democracy by direct action idea, however.

409. Systematic and Scientific Selection and Placing of Men.
— Managing officers and heads' of departments should be endeav-
oring to ascertain the natural aptitude of each individual, and
put him into such a department and at such work as he is best
fitted for. The most efficient line officers are declared by many
successful managers to be men whose characteristics are unswerv-
ing devotion to duty and dogged tenacity, rather than men of
bright intellect, technical ability, and attractive personality.
The last-named qualities are by no means disadvantageous,
but they cannot take the place of the first-mentioned ones.

In the matter of appointing department heads and foremen, it

PRINCIPLES UNDERLYING GOOD MANAGEMENT 363

should be borne in mind that while a good spirit is engendered
by promoting men from the ranks, it is necessary to appoint a
certain proportion of men from the outside who have had wider
experience than that which can be obtained in any one shop.
At the same time, whenever a department head or foreman is
taken into the company from outside it must be borne in mind
that there is apt to be some one disappointed, whose good-will
may be lost, hence an outsider appointed as a department head
or foreman needs especially to possess ability to get along with
men, and if there is any doubt on this score he should not be
appointed, no matter what his technical ability may be. The
foreman or department head is always looked upon as the com-
pany's direct representative among the men, and the opinion of
the men as to the company is based upon their opinion of the fore-
man or department heads.

410. Justice in Wage Systems. — All systems of piece work,
bonus or premium wrage, must be just and reasonable. There is
hardly any shop where the same system of compensation can be
made to apply to all work, and to be able to say that all of the
company's work is on piece work or on the bonus system is likely
to be nothing at all to brag of. It would be far better to be able to
say that all of the work which can be advantageously done on a
piece-work or bonus basis is placed on that basis.

In the matter of wage systems, much trouble can be forestalled
by making it a rule that a certain piece rate, premium, or bonus
time is established for each separate machine and process, and
have this most. distinctly understood and specified. By distinctly
specifying that a certain premium, bonus or piece rate applies
to machine No. so and so and only to machines of the same type,
style and condition, and driven in the same manner, there can be
possible complaint if the rate is changed, as it should be, if a
different type of machine is installed or machinery is driven in a
different way. There can be only one rational basis for piece,
premium, or bonus times, and that is an absolutely certain knowl-
edge of conditions currently existing and applying to each separ-
ate machine or method. Men experienced at rate-fixing can
establish many such time standards from the records of observa-
tions on similar work. However, the utmost caution should
be observed in establishing standards without demonstrations,
since nothing establishes confidence in the ability and justice
of the management in a more satisfactory way than time stand-

364 FACTORY ORGANIZATION AND ADMINISTRATION

ards, which are neither too low nor too high, but are eminently
correct at their first announcement. An expert machine operator
usually makes a poorer job of establishing time standards than a
technically educated man used to taking and recording observa-
tional data. On the other hand, if the expert machine operator or
expert mechanic in other lines be used as demonstrator, and a
man skilled at accurate observational records be assigned to do
the timing, the results are far more likely to be satisfactory. It
is impossible to secure a man who is an expert operator on all
kinds of machinery, and it is utter folly to hire as a speed boss, or
rate fixer, a man who claims to be such a prodigy. A man
experienced at time-study work, using such mechanics for demon-
strators as each department can furnish, these mechanics receiv-
ing extra pay while on demonstration work, will secure correct
time standards. If the time-study man claims to be a universal
expert on all kinds of machinery, he may at once be set down as a
quack and a man who will cause more friction than good.

411. Sufficient Clerical Force. — Sufficient clerical force to
get out all of the needed records and departmental reports does
not necessarily mean many non-producers. The only use of
records and departmental reports is as an incentive to action.
There is absolutely no use of a transfer clerk or good tracing
records if the shop superintendent or general foremen do not make
use of these records. The same is true of all reports having to do
with cost-analysis and comparative inventories. Certain defi-
nite times should be set aside for meetings to discuss all such
reports, and it should always be borne in mind that the object of
such meetings is to find out what conditions are revealed by the
reports based upon records, and what actions should be taken as a
result of the revealing of these conditions.

412. Apprenticeship Systems. — I come now to the most impor-
tant as well as the most neglected of all opportunities in connection
with good management, namely, the apprenticeship system.

There is no gainsaying the fact that the manufacturing trades
do not get their fair percentage of bright, ambitious, and serious-
minded boys. The reason for this is that the boys are neglected,
and far too often have to work in unsanitary and unnecessarily
dirty surroundings, so that the most self-respecting are attracted
by opportunities to enter mercantile pursuits whose managers
seem to give more attention to the selection and developing of
boys they hire than is the case with manufacturers.

PRINCIPLES UNDERLYING GOOD MANAGEMENT 365

Each apprentice should have a certain course laid out, at
least tentatively, when he starts in. This course need not and
cannot be the same for each apprentice. In fact, it will probably
have to be varied from time to time during his apprenticeship as
close attention to him and his work reveals what are his best
aptitudes. The old catch phrase, "We aren't running an edu-
cational institution," which is told the apprentice boy all too often,
will have to be retired if manufacturers want good apprentices,
for that is exactly what they will have to make of their appren-
ticeship system — an " educational institution." The boy cannot
be taught too much about the business during his apprenticeship
years, and the teachers cannot be any too good. Talks during
working hours by the very best men in each department, with
demonstrations, as well as individual instruction, will result in
advantage to the employer who uses such systems.

413. Industrial and Vocational Education -Continuation
Schools. — There is much talk nowadays of extension work in the
way of the higher technical state institutions reaching out into
the industries and teaching the employees, and of continuation
schools in which the students who have had only six or seven
years of public school life are given the benefits of further training
as part of the regular public common-school system. The sooner
this talk materializes into actual accomplishment the better,
since such work will result not only in better intelligence among
the workers, but in better habits and cleaner manhood. An
employer can well afford to allow his apprentices to have an hour
a day on pay to attend continuation school for the sake of making
them better citizens, and he can afford to add to this hour another
hour of technical instruction during the daytime. Whether this
technical instruction is a sort that can be given in extension work
by a state technical institution, or whether it must be so special-
ized that it will require a teacher from the staff of the company
itself, will depend wholly on the nature of the industry. Natu-
rally it would be cheaper, where the number of apprentices are
limited, and the technical branches are such as can be taught in
general classes, to allow the students to attend extension classes,
supported by either state, municipal, or employers' association
funds, than to attempt to run a private school.

The day schools have been found to accomplish definite results
in a far better manner than night schools. When the school
session is in the day, the boy can prepare his work at night, whereas
with night school he has no time for such preparation.

366 FACTORY ORGANIZATION AND ADMINISTRATION

To a lesser extent the neglect of the apprentice boy has its
parallel in the neglect of the technical school and college graduate
in special apprenticeship courses. A few of the larger electrical
corporations are doing excellent work in giving systematic instruc-
tion to this class of apprentices, with excellent results in their
own favor, and their example could well be followed quite
generally.

414. Bureaus of Vocational Guidance. — A number of our large
cities have begun to establish bureaus of vocational guidance
whose purpose is to gather scientific data on the qualifications of
individuals best fitted for certain occupations, and of the occupa-
tions best fitted to individuals showing certain physical and
psychological combinations. Such bureaus should be under
the leadership of men with industrial experience, liberal education,
and broad human interests. In the large cities the directors of
such bureaus should be provided with capable specialists as
assistants to conduct the psychologic and medical examinations,
prepare the economic and statistical records, and conduct the
clerical work. In the smaller industrial centers, the superintend-
ent of schools should be aided by specialists from the state col-
leges and universities assigned to such extension work, in starting
proper systems of vocational guidance.

415. Educational Activities must not be Hampered by Fac-
tional Influence brought to bear by Organized Business or Organ-
ized Labor. — H. L. Gantt states that "Our difficulty has been
mainly with the commercial man, who often seems incapable of
considering anybody's interest except his own, and has not yet
recognized that the prosperity of all is directly helped by the pros-
perity of each. As yet he has no idea of what real co-operation
means. His idea of co-operation is that of the pack or the herd,
whose co-operation is for attack or defense. Certain well-known
leaders of manufacturing and labor organizations respectively are
prominent public advocates of this kind of co-operation, which
aims to despoil the outsiders for the benefit of those in the ring."
Those leaders in industrial education who are earnestly striving
for the benefit of all, are seriously handicapped by the activities
of the representatives of labor and employers' organizations on
the one hand and the old-school advocates of education for cul-
ture only on the other. The employer frequently wishes indus-
trial and vocational education to be an immediate tool for break-
ing up trades unionism, and will lobby strongly for men who are in

PRINCIPLES UNDERLYING GOOD MANAGEMENT 367

sympathy with this attitude. The labor union leader frequently
will oppose in educational work any man who has been identi-
fied with scientific management or efficiency movements, and
will oppose any system of industrial education which in his opin-
ion aims to give training which should be given by members of the
trade to a limited number of apprentices. The classicist demands
cultural subjects first and will not recognize culture in most
modern practical industrial and vocational training. Between
these three mutually opposing influences the educator who is
timid and under-paid and afraid of arousing hostile influences,
is frequently in a dilemma in which he needs the support of civic
organizations which are thoroughly non-partisan.

416. Some Examples of Good Apprenticeship Systems. —
The Baldwin Locomotive Works have conducted three dis-
tinct classes of apprentices for a number of years, and as their
system has been eminently successful an outline of it is appended :

BALDWIN LOCOMOTIVE WOKKS

BURNHAM, WILLIAMS & CO.

PHILADELPHIA

Apprenticeship System

In recent years manufacturing has tended so largely toward
specialization that young men apprenticed to mechanical trades
have been able in most cases only to learn single processes, and,
as a result, the general mechanic has threatened to become prac-
tically extinct, to the detriment of manufacturing interests gener-
ally. In view of this fact the Baldwin Locomotive Works have
established a system of apprenticeship on a basis adapted to
existing social and business conditions.

Apprentices are taken in three classes, as follows:

Apprentices of the First Class

The first class will include boys seventeen years of age, who
have had a good common-school education, and who will bind
themselves by indentures (with the consent of a parent or guar-
dian in each case) to serve for four years; to be regular at their
work; to obey all orders given them by the foreman or others in
authority; to recognize the supervision of the firm over their

368 FACTORY ORGANIZATION AND ADMINISTRATION

conduct out of the shop as well as in it; and to attend such night
schools during the first three years of their apprenticeship as will
teach them, in the first year, elementary algebra and geometry;
and in the remaining two years, the rudiments of mechanical
drawing.

Apprentices of the Second Class

The second-class indenture is similar to that of the first class,
except that the apprentice must have had an advanced grammar-
school or high-school training, including the mathematical courses
usual in such schools. He must bind himself to serve for three
years, and to attend night schools for the study of mechanical
drawing at least two years, unless he has already sufficiently
acquired the art.

Apprentices of the Third Class

The third-class indenture is in the form of an agreement made
with persons twenty-one years of age or over, who are graduates
of colleges, technical schools, or scientific institutions, having
taken courses covering the higher mathematics and the natural
sciences, and who desire to secure instruction in practical shop
work.

The indentures or agreement in each case place upon the
firm the obligation to teach the apprentice his art thoroughly and
to furnish him abundant opportunity to acquire a practical
knowledge of mechanical business. The firm is also bound to
retain the apprentice in service until he has completed the term
provided for in the indenture or agreement, provided his services
and conduct are satisfactory. In all cases the firm reserves the
right to dismiss the apprentice for cause.

The rates of pay in the different classes have been adjusted
from time to time in accordance with prevailing wage con-
ditions. In general the practice has been followed of making
a- semi-annual increase of pay in each class.

In addition to the regular rates of pay, apprentices of the
first class each receive an additional sum of $125, and apprentices

PRINCIPLES UNDERLYING GOOD MANAGEMENT 369

of the second class an additional sum of $100, at the expiration
of their full term of apprenticeship respectively.

By the course of training provided for in this system it is
believed that a great benefit will accrue to the mechanic as well
as to the employer. To young men who have received a thor-
ough technical education, the two years' course in shop work
is especially recommended.

Further particulars will be given on application.

The Westinghouse industries in the vicinity of East Pitts-
burg have carried on extension and continuation work to a con-
siderable extent. Following is an outline of their work which
was given by Mr. C. R. Dooley (who is in charge of the educational
division of the apprenticeship department of the Westinghouse
Electric and Manufacturing Company) , in a paper read before the
American Institute of Electrical Engineers in June, 1909 :

The educational activities in the vicinity of the Westinghouse
interests at East Pittsburg divide themselves into two general
classes: 1. The training of the graduates of engineering schools.
2. The training of non-technical men. The training of non-
technical men is further divided into two distinct lines: 1. The
apprenticeship system, which includes a certain amount of sys-
tematic class instruction given during working hours. 2. The
night school, where attendance is purely voluntary. Both of
these have a place in the training of non-technical men.

The Apprenticeship System. — In the shop a certain section
is devoted to the apprentices. This section is fitted with a com-
plete equipment to furnish shop practice in all branches of the
machinists' trade. The boys are under the guidance of all-
around mechanics taken from the shop organization and chosen
for their interest in young men as well as for their skill as workmen.
The boys remain in this section approximately two years. The
latter half of their course is spent in the various sections of the
shop.

The class-room instruction is provided on the company's
time, and is conducted throughout the four years of the course.
Special rooms inside the works have been fitted up with suitable
tables, desks, blackboards, etc., much the same as in an ordinary
schoolroom. The atmosphere is hardly that of a school, but
rather that of a class where the boys are given problems and
explanations concerning the things with which they work every
day, instead of problems in abstract mathematics. In connec-

370 FACTORY ORGANIZATION AND ADMINISTRATION

tion with the character of the class work, there are three vital
points: 1. The scientific principles underlying the subjects must
be taught. 2. The scientific principles can best be presented
through the working of practical problems dealing with the
things of the boy's every-day life. 3. The same problem must
teach him certain facts and specific knowledge concerning the
things with which he is working, such as weights, costs, and
strength of materials, gear speeds, pulley and belt speeds, etc.
In fact, a knowledge of the things with which the problems deal
and the facility afforded for thinking about these very ordinary
things may be the most valuable feature of this instruction.

There is another phase of the work without which all else will
fail. For want of a better name, we call it spirit. It includes
loyalty and enthusiasm, not only in the work and the future it
holds for the boys, but also in all their daily relations with their
fellows — a spirit of service and willingness, confidence in all
things and all people, and eternal optimism.

The Technical Night School. — Some years ago a technical night
school was started in the vicinity of the manufacturing interests
at East Pittsburg. Its management is independent of any com-
mercial industry, though its activity is encouraged and fostered
by the local organizations, including the public school board,
the latter furnishing the building. In the beginning there were
half a dozen teachers and a few dozen students who attended
classes in drawing, elementary mathematics, and shop practice.
At present there is offered an opportunity for systematic study
in such fundamentals as mathematics, mechanical drawing, me-
chanics, physics, theoretical and applied electricity, chemistry,
shop practice in both wood and metal, theoretical and applied
steam engineering, etc. There is a faculty of twenty-five instruct-
ors and an enrolment of about three hundred students. The
instructors are not only versed in the theory of their respective
subjects, but each is also actively engaged during the day with
his subject within the organization of a commercial factory. The
opportunities for obtaining exceptionally trained teachers are
therefore ideal.

Attendance is voluntary, and a small tuition fee is charged.
Admission is extended to all, regardless of occupation or previous
education. The low educational entrance qualifications are cared
for by a preparatory department. Practically all of the students
are employed in the various shops in this vicinity. Of the forty-

PRINCIPLES UNDERLYING GOOD MANAGEMENT 371

five men who have been graduated during the past three years,
practically all have been steadily advanced in position and re-
ponsibility, and forty are still with their original employers.
Some of the students are doing high-grade engineering work in the
engineering department and in the drafting office of the nearby
electrical manufacturing company. Others are successful sales-
men and many are doing responsible work in the erection depart-
ment and in the shop organization.

The engineering night school has a large field of activity.
At the start its students have a clear idea of commercial practice
such as is seldom possessed by the newly graduated college stu-
dent. This early experience instils an appreciation of the value
of time and of scientific training that tends to produce the most
efficient student. They have learned several years earlier in
life than the college student that scientific study and commercial
practice not only go hand in hand, but that they should continue
hand in hand throughout life, if the highest achievements are to
be attained; that there never comes a time when the one can be
laid aside and the other taken up. They also know the impor-
tance of the routine of life, that from the office boy to the presi-
dent, it is the fellow who gets the job done that gets the bigger
job to do.

417. Co-operative Schools. — An account of educational
activities engaged in by manufacturers would be incomplete with-
out mention being made of the co-operative work first initiated by
the University of Cincinnati under the direction of Dean Her-
mann Schneider. In this plan students prepared to enter the
university are taken into the machine shops by the owners of the
shops. The students spend alternate weeks in the shops and
alternate weeks in the university. While in the shops they are
visited by university instructors designated as co-ordinators, who
note what they are working on, how they are doing it, and any
other points of educational value in their surroundings, and dis-
cuss them in a class devoted to this purpose during the week that
they are attending the university. The course covers five years,
eleven months of each year being put in during alternate weeks
at the university, the remainder of the time being in the shops as
regular workmen. The employers are thoroughly satisfied with
the plan and state that it develops men who do not have the
handicap of inability to conform to shop discipline, and ignorance
of shop methods, which characterized a considerable percentage of

372 FACTORY ORGANIZATION AND ADMINISTRATION

their university graduate apprentices formerly. The plan has
also been adopted at the Fitchburg, Mass., and York, Pa. high
schools and at the Lewis Institute of Technology in Chicago in
co-operation with members of the National Metal Trades
Association.

418. Employment of Industrial Engineers in an Advisory
Capacity. — It must be quite apparent to the progressive manu-
facturer who has followed the development of industrial engi-
neering and scientific management, that most of the work of
factory planning, equipping and organizing requires exceptional
experience and training. Most ability of this sort is one-man
ability and cannot be syndicated. As soon as we have expert
service of this sort take the corporate form with a large force of
assistants, it means that the service is of the mimeographed,
ready-made, correspondence-school standard. The personal
servic'es of a well-educated well-trained mature expert at $100 a
day and upward plus traveling expenses are frequently cheaper in
the long run than syndicated expert services at lower prices.

REFERENCES

BRISCO: "Economics of Business," Chapter IV.

DODGE: "The Spirit in Which Scientific Management Should be Ap-
proached," Tuck School Conference Report.

CARPENTER: "Profit-making Management," Chapter XIV.

REDFIELD: "The New Industrial Day," Chapters VI-X.

LODGE: "Rules of Management."

GANTT: "Work, Wages and Profits," Chapter IX.

CARLTON: "Education and Industrial Evolution," Chapters I-IV and
VII-XII inclusive.

DAY: "Industrial Plants," Chapter XII.

BASSETT: "When the Workmen Help You Manage."

COHEN: "An American Labor Policy."

STODDARD: "The Shop Committee."

GANTT: "Organizing for Work."

COMMONS: "Industrial Goodwill."

LEITCH: "Man to Man — The Story of Industrial Democracy."

CHAPTER XXVIII
A BIBLIOGRAPHY OF WORKS MANAGEMENT

419. Reading and Study Necessary for the Man Who Aspires
to Success in Business Administration and Industrial Man-
agement.— The application of scientific methods to the in-
vestigation of problems of factory management has resulted in
the accumulation of a bibliography of considerable extent having
to do wholly with these questions. Fundamental prerequisites
or accompaniments to the study of such a bibliography are the
three branches of learning in which he who would train himself
for the profession of works management should be thoroughly
grounded, namely, engineering, industrial economics and in-
dustrial psychology. It is noteworthy that the authors of the
works hereafter referred to have been, almost without exception,
engineers, who have added to their technical training and
experience the essential knowledge of accounting, psychology,
and economics, requisite to a comprehensive grasp of the problems
of factory management.

The ambitious engine tender has at hand several works of
more or less merit on the steam-engine. He is a subscriber to
some technical or trade paper from which he gains advice and
inspiration. The same is true of the first-class pattern-maker
and draftsman, and of any high-grade craftsman. The chief
engineer and the master mechanic of a large industrial establish-
ment usually have at hand a supply of high-class works of refer-
ence. It seems singular that the same should not be true of
commercial managers, or of engineers who have been drawn into
positions of works management. To be sure, the literature of
factory economics is not abundant. Yet there have been some
very good works published. A reading knowledge of some of
these works would be of great value to managers and their assist-
ants in charge of departments. Such a knowledge might often
result in the anticipation of plans and methods which would other-
wise require years to mature. That this is true is evidenced by the
frequent reproduction, in the most elementary form, of methods

374

A BIBLIOGRAPHY OF WORKS MANAGEMENT 375

thought new and original by those introducing them, when in
fact the same methods have been far more completely worked out
by others. A similar ignorance of current practice and of best
methods on the part of the mechanical and engineering depart-
ment heads would be considered unpardonable.

420. A Business or Shop Library for Managers and Employees.
— A certain evidence of the lack of reading along these lines
by those who might profit therefrom is the ease with which an
unscrupulous man who has made himself familiar with the litera-
ture of works management is able to palm off, as originated by
himself, charts, tables, and forms, and sometimes pages of dis-
cussion, copied verbatim from standard works. It certainly
would be a profitable investment for many a manufacturing
corporation to provide a reference library of such standard works
as would be of particular application to and bear upon the busi-
ness concerned, and to encourage the employees to make use of
this reference library in working hours for reference, and out of
working hours for education.

A. S. M. E. Papers. — There are certain papers presented before
the American Society of Mechanical Engineers which may
justly be termed classics in industrial management. Most of
these have been reprinted by the society and can be purchased in
pamphlet form. The entire series should be bound together
into a single volume for convenience in handling and to prevent
wear and tear. These papers are as follows :

Vol. X, Paper No. CCCXLI.—"Gain Sharing," a paper by
Henry R. Towne, presented at the May, 1889, meeting of the
American Society of Mechanical Engineers.

This paper, and several others, will be listed among the books
reviewed, since these papers well deserve the name of classics.

" Webster defines profit as excess of value over cost, and gain
as that which is obtained as an advantage. I have availed of
this well-expressed though delicate distinction between the two
terms, to coin a name for the system herein described, whereby
to differentiate it from profit-sharing as ordinarily understood
and practised. The right solution of this problem will manifestly
consist in allotting to each member of the organization an interest
in that portion of the profit fund which is or may be affected by
his individual efforts or skill, and in protecting this interest against
diminution resulting from the errors of others or other extraneous
causes not under his control. Such a solution, while not simple,

376 FACTORY ORGANIZATION AND ADMINISTRATION

is attainable under many circumstances, and attainable by
methods which experience has shown to be both practical and
successful."

The plan advocated by Mr. Towne is the differentiating of
all items affecting cost of production over which the operatives
have any control whatever, and offering the operatives a share,
say one-half, of any reduction per unit of product that they
may be able to bring about in these items in the course of a year.
Foremen and other responsible heads are to receive a larger pro-
rata share of the saving effected than the rank and file.

Mr. Towne presents tables showing the operation of the system
for two years at the Yale and Towne Works. It is interesting to
note that the company has discontinued the plan.

The discussion by Mr. E. F. C. Davis is the first record pub-
lished of the so-called premium plan. He cites an instance of a
friend of his who announced to his workmen that he would allow
a definite number of hours to do a certain machine-shop job,
and that of any time the workman saved over that he would
get one-half the benefit. Mr. Davis stated that after the work-
men found that the offer was really made in good faith, the plan
worked very well.

Vol. XVI, Paper No. DCXLVII.—"A Piece-rate System" by
Fred W. Taylor, a paper presented at the June, 1895, meeting of
the American Society of Mechanical Engineers.

In this paper, Mr. Taylor presents the first recorded recom-
mendations in favor of a careful or scientific study of the subject
of rate-fixing, and of the differential piece rate. Piece-work
prices based on elementary rate-fixing differ from such prices as
usually made, in that a careful study is made of the elemental
times required to do each of the constituent steps into which the
manufacturing operations of an establishment may be analyzed.
These elementary operations are then classified, recorded, and
indexed, and when a piece-work price is wanted for work, the
job is first divided into its elementary operations, and the total
time for the job is summed up from these elementary data.

The differential-rate system of piece work consists of the offer-
ing of two different rates for the same job — a high price per piece
in case the work is finished in the shortest possible time and in
perfect condition, and a lower price per piece if it takes a longer
time to do the job, or if there are any imperfections in the work.

Mr. Taylor expresses it as his opinion, based on extensive

A BIBLIOGRAPHY OF WORKS MANAGEMENT 377

experience, that the workmen in nearly every trade can and will
materially increase their present output per day, providing they
are assured of a permanent larger return for their time than they
have been receiving, and that employers can well afford to pay
higher wages per piece, even permanently, provided each man
and machine in the establishment turns out a proportionately
larger amount of work.

The most formidable obstacle to the solution of the piece-
work problem, Mr. Taylor states, is the lack of knowledge of the
quickest time in which each piece of work can be done, the remedy
for this lying in the establishment in every factory of a proper
rate-fixing department.

In closing the discussion of his paper, Mr. Taylor expressed
regret that the elementary rate-fixing features of the system he
described did not receive more attention by the members dis-
cussing his paper, and stated it as his firm conviction that this
question must occupy more and more of the attention of manu-
facturers in the future.

This paper of Mr. Taylor's, together with his later and exhaust-
ive one delivered at the June, 1903, meeting (an abstract of which
is given in this bibliography), deserve the most careful perusal of
every manufacturer.

Vol. XXIII, Paper No. 928. — "A Bonus System of Rewarding
Labor," a paper by H. L. Gantt, presented at the December,
1901, meeting of the American Society of Mechanical Engineers.

The paper is a description of a system introduced by the author
into the machine shop of the Bethlehem Steel Company. An
instruction card is made out, showing in detail the best method
(so far as knowledge and experience available can give it) of
performing each of the elementary operations on any piece of
work, specifying the tools to be used, and setting the time needed
for each of these operations as determined by experiments. The
sum of these times is the total time needed to complete the piece
of work. If the workman accomplishes all the work assigned
in any one day within the total time limits specified, he is paid a
definite fixed bonus, in addition to the day rate which he always
gets. If he fails, he gets simply his day rate. As the time for
each detail operation is specified on the instruction card, the work-
man can see continually whether he is going to earn his bonus or
not. If he finds any operation which cannot be done in the time
specified, he must at once report it to his foreman. If, on care-

378 FACTORY ORGANIZATION AND ADMINISTRATION

ful investigation by the man making out the card, the work-
man's statement is found to be correct, a new instruction card
is made out, explaining the proper method of working, and allow-
ing the proper time

The foremen also receive, in addition to their day wages, com-
pensation proportional to the number of their men who earn a
bonus, and an extra compensation if all of their men earn bonuses.

"As the instruction cards are made out by a skilful man, with the
records at hand, they invariably prescribe a better method for doing
the work than the ordinary workman or foreman could devise on the
spur of the moment. ...

"The system has many of the advantages of the differential piece-
work method, by which the compensation is quite large for the maximum
amount of work obtainable. Since it is impossible for men to earn
bonuses when their machines are out of order, an automatic punishment
is provided for breakdowns. . . .

"Considerable training is necessary to teach the men, who, as a rule,
are ordinary laborers, to follow the instruction cards. Having once
given them this training, however, the advantage of having a first-class
machinist to do the thinking, and to use for them the best results already
obtained, produces an efficiency which would be absolutely impossible
if the workmen were left to themselves."

Samples of the forms used are given, as filled out in actual use.
The author states:

"If we have a thorough knowledge of all the conditions, and are
able to introduce piece work, it is undoubtedly to be preferred. But
we must remember that aside from the great injustice of it, there is
nothing so demoralizing as cutting piece rates."

The bonus system carries with it the advantage that if the
time allowance is too easily reached, a limit is nevertheless set
to any workman's daily gain, which can never be more than the
fixed daily bonus.

Vol. XXIV, Paper No. 1003— "Shop Management," by
Fred W. Taylor, a paper presented at the June, 1903, meeting of
the American Society of Mechanical Engineers.

This exhaustive paper, which covers 150 pages of the society's
transactions, is a record of some twenty years of genuine research
work by the author. The compiler of this bibliography emphat-
ically agrees with Mr. Henry R. Towne in his characterization of
this paper as the most valuable contribution to this subject which

A BIBLIOGRAPHY OF WORKS MANAGEMENT 379

has yet been made. As stated by Mr. Towne, it includes so
complete a review as to constitute almost a history. It is clear-
cut and comprehensive, written in a characteristic, vigorous,
clear style.

Mr. Taylor brings out again, and in greater detail than in his
former paper of 1895, the importance of scientific time study
as the foundation of the best management. In addition to the
more detailed description of scientific rate-fixing, the other new
features not brought out in his previous paper referred to are
the use of the " Instruction Card" to accompany any system of
compensation, whether it be Mr. Gantt's bonus, Mr. Taylor's
differential piece rate, the premium method, or ordinary piece
rate; also the system of functional foremanship.

Functional management consists in so dividing the work of
management that each man, from the assistant superintendent
down, shall have as few functions as possible to perform. If
practicable, the work of each man in the management should
be confined to the performance of a single leading function. As
example of this fuctional management, there are suggested in
the factory office, the man in charge of order of work and routing
department, the one in charge of instruction-card department,
the time and cost clerk, and the shop disciplinarian, these four
divisions making up what Mr. Taylor calls the " planning depart-
ment." In the shop itself the functional foremanships are those
of "gang boss," who has charge of the preparation of all work
up to the time the piece is set in the machine, including the selec-
tion and providing of jigs, templates, drawings, etc.; the "speed
boss," who must see that the proper cutting tools are used, that
the cuts are started right, and that the best speeds and feeds are
employed; the "inspector," who is responsible for the quality of
the work; and the "repair boss," who sees that each machine is
kept clean by its operator and free from rust and scratches, and
that it is oiled and otherwise properly treated.

Vol. XXV, Paper No. 1010.— "Slide Rules for the Machine
Shop," by Carl G. Barth, a paper presented at the Dec. 1903
meeting of the American Society of Mechanical Engineers. In
this paper Mr. Barth describes the methods to be undertaken in
securing correct feeds and speeds and other matters connected
with the machine tool equipment of a metal-working industry.
He also outlines the mathematical theory on which he bases the
construction of his slide rules by the use of which an experienced

380 FACTORY ORGANIZATION AND ADMINISTRATION

machine-tool operator with mental capacity to understand the
slide rule, or a technically trained man preparing instruction cards,
can determine the correct gear and pulley combination to use in
machining a given piece.

Vol. XXVII Index.— At the close of the 1906 volume there is
an index of all papers on Works Management and discussions in
the transactions of the society up to that date. This index in-
cludes reference to several discussions not here mentioned.

Vol. XXVIII, Paper No. 1119.—" The Art of Cutting Metals, "
by Fred W. Taylor. This paper should be read and reread by
every foreman, manager, or proprietor of an industry using
machine tools, as well as by any person proposing to undertake
the fixing of time standards or wage rates on machine tool
work. It is a monumental piece of research work that has seldom
been equalled even in the field of pure science. The paper is
illustrated by a large number of charts, tables and photographs
illustrating proper cutting angles, feeds and speeds, lubrica-
tion, etc.

Vol. XXXIV, Paper No. 1378. — Report of Sub-committee on
Administration on the Present Status of the Art of Industrial
Management, presented at the December, 1912; meeting of the
Society. The report of the committee itself is excellent and in-
dicates marked progress toward the formulating of definite prin-
ciples of the Science of Management. Unfortunately a good deal
of the discussion does not directly bear on the report of the com-
mittee but is a repetition of matter already presented to the
public by the speakers.

421. A Bibliography of the Classical or Pioneer Literature of
Works Management or Industrial Engineering prior to 1904.—
In the Engineering Magazine, Vol. XXVII, No. 4, July, 1904, the
author of this text reviewed the bound volumes and A. S. M. E.
papers published up to that time. This bibliography included a
number of volumes not mentioned in the present edition of this
work, as they are not representative of present-day practice.
However to the man interested in the historical development of
the subject the list given will be of interest. In the same number
of the Engineering Magazine immediately following the paper
just referred to, is a complete bibliography of the periodical lit-
erature of Industrial Engineering up to and including May, 1904.

422. A Standard Reference Library of Industrial Management
and Industrial Engineering.— The following list is intended to

A BIBLIOGRAPHY OF WORKS MANAGEMENT 381

include such works as the progressive industrial corporation should
possess and encourage its employees to read :

ALEXANDER HAMILTON INSTITUTE: "Organization and Management,"
by Lee Galloway.

BABCOCK: "Taylor System in Franklin Management."

BENTLEY: "Corporate F. nance and Accounting."

BLACKFORD AND NEWCOMB: "The Job, the Man, the Boss.",

BRANDEIS: "Scientific Management."

BRISCO: "Economics of Business."

BR sco: "Econom'cs of Efficiency."

BUNNELL: "Cost Keeping for Manufacturing Plants."

CARLTON: "Education and Industrial Evolution.'

CARPENTER: "Profit-making Management."

CHURCH: "Expense Burden."

CHURCH: "Production Factors in Cost Accounting and Works
Management."

CHURCH: "Science and Practice of Management."

COOK: "Factory Management."

CONYNGTON: "The Modern Corporation. '

COWEE: "Practical Safety Methods and Devices."

DAY: "Accounting Practice."

DAY: "Industrial Plants."

DIEMER: "Factory Organization and Administration.'

DICKSEE AND B LAIN I "Office Organization and Management."

DICKSEE: "Business Organization."

DUNCAN: "The Principles of Industrial Management."

DURELL: "Fundamental Sources of Erne ency."

EMERSON: "Efficiency."

EMERSON: "Twelve Principles of Efficiency."

ENNIS: "Works Management."

EVANS: "Cost Keeping and Scientific Management."

FICKES: "Shop Expense, Analysis and Control."

GALLOWAY: "Organization and Management."

GANTT: "Work, Wages and Profit."

GILBRETH: "Applied Motion Study."

GILBRETH: "Motion Study."

GILBRETH: "Primer of Scientific Management."

GOING: "Principles of Industrial Engineering."

HARTNESS: "The Human Factor in Works Management."

HOXIE: "Scientific Management and Labor."

KEMBLE: "Choosing Employees by Test."

KNOEPPEL: "Maximum Production."

LODGE: "Rules of Management."

LODGE: "Shop Rules."

MATHESON: "The Depreciation of Factories."

MUENSTERBERG: "Psychology and Industrial Efficiency."

PARKHURST: "Applied Methods of Scientific Management."

382 FACTORY ORGANIZATION AND ADMINISTRATION

PARKHURST: "Symbols."

REDFIELD: "The New Industrial Day."

SCHLOSS: "Methods of Industrial Remuneration."

SCOTT: "increasing Human Efficiency in Business."

SHEPARD: "Application of Efficiency Principles."

SULLIVAN: "American Corporations."

TAYLOR: "Shop Management."

TAYLOR: "The Art of Cutting Metals."

TAYLOR: "The Principles of Scientific Management."

THOMPSON: "Scientific Management."

TUCK SCHOOL: "Conference on Scientific Management."

TWYFORD: "Purchasing."

TYRRELL: "Engineering of Shops and Factories."

WEBNER: "Factory Costs."

The above list includes most of the works mentioned as supple-
•mentary reading to the various chapters of this work and repre-
sent an up-to-date private or company library.

423. A Comprehensive Library of Supplementary Reading
for a School of Engineering or School of Business Administration
or Public Library. — The following list is in addition to the afore-
mentioned works :

Accounting and Cost-keeping.

COLE: "Accounts."

HATFIELD: "Modern Accounting."

RIDGWAY: "Cost Accounts."

ARNOLD: "The Complete Cost Keeper.'1

ARNOLD: "The Factory Manager and Accountant."

BENTLEY: "The Science of Accounts."

GARCKE AND FELLS: "Factory Accounts."

LISLE: "Accounting in Theory and Practice."

DICKSEE: "Advanced Accounting."

KEISTER: "Corporation Accounting and Auditing."

MOORE AND MINER: "Accounting and Business Practice."

SOULE: "New Science and Practice of Accounts."

MACKENZIE ST. CLAIR: "The Modern Balance Sheet."

"The Accountant's Library." Published by Gee & Sons, London.

"Cyclopedia of Accounting." 8 volumes. Published by W. Green &
Sons, London.

BROWN: "History of Accounting and Accountants."

"The Accountant's Manual." Published by Gee & Sons, London.

DAWSON: "The Accountant's Compendium."

RENN: "Practical Auditing."

J. H. GOODWIN: "Bookkeeping and Business Manual."
Business and Engineering Law.

BURDICK: " Essentials of Business Law."

PARSONS: "Laws of Business."

WAIT: "Law of Operations Preliminary to Construction."

A BIBLIOGRAPHY OF WORKS MANAGEMENT 383

BALL : ' ' The Law Affecting Engineers. ' '

HARING: "Engineering Law."

JOHNSON: "Contracts and Specifications."

BRENNAN: "Handbook of Commercial Law."

SPENCER: 'Commercial Law."

SULLIVAN: "American Business Law."

TUCKER: "Contracts in Engineering."
Commercial Geography.

ADAMS: "Commercial Geography."

CHESHOLM: "Commercial Geography."

GREGORY: "Physical and Commercial Geography."

MACFARLANE: "Commercial and Industrial Geography."

MORRIS: "Industrial and Commercial Geography."

TROTTER: "The Geography of Commerce."
Economics of Workingmen.

GUNTON: "Wealth and Progress."

UNION: "Labor Legislation, Labor Movements and Labor Leaders."

MARX: "Wage Labor and Capital."

PETERS: "Labor and Capital."

Rus: "How the Other Half Lives."

ROBERTSON: "The Eight Hours Question."

SCHOENHOF: "The Economy of High Wages."

SHAD WELL: "Industrial Efficiency."

SPAHR: "America's Working People."

HOBSON: "Evolution of Modern Capitalism."

MALLOCK: "Classes and Masses."

COMMONS: "Selected Readings on Labor Problems."

WEBB: "Industrial Democracy."

British Royal Commission on Labor. Foreign Reports. (For histor-
ical account of social efforts at amelioration of wage-earners' condition
in different countries.)

British Statutes (such as Friendly Societies Acts, Trade-Union Acts,
and Workmen's Compensation and Trades Disputes Acts of 1906).

Monographs on Labor Legislation in several States. (Massachusetts,
Pennsylvania.)

TOYNBEE: "Industrial Revolution."

ASHLEY: "Adjustment of Wages."

BOOTH: "In Darkest England and the Way Out."

CHAPMAN: "Work and Wages."

BRETANO: "The Relation of Labor to the Law of To-day."

DRAGE: "The Unemployed, and the Problem of Aged Poor."

GILMAN: "A Dividend to Labor."

SCHULZE, GAEVERNITZ: "Social Peace."

MITCHELL: " Organized Labor."

ADAMS AND SUMNER: "Labor Problems," pp. 3-16, 502-547.

LEVASSEUR: "American Workman," pp. 436-509.

MITCHELL: "Organized Labor," pp. 391-411.

"Twelfth Census." Special Report on Employees and Wages, p. xcix.

"National Civic Federation, Industrial Conciliation," pp. 40-48, 141-
154, 238-243, 254-266.

GLADDEN: "Working People and Their Employers."

384 FACTORY ORGANIZATION AND ADMINISTRATION

"Workmen's Compensation," U. S. Dept. Commerce and Labor.
"Workmen's Insurance and Compensation Systems," U. S. Bureau of
Labor.

ADAMS & SUMNER: "Labor Problems."

CARLTON: "The Industrial Situation."

COMMONS: "Industrial Goodwill."

GANTT: "Industrial Leadership."

HARTNESS: "The Human Factor in Works Management."

HOBSON: "Work and Wealth."

Karapetoff : "The Human Side of the Engineering Profession."

MYERS: "Preventing Losses in Factory Power Plants."

REDFIELD: "The New Industrial Day."
Employment Management.

BASSET: "When the Workmen Help You Manage."

BLOOMFIELD: "The Vocational Guidance of Youth."

BRAY: "Boy Labor and Apprenticeship."

CLOTHIER: "Function of the Employment Department."

COHEN: "An American Labor Policy."

"Commissioner of Education Reports," Washington, D. C.

COMMONS: "Industrial Goodwill."

COOLEY: "Vocational Education in Europe."

DAVENPORT: "Education for Efficiency."

DAVIDSON: "Education of the Wage Earner."

DAVIS: "Vocational and Moral Guidance."

DOFF: "The Place of Industries in Elementary Education."

GANTT: "Organizing for Work."

GILLETTE: "Vocational Education."

HANUS: "Beginnings in Industrial Education."

KELLY: "Hiring the Worker."

LEAKE: "Industrial Education."

LEAVITT: "Examples of Industrial Education."

LEITCH: "Man to Man — The Story of Industrial Democracy."

MAROT: "Creative Impulse in Industry ," New York, 1918.

METROPOLITAN LIFE INSURANCE Co.: "Hiring and Firing," New York,
1918.

National Association of Corporation Schools Publications, 15th St. &
Irving PI., New York City.

National Society for Promotion of Industrial Education, 140 W. 43rd
St., New York City.

PUFFER: "Vocational Guidance."

ROBERTS: "Manual for Teachers."

ROBINSON: "The Wage Earning Boy." •

RUSSELL SAGE FOUNDATION: "Boyhood and Lawlessness."

SCHNEIDER: "Education for Industrial Workers."

SNEDDEN: "The Problem of Vocational Education."

STOOD ARD: "The Shop Committee."

TAYLOR: "Handbook of Vocational Education."

TEAD: "Instincts in Industry."

"U. S. Federal Board for Vocational Education Bulletins."

A BIBLIOGRAPHY OF WORKS MANAGEMENT 385

TRAVIS: "The Young Malefactor."

U. S. Bureau of Labor Bulletins, Nos. 31, 54, 159 and others.
WARE: "Educational Foundations of Trade and Industry.
WEAVER: "Profitable Vocations for Boys."

WRIGHT: "The Apprenticeship System and its Relation to Industrial
Education."
Finance, Banking, and Currency.

ALDRICH: "Money and Credit," Chapters, I, II, V.

BRYAN: "Credit, Its Meaning and Moment."

WALKER: "Money."

ZIMMERMAN: "Credits and Collections."

HEPBURN: "Contest for Sound Money."

KINLEY: "Money."

JOHNSON: "Money and Currency."

LEWIS: "The Credit Man and His Work."

PRESTON: "Credits, Collections, and Their Management."

WATSON: "History of American Coinage."

DEWEY: "Financial History of the United States," pp. 34-59, 76-117,

224-246, 252-262.
CATTERALL: "The Second Bank of the United States," pp. 1-24,

63-119, 376 map, 402-403, 464-477.
BULLOCK: "Essays on the Monetary History of the United States,"

pp. 60-93.
HAMILTON: ''Reports on Public Credit." Amer. State Papers, Finance,

Vol. I, pp. 15-37, 64-76.

KINLEY: "History of the Independent Treasury," pp. 16-39.
SUMMER: "Andrew Jackson" (ed. 1886), pp. 224-249, 257-276,

291-342.

Ross: "Sinking Funds," pp. 21-35.
SCOTT: "Repudiation of State Debts," pp. 33-196.
BOURNE: "History of the Surplus Revenue of 1837," pp. 1-42, 125-135.
CONANT: "History of Modern Banks of Issue," pp. 3103-47.
MITCHELL: " History of the Greenbacks," pp. 3-43, 403-420.
NOYES: "Thirty Years of American Finance," pp. 1-72, 234-254

(73-233).

TAUSSIG: "Silver Situation in the United States," pp. 1-157.
DUNBAR: "National Banking System," Q. J. E., Vol. XII, pp. 1-26;

printed also in Dunbar's "Economic Essays," pp. 227-247.
HOWE: "Taxation and Taxes in the United States under the Internal

Revenue System," pp. 136-262.
"Tenth United States Census " (1880), Vol. VIIjBayley, "History of the

National Loans,-" pp. 369-392, 444-486.
WHITE: "Money and Banking."
TAYLOR: "Chapters on Money."
DUNBAR: "Theory and History of Banking."
Industrial History of the Ur.ited States.

COMAN: "Industrial History of the United States."
TAUSSIG: "Tariff History."

DEWEY: "Financial History."
25

386 FACTORY ORGANIZATION AND ADMINISTRATION

HART: "American History as told by Contemporaries," Vols. Ill and IV.

SEMPLE: "American History and its Geographic Conditions."

BULLOCK: "Selected Readings in Economics."

CAIRNES: "The Slave Power."

CALLENDER: "Early Transportation and Banking Enterprises in rela-
tion to the Growth of Corporation," in Quarterly Journal of Eco-
nomics, Vol. XVII.

NOTES: "Recent Economic History of the United States," in Quarterly
Journal of Economics, Vol. XIX.

DAY: "History of Commerce."

HAMILTON: "Report on Manufacturers," in Taussig's State Papers and
Speeches on the Tariff, pp. 1-79, 103-107 (79-103).

BOLLES: "Industrial History of the United States," Book II, pp. 403-
426.

BISHOP: "History of American Manufacturers," Vol. II, pp. 256-505.

BABBENO: "American Commercial Policy," pp. 146-183.

RINGWALT: "Development of Transportation Systems in the United
States," pp. 41-54, 64-166.

CHITTENDEN: "Steamboat Navigation on the Missouri River," Vol. II,
pp. 417-424.

SEMPLE : "American History and its Geographic Conditions," pp. 52-74.

DONALDSON: "Public Domain," pp. 1-29, 196-239, 332-356.

SANBORN: "Congressional Grants of Land in Aid of Railways," Bulletin
of University of Wisconsin Econ., Pol. Sci. and Hist. Series, Vol. II,
No. 3, pp. 269-254.

HART: "History as Told by Contemporaries," Vol. Ill, pp. 459-478.

QUAINTANCE: "Influence of Farm Machinery," pp. 1-103.

BEMIS: "Discontent of the Farmer," J. Pol., EC., Vol. I, pp. 193-213.

JOHNSON: "American Railway Transportation," pp. 24-68, 307-321,

367-385.
Organization of Business Enterprises.

BENTLEY: "Corporation Finance and Accounting."

SULLIVAN: "American Corporations."

VEBLEN: "The Theory of Business Enterprise."

WOOD: "Modern Business Corporations."

CONYNGTON: "Corporate Organization."

FRANK: "Science of Organization and Business Development."

KIRSCHBAUM : " Business Organization and Administration."

SPARLING: "Business Organization."

MEADE: " Corporation Finance."

DUNCAN: " Principles of Industrial Management."

HENDRICK: "The Power to Regulate Corporations and Commerce."

RIPLEY: "Trusts, Pools, and Corporations."

FLOY: "Valuation of Public Utility Properties."

BURTON: " Corporations and the State."

WHITTEN: "Valuation of Public Service Corporations."

GREEN: "Corporation Finance."

MEADE: "Trust Finances."

COMMON: "Trade Unions and Labor Problems."

A BIBLIOGRAPHY OF WORKS MANAGEMENT 387

WEBB: "Industrial Democracy."

HOBSON: "Evolution of Modern Capitalism."

ELY: "Monopolies and Trusts."

Industrial Commission Report.

Commissioner of Corporations: Report on the Beef Industry; Report

on the Transportation of Petroleum; Report on the Petroleum Indus-
try.

MONTAGUE : " The Ethics of Trust Competition, in Atlantic," Vol. XCV.
MONTAGUE: "The Transportation Phase of the Oil Industry," in

Journal of Political Economy, Vol. XV.
ADAMS: "The Relation of the State to Industrial Action," in American

Economic Association Publication, Vol. I.
WILLOUGHBY: "Integration of Industry in the United States," Vol.

XVI, pp. 94-115.
NOVES: "Recent Economic History of the United States," Vol. XIX,

pp. 188-209.

Twelfth Census, Vol. VII, pp. 110-214.
Industrial Commission, Vol. XIII, pp. 5-18.
BULLOCK: "Trust Literature," Vol. XV, pp. 167-217.
ALLEN: " Business Employment."

BLOOMFIELD: "Relations of Foremen to Working Force."
BRISCO: ' 'Economics of Business."
CADBURY: ''Experiments in Industrial Organization."
CARPENTER: "Profit Making in Shop and Factory Management."
DRESSER: "Human Efficiency."
ENNIS: "Works Management."
GOING: "The Principles of Industrial Engineering."
HINE: "Modern Organization."
JONES: "Business Administration."
KELLY: "Hiring the Worker."
KENT: "investigating an Industry."
KIMBALL: "Principles of Industrial Organization."
LINCOLN: "The Factory."
McVEY: "Modern Industrialism."
PARSONS: "Office Organization and Management.'
PRICE: "The Modern Factory."
Transportation.

COOLEY: "The Theory of Transportation."

JOHNSON: "American Railway Transportation."

JOHNSON: "Ocean and Inland Water Transportation."

HADLEY: "Railroad Transportation."

MEYER: "Government Regulation of Railway Rates."

RIPLEY: "Railway Problems."

NEWCOMB: "Railway Economics."

NOYES: "American Railroad Rates."

MEYER: " Railway Legislation."

"Industrial Commission," Vol. XIX, pp. 466-481.

ADAMS: "Chapters of Erie," pp. 1-99, 333-429.

DAVIS: "The Union Pacific Railway, Annals of the Amer. Acad.," VoL

VIII, pp. 259-303.

388 FACTORY ORGANIZATION AND ADMINISTRATION

VILLARD: "Memoirs," Vol. II, pp. 284-312.

DIXON: "Interstate Commerce Acts as Amended," Vol. XXI, pp.
22-51.

CHISHOLM: "Inland Waterways."
Selling and Advertising.

ATKINSON: "Psychology of Salesmanship."

BRIDGE WATER: "Advertising."

BALMER: "The Science of Advertising."

BELLAMY: "Effective Magazine Advertising."

BUNTING: "Specialty Advertising."

BOWKER: "Copyright, Its History and Its Law."

SHRYER: "Analytical Advertising."

STARCH: "Principles of Advertising."

System Co., "How to Write Letters That Win."

SINGER: "Patent and Trade Marks Laws of the World."

SWAN: "Patents, Designs and Trade Marks."

THOMPSON: "Things to Know about Trade Marks."

VARDAMAN: "The Master Salesman."

CORBION: "Principles of Salesmanship."

COLLINS: "Human Nature in Selling Goods."

CASSON: "Ads and Sales."

CALKINS AND HOLDEN: "Modern Advertising."

COLEMAN: "Advertising Development."

CHERINGTON: "Advertising as a Business Force."

DAVENPORT: "Value and Distribution."

DEWEESE: "Principles of Practical Publicity."

FOWLER: "Practical Salesmanship."

FARRINGTON: "Store Management."

HIRSCHLER: "Art of Retail Selling."

HESSELTINE: "Law of Trade Marks and Unfair Trade."

JOHNSON: "Library of Advertising."
KNOX: "Salesmanship and Business Efficiency."
LENINGTON: "Seven Principles of Successful Salesmanship."
LINDGREN: "The New Salesmanship."
LAWRENCE: "Making Him Buy."
MACBAIN: "Selling."

MOODY: "Men Who Sell Things" Moran, "The Business of Adver-
tising."

MACDONALD: "Successful Advertising."
PARSON: "Principles of Advertising Arrangement."
PAGE: "Advertising."

NEWELL: "Patents, Copyrights and Trade Marks."
PIERCE: "Scientific Salesmanship."
POWELL: "Practical Advertiser."
Statistics.

DAVENPORT: "Statistical Methods."
MULHALL: "The Dictionary of Statistics."
BOWLEY: "Elements of Statistics."

rA BIBLIOGRAPHY OF WORKS MANAGEMENT 389

MEITZEN: " History, Theory, and Technique of Statistics."

NEWSHOLME: "Vital Statistics."

BERTILLON: "Cours Elementair."

LEVASSEUR: "La population francaise."

BLOCK: " Trait e de statistique."

MAYO-SMITH: "Statistics and Economics."

DEWEY: " Discussion of Wage Statistics in volume on Wages, 12th U. S.

Census."

Consular Reports (British and American).
Publications of Census Bureau (and of other Departments on Labor,

Trade, and Finance).
British Board of Trade Publications.
Journal of the Royal Statistical Society.
Journal of the American Statistical Society (Articles by Mitchell, James,

Bullock, etc.).

Publications of the State Labor and Statistical Bureaus.
Trade Unions.

KIRK: "National Labor Federations in the United States."

WEBB: "Industrial Democracy."

COMMONS: "Trade Unions and Labor Problems."

HOLLANDER AND BARNETT: "Studies in Trade Unionism."

COGLEY: "The Law of Strikes, Lockouts, and Labor Organizations."

EDDY: "The Law of Combinations."

ELY : " The Labor Movement in America."

HOWELL: "Trade Unionisin, New and Old."

Mitchell: "Organized Labor."

Peters: "Labor and Capital."

SPEDDEN: "The Trade Union Label."

U. S. Industrial Commission Reports.

WEBB: "History of Trade Unionism."

INDEX

Accounting, 5, 51, 382.

Accounting system, merging costs
into, 51, 284.

Addressing machine, use of in con-
nection with pay-roll, 268.

Advisory board method of factory
control 47, 60, 361.

Aids in taking inventory, 304.

Air-spraying, 91.

Air washer, 93.

Alterations in bills of material, 156.

Alterations in orders, 151.

Alterations in patterns, 172.

Alterations to machinery, 239.

Analysis of pay-roll, 66, 279.

Application for employment, 114.

Appraisals, 21, 313.

Apprenticeship systems, 127, 364.

Arc lamps, 97.

Authorization of piece-work rates,
337.

Babbage, Chas., "Economy of Ma-
chinery and Manufactures,"
9.

Balances in stock-room recorded on
shop tags, 221.

Baldwin Locomotive Works appren-
ticeship system, 367.

Banking, syllabus of works on,
385.

Bearing bracket data, 161.

Betterment work, 129, 359.

Bibliography of Works management,
374.

Billing machine, 143.

Bills of material, 152.

Bill of material used for posting cost
records, 300.

Bins in packing room, 254.

Bins, numbering in storerooms, 193.

Bin-ticket, 191.

Blake & Johnson factory, 95.

Blue-print machines, 167.

Blue-print record, 167.

Blue-print storage, 163.

Blue-prints, mounting, filing, and
issuing, 163, 167, 238.

"Bonus System of Rewarding
Labor," by H. L. Gantt, re-
viewed, 377.

Bonus system, time sheet for, 271.

Bonus wage system, 351, 353, 354.

Buildings, factory, 80.

Burden rates, 53, 286-288.

Bushing data, 160.

Business and Engineering Law, syl-
labus of works on, 382.

Call-bell system, 238.

Carbon copies of correspondence,

139.

Card's machine tool recorder, 333.
Car-load shipments, 258.
Car record, 259.
Castings, perpetual inventory of,

186.

Castings received, report of, 262.
Castings, record of foundry, 233.

record of stock of, 187.

requisitions and purchase or-
der for, 179.

requisition in foundry, 224.

scrapped, 229.

warehouse, 188.
Centralized control in the factory,

24.

Changes in bills of material, 159.
Changes in design, 360.
Changes in drawings, 163.
Changes in employees, 360.
Changes in orders, 151.
Changes in patterns, 171.
Changes in piece-rates, 335, 346.
Charts, graphical, 63.
Charts organization, 39-50.

391

392

INDEX

Check numbers, assigning, 268.

Checking drawings, 167.

Cipher code for employees' charac-
teristics, 123.

City site for factory, 71, 74.

Classification of shop orders, 143.

Clean air, 91. .

Clerical force, need of sufficient, 364.

Clock -card used as work-card, 268.

Coke air washer, 93.

Commercial Geography, syllabus of
works on, 383.

Comparative individual operation
costs, 299.

Comparative time record for refer-
ence in rate fixing, 337.

Comparative total costs, 298.

Competitors' prices, 302.

Completion of orders, notice of, 298.

Component part costs, 286.

Concrete floors, 105.

Concrete, reinforced, 106.

Continuation schools, 365.

Cooperation between accounting
and cost departments, 295.

Cooperation between employers and
employees, 359.

Cooperative engineering schools, 371.

Core-maker's order copy, 225.

Correspondence, 136.
filing of, 137.
interdepartmental, 137.

Costs, comparative, 299-301.

Cost department, 281.

qualifications of head of, 282.
reports, 63, 64.

Costs, material, 285.

Costs merged into accounting sys-
tem, 284.

Cost postings checked against pay-
roll, 288.

Cost record on bill of material, 155,
300.

Cost system, adapting to premium
or bonus wage systems, 356.

Cost system, development of, 283.

Country site for factory, 72.

Credit for material returned to
storeroom, 177.

Cupola charge sheet, 231, 232.

Cupola report, 232.

Currency, syllabus of works on, 385.

Day -rate of pay, field for, 342.
Defects and errors, 321, 322.
Defective castings, 229.
Delays due to time-posting, 270.
Delays in purchase orders, 180, 216.
Demonstrators in rate fixing, 362.
Departmental bills of material, 154.
Departmental reports, 58.
Departments, arrangements of, 85.
Depreciation, 21, 308, 311.
Designing factory buildings, 80.
Designing department, 159.
Desks, flat-top or roll-top, 140.
Detached lots of stock orders, 219.
Detail drawings, 164.
Dimensional inspection, 318.
Direct labor defined, 288.
Direct shipments, 257.
Distribution of labor, 279.
Dooley, C. R., discussion of factory

schools, 369.
Double entry system, merging costs

into, 51, 284.

Drafting department, 159.
Drafting department report, 61.
Draftsman's time cards, 168.
Drawing list, 162.
Drayage, 183, 286.
Duplicate work in tool department,

241.

Economics of workingmen, syllabus

of works on, 383.
Educational extension work, 365.
Education for factory management,

2.
Efficiency records of workmen, 123,

237, 355.

Electrical inspection, 325.
Employment of labor, 109.
Employment record, 115.
Equipment, inventorying, 309.
Erection inspection, 319.
Errors and defects, 321, 322.
Executive control in the factory, 40.

, INDEX

393

Expense account, 53, 289.

Expenses, hourly rate method, 292.
localizing, 279, 294.
manufacturing, items consti-
tuting, 289.

percentage method of adding
to costs, 291.

Express charges, 183, 263/290.

Extension work in educating work-
men, 365.

Factor of safety, 290.

Feeds and speeds of machine tools,

records of, 331.
Files, records of, 241.
Filing catalogues, 182.
Filing correspondence, 137.
Filing orders in shipping office,

253.

Filing purchase orders, 180.
Filing tracings and blue-prints, 162.
Final inspection, 320.
Finance, banking and currency,

syllabus of works on, 385.
"Finding lists" in storerooms and

warehouses, 193.
Finished parts record, 188.
Finished product, 185, 284.
Fireproof vaults, 162.
Fixing piece-work rates, 329.
Fixtures, orders for, 148.
Flaming arc lamps, 97.
Floors, factory, 104.
Floor inspection, 319.
Foremen, selecting, 110, 363.
Foremen's meetings, 60, 217.
Foundry, consecutive job list, 220.
Foundry's daily record of work done,

227.

Foundry delivery record, 228.
Foundry record of work in process,

229.

Foundry systems, 224.
Foundry time ticket, 233.
Freight charges, 286.
Freight claims, 260.
Freight payments, 259.
Freight receipts, 256.
Functional control, 26.

"Gain Sharing," by Henry R.
Towne, reviewed, 375.

Gain-sharing wage systems, 347.

Gantt, H. L., "A Bonus System of
Rewarding Labor," reviewed,
377.

Gear data, 160.

General office, 136.

General office report, 60.

Glass, 94.

Glass, prismatic, 97.

Good management, principles under-
lying, 359.

Graphical charts, 63.

Group arrangement of bill of mate-
rial, 154.

Groups of parts, inspection of, 319.

Health as affected by heating sys-
tems, 91.

Heating systems for factories, 89.
Hiring labor, 109.
Hot blast heating system, 91.
Hourly expense rates, 292.
Hourly machine rate, 294.
Human element in manufacturing, 7.
Humidifying air, 93.

Ideals to be attained in manufactur-
ing, 129.
Illumination, 94.
Incandescent lamps, 97.
Indexing in drafting department,

159.
Indirect heating pressure system,

90.

Indirect labor, 53, 148, 288.
Industrial agents of railroadsr 75.
Industrial engineer, employment of,

108, 372.
Industrial History of the United

States, syllabus of works on,

385.
Inspection, dimensional, 318.

electrical, 320.

erection, 319.

final, 320.

floor, 319.
Inspection methods, 317.

394

INDEX

Inspection of groups of parts, 319
Inspectors, qualification of, 321.
Inspectors' report, 324.
Instructions to time-takers, 272.
Interdepartmental movement

work in process, 212.
Interest, as part of cost, 290.
Inventory, aids in taking, 304.

classifying materials, 305.

precautions in taking, 313.
Inventory tags, 306.
Invoices, checking, 184.

Job-card, 275.

Labor account, 52, 274, 286.

Labor conditions as affecting fac-
tory site, 72.

Land, cost of, as affecting type of
building, 74.

Labor cost, posting of, 286.

Labor distribution, report of, 279.

Labor efficiency records, 126, 339,
345, 355.

Labor problems, 109.

Labor, productive, defined, 288.

Lamps, arc, 97.

incandescent, 97.
mercury vapor, 97.

Laws of Business, syllabus of works
on, 382.

Laying out factory buildings, 80.

Letters, filing, 137.

Light in shops, 94.

List of parts, 152, 300.

Literature pertaining to works man-
agement, 374.

Localizing expenses, 279, 294.

Locating a factory, 71.

Location of lockers, 87.

Location of power plant, 102.

Location of wash-rooms, 87.

Lockers, location of, 87.

Loyalty of employees, 359.

Machine rate, hourly, 294.
Machine shop and tool department,

236.
Machine tools classified, 249.

Machines, arrangement of, 83.

Machinery proposition for new,
251.

Mail, opening of, 136.

Management of factories, educa-
tion for, 2.

Management of factories, bibliog-
raphy of works relating to,
374.

Management, principles underlying,
359.

Manifold copies of orders, 143.

Manufactured parts, record of, 188.

Manufacturing department report,
61.

Market as affecting factory site,
73.

Material account, 52.

Material costs, 285.

Materials, inspecting, 317.

Materials received report, 261.

Mechanical engineering, 7.

Meetings of department heads, 28,
204.

Merging costs into accounting sys-
tem, 51, 284.

Mercury vapor lamps, 97.

Messenger system, 137.

"Minimum" stock of standard
parts, 191, 194.

Monitor roof, 87, 97.

Monthly stock balances, 197.

Moulders' order copy, 225.

Moulders' time card, 347.

Mounting blue-prints, 163.

Moving work in process, 212, 237.

National Motor Vehicle Co., organi-
zation, 44.

Night-schools for workmen, 370.

Non-productive labor, orders cov-
ering, 53, 148, 279, 288.

Non-productive travel, avoidance
of, 80, 83.

Notification to workmen of gains
under premium or bonus wage
systems, 350, 352.

Numbering bins, 193.

Numbering parts and patterns, 159.

INDEX

395

Observational data as basis for rate

fixing, 335.
Obsolete parts, 308.
Office employees, record of, 115.
Office, general, 136.
Officials, selection of, 6, 110, 344,

360.

Opening mail, 136.
Order department, 142.
Order on storeroom, 178, 199.
Order on tool-room, 240, 243.
Orders, classification of, 143.

delivery to foremen, 203.

manifold copies of, 143.
Orders to repair machinery, 239.

tracing, 61.

Organization charts, 28—44.
Organization of business enterprises,

syllabus of works on, 386.

Packing card, 254.

Packing list, 256.

Partial delivery of parts on stock

orders, 219.

Partial shipments, 146, 257.
Parts, lists of, 152.

numbering, 159.

record of, 186-191.

tracing of, 210.
Passage ways, 83, 101.
Pattern department, 169.
Pattern makers' time-card, 170.
Pattern material, 169.
Patterns, numbering, 159.
Pattern orders, 169.
Patterns received, report covering,

266.

Pattern record, 159, 171.
Pattern storage, 169.
Pattern-tag, 174.
Pay-roll analysis, 66, 279.
Pay-roll checked with cost postings,

272, 287.
Pay-roll systems for various wage

systems, 330, 336, 356.
Perpetual inventory, 186, 191.
"Piece Rate System," by F. W.

Taylor, reviewed, 375.
Piece-work, field for, 345.

Piece-work rates, changes in, 338,

344.
Piece-work rates, the fixing of, 329-

335.
Pittsburg district, welfare work in,

370.

Planning work ahead, 201, 222.
Potter & Johnson factory, 106.
Power plant, location of, 102.
Premium systems described, 348-

356.
Premium system, -efficiency record

under, 355.
Premium system, time-sheet for,

356.

Press working of metals, 249.
Price list of purchases, 182.
Prismatic glass, 97.
Production department, functions
of, 201-211, 222.

qualifications of head of, 204.

report, 61.

Production engineering, 7.
Productive labor defined, 288.
Promise dates of completion of shop

orders, 210, 216, 221.
Promises to fill purchase orders,

180.

Pulley data, 160.
Purchase order, 179.
Purchase record, 182.
Purchased finished parts, 185.
Purchases, delivery of, 180, 205, 216.

reports of, 67.
Purchasing agent, qualifications of,

175.
Purchasing department, functions

of, 175.
Purchasing important parts before

completion of bill of material,

157.

Railway industrial agents, as judges

of factory sites, 75.
Railway transportation, syllabus of

works on, 387.
Rate-fixing department, 329.
Raw material as affecting factory

site, 71.

396

INDEX

Raw material costs, record of, 286.

Raw materials, inspecting, 317.

Raw material records, 186.

Recalling bills of material, 156.

Receipts of castings report, 262.

Receipts of material report, 261.

Receiving, 26.

Reception room, 140.

Reinforced concrete, 108.

Release card, 1 25.

Remington Typewriter Co. organi-
zation, 41.

Repair orders, 148.

Repairs to machinery, 239.

Replenishment of storeroom sup-
ply, 194.

Reports, cost department, 62, 65.
departmental, 58.
drafting department, 61.
general office, 60.
inspectors', 324.
manufacturing department,
61.

Reports of labor distribution, 279.

Reports of purchases, 68.

production department, 61.
summarizing, 63.
tracing department, 211.
weekly, 60.

Request for production order, 194.

Requisition on foundry for castings,
224.

Requisitions on purchasing depart-
ment, 126.

Requisitions on storekeeper, 194.

Returned goods, disposition of,
265, 322.

Returned purchases, 182.

Roof, factory, 94-97.
monitor, 94-97.
saw-tooth, 94-97.

Rowan sliding scale wage system,
349.

Rules, booklet of, 133.

Rush orders, 213.

Sanitation, 99.

Saw-tooth roof, 94-97.

Scheduling machine-shop work, 210.

Schneider's plan for cooperation be-
tween engineering school and
industries, 371.

School-work in factories, 365.

Scrapped castings, 229.

Scrapping defective parts, 321.

Selling prices based on shop costs,
281.

Shape of factory buildings, 85-88.

Shipping, 253.

Shipping and Receiving Depart-
ments, 253.

Shipping record, 255.

Shipments, carload, 258.

direct from other factories,
257.

Shipments direct from shop floor,

320.
partial, 146.

Shop drawings, 1 63.

"Shop Management," by Fred W.
Taylor, reviewed, 378.

Shop orders, classification of, 144.

Shop tag, 218.

Single-floored factory buildings, 87.

Sites, factory, 71.

Skylights, 94.

Slow burning construction, 106.

Social betterment work, J 29.

Speeds and feeds of machine tools,
records of, 331.

Special manufacturing order, 150.

Specifications covering inspection,
317.

Splitting orders of work in process,
219.

Spraying air, 93.

Standardizing drawings, 159.

"Standard Operation," time sheet
for, 271.

"Standard Operation," wage plan,
348.

Standing orders, 148, 279, 288.

Statistics, syllabus of works on, 387.

Stock balances, monthly, 197.

Stock defined, 185.

Stock-moving, 212, 237.

Stock-room methods and systems,
185.

INDEX

397

Stock-taking, 304.

Stop-watch, use of in rate fixing, 332.
Storage of work in process, 83.
Stores and stock departments, 185.
Suburban site for factory, 76.
Suggestion system, 128, 251.
Summarizing reports, 63.
Summary of cost, 297. •
Superintendent as related to produc-
tion department, 206.
Supplies defined, 186.
Supply department, 148.

Tabulating machine used in time-
taking, 277.
Tagging materials for inventorying,

306.
Tags for tracing work in process,

218.
Taylor, Fred W., 5.

"A Piece-rate System," reviewed,

376.
"Shop Management," reviewed,

378.

Telephone operator, 140.
Templets of machinery, use of, 84, 85.
Temporary bin-ticket, 193.
Testing assembled machines, 319-

320.
Testing department report, 61, 326-

328.

Test record, 326.
Tests of tool-steel, 241.
Test tag, 327.

Time-card for calculagraph, 275.
Time-card for each job, 275.
Time-card for tabulating machine,

278.

Time-card of pattern-makers, 170.
Time-cards for draftsmen, 168.
Time-cards of foundry employees,

230.

Time-clock, 268.
Time-estimates of completing orders,

213.

Time-posting, delays due to, 271.
Time-sheet, weekly, 271.
Time-stamps, 130, 270.
Time-study data, recording, 335.

Time-taker, 271.

Time-takers, instructions to, 272.

Time-taking, 268.

Tipless incandescent lamps, 98.

Titles" of drawings, 164.

Tool department, 236.

Tool orders, 148, 240.

Tool room fixtures and storage de-
vices, 245.

Tool room orders, 240.

Tool steel, identifying different
brands, 244.

To.ol steel tests, 241.

Tools, records of those required to
make any part, 243.

Tote boxes, 102.

Towne, Henry R., 1.

"Gain Sharing," reviewed,
375.

Tracing assembled groups, 214.

Tracing department report, 217.

Tracing function of production de-
partment, 210.

Tracing individual part orders,
210.

Tracing interdepartmental move-
ment of work in process, 212.

Tracing orders, 142.

Tracing parts and groups to make
up complete machines, 214.

Tracing patterns, 174.

Tracing progress of orders in foun-
dry, 229.

Tracing purchased items, 216.

Tracing record on bill of material,
215.

Tracing tag, 218.

Tracings, filing and storing, 162.

Trade unions, syllabus of works on,
388.

Transportational facilities as affect-
ing factory site, 72.

Transportation in shop, 99.

Unsatisfactory purchased goods,
182.

Valuing for inventory, 313.
Vault for tracings, 162,

398

INDEX

Wage systems, 342.
Washing air, 93.
Wash-rooms, location of, 87.
Weekly meetings, 217.
Weekly reports, 59.
Weekly time-sheet, 271.
Welfare work, 130.
Western Gas Construction Co., or-
ganization, 46.

Westinghouse industries, educa-
tional activities in vicinity
of, 369.

Wood, use of in factory construc-
tion, 104.

"Work in Process" Account, 53,
284.

Work in process, room for, 83.

Works manager, duties of, 40.

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